## Facts

- Jere D. Detter and Jeffrey A. Schreiber were 50–50 shareholders and the only directors of a closely held Nebraska professional corporation, Miracle Hills Animal Hospital, P.C.
- In 1992, Schreiber executed two promissory notes to Detter totaling $19,000 in principal.
- In 1996, Schreiber retained attorney Thomas J. Young to draft a shareholder agreement and assist with related corporate matters; the corporation paid for Young’s services.
- Young worked primarily with Schreiber but met with Detter for approximately 1.5 hours to discuss the proposed shareholder agreement, which addressed stock transfer restrictions and buy-sell arrangements upon death or disability.
- Detter later sued Schreiber to collect on the promissory notes, alleging a remaining balance after partial payment; Schreiber denied a balance and asserted estoppel and setoff based on claimed management services.
- Detter moved to disqualify Young from representing Schreiber, asserting Young’s prior work for the corporation and dealings with Detter created a conflict of interest.
- Affidavits conflicted on whether Detter reasonably believed Young also represented him (and whether Detter shared confidential financial information); the shareholder agreement was never executed.

## Issues

1. Whether the trial court clearly erred in finding an attorney–client relationship (express or implied) between Young and Detter, arising from Young’s corporate work and meeting with Detter.
2. Whether Young’s prior work was substantially related to the promissory-note dispute such that representing Schreiber against Detter required disqualification under conflict-of-interest principles protecting former clients and confidences.

## Decision

- The Nebraska Supreme Court affirmed the order disqualifying Young from representing Schreiber.
- The court held the trial court did not clearly err in finding circumstances supporting an implied attorney–client relationship and reasonable reliance by Detter.
- The court independently agreed that the prior representation and the current dispute were substantially related and that disqualification was warranted.

## Legal Principles

- On appeal from an order disqualifying counsel, factual findings are reviewed for clear error, and the appellate court independently decides whether disqualification is required.
- An attorney–client relationship can be implied from conduct when a person seeks legal advice and reasonably relies on the lawyer’s representation under circumstances where the lawyer should recognize that reliance.
- A lawyer may be disqualified from representing a current client against a former client when the matters are the same or substantially related and the representation is materially adverse.
- When matters are substantially related, courts may presume the lawyer had access to confidential information relevant to the later dispute; the former client need not prove actual disclosure or use.
- In closely held corporations with only a few owner-directors, corporate-paid legal work on governance and ownership arrangements may reasonably be understood as representation affecting, and potentially creating duties to, each owner.

## Conclusion

The court upheld disqualification because Young’s corporation-paid work on shareholder governance and his consultation with Detter supported an implied attorney–client relationship and involved matters substantially related to the later dispute between the two equal owners, creating an impermissible former-client conflict.


Detter v. Schreiber, 610 N.W.2d 13 (Neb. 2000)