The lawsuit filed by the Atlantic Coast Conference against the University of Maryland continues to percolate in the North Carolina Business Court. But the University will have to proceed without its chosen attorneys, as the Court last week refused to admit them on a pro hac vice basis. The decision came in an Order in Atlantic Coast Conference v. University of Maryland.
If you have forgotten about the ACC’s lawsuit against the University of Maryland, it was filed by the ACC to recover the $50 million exit fee it says is due from the University upon its departure from the ACC to join the Big Ten Conference. The University disputes the validity of the exit fee, and has counterclaimed in very detailed claims for violation of antitrust laws and unfair competition.
The Maryland University was represented by a lawyer from the Maryland Attorney General’s office, and two lawyers from the Milwaukee firm Foley & Lardner. When these lawyers moved to be admitted pro hac, the ACC objected. It argued that the counsel from Foley & Lardner were in violation of Rule 1.7 of the North Carolina Rules of Professional Conduct due to their representation in other matters of Florida State, Virginia Tech, and the University of Virginia, members of the ACC, and the University of Louisville, which officially joined the ACC on July 1st.
Rule 1.7 says that "[a] lawyer shall not represent a client if the representation involves a concurrent conflict of interest." There is a concurrent conflict of interest if:
(1) the representation of one client will be directly adverse to another client; or
(2) the representation of one or more clients may be materially limited by the lawyer’s responsibilities to another client, a former client, or a third person, or by a personal interest of the lawyer.
The ACC lawyers argued that the University of Maryland’s lawyers were acting adversely to the interests of their other University clients. One of the comments to Rule 1.7 is favorable to the University’s position. Comment 34 says that "[a] lawyer who represents a corporation or other organization does not, by virtue of that representation, necessarily represent any constituent or affiliated organization."
But Comment 34 ends on a bad note for the University’s argument. It says that this qualification does not apply if "the lawyer’s obligations to either the organizational client or the new client are likely to limit materially the lawyer’s representation of the other client."
The University’s (former) counsel argued that they could ameliorate any conflict by hiring independent counsel to take the depositions of any institution which was a member of the ACC and represented by them. There is an ABA Opinion that supports this position, ABA Standing Committee on Ethics and Professional Responsibility, Formal Opinion 92-367, but it also says that if the "conflict is clearly forseeable, then the solution, absent client consent, is clear enough: the prospective engagement must be declined."
The Court refused to admit the University’s attorneys on a pro hac basis, noting the lack of any conflict waiver, and stating that:
[w]hile it is true that a party’s right to choose its own counsel is generally considered fundamental, ‘an out-of-state attorney has no absolute right to practice law in another forum.’
Judge Jolly did admit pro hac an attorney from the Maryland Attorney General’s office to represent the University, observing "the public policy behind permitting the attorney general of another state to practice in North Carolina, combined with the absence of direct legal authority preventing" his appearance in the case. Order ¶11.
Is the resolution of this pro hac admission issue a victory for the ACC? My general philosophy on efforts to preclude opposing counsel from representing a client is that you face a risk that they will be replaced by better lawyers. In the University’s situation, that seems to be unlikely. Their now unadmitted counsel looked like a powerhouse in the area of sports law. So score this as a win for the ACC. But it’s early in the first quarter.