## Facts

- Metropolitan Life Insurance Company operated as a mutual insurance company after converting from stock form in 1915.
- In 2000, MetLife completed a demutualization and returned to stock form; Debevoise & Plimpton LLP served as MetLife’s outside counsel in the transaction.
- Shortly after demutualization, policyholders filed a federal securities class action alleging misstatements and omissions in materials provided to policyholders during the demutualization process.
- In discovery, MetLife asserted attorney–client privilege over communications with in-house and outside counsel; the district court suggested policyholders were effectively clients because they were beneficiaries of counsel’s advice.
- Nine years into the litigation and shortly before trial, plaintiffs moved to disqualify Debevoise from representing MetLife in the class action.

## Issues

1. Whether outside counsel that represented a mutual insurer in a demutualization also formed an attorney–client relationship with the insurer’s policyholders, creating a conflict barring representation adverse to those policyholders in later litigation.
2. Whether Debevoise should be disqualified under the witness–advocate rule because lawyers involved in the demutualization were expected to testify.
3. Whether the timing and circumstances of the motion (filed near trial after years of litigation) weighed against disqualification.

## Decision

- The Second Circuit reversed the district court’s order disqualifying Debevoise.
- The court held Debevoise did not have an attorney–client relationship with MetLife’s policyholders by virtue of representing MetLife in the demutualization.
- The court held plaintiffs did not make the required showing that any witness–advocate concern warranted disqualification.
- The court noted disqualification motions receive strict scrutiny given the risk of tactical use and disruption, especially when raised late.

## Legal Principles

- Under New York law, a corporation’s outside counsel represents the corporate entity, not its shareholders, policyholders, or other constituents, absent a separate relationship creating duties to those individuals.
- A constituent’s status as a beneficiary of a mutual entity, or as an intended recipient of corporate disclosures, does not by itself create an attorney–client relationship with corporate counsel.
- Disqualification under the witness–advocate rule requires a strong showing that counsel’s testimony is likely and would be substantially prejudicial to the client; speculative or marginal testimony is insufficient.
- Courts scrutinize late-filed disqualification motions because they can impose substantial cost and delay and may be used to gain litigation advantage.

## Conclusion

The Second Circuit held that Debevoise’s work for MetLife in the demutualization did not make it counsel to MetLife’s policyholders and that alleged witness–advocate issues did not justify removing long-standing counsel on the eve of trial, so the disqualification order was reversed.


Murray v. Metro. Life Ins. Co., 583 F.3d 173 (2d Cir. 2009)