Murphy & Demory, Ltd. v. Admiral Daniel J. Murphy, U.S.N. (Ret.)

Admiral Daniel Murphy (defendant), an employee of Murphy & Demory, Ltd. (plaintiff), planned to either take over the company or start a competing firm before resigning, enlisting attorneys Siemer and Mendelson of Pillsbury, Madison & Sutro (defendant) — the same firm that provided legal counsel to Murphy & Demory — to help. Pillsbury placed Siemer, who was directly involved in developing Admiral Murphy's takeover plans, in charge of assessing whether the firm's dual representation created a conflict of interest; Siemer and Mendelson recruited a Murphy & Demory director to support the takeover, drafted takeover documents and employee resignation letters, organized employee meetings to recruit staff away, and prepared letters authorizing clients to transfer their business to Admiral Murphy's new venture, all while withholding this activity from Murphy & Demory's board. After being terminated, Siemer and Mendelson sued to dissolve Murphy & Demory, which countersued for malpractice.

Whether a law firm engages in legal malpractice by failing to effectively identify, disclose, and obtain consent to a conflict of interest between represented clients.