IN RE: GOVERNMENT INVESTIGATION (2022)

OPINION AND ORDER 1

This matter is before the Court pursuant to the Notice of Potential Conflict and Request for a Conflicts-Inquiry Hearing filed by the United States. (ECF No. 148.) Therein, the government indicates that it believes there is a potential conflict created by Defense Counsel ² representing both Client 1 (a putative defendant or “target” in this grand jury proceeding) and Client 2 (a putative witness for the government against Client 1 in the same proceeding). Client 1 and Client 2 will be collectively referred to as “the Clients.”

Also before the Court are the Motions to Withdraw of Attorneys James McGuire, Mark Doerr, Jonathan Olivito, and Kathryn Wallrabenstein (ECF Nos. 354, 356) and the Motion for Leave to Serve as Trial Attorney of Attorney McGuire. (ECF No. 355).

The Court initially set the conflicts matter for a hearing on February 28, 2022. (ECF No. 170.) After the Clients filed a Memorandum of Law in Support of Application to Show Cause ³ (ECF No. 217). the hearing was converted to a status conference. (ECF No. 224.) At the status conference, the Court ordered additional briefing by the parties. (ECF No. 236.) The Clients then filed a Memorandum of Law in Opposition to Government Motion for Conflicts-Inquiry Hearing and in Support of Cross-Motion for Attorneys’ Fees.⁴ (ECF No. 240.) The government filed a Response in Support of Conflicts Hearing (ECF No. 262) and the Clients filed a Reply Memorandum in Further Opposition to Government Motion for Conflicts-Inquiry Hearing and in Support of Cross-Motion for Attorney Fees. (ECF No. 275.)

I. BACKGROUND

A. The Fraud Scheme

According to the government's filings, the grand jury is investigating an alleged multi-year, multi-million-dollar fraud scheme. One target of this investigation, Defendant 1, has pled guilty to charges of wire fraud and money laundering and is awaiting sentencing. Another, Defendant 2, has pled guilty to similar charges and is also awaiting sentencing. Client 1 has been identified as a target in the fraud investigation. The government alleges that he was the “fraudulent ‘money man.’ ” (ECF No. 148, PageID 419.) Client 1 allegedly represented to investors that his company (Company A) was acting as a neutral escrow agent that would securely hold investor funds, but when he received the money, Client 1 sent the monies to other co-conspirators or to prior victim-investors. (ECF No. 262, PageID 844.)

During the course of its investigation, the grand jury has subpoenaed Client 2.

B. The Clients and Their Companies

Client 1 and Client 2 share familial relationships as well as financial and business interests. Client 1 is married to Client 2's sister.⁵ As for their business ties, Client 2 was listed as a shareholder and authorized signer on the bank account associated with Company A (a New Jersey corporation), and the Clients co-owned and worked together in the operation of Company B, an import/export business. (ECF No. 148, PageID 419; ECF No. 275-4, ¶ 5.)

Client 1 and Client 2 stopped working together in or around 2014. In March 2014, Client 2 was removed as co-signer on the Company A accounts and, in May 2015, Client 1 was removed as a co-signer on the Company B. (ECF No. 148, PageID 419.) Today, Client 2 alone owns and operates Company B. (ECF No. 275-4, ¶ 5.) The government asserts that the split was the result of Client 2's desire to distance himself from Client 1's business operations because he was aware of Client 1's role in the fraudulent scheme (ECF No. 262, PageID 841-42), an assertion that Defense Counsel and Client 2 vehemently deny.

The government alleges that Company A and Company B were both involved in Client 1's criminal activities. (ECF No. 148, PageID 422; ECF No. 262, PageID 840.) In support of this allegation, the government provides bank information showing transfers among Company A, Company B, Client 2, Client 1, and other accounts on which the two men were co-signers. (ECF No. 262, PageID 840.) The government believes that Company B received money related to the fraud conspiracy and those moneys were “transferred into accounts to which Client 2 had control or access,” including payments to Client 2 personally. (ECF No. 148, PageID 419; ECF No. 262, PageID 840–41.)

At this time, “the government does not believe that Client 2 is a potential defendant.” (ECF No. 148, PageID 422.) However, it believes that Client 2 knew about Client 1's involvement in alleged fraudulent activity because, among other reasons, Client 1 told Defendant 1 in May 2015 that Client 2 was “freaking out” and said that Client 2 was asking questions about what was going in with Defendant 1 and Client 1. (ECF No. 262, PageID 842–43.) There is evidence that at least one of the victims of the alleged fraud contacted Client 2 to find out what happened to his or her investment. (Id.)

C. The Clients’ Counsel

Attorney McGuire has represented Client 1 since early 2019; at that time, Attorney McGuire was employed at Barton LLP, a firm where Client 1's wife was a partner. (ECF No. 217, PageID 638; ECF No. 217-1, ¶ 3.) In February 2021, Attorney McGuire moved to the firm of Greenspoon Marder LLP, where he is still employed. (ECF Nos. 217, PageID 638 and 217-1, n.1.) Attorney McGuire's representation of Client 1 in the grand jury proceeding has been constant since 2019 except for the first six months after he moved to Greenspoon Marder; his representation of Client 1 resumed around August 2021. (ECF No. 217-1, ¶ 3 and n. 1.)

Attorney McGuire also represented Company A and Company B in the grand jury proceedings by accepting service of subpoenas for documents. (ECF No. 217-1, ¶ 6; Hr'g Tr., 11–13.)

In March 2020, the grand jury subpoenaed Client 2. (ECF No. 217-1, ¶ 7.) Client 2 hired Attorney McGuire and Barton LLP as his counsel the same month. Id.

In addition to the grand jury investigation, Attorney McGuire and the Taft firm represented Client 1 and Company A from February 2019 through October 2019 in a civil case pending before the Undersigned.⁶ That civil case arises from the same factual underpinnings that are the subject of the grand jury investigation. In that case, Attorney McGuire and the Taft firm actively represented Client 1 and Company A until Client 1 and Company A declared bankruptcy. Significant to this proceeding, after Client 1 and his business declared bankruptcy, Attorney McGuire and the Taft firm moved to withdraw from the civil case on the grounds that the Taft and Barton firms were potential creditors of Client 1 and Company A so a “potential conflict” had arisen that “could prevent them from zealously representing said defendants in this suit.” Their motion to withdraw was granted on October 28, 2019.

D. The 2019–2020 Grand Jury Proceedings

In 2019, Defense Counsel identified themselves to the government as counsel for Client 1. (ECF No. 217, PageID 638.) From that identification through early 2021, Defense Counsel had multiple communications with the government about, among other things, the “exchange of information, evidence, and opinions.” Id. Throughout this time, the government told Defense Counsel that Client 1 was a “target” of the investigation. Id. at PageID 639.

Despite Defense Counsel's concerns in the related civil case that, as potential creditors, they could be prevented from zealously representing Client 1 and Company A, they never withdrew from the grand jury proceeding and did not notify the government of this potential conflict.

After the grand jury subpoena was issued to Client 2 in March 2020, Defense Counsel indicated that they were also representing Client 2. (ECF No. 217-1, ¶7.) Defense counsel asserts that they offered to arrange a proffer session between the government and Client 2 in lieu of a grand jury appearance but the government declined the offer, citing its concern of a possible of a conflict of interest based on Defense Counsel's dual representation of the Clients. (ECF Nos. 217-1, ¶ 8 and 262, PageID 851.) Before the issue could be fully addressed, the COVID-19 pandemic shut down the regular operation of the grand jury.

E. The Grand Jury Proceedings Restart

In or around October 2021, the government informed Defense Counsel that it would be asking the grand jury to return a multi-count indictment against Client 1. (ECF No. 217, PageID 640–41.) This led to negotiations with Defense Counsel, but the parties were unable to resolve Client 1's issues pre-charge. Id. The government then advised Defense Counsel that it intended to continue the grand jury investigation, including enforcing the prior issued grand jury subpoena to Client 2.⁷ In response, Defense Counsel renewed its previous offer of a proffer session with Client 2 which the government rejected. Id.

Before proceeding with the grand jury, the government notified the Court of Defense Counsel's potential conflict of interest and requested a conflicts-inquiry hearing. (ECF No. 148.) After the Notice was filed, the government had “additional and detailed interactions” with both Clients—including providing “additional information and supposed evidence” to Defense Counsel. (ECF No. 217, PageID 641.) After review of that information and discussions with Defense Counsel, Client 1 and Client 2 each executed his own “Engagement Agreement As to Joint And Concurrent Representation Of [Client 1] and [Client 2] Relating To A Grand Jury Investigation in The United States District Court for the Southern District of Ohio” dated February 18, 2022 (“the Agreements”). Id.

Recently, Defense Counsel refused to accept service of a documents subpoena on Company B unless the government withdrew its request for a conflicts-inquiry hearing. (ECF Nos. 262, PageID 854 and 262-7, PageID 933; Hr'g Tr., 28–29.)

F. The Engagement Agreements

The Agreements are written in English and they provide that the Clients will each pay the rate of $695 an hour, instead of the typical $995 an hour, for Attorney McGuire's services. (ECF Nos. 217-1, PageID 673–687.) The Agreements state that while retainers and cost deposits are typically required, they would not be required for the Clients. Id.

Client 1's Agreement states that both he and Client 2 are considered Attorney McGuire's clients so

matters that [Client 1] and/or Client 2 discuss with Firm personnel in the course of this joint and concurrent representation may be disclosed to both [Client 1] and Client 2. Ethical considerations prohibit the Firm from agreeing either with [Client 1] or Client 2 to withhold information from either of the two. Of course, anything that [Client 1] or Client 2 discuss with the Firm during the joint and concurrent representation remains privileged and should not and will not be disclosed to third parties outside the attorney-client relationship without permission from both [Client 1] and Client 2.

Id. at 682. Client 1's Agreement indicates that the dual representation does not pose a conflict and further provides:

to the extent a conflict of interest arises or should come to the fore after the date of this letter Agreement, both and each of You and Client 2 hereby agree to waive that conflict of interest to the extent that, and so that, the Firm will be permitted to continue to represent both You and Client 2 jointly and concurrently, as described herein.

Id. His Agreement states that Attorney McGuire informed him of: (1) the risks associated with joint representation; (2) his right to secure alternative counsel and guidance; and (3) the government's objection to the joint representation. Id. at 685.

Client 2's Agreement is identical but for making appropriate references to he and Client 1.

No fee agreements between either of the Clients and the Taft firm were provided to the Court.

G. The Filings

The government's Notice of Potential Conflict argues Defense Counsel's joint representation of the Clients creates actual and potential conflicts under Ohio Rules of Professional Conduct 1.1, 1.3, and 1.6–1.8 such that a conflicts-inquiry hearing is required. (ECF No. 148.)

Defense Counsel argue that the Court does not have jurisdiction over Client 1 and that the issue is not ripe for adjudication. (ECF Nos. 217, 240.) Defense Counsel does not believe that an actual or potential conflict exists and argues that, even if it does, the Clients have waived any such conflict. Id.

H. The Pre-Hearing Appeal

On April 26, 2022, the Court issued an Order re-scheduling the conflicts-inquiry hearing for May 12. (ECF No. 287.) Three days later, in response to correspondence from counsel before the hearing, the Court issued an Order stating that the Court had determined it had personal jurisdiction over the Clients and their attorneys and that the conflicts issue was ripe. (ECF No. 298.) That Order also required the Clients to personally appear at the hearing. Id.

The Clients appealed the April 2022 interlocutory orders and filed a Motion to Stay the Conflicts-Inquiry hearing with this Court. (ECF Nos. 324, 325.) The Court denied the stay motion and more fully addressed the Clients’ personal jurisdiction and ripeness arguments. (ECF No. 331.)

Shortly after the Court's Order denying the stay was issued, the Clients filed an “Emergency Motion to Continue May 12, 2022 Conflicts-Inquiry Hearing to on or After May 20, 2022 Owing to COVID Diagnosis of Spouse of Defense Counsel.” (ECF Nos. 332, 333.) In that Motion, the Clients stated “[c]urrent United States Center for Disease Control and Prevention (“CDC”) Guidelines provide that a person in Mr. McGuire's position should not travel for up to ten (10) days after his/her last exposure to the virus.” (ECF No. 332, PageID 1200) (emphasis in original). To follow those guidelines, Attorney McGuire argued he could not travel until May 20 at the earliest. Id. The Court denied the continuance request but permitted him to attend the hearing remotely. (ECF No. 336.) Despite his representations in the Motion and his Declaration, Attorney McGuire attended the hearing in person.

Very late in the day of May 9, Attorney Doerr contacted the Court to request the presence of a foreign language interpreter at the hearing.

The Clients also pursued a stay in the appeals court, and the government moved to dismiss the appeal for lack of jurisdiction. (ECF Nos. 341–342.) On May 11, the Sixth Circuit granted the government's motion and found the Clients’ motion for stay moot. Id.

I. The Conflicts-Inquiry Hearing

The hearing was held in a closed courtroom. Attorneys Courter Shimeall and Kevin Koller appeared for the government. Defense Counsel appeared for the Clients. (Hr'g Tr., 2.) Client 2 appeared; Client 1 did not.

Upon inquiry from the Court, Attorney McGuire indicated the interpreter was for Client 2. Client 2 stated that “sometimes, he can understand [English] a little, but [he] prefer[s] to, you know, talk with interpreter.” (Hr'g Tr., 4.)

1. The Argument of Defense Counsel

Attorney McGuire told the Court and the government that he had terminated his representation of Client 1 the night before. Attorney McGuire said he did not know where Client 1 was or why he had not come to the hearing. Attorney McGuire provided the Court a paper motion to withdraw as counsel for Client 1,⁸ a letter purportedly signed by Client 1 (“the Letter”), and a declaration from Client 2.

