Sheppard, Mullin, Richter & Hampton, LLP v. J-M Manufacturing Co.

Law firm Sheppard Mullin (plaintiff) knew, when it took on J-M (defendant) as a client in a qui tam action, that existing client South Tahoe was a real party in interest presenting a direct conflict, but disclosed this to neither client and instead relied on broad advance waivers in each engagement agreement; the firm was later disqualified from the qui tam matter once the undisclosed conflict came to light, and an arbitration panel found an ethical violation occurred but declined to require full fee disgorgement.