The opinion of the court was delivered by: SOFAER
During the jury trial of this action, it became apparent that a partner in the firm representing the defendant ought to testify on behalf of his client. The court sua sponte disqualified defendant's counsel and declared a mistrial. Several of the issues raised by the disqualification deserve comment.
This is an action sounding in contract. Plaintiff alleges that the defendant entered into a joint venture with him to manage and reorganize four failing companies that were indebted to defendant. The companies' indebtedness to the Bank allegedly was to be reduced by repayment or sale of the companies to a third party. The plaintiff claims that the defendant breached the joint venture agreement by failing to compensate him in accordance with its terms. Specifically, he alleges that the defendant refused to execute a sale of the companies to a third party and that the defendant refused to transfer the companies' common stock to him as agreed. The plaintiff contends that these acts deprived him of compensation. Alternatively, plaintiff seeks recovery in quantum meruit.
The defendant denies that a joint venture existed and alleges that plaintiff received full compensation for services rendered. Alternatively, he claims that, even if a joint venture agreement did exist, it was conditioned upon reduction of the companies' debt. Defendant contends that the escalation of the debt during plaintiff's management precludes any recovery. Defendant has also interposed a counterclaim for money due under a promissory note.
On the second day of plaintiff's direct testimony, it became evident to the court that Donald McNicol, a senior partner in the firm representing defendant (Hall, McNicol, Hamilton, Clark & Murray), was intimately involved in the events at the heart of this litigation, and that other members of the firm (particularly William Collins) were involved to a lesser extent.
Absent testimony of McNicol and others in the firm it appeared impossible for the bank effectively to explain or rebut plaintiff's testimony. For this reason, the court suggested to the litigants, outside the presence of the jury, that defendant would need to call McNicol as its witness and that this might require his firm to withdraw from further representation of defendant in this suit.
In the discussions that followed, the parties repeatedly revised their positions on the disqualification issue. See Transcript of Trial ("Tr.") 294, 300-301, 304, 306-307, 310-319, 332, 349-350, 359. Plaintiff's attorney declined to move either for disqualification or for a mistrial, but nevertheless repeatedly raised questions as to the propriety of defendant's counsel's continued participation. Tr. 294, 304, 314, 317-318. Initially, defendant's attorney took the position that McNicol's testimony was unnecessary. Later, counsel for defendant said they would not call McNicol, but asked the court to instruct the jury that the reason McNicol did not testify was that this firm could not act as counsel if he had done so. Tr. 332. Ultimately, defense counsel agreed that McNicol and other members of the firm ought to testify on behalf of defendant, but argued that disqualification was inappropriate as it would cause substantial hardship to the client. The defendant Bank of New York, through its officers, remained adamant in its position that it wanted Hall, McNicol to continue as its counsel, even if that would preclude defendant from offering testimony of firm members. Tr. 311-312, 319-320, 325, 327.
The court followed the mandate of Disciplinary Rule 5-102(A) of the Code of Professional Responsibility ("DR 5-102(A)") and ordered defendant's counsel to withdraw. That Rule provides:
If, after undertaking employment in contemplated or pending litigation, a lawyer learns or it is obvious that he or a lawyer in his firm ought to be called as a witness on behalf of his client, he shall withdraw from the conduct of the trial and his firm, if any, shall not continue representation in the trial, except that he may continue the representation and he or a lawyer in his firm may testify in the circumstances enumerated in DR. 5-101(b)(1) through (4).
The court declared a mistrial because of the disqualification. The defendant needed several weeks to retain and properly inform new trial counsel, making it impracticable to retain the jury that had already been impanelled. The fact that the jury would conceivably speculate to the prejudice of either party as to the reason counsel had been changed after two days of testimony was sufficient reason to warrant a new trial.
Strong policies underlie DR 5-102(A). Calling a party's attorney as a witness undermines the integrity of the judicial process. The rule operates to protect the interests of the plaintiff, the interests of the adverse party, and the reputation of the legal profession as a whole. See generally 6 J. Wigmore, Evidence § 1911 (Chadbourn rev. ed. 1976); Note, The Advocate Witness Rule: If Z, then X. But Why?, 52 N.Y.U. L. Rev. 1365 (1977); American Bar Association Committee on Ethics and Professional Responsibility, Formal Opinion 339 (January 31, 1975) (hereinafter cited as ABA Report). These interests are well expressed in Ethical Consideration 5-9 ("EC 5-9"):
Occasionally a lawyer is called upon to decide in a particular case whether he will be a witness or an advocate. If a lawyer is both counsel and witness, he becomes more easily impeachable for interest and thus may be a less effective witness. Conversely, the opposing counsel may be handicapped in challenging the credibility of the lawyer when the lawyer also appears as an advocate in the case. An advocate who becomes a witness is in the unseemly and ineffective position of arguing his own credibility. The roles of an advocate and of a witness are inconsistent; the function of an advocate is to advance or argue the cause of another, while that of a witness is to state facts objectively.
DR 5-102(A) implicitly recognizes the potential conflict of interest with which an attorney may be faced in this situation: attorneys anxious to participate in the litigation might fail to step aside as counsel and testify even if their testimony could help the client; other attorneys might fail to step aside and testify because the client insists upon their continued representation. The Code of Professional Responsibility seeks to prevent such conflicts by keeping separate the roles of attorney and witness. EC 5-9.
DR 5-102(A) also operates to protect the interests of the adverse party. A jury may view an attorney as possessing special knowledge of a case and therefore accord a testifying attorney's arguments undue weight. Also, as EC 5-9 suggests, the adverse party's attorney may, for reasons of professional courtesy and court etiquette, be handicapped in challenging the testimony of another lawyer. General Mill Supply Co. v. SCA Services, Inc., 505 F. Supp. 1093 (D.Mich.1981). Finally, the bar is ill-served when an attorney's veracity becomes an issue in a case; lay observers especially might speculate whether counsel has compromised his integrity on the stand in order to prevail in the litigation. International Electronics Corp. v. Flanzer, 527 F.2d 1288, 1294 (2d Cir. 1975); United States ex rel. Sheldon Electronic Co. v. Blackwood Heating & Plumbing Co., 423 F. Supp. 486, 489 (S.D.N.Y.1976); 6 J. Wigmore, supra, § 1911 Cf. EC 7-24 (attorney may not claim innocence of client or justness of position to the jury). Having seen the attorney take an oath on the witness stand, the jury might accord testimonial weight to his closing arguments, or might simply place undue weight on the testimony of a court officer. See Developments in the Law, Conflicts of Interest in the Legal Profession, 94 Harv.L.Rev. 1244, 1290 (1981).
DR 5-102(A) applies when a lawyer "ought to be called as a witness on behalf of his client." That the lawyer may not actually testify is not controlling. What matters is that he ought to testify. J.P. Foley & Co., Inc. v. Vanderbilt, 523 F.2d 1357 (2d Cir. 1975). Defendant's argument that McNicol's testimony would merely corroborate other testimony, even if accurate, is unavailing. The test is whether ...