The Letter was dated May 12, the day of the hearing, despite the fact that Attorney McGuire told the Court that he had not spoken to Client 1 since May 11 and that he had no idea where Client 1 was located. The correspondence, which is neither an affidavit nor a declaration, states Client 1 does not object to the resignation of Attorney McGuire and Greenspoon Marder as his counsel. (ECF No. 343-2.) According to the Letter, Client 1 “fully approve[s] and support[s] the continuing representation of” Client 2 by Attorney McGuire in the grand jury proceeding. Id. Client 1 writes

Mr. McGuire and GM have consulted with me about their possible use of information they have obtained during their representation of me to possibly assist Client 2.1 understand and provide my full and informed consent to Mr. McGuire and GM using any such information obtained from me during their continuing representation of Client 2.

Id.

Client 2's Declaration, written in English, avers that he wants Attorney McGuire to continue representing him. (ECF No. 343-3.’) Client 2 declares that he “has not learned anything from Mr. McGuire or [Greenspoon Marder] during our relationship relating to my brother-in-law, [Client 1], that I believe to be adverse to by brother-in-law, or that could be used against [Client 1].” (ECF No. 343-3, PageID 1238, ¶ 8.)

Attorney McGuire argued the termination of the attorney-client relationship with Client 1, combined with Client 1's written consent to Defense Counsel's continued representation of Client 2, effectively “mooted” the conflict issue under Prof.Cond.R. 1.9 even though the Court had not yet ruled on his motion to withdraw as counsel to Client 1. (Hr'g Tr., 9, 14–15.) Rule 1.9 pertains to a lawyer's duties to former clients. It allows former clients to permit counsel to represent new clients in the same matter with several qualifications. Attorney McGuire argued that was the only “relevant” rule for the Court to consider. Id. at 17–18, 33.

2. The Government's Argument

The government had little advance notice of the attempted termination of representation of Client 1 by Attorneys McGuire and Doerr and Greenspoon Marder. Id. at 21–22. Its argument was therefore primarily limited to the contention that Prof.Cond.R. 1.7 prohibits Defense Counsel's continued representation of Client 2 because there is a substantial risk that their ability “to carry out an appropriate course of action” for him will be limited by their representation of Client 1. Id. at 22–25. The government also argued Prof.Cond.R. 1.9 did not permit continued representation because the interests of Client 1 and Client 2 are materially adverse and because Client 1's consent was uninformed. Id. at 25–28.

3. Questioning of Client 2

The Court asked Client 2 several questions under oath. Id. at 43. Client 2 testified through the interpreter that he did not know what a conflict waiver was. Id. at 47. He was unable to describe the potential conflicts at issue. Id. He also testified that: (1) his sister introduced him to Attorney McGuire; (2) his sister interpreted the fee agreements and his three declarations for him; (2) his sister pays his legal fees ⁹ ; (3) he did not know why Attorney McGuire and Greenspan Marder were charging him a reduced rate; and (4) he did not know why he did not have to pay a retainer. Id. at 44–48. He said he had not consulted with separate counsel about proceeding with Mr. McGuire as his attorney. Id. at 49.

The Court then afforded Attorney McGuire the opportunity to question Client 2. Id. Client 2 testified that Attorney McGuire told him he may hire another lawyer. Id. at 50. He also testified that he wanted Attorney McGuire to continue as his counsel. Id. Client 2 testified that he did not know anything that could implicate Client 2 in any illegal activity. Id.

J. Defense Counsel's Post-Hearing Motions

After the hearing, Attorneys McGuire and Doerr renewed their Motion to Withdraw as Counsel for Client 1. (ECF No. 354.) At the same time, the Taft lawyers and firm moved to withdraw as counsel for both Clients (ECF No. 356) and Attorney McGuire moved to serve as Trial Attorney for Client 2 under the Court's Local Rules. (ECF No. 355.) These motions remain pending.

II. ANALYSIS

The initial issue before the Court is whether Defense Counsel's representation of both a target and a non-target witness in a grand jury proceeding constitutes an actual or potential conflict of interest. Because the Court finds that such representation is an actual conflict, the Court next analyzes whether that conflict can be, and has been, waived. Determining that the conflict is not waiveable, the Court concludes that Defense Counsel cannot continue representing either of the Clients.

A. An Actual Conflict of Interest Exists.

Defense Counsel argues that the Clients’ Sixth Amendment right to counsel of their choice outweighs the government's concerns about a potential conflict. (ECF No. 240, PageID 752.) However, there is no Sixth Amendment right to counsel for pre-indictment grand jury proceedings. See U.S. v. Myers, 123 F.3d 350, 359 (6th Cir. 1997) (concluding that, although the defendant had been “a target when he appeared before the grand jury,” he “had not been formally charged,” and thus “his Sixth Amendment right to counsel had not yet attached”). See also U.S. v. Fowler, 535 F.3d 408, 416 (6th Cir. 2008) (similarly concluding that there could be no Sixth Amendment violation “because the Sixth Amendment right to counsel attaches only at or after the initiation of adversary judicial proceedings—whether by way of formal charge, preliminary hearing, indictment, information, or arraignment”) (internal quotation marks and citations omitted).

Nevertheless, courts have recognized that a witness or target has the right to consult with an attorney outside the grand jury room. U.S. v. Mandujano, 425 U.S. 564 (1976); see also In re Schmidt, 775 F.2d 822, 824 (7th Cir. 1985) (a grand jury witness's “right is akin to that of parties in civil cases—a right under the due process clause to be free of unjustified interference by the government in a private arrangement between client and lawyer”).

1. The Right to Conflict-Free Counsel

Where a right to counsel exists, “there is a correlative right to representation that is free from conflicts of interest.” Wood v. Georgia, 450 U.S. 261, 271 (1981) (citing Cuyler v. Sullivan, 446 U.S. 335 (1980) and Holloway v. Arkansas, 435 U.S. 475, 481 (1978)). Thus, a defendant's right to a particular counsel is not absolute. Rather, his choice of counsel can be overcome “not only by a demonstration of an actual conflict but by a showing of a serious potential for conflict.” Wheat v. U.S., 486 U.S. 153, 164 (1988). Although Wheat was decided in the context of trial, this same standard has been applied to persons appearing before a grand jury. See In re Grand Jury Investigation, 447 F. Supp. 2d 453, 457 (E.D. Pa. 2006) (collecting cases before and after Wheat applying the “actual or serious potential for conflict” standard to representation of multiple witnesses at the grand jury stage). Thus, an individual's choice of counsel in a grand jury proceeding can be overcome when there is an actual or serious potential for a conflict of interest.

