Beachcomber Management Crystal Cove, LLC v. Superior Court

Attorney who had represented a corporation and its control group is not disqualified from representing the control group in a shareholder derivative action because the control group already knows the corporation’s confidential information.  The trial court erred in disqualifying counsel who had represented corporation and its control group before suit from continuing to represent the control group in a shareholder derivative action brought nominally in the name of the corporation.  This is a successive representation situation in which the interest to be preserved is lawyer confidences.  But since the control group would already have been privy to those confidences during the period before suit was filed, there is no reason to prevent corporate counsel from representing the control group in the derivative action.  This reasoning holds even if the control group is not the sole repository of the corporation’s confidences.  The fact that the control group was already privy to the information suffices even if others also know the same information.

California Court of Appeal, Fourth District, Division 3 (Aronson, J.); June 28, 2017 (published July 28, 2017); 2017 WL 2823001

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