Bond insurer attorneys barred from San Bernardino bankruptcy

Article found on:
http://www.reuters.com/article/2013/06/13/us-usa-municipality-sanbernardino-idUSBRE95C1HG20130613

I had a chance to view the hearing on this dispute over last summer and found it interesting. The dispute involved Calpers, a creditor in the San Bernardino bankruptcy, trying to disqualify the law firm Winston & Strawn from continuing to represent National Public Finance Guarantee Corp, another creditor of San Bernardino. The dispute arose after a few attorneys who worked for the law firm K&L Gates, which represented Calpers, switched firms to Winston & Strawn. Some of the attorneys who switched firms had spent a few hours for Calpers on the San Bernardino bankruptcy case.

Judge Meredith Jury disqualified Winston & Strawn from representing National Public Finance Guarantee Corp. She found that despite screening off attempts, National Public Finance and Calpers had inherently conflicting issues in the case and therefore the attorneys could not switch firms without violating their duty of loyalty to their former client.

I think an interesting aspect of this case was the issue of whether the two creditors in fact had conflicting interests. It does not seem that two creditors have inherently conflicting interests. They are both attempting to get money from the debtor and are in essence on the same side of the dispute. However, on the other hand they are both going after the same money and there is only so much money to go around. I ultimately agree with the finding in the case but there are probably instances where two creditors would not have conflicting interests.