To determine whether a lawyer's representation is conflicting, the Court performs a three-part inquiry: (1) whether there is an actual conflict or the serious potential for an actual conflict; (2) if there is, whether the conflict has been properly waived; and (3) if there is a conflict and if the conflict has not been properly waived, whether disqualification is appropriate. See In re Grand Jury Investigation, 447 F. Supp. 2d at 457 (citing In re Investigative Grand Jury Procs. on April 10, 1979 and Continuing, 480 F. Supp. 162, 168 (N.D. Ohio 1979); In re Grand Jury, 446 F. Supp. 1132 (N.D. Tex. 1978); In re Grand Jury Investigation, 436 F. Supp. 818 (W.D. Pa. 1977)). In performing this inquiry, the Court balances “a party's right to counsel of his choosing, a party's right to conflict-free representation, the court's interest in maintaining the efficacy of the grand jury process, the sanctity of the attorney-client relationship, and the necessity of ensuring compliance with the highest standards of professional ethics.” In re Grand Jury Investigation, 447 F. Supp. 2d at 457 (citations omitted).

2. Whether There is a Conflict

Conflicts of interest “arise whenever an attorney's loyalties are divided.” U.S. v. Moscony, 927 F.2d 742, 750 (3d Cir. 1991). An attorney's representation of multiple clients in a single proceeding increases the likelihood of both actual and potential conflicts. Wheat, 486 U.S. at 159 (recognizing that “multiple representation of criminal defendants engenders special dangers of which a court must be aware”).

“The ethical standards by which federal courts measure an attorney's professional conduct are standards defined by federal law.” Kitchen v. Aristech Chemical, 769 F. Supp. 254, 258 (S.D. Ohio 1991) (Weber, J.). “Rule IV of the Model Federal Rules of Disciplinary Enforcement sets forth the standards for professional conduct, adopting the Code of Professional Responsibility for the highest state court in which each district court sits.” Yates v. Applied Performance Techs., Inc., 209 F.R.D. 143, 150 (S.D. Ohio 2002) (citing Kitchen, 769 F. Supp. at 258).

Accordingly, analysis of the potential conflict in this case begins with the standards established by the Ohio Code of Professional Responsibility. However, because “questions of ethics in federal cases are ultimately questions of federal law, the Court is guided by federal case law, as well as the American Bar Association[’]s comments to its Model Rules of Professional Conduct and the policies underlying the particular ethical rule at issue.” Kitchen, 769 F. Supp. at 258.

The relevant provisions of the Ohio Code of Professional Responsibility provide:

RULE 1.3: Diligence

A lawyer shall act with reasonable diligence and promptness in representing a client. (emphasis in original).

RULE 1.6: Confidentiality of Information

(a) A lawyer shall not reveal information relating to the representation of a client, including information protected by the attorney-client privilege under applicable law, unless the client gives informed consent, the disclosure is impliedly authorized in order to carry out the representation․

RULE 1.7: Conflict of Interest: Current Clients

(a) A lawyer's acceptance or continuation of representation of a client creates a conflict of interest if either of the following applies:

(1) the representation of that client will be directly adverse to another current client;

(2) there is a substantial risk that the lawyer's ability to consider, recommend, or carry out an appropriate course of action for that client will be materially limited by the lawyer's responsibilities to another client, a former client, or a third person or by the lawyer's own personal interests.

(b) A lawyer shall not accept or continue the representation of a client if a conflict of interest would be created pursuant to division (a) of this rule, unless all of the following apply:

(1) the lawyer will be able to provide competent and diligent representation to each affected client;

(2) each affected client gives informed consent, confirmed in writing;

(3) the representation is not precluded by division (c) of this rule.

(c) Even if each affected client consents, the lawyer shall not accept or continue the representation if either of the following applies:

(1) the representation is prohibited by law;

(2) the representation would involve the assertion of a claim by one client against another client represented by the lawyer in the same proceeding.

RULE 1.8: Conflict of Interest: Current Clients: Specific Rules

(b) Except as permitted or required by these rules, a lawyer shall not use information relating to representation of a client to the disadvantage of the client unless the client gives informed consent.

Based on the information before the Court and applying these professional responsibility standards, it is clear that Defense Counsel has an actual conflict of interest in its representation of both Clients.

The conflicts in this case are significant. Not only are the Clients related by marriage, they were also business partners. And the government has evidence that the Clients’ joint businesses were used in Client 1's illegal scheme. There is also evidence that Client 1 attempted to (or at last considered) involving Client 2 in the alleged scheme. The government has submitted text message correspondence between Client 1 and Defendant 1 in which Client 1 indicates that he will ask Client 2 to issue bills of lading for [redacted]—Defendant 1 tells Client 1 that he needs the bills of lading to “show something to keep [the] deal together.” (ECF No. 148-1, PageID 434-39.) Client 1 then tells Defendant 1 that Client 2 did not want to issue the bills of lading. Id. at 438.

Further, there is evidence that Client 2 had direct contact with two alleged victims: once when he was on a call with Client 1 and a potential investor in which Client 1 had been offered $10,000 to convince that investor to delay taking any action related to a failed deal and later when Client 2 received a call from a victim of Client 1's fraud trying to find out what happened to an investment. (ECF No. 262, PageID 840-42.)

Client 2's statement that he has “nothing negative to say about Client 1 and [is] completely unaware of any criminal or unlawful activity by him” does not diminish the fact that his testimony may be adverse to Client 1 when Client 2's information is laid beside the other evidence that the government presents to the grand jury. (ECF No. 271-4, PageID 999, ¶ 9.) Fraud cases are inherently complex and difficult to prove; Client 2 may have knowledge of only a piece of the criminal organization without context. Moreover, Client 2's lack of “awareness” of criminal activity could also stem from a natural tendency to give family members the benefit of the doubt—no one wants to think that a close family member could engage in illegal conduct.

Defense Counsel characterizes the conflict here as “guesswork” but it is much more than that. (ECF No. 217, PageID 650.) Defense Counsel's obligation to advocate diligently on behalf of their clients could come into conflict with their responsibilities to protect privileged information and to uphold their duties of confidentiality and loyalty. Prof.Cond.Rs. 1.3, 1.6, 1.7. Under these circumstances, Defense Counsel's dual representation raises “ethical quandaries” caused by “divergent legal positioning of the target witness[ ] and the non-target witness[ ].” See, e.g., In re Grand Jury Investigation, 447 F. Supp. at 459; State v. Hackney, 2021-Ohio-2064, ¶ 18, 173 N.E.3d 204, 209 (6th Dist.) (a conflict is non-consentable where “it is at least conceivable, if not probable,” that counsel representing both a defendant and a witness expected to be called at trial would have to cross-examine the witness-client). While the Clients may not be in a directly antagonistic relationship yet, Defense Counsel will likely be in the untenable position of recommending a course of action that could work to the detriment of one or the other.

