The Arkansas Supreme Court has affirmed a lower court’s decision to disqualify a law firm, RMP LLP, from representing Pinnacle In Home Care, LLC (Pinnacle) in a significant legal battle against a competitor, 1 Source Senior Care, LLC (1 Source). The ruling hinges on a conflict of interest arising under professional conduct rules, specifically the tension between Pinnacle and its former employees who were initially sued alongside the company.
This case is an interlocutory appeal, meaning it addresses a ruling made before the final judgment in the underlying lawsuit. The Supreme Court took up the matter because it concerns the court’s inherent authority to regulate the practice of law in Arkansas. Ultimately, the state’s highest court found no error in the Washington County Circuit Court’s decision to remove RMP LLP, including attorneys Timothy Hutchinson and Scott Tidwell, from representing Pinnacle.
The Background of the Dispute
The litigation began in August 2021 when 1 Source, a provider of targeted case-management and personal-care services, sued its competitor Pinnacle, along with two of Pinnacle’s employees at the time, Sarah and Anthony Sanchez. The allegations were serious: 1 Source claimed the Sanchezes, former 1 Source employees, had breached noncompete agreements to join Pinnacle. Further accusations included defamation, breaches of confidentiality, violation of loyalty duties, conversion, tortious interference with business relationships, unjust enrichment, and civil conspiracy.
RMP LLP, represented by Hutchinson, initially defended all the defendants. However, the relationship quickly grew complicated. After Sarah Sanchez’s death, RMP moved to withdraw as counsel for the Sanchezes. This withdrawal was prompted by the death and the subsequent departure of Anthony Sanchez from Pinnacle’s employment, which RMP noted “created a potential conflict of interest” between Pinnacle and Anthony. The circuit court granted this withdrawal. Later, Anthony was appointed special administrator for his late wife’s estate and substituted as a party in her place.
Further complications arose when another former 1 Source employee, Amanda Sumpter, also joined Pinnacle and was subsequently added as a defendant by 1 Source. RMP also withdrew from representing Sumpter after she left Pinnacle, citing the same potential conflict.
The Conflict Sharpens
The central issue leading to the disqualification involved admissions made by the former employees. When 1 Source served requests for admission on Anthony (in his capacity as special administrator for Sarah), Anthony failed to respond, meaning the statements were automatically deemed admitted. These admissions included damaging facts, such as the assertion that Pinnacle *instructed and encouraged* Anthony to defame 1 Source to entice its clients to switch businesses.
Pinnacle attempted to distance itself from these admissions, claiming they should not be imputed to the company. However, the Supreme Court noted that Pinnacle’s own defense strategy highlighted the adversity. In its answer to a subsequent amended complaint, Pinnacle explicitly stated that any losