## Facts

- Stefania Santacroce brought a diversity action against the executors of Arthur M. Goldberg’s estate and Dice Investments, LLC.
- Jaffe & Asher, LLP had a longstanding attorney-client relationship with Goldberg and represented several of his companies, including Dice.
- At Goldberg’s request, Jaffe & Asher undertook representation of Santacroce and her company, EuroJewels, Inc., in a separate contractual dispute with a jewelry manufacturer (the Damiani matter) and filed a complaint and supporting affidavit on her behalf.
- Goldberg paid Santacroce’s legal fees in the Damiani matter until his death.
- After Goldberg died and left Santacroce nothing in his will, Santacroce asserted that Goldberg had promised lifetime financial support if she abandoned her business and cared for him, and she pursued a claim against the estate based on that alleged promise.
- While Santacroce’s claim against the estate was developing, the estate and related entities asked Jaffe & Asher to represent them in litigation including Santacroce’s claim.
- Jaffe & Asher informed Santacroce that the estate’s request created a conflict, sought a waiver, and—after she refused—withdrew from the Damiani matter and then undertook representation of the estate, the executors, and Dice in the dispute with Santacroce.
- Santacroce moved to disqualify Jaffe & Asher, asserting conflicts of interest and improper “switching sides.”

## Issues

1. Whether a law firm may represent parties directly adverse to an existing client in related litigation without that client’s informed consent under New Jersey RPC 1.7(a).
2. Whether a firm’s prior representation of a client, including exposure to confidential business and financial information, bars later representation of materially adverse parties in the same or a substantially related matter under RPC 1.9(a)(1).
3. Whether a firm may avoid a concurrent-client conflict by withdrawing from the less favored client and then appearing against that client (the “Hot Potato Doctrine”).

## Decision

- The court granted Santacroce’s motion to disqualify Jaffe & Asher.
- The court held that RPC 1.7(a) barred Jaffe & Asher from representing all defendants because the firm sought to act directly adverse to a current client and Santacroce did not consent.
- The court held that, even analyzed as a former-client situation under RPC 1.9(a)(1), the firm was disqualified because the matters were substantially related and the defendants’ interests were materially adverse to Santacroce’s, without her consent.
- The court applied the Hot Potato Doctrine and refused to allow the firm to convert a concurrent conflict into a former-client conflict by dropping Santacroce to accept representation of her adversaries.

## Legal Principles

- Under RPC 1.7(a), a lawyer may not represent a client if the representation is directly adverse to another current client unless the required informed consent and other conditions are satisfied.
- Under RPC 1.9(a)(1), a lawyer may not represent a new client against a former client in the same or a substantially related matter where interests are materially adverse, absent the former client’s informed consent.
- A law firm may not “cure” a concurrent conflict by unilaterally terminating representation of one client to accept representation of a more desirable adverse client; courts may disqualify counsel where withdrawal is used to sidestep conflict rules.
- When substantial relationship and adversity are shown, a firm’s access to a client’s confidential business and financial information can warrant disqualification to protect loyalty and confidentiality.

## Conclusion

The court disqualified Jaffe & Asher from representing the estate, the executors, and Dice because the firm attempted to oppose a current (and then former) client in a substantially related dispute without consent, and it could not avoid the resulting ethical conflict by withdrawing from the client it had previously represented.


Santacroce v. Neff, 134 F. Supp. 2d 366 (D.N.J. 2001)