This conclusion is consistent with decisions of other courts in the Sixth Circuit and elsewhere that an attorney representing both a target and a non-target witness in a grand jury investigation is an actual conflict of interest. In re Investigative Grand Jury Procs. on April 10, 1979 and Continuing, 480 F. Supp. at 168 (joint representation of targets and non-targets before grand jury constitutes conflict of interest warranting remedial judicial action); see also In re Grand Jury Investigation, 447 F. Supp. 2d at 459 (citing Sara Beale, Grand Jury Law and Practice § 6:29 (2005) (noting that “[s]ome courts find an actual conflict exists if an attorney represents both a target and non-target witness”)); In re Investigating Grand Jury of Philadelphia Cty No. 88-00-3503, 593 A.2d 402, 409–10 (Pa. 1991) (affirming disqualification of lawyer who represents target and non-target witnesses with “potentially conflicting interests” in grand jury investigation). To summarize:

joint representation of target and non-target clients creates a substantial danger that the personal and legal interests of the non-target client can be jeopardized, if not sacrificed, as a result of the fact that the attorney owes an equivalent duty of zealous representation and fidelity to the interests of a target client. Similarly, the interests of a target can be just as adversely affected if his or her attorney advises the non-target client to cooperate.

In re Investigative Grand Jury Procs. on April 10, 1979 and Continuing, 480 F. Supp. at 167.

Much of Defense Counsel's argument against the finding of a conflict is that Client 1 has not yet been charged but that is exactly the issue. Defense Counsel has an obligation to do what it can to keep Client 1 from being charged and if Client 2 has evidence that the government will use against Client 1, that is a conflict. In re Investigative Grand Jury Procs. on April 10, 1979 and Continuing, 480 F. Supp. at 166–67 (finding actual conflict in representation of target and non-target clients because law firm's “duty to represent the targets zealously may, and in all likelihood does, compel them to seek to prevent the disclosure to the grand jury of information injurious to the targets”). Indeed, representing a grand jury target necessarily requires defense counsel to work to “prevent the disclosure to the grand jury of information injurious to the target.” Id.; see also In re Grand Jury Investigation, 447 F. Supp. 2d at 459 (if counsel recommends one client cooperate with the government and provide testimony, doing so could likely “breach[ ] its ethical obligation of loyalty to prevent the disclosure of adverse testimony against” the other).

At the same time, Defense Counsel has an obligation to Client 2 and if they advise him not to cooperate with the investigation, he could be subject to contempt charges. Id. (citing In re Grand Jury Procs., 428 F. Supp. 273, 277 (E.D. Mich. 1976)) (representation of target and non-target clients, who may possess information detrimental to target clients, generates conflicting loyalties that may adversely impact professional recommendations); see also In re Investigation Before Feb. 1977 Lynchburg Grand Jury, 563 F.2d 652, 656 (4th Cir. 1977) (“[a]n attorney with undivided allegiance to one of these witnesses might strongly urge him to testify truthfully rather than to risk almost certain contempt of court by invoking the Fifth Amendment to protect others.”).

Similarly, Defense Counsel's argument that there is no conflict because Client 2 has not been offered immunity misses the mark. In the first instance, an attorney with undivided allegiance to Client 2 might determine that it is in Client 2's best interest to approach the government with an offer to testify in return for immunity. But a conflicted lawyer cannot even “undertake to obtain immunity, nor, if immunity has been granted can the lawyer advise the [witness] client not to testify” because doing so “would clearly jeopardize and conflict with the interests of the target client.” In re Investigative Grand Jury Procs., 480 F. Supp. at 166. Thus, an offer of immunity by the government to Client 2 would only exacerbate the conflict between the Clients. In re Grand Jury Investigation, 447 F. Supp. 2d at 459 (recognizing that a law firm's representation of the two grand jury targets had “actualized into a direct and immediate conflict by virtue of the government's ․ desire to provide immunity to one (but not both) of these targets, following an off-the-record proffer”); In re Grand Jury Empaneled Jan. 21, 1975, 536 F.2d 1009 1012 (3d Cir. 1976) (suggesting that actual conflict exists with respect to attorney's multiple representation of grand jury witnesses when government seeks to discuss immunity with one of these witnesses).

Here, the government understandably has not sat down for a proffer from Client 2 or discussed immunity with him because of its concern that his counsel have a conflict. (ECF No. 262, PageID 851.) As the United States District Court for the Western District of Pennsylvania observed: “[i]t requires but a statement of the obvious to realize that negotiations for a promise of non-prosecution cannot properly be conducted by attorneys who also represent those people who may well be hurt by testimony resulting from such a promise.” In re Grand Jury Investigation, 436 F. Supp. 818, 821 (W.D. Pa. 1977). Thus, the fact that there is no offer of immunity to Client 2 on the table does not change the Court's analysis because even engaging in immunity discussions with the government creates a serious potential of conflict—the client will then be required to provide testimonial evidence that could lead, however directly or indirectly, to the indictment of the non-immunized target client. See Prof.Cond.R. 1.7(a)(2) (concurrent conflict exists if there is “a substantial risk that the lawyer's ability to consider, recommend, or carry out an appropriate course of action for that client will be materially limited by the lawyer's responsibilities to another client [or] a former client”) (emphasis in original); In re Grand Jury Investigation, 447 F. Supp. 2d at 460 (although there had not been any immunity discussions, “the fact remains that the Law Firm's advice to each target client is not free from conflict; it is constrained by the Law Firm's fidelity to the other target client) (citing Beale, Grand Jury Law and Practice § 6:29 (2005) (noting that lawyer representing multiple grand jury witnesses may be prevented from exploring immunity with prosecutors as to one witness due to ethical obligations to other witnesses”)).

As a final matter, the Court acknowledges that Defense Counsel stated that “[i]n the event that an irreconcilable and unwaiveable conflict arises, [they] will discuss the circumstances with the Clients and, if and as necessary and/or appropriate, seriously consider withdrawing.” (ECF No. 217, PageID 659.) This is far from an assurance that counsel with withdraw upon a conflict developing. Nevertheless, the Court has concluded that an actual conflict already exists.

For these reasons, there is an actual conflict in Defense Counsel's dual representation of the Clients.

3. Whether the Conflict has Been Properly Waived

The Court must make two affirmative findings in order to hold that the Agreements effectively waive the actual conflict. First, that the Agreements are knowing, intelligent, and voluntary. Second, that the balancing inquiry among the Clients’ right to counsel, the ethical obligations of the lawyers, and the Court's and the public's interest in a properly functioning grand jury favors the Clients’ right to waive conflict-free counsel. On this record, the Court cannot make either finding.

i. The Agreements are not Knowing, Intelligent, and Voluntary.

As discussed above, the Clients signed conflict waivers in their Engagement Agreements with Defense Counsel. To refresh, the Agreements provided:

Based upon what [the Clients] have communicated to the Firm about this Matter, and as the Firm has extensively discussed with both [Clients], the Firm does not foresee any conflict of interest that would prevent the Firm from continuing to represent both [Clients] at the same time in the Matter at hand. Nevertheless, to the extent a conflict of interest arises or should come to the fore after the date of this letter Agreement, both and each of [the Clients] hereby agree to waive that conflict of interest to the extent that, and so that, the Firm will be permitted to continue to represent both [Clients] jointly and concurrently, as described herein.

(ECF Nos. 217-1, PageID 674, 682.)

In some circumstances, a grand jury witness or target can waive his right to conflict-free representation. Such a waiver must be an “intentional relinquishment or abandonment of a known right,” Johnson v. Zerbst, 304 U.S. 458, 464 (1938), and must be voluntary and intelligent “with sufficient awareness of the relevant circumstances and the likely consequences.” Brady v. U.S., 397 U.S. 742, 748 (1970). A court is not obligated to accept a witness's waiver of conflict-free representation, so it must evaluate the voluntariness, knowledge, and factual circumstances surrounding the waiver. Specifically, the Court must be satisfied that “the defendant is aware of the foreseeable prejudices his attorney's continued representation could entail for his trial, and possible detrimental consequences of those prejudices.” U.S. v. Dolan, 570 F.2d 1177, 1181 (3d Cir. 1978). “[W]here a court justifiably finds an actual conflict of interest, there can be no doubt that it may decline a proffer of waiver” not only when there is an actual conflict but also when a “potential for conflict exists.” Wheat, 486 U.S. at 162.

The Agreements do not meet the knowing, intelligent, and voluntary standard for several reasons. First, Client 1 failed to appear at the hearing, which prevented the Court from questioning him to determine whether his waiver was knowing, intelligent, and voluntary. For his part, Client 2 could not tell the Court what a conflict waiver is, and thought that the nature of the potential conflict with Defense Counsel's dual representation was that he and Client 1 “might have some difference of opinions.” (Hr'g Tr., 47.) Given Client 2's limited English language skills, he had to rely on his sister to translate the Agreement containing the conflict waiver to him. (Id.) Second, Defense Counsel has been representing Client 1 for more than three years and Client 2 for more than two, but neither of the Clients executed a conflict waiver until three months ago. See In re Grand Jury Investigation, 447 F. Supp. 2d at 465 (holding timing of waiver established lack of knowledge element). Third, the conflict waivers omit a great deal of critical information—they make no mention of Defense Counsel's representation of Company A, they do not address the nature of the conflict between the Clients (i.e., that Client 1 is a target of the grand jury, and that Client 2 has been subpoenaed to testify about Client 1 and their shared business operations), and the waivers do not advise either of the Clients of the effect of any potential conflict on them. In re Grand Jury Investigation, 436 F. Supp. at 821 (finding waiver of actual conflict illusory in part because lawyers advised grand jury witness that conflict did not exist, thereby defeating voluntary and knowing aspect of relinquishment of right). Fourth, and finally, Client 1 and Client 2 may have hidden (either consciously or unconsciously) motives for executing the waivers. For Client 1's part, if he has engaged in illegal conduct, he would be strongly motivated to keep adverse witnesses from testifying fully and completely. And Client 2 may be willing to waive any conflict because of a natural hesitancy to alienate, if not inculpate, the target of the investigation who is also his brother-in-law. See, e.g., In re Grand Jury Investigation, 447 F. Supp. 2d at 464 (targets would not want to alienate the public official who chaired the committee that they worked for); In re Grand Jury Investigation, 436 F. Supp. at 821 (waiver is illusory in part because witness's immediate employer is the target so the waiver “is likely a function in large part of one's natural hesitance to alienate their employer rather than a product of a free and unrestrained will.”).

For those reasons, the Court concludes that the Clients did not knowingly, intelligently, and voluntarily waive their right to conflict-free counsel.

ii. The Balancing Inquiry Favors Exclusion.

Even assuming, arguendo, that the Agreements were sufficient to waive the conflict, disqualification is still required under the requisite balancing test.

When evaluating whether to honor a conflict waiver, a court must balance clients’ rights to counsel and rights to waive conflict-free counsel with the ethical obligations of the lawyers and the court's and the public's interest in a properly functioning grand jury. For that reason, a court is not required to accept a client's waiver of his right to conflict-free representation. See Moscony, 927 F.2d at 749 (“trial court has an institutional interest in protecting the truth-seeking function of the proceedings over which it is presiding by considering whether the defendant has effective assistance of counsel, regardless of any proffered waiver”). Courts have “substantial latitude in refusing waivers of conflicts of interest not only in those rare cases where an actual conflict may be demonstrated before trial, but in the more common cases where a potential for conflict exists which may or may not burgeon into an actual conflict.” Wheat, 486 U.S. at 163.

Balancing the interests here, Defense Counsel have an affirmative duty to ensure that their representation of the Clients is conflict-free. Prof.Cond.Rs. 1.7, 1.8. In this proceeding, they face significant risks of breaching that duty because they cannot remove themselves

from the position of conflicting interests sufficiently far or long enough to provide neutral and objective advice about the proper course to follow. Advice to client A to secure other counsel might be adverse to client B's interests, while advice to client A not to obtain other counsel might be adverse to that client's interests.

In re Investigative Grand Jury Procs., 480 F. Supp. at 171.

In turn, the public has a right to an effectively functioning grand jury investigation. Individuals cannot waive this right. See In re Grand Jury Procs., 428 F. Supp. at 278. Nor can individuals be permitted to “stonewall” the grand jury's investigative process or to otherwise “set limits on the investigation being conducted by the grand jury.” In re Investigative Grand Jury Procs., 480 F. Supp. at 170 (citation omitted); see also Dolan, 570 F.2d 1177, 1182 (3d Cir. 1978) (recognizing that joint representation “creates the possibility of defendants’ ‘stone-walling’—obstructing Government attempts to obtain cooperation of one of a group of defendants,” which “phenomenon is particularly frustrating in the context of grand jury proceedings, in which the public interest in ferreting out criminal activities ․ have been held to outweigh the defendant's choice of counsel.”). The identified conflicts have already caused stonewalling: Defense Counsel refused to accept service of a documents subpoena on Company B unless the government withdrew its request for a conflicts-inquiry hearing.¹⁰ (ECF No. 262, PageID 854.)

On this point, there are courts, including some in the Sixth Circuit, that have concluded that a waiver of an actual conflict is per se invalid in the grand jury context. See, e.g., In re Grand Jury Procs., 428 F. Supp. at 278 (disqualifying counsel because, although the witnesses could waive a conflict, they cannot waive the public's right to an effective functioning grand jury investigation); In re Investigative Grand Jury Procs. on April 10, 1979 and Continuing, 480 F. Supp. at 170 (suggesting that there can be no waiver of conflicted counsel in grand jury proceedings because an individual cannot waive public's right to effective grand jury process); In re Grand Jury, 446 F. Sunn. 1132, 1139 (N.D. Tex. 1978); In re Grand Jury Procs., 428 F. Supp. at 278 (refusing to allow waiver of conflict because clients may not waive “right of the public to an effective functioning grand jury investigation”). Other courts have refused to adopt a per se rule prohibiting a conflict waiver during a grand jury investigation. See, e.g., In re Grand Jury Investigation, 447 F. Supp. 2d 453: In re Grand Jury Investigation, 436 F. Supp. at 822 n.14 (“discomfort to the Grand Jury process, without more, is not sufficient to vitiate an individual's important right to counsel of his own choosing”); In re Taylor, 567 F.2d 1183, 1192 (2nd Cir. 1977) (court must accept client's knowing and intelligent waiver despite existence of actual conflict of interest).

Finally, the Court has “an institutional interest in protecting the truth-seeking function of the proceedings over which it is presiding by considering whether the defendant has effective assistance of counsel, regardless of any proffered waiver.” Moscony, 927 F.2d at 749; see also Von Moltke v. Gillies, 332 U.S. 708, 723–24 (1949) (recognizing the need for affirmative judicial involvement in the waiver process); United States v. Mays, 69 F.3d 116, 121 (6th Cir. 1995) (recognizing court's interest in integrity of proceedings when addressing conflict waivers). The Court must also police the professional conduct of attorneys appearing before it, which necessarily includes policing an attorney from representing multiple witnesses at a grand jury proceeding. In re Landstreet, 490 F. App'x 698, 701 (6th Cir. 2012) (court has an “inherent duty and responsibility” to police attorney conduct); see also U.S. v. Miller, 624 F.2d 1198, 1201 (3d Cir. 1980); In re Gopman, 531 F.2d 262, 266 (5th Cir. 1976); In re Grand Jury Investigation, 447 F. Supp. 2d at 456 (“court has supervisory authority to regulate the professional conduct of lawyers during federal grand jury proceedings, including the power to disqualify an attorney, or law firm, from representing more than one witness in certain circumstances.”).

The Court here does not apply a per se rule that a waiver of an actual conflict is invalid. But to preserve the integrity of the attorney-client relationship, to safeguard the interests of the Clients, and to promote the effective administration of justice during the remainder of the grand jury proceedings and any related criminal proceedings in the future, the Court does not accept the waivers in this case.

4. Disqualification of Defense Counsel is Appropriate.

The government's Notice is not a Motion for Disqualification. This is of no consequence, as the Court can “assess a request for disqualification without a formal motion.” United States v. Chalhoub, No. 16-CR-23, 2017 WL 2568919, at *1 (E.D. Ky. June 13, 2017) (citation omitted). Indeed, the Court “has the authority and the duty to prevent a violation of the Code of Professional Responsibility involving conflicts of interest.” Coaker v. Geon Co., 890 F. Supp. 693, 694 (N.D. Ohio 1995).

Disqualification is “a measure of ‘last resort’ ” so the Court should first consider alternatives to removing counsel. In re Grand Jury Investigation, 447 F. Supp. 2d at 466 (quoting In re Grand Jury Procs., 859 F.2d 1021, 1026 (1st Cir. 1988).) See also In re Investigative Grand Jury Procs. on April 10, 1979, 480 F. Supp. at 168–71 (evaluating feasibility of less drastic remedies prior to ordering disqualification of attorney representing target and non-target clients before grand jury).

In this proceeding, the Clients have not proposed any alternatives to disqualification of Defense Counsel. Rather, after multiple unsuccessful efforts at delaying the conflicts-inquiry hearing, the Clients and Defense Counsel attempted an end-run around the Court's obligation to police the conduct of the attorneys appearing in front of it by Defense Counsel's last-minute efforts to withdraw as counsel for Client 1. It is within this context that the Court considers the Clients’ argument that Prof.Cond.R. 1.9 operates to prevent Defense Counsel's disqualification from representation of Client 2. Specifically, they argue that Defense Counsel's attempt to withdraw as counsel for Client 1 effectively nullifies the actual conflict as to their continued representation of Client 2.

Defense Counsel's conflict of interest was not cured by its purported termination of the attorney-client relationship with Client 1. Courts “universally hold that a law firm will not be allowed to drop a client in order to resolve a direct conflict of interest, thereby turning a present client into a former client.” El Camino Resources, Ltd. v. Huntington Nat'l Bank, 623 F. Supp. 2d 863, 877–78 (W.D. Mich. 2007) (citing Picker Int'l, Inc. v. Varian Assoc., Inc., 869 F.2d 578, 583–84 (Fed. Cir. 1989)); Unified Sewerage Agency of Washington Cty. Ore. v. Jelco Inc., 646 F.2d 1339, 1345 n.4 (9th Cir. 1981); Stratagem Dev. Corp. v. Heron Int'l, N.V., 756 F. Supp. 789, 794 (S.D.N.Y. 1991); Florida Ins. Guar. Ass'n, Inc. v. Carey Canada, Inc., 749 F. Supp. 255, 261 (S.D. Fla. 1990); Harte Biltmore Ltd. v. First Penn. Bank, N.A., 655 F. Supp. 419, 421 (S.D. Fla. 1987). Rather, “the status of the attorney/client relationship is assessed at the time the conflict arises, not at the time the motion to disqualify is presented to the court”—and certainly not at the time of the conflicts-inquiry hearing in this proceeding. El Camino Res., 623 F. Supp. 2d at 878. (citation omitted). Otherwise, “the challenged attorney could always convert a present client into a ‘former client’ by choosing when to cease to represent the disfavored client.” Unified Sewerage Agency, 646 F.2d at 1345 n.4. As the Western District of Michigan recognized:

This unilateral abrogation of the duty of loyalty cures nothing, but serves to make matters worse.

Indeed, the offense inherent in taking on the conflicting representation is compounded by seeking to “fire” the client in pursuit of the attorney's interest in taking on a new, more attractive representation. If, as one judge has written, “the act of suing one's client is a ‘dramatic form of disloyalty,’ what might be said of trying to drop the first client in an effort to free the attorney to pursue his or her self-interest in taking on a newer and more attractive professional engagement?”

Universal City Studios, Inc. v. Reimerdes, 98 F. Supp. 2d 449, 453 (S.D.N.Y. 2000) (quoting British Airways, PLC v. Port Authority, 862 F.Supp. 889, 899 (E.D.N.Y. 1994)). This ethical rule [Rule 1.7] is not triggered only when the attorney's motives are selfish or otherwise suspect. The rule vindicates the attorney's fundamental duty of loyalty: the breach of ethics is not triggered by bad motive or excused by good motive.

El Camino Res., 623 F. Supp. 2d at 878.

