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Intervenor’s motion to disqualify protester’s counsel is granted. The protester’s counsel had previously represented another offeror in preparing an initial public offering. The court found that counsel’s representation of the protester was substantially related to the work it performed for the other offeror. In its protest, the protester alleged that the other offeror had misrepresented its status as a small business. In the previous representation, however, protester’s counsel had advised the other offeror about how its affiliations could impact its size status. The court reasoned that the two matters involved overlapping legal issues. The risk of unfair advantage to the protester arising from the previous representation was too great to allow counsel to continue representing the protester.

The Defense Logistics Agency published a solicitation seeking logistics support for special operations equipment. Quantico Tactical, Inc. submitted a proposal in response to the solicitation. DLA, however, excluded Quantico from the competitive range.

Quantico filed a protest with the Court of Federal Claims challenging its exclusion. In its complaint, Quantico claimed that DLA was biased in favor of another company, Atlantic Diving Supply, Inc. (ADS). Quantico alleged that ADS had committed fraud in connection with the incumbent contract and misrepresented its small business status. Quantico further noted that ADS had settled a False Claim Act suit brought by the government.

ADS moved to intervene in Quantico’s protest, alleging that the protest implicated its own interest in remaining in the competitive range. The court allowed ADS to intervene. ADS then moved to disqualify Quantico’s counsel, Latham & Watkins. Latham had previously represented ADS in connection with a potential public offering. The firm had prepared and filed a Form S-1 for ADS with the Securities and Exchange Commission. As part of that representation. Latham had reviewed ADS’s government contracts, including its role in the incumbent DLA contract and confidential information related to its bidding and price strategy.

The court noted that ADS’s motion relied primarily on ABA Model Rule 1.9(a) , which provides that a lawyer that has represented a client in one matter shall not represent another client in the same or substantially related matter in which the client’s interests are materially adverse. There was no question that Latham had previously represented ADA. It was also clear that Quantico’s and ADS’s interest were adverse; Quantico’s complaint challenged ADS’s ability to bid on the DLA solicitation. The issue was whether Quantico’s protest was substantially related to the work Latham performed for ADS in preparing a public offering.

The court noted that the Comment to Rule 1.9 states that matters are substantially related if they involve the same transaction or legal dispute or if there is a risk of that confidential information obtained from the prior representation would materially advance a client’s position in a subsequent matter. The court found that this rule was disjunctive. In other words, matters are substantially related if either (1) they involve the same transaction, or (2) there is a risk of that confidential information obtained in one representation will advance the interests of a client in a subsequent representation.

The court found that the Latham’s representations of ADS and Quantico were related under the first prong—they implicated the same transaction/legal dispute. Quantico’s complaint relied on assertions that involved Latham’s representation of ADS. In particular, Quantico alleged that ADS should have been disqualified from the competition for making misrepresentations about its status as a small business. Quantico claimed that ADS was not small due to its affiliation with two other businesses. But in its previous representation of ADS, Latham had reviewed ADS’s affiliations with those entities and advised ADS on the risk of those affiliations posed to the company’s ability to bid on set aside contracts. The legal issues in both matters plainly overlapped and were material to the issues that Quantico had put before the court. The risk of unfair advantage to Quantico was too great for the representation to continue.

The court also found that Latham’s representations of Quantico and ADS were related under the second substantially-related prong—i.e., there was a risk that ADS’s confidential information would materially advance Quantico’s position. The Comment to Rule 1.9 provides that knowledge of specific facts gained from one client in a prior representation that are relevant to another client in a subsequent representation will preclude the subsequent representation.

In this case, it would have been impossible for Lathan to provide ADS with accurate legal advice without an in-depth review of ADA’s military contracts. The court opined that it was entitled to infer that Latham’s preparation of the SEC disclosures for ADS necessarily involved the exchange of confidential information.

Quantico argued that Latham should not be disqualified because the information that Latham used in the SEC form was publicly available. What’s more, ADS’s discussions with Latham were attended by other parties and thus none of the information Latham obtained from ADS was privileged.

The court, however, found that the public nature of the information on the SEC disclosures did not change the fact that Latham had access to highly confidential information that was not disclosed. Moreover, the fact that not all the information was privileged was irrelevant. Information does not need to be privileged to be confidential.

Quantico is represented by David R. Hazelton, Kyle R. Jefcoat, Melissa Sherry, and Dean W. Baxtresser. The intervenor, ADS, is represented by Paul F. Khoury, John R. Prairie, Kendra P. Norwood, and J. Ryan Frazee. The government is represented by Doug Hoffman, Martin F. Hockey, Jr., Robert E Kirschman, Jr., and Joseph H. Hunt of the Department of Justice