A Company Insider May Serve as its Trial Counsel

Recently, a Tennessee federal magistrate judge held that a company would be able to use its inside counsel as its trial counsel, even though he had strong ties to the case.

In America’s Collectibles Network. Inc. v. Sterling Commerce (Am.) Inc., Judge Guyton urged that the company’s opponent did not argue the “lawyer as witness” rule correctly. Tennessee Rule of Professional Conduct 3.7 (mirroring ABA Model Rule 3.7) allows for the disqualification of a trial counsel if that person is a necessary witness. Judge Guyton explained that this rule would only preclude the inside counsel here from serving as trial counsel if his testimony was relevant, material, and unobtainable elsewhere—making him a necessary witness in the case.

The opponent’s arguments for the insider’s disqualification included that: 1) he was designated as the company’s corporate representative for depositions, 2) he had been intimately involved with the company since its inception, and 3) he played a key role in implementing the contract underlying the parties’ dispute.

Despite these strong ties, Judge Guyton pointed out that the opposing party did not indicate that it intended to rely on the insider’s testimony, nor did it pinpoint any specific testimony the insider would be the necessary witness for on either side.

While the judge mentioned that he personally thought using the insider as the trial counsel was “ill-advised,” he stated that unless the insider’s questioning during trial devolved into testimony, the insider was eligible to serve as trial counsel under rule 3.7.

To read the opinion in full, click here.

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