Here, Defense Counsel urges the Court to apply Prof.Cond.R. 1.9 instead of Rule 1.7 to its continued representation of Client 2, in an apparent effort to avoid the more stringent prohibitions in Rule 1.7 on counsel simultaneously representing adverse current clients (a rule designed to vindicate the fundamental duty of loyalty) in favor of the more lenient Rule 1.9 involving former clients (a rule that focuses on the existence of confidential information and a substantial relationship between the present matter and the former one). See e.g., El Camino Res., 623 F. Supp. 2d at 878; Ehrich v. Binghamton City Sch. Dist., 210 F.R.D. 17, 24 (N.D.N.Y. 2002) (“The more stringent per se rule vindicates an entirely different ethical principle than does the substantial relationship test. The propriety of representing interests adverse to a current client must be measured not so much against the similarities in litigation as against the duty of undivided loyalty which an attorney owes to each of his clients.”). However, “[a] law firm is not privileged to extinguish its duty of loyalty to a present client by unilaterally turning it into a former client.” El Camino Res., 623 F. Supp. 2d at 879. That is what Defense Counsel attempted to do here and their efforts are unsuccessful – Prof.Cond.R. 1.7 applies to the conflict issues before the Court.

Even applying Prof.Cond.R. Rule 1.9, disqualification is necessary. Rule 1.9(a) states:

Unless the former client gives informed consent, confirmed in writing, a lawyer who has formerly represented a client in a matter shall not thereafter represent another person in the same or a substantially related matter in which that person's interests are materially adverse to the interests of the former client.

(emphasis in original). According to Defense Counsel, the Letter serves as Client 1's informed consent to their continued representation of Client 2, and Client 2's declaration establishes that he wants them to continue to represent him. Defense Counsel does not argue that their representation of both Clients is in different matters. (Hr'g Tr., 14–15.) And Client 2's personal belief that his interests are not materially adverse to Client 1's is insufficient for the Court to find same, especially given the Court's discussion in section II.A. supra.

Id. at 16–18.

Although the Letter is dated May 12, Client 1 did not appear at the hearing. Attorney McGuire told the Court he did not know why Client 1 did not appear, and he did not know Client 1's location. Attorney McGuire told the Court he instructed Client 1 on May 11 to sign the Letter and date it for May 12. (Hr'g Tr., 10–11.) These circumstances cast a pall over the Letter's validity. Regardless, for the sake of argument, the Court will assume the Letter was actually executed by Client 1.

Prof.Cond.R. 1.9 requires informed consent for purported waivers of duties to former clients to be effective. Informed consent “denotes the agreement by a person to a proposed course of conduct after the lawyer has communicated adequate information and explanation about the material risks of and reasonably available alternatives to the proposed course of conduct.” Prof.Cond.R. 1.0. Client 1's absence prevented the Court from questioning him about his understanding of the Letter's contents and effects. The Court could not ascertain whether Client 1 received sufficient information about the risks and alternatives to Defense Counsel's continued representation of Client 2 from Defense Counsel. Thus, the Court could not discern whether his purported waiver was adequately informed and therefore executed with the requisite consent.

Accordingly, the Court concludes that the Letter does not equate to informed consent for those reasons and for the additional reasons set forth above in the discussion about the Agreement's effectiveness. As such, the Court must decide if disqualification should be utilized in this instance.

The Court has identified an actual conflict that the Clients have not effectively waived. The record in this case raises significant questions about the adequacy of the advice given by Defense Counsel concerning the existence and consequences of, and remedies for, the conflict of interest that exists here. Additionally, the conflict has “stonewalled” the grand jury's function and progress. And disqualification now will “preempt the litany of foreseeable and unforeseeable ethical issues that will ripen into [additional] actual conflicts at the conclusion of the grand jury proceedings.” In re Grand Jury Investigation, 447 F. Supp. 2d at 466 (citing Wheat, 486 U.S. at 162–3 (court has power to reject waiver and disqualify attorney for potential conflict because “likelihood and dimensions of nascent conflicts of interest are notoriously hard to predict”) and In re Gopman, 531 F.2d at 266 (affirming disqualification of attorney representing multiple grand jury witnesses in effort “to nip any potential conflict of interest in the bud”) (internal citations omitted)).

Hence, the Court concludes that disqualification of Defense Counsel from representing the Clients jointly or individually is necessary.

B. Motions to Withdraw and for Leave

Because the Court has disqualified Defense Counsel from representing both of the Clients, the motions are MOOT. (ECF Nos. 354, 355, 356.)

III. CONCLUSION

The Court disqualifies Defense Counsel from representing Client 1 and/or Client 2 in the grand jury proceedings and any and all related criminal matters in the future.

The Court will file un-sealed versions of this Opinion and Order and of the Order Under Seal dated May 9, 2022 (ECF No. 331), redacted to protect the identities of the Clients. Any objections to this course of action shall be filed within ten days of this Opinion and Order. No replies will be permitted.

IT IS SO ORDERED.

FOOTNOTES

2.   For purposes of this Opinion and Order, Defense Counsel refers to Jonathan Olivito (Trial Attorney under S.D. Ohio Civ. R. 83.4), Kathryn Wallrabenstein, and their firm, Taft Stettinius & Hollister LLP; and James McGuire, Mark Doerr, and their firm, Greenspoon Marder LLP. Attorneys McGuire and Doerr have been admitted pro hac vice for purposes of this grand jury investigation. (ECF No. 230.)

3.   Despite being titled a “Memorandum of Law in Support of Application for an Order to Show Cause,” the Clients did not file an application for an order to show cause.

4.   Again, despite titling their filing “Memorandum of Law ․ in Support of Cross-Motion for Attorneys’ Fees,” the Clients did not file a motion for attorneys’ fees.

5.   Client 1's wife's conduct is a subject of the grand jury investigation. (May 12, 2022 Conflicts-Inquiry Hearing Rough Tr., 48.) She is an attorney and former law partner of Mr. McGuire. (ECF No. 217, PageID 638; ECF No. 217-1, ¶ 3.)

6.   In the civil litigation, Michael Byers of the Taft firm was Trial Attorney and Attorney McGuire and two others from the Barton firm were admitted pro hac vice as counsel for Client 1 and Company A.

7.   The 2020 subpoena expired when that grand jury's term expired. A new grand jury subpoena was issued to Client 2 earlier this year, and Defense Counsel accepted service thereof. (ECF No. 240, PageID 753.)

8.   The Motion only sought to withdraw Attorneys McGuire and Doerr and their law firm, it did not seek to withdraw the Taft lawyers or firm. The Motion was not ruled on at the hearing, so Defense Counsel continued as counsel of record to both Clients at the hearing. The Motion was subsequently denied for failure to comply with the Local Rules. (ECF No. 345.)

9.   This testimony conflicts with Defense Counsel's representation to the Court that Client 2 was paying his own fees. (ECF No. 275, PageID 974.)

10.   Defense Counsel's refusal to cooperate with the government's service of a subpoena unless government's counsel violated their professional obligations is very concerning to the Court. “[A]ny litigant, including the United States, has a duty to promptly bring potential conflicts of interest to the attention of the Court.” United States v. Daulton, No. 1:04-CR-20, 2009 U.S. Dist. LEXIS 142597, at *28 (S.D. Ohio Mar. 25, 2009) (Beckwith, J.).

SARAH D. MORRISON, UNITED STATES DISTRICT JUDGE