## Facts

- The SEC investigated Clovis W. McAlpin and related offshore investment entities for alleged securities violations and asset misuse.
- In the SEC enforcement case, the district court entered a default judgment against McAlpin and appointed Michael F. Armstrong as receiver to marshal and recover assets for investors.
- Armstrong retained the Gordon, Hurwitz, Butowsky, Baker, Weitzen & Shalov firm (Gordon firm) as counsel.
- Armstrong later filed a civil recovery action seeking more than \$24 million in damages against McAlpin and others based on the alleged scheme.
- Theodore Altman, a former SEC Enforcement Division official who had supervisory responsibility for the McAlpin investigation, left the SEC and joined the Gordon firm.
- The parties agreed Altman was personally barred from working on the Armstrong litigation due to his prior “substantial responsibility” in the government matter.
- The Gordon firm implemented an internal screen preventing Altman from participating in or accessing files related to the litigation.
- McAlpin and co-defendants moved to disqualify the Gordon firm, arguing Altman’s presence created conflict and appearance-of-impropriety concerns, particularly given the receiver’s access to SEC investigative files.
- The district court denied disqualification, finding the screen effective and no evidence of improper use of confidential information.
- A Second Circuit panel reversed and ordered firm disqualification, relying heavily on “appearance of impropriety” concerns.
- The Second Circuit reheard the matter en banc to determine whether firm-wide disqualification was required.

## Issues

1. Whether a former government lawyer’s personal disqualification for prior “substantial responsibility” in a matter automatically requires disqualification of the lawyer’s entire private firm in that same matter.
2. Whether timely and effective screening can prevent imputed disqualification by rebutting any presumption of shared confidences.
3. How courts should weigh protection of government confidences and public trust against litigants’ interest in chosen counsel and the practical effects on government-to-private employment.

## Decision

- The en banc court held Altman was personally disqualified from participating in the litigation due to his prior substantial responsibility in the SEC investigation.
- The court rejected a per se rule that Altman’s personal disqualification required disqualification of the entire Gordon firm.
- The court held the firm could continue the representation if Altman was effectively screened and there was no showing that confidential government information had been used or was likely to be used.
- The court reversed the panel’s order of firm-wide disqualification and permitted continued representation subject to the screening measures.

## Legal Principles

- A former government lawyer who had substantial responsibility in a matter is personally disqualified from later representing a private client in the same matter.
- Personal disqualification of a former government lawyer does not automatically impute to the entire firm; firm-wide disqualification is not required absent case-specific justification.
- Effective, promptly implemented screening may prevent transmission or use of confidential government information and can support denial of firm-wide disqualification.
- Disqualification is a preventive remedy that should be imposed only when necessary to protect confidences or the integrity of judicial proceedings; speculation and conjecture are insufficient.
- “Appearance of impropriety” concerns require more than a theoretical possibility and must reflect a genuine risk when balanced against countervailing interests such as choice of counsel and litigation efficiency.

## Conclusion

The Second Circuit held that while a former SEC attorney with prior substantial responsibility was personally barred from the related private litigation, the lawyer’s firm could continue to represent the receiver because an effective screen and the absence of evidence of confidential-information misuse made firm-wide disqualification unwarranted.


Armstrong v. McAlpin, 625 F.2d 433 (2d Cir. 1980), vacated, 449 U.S. 1106 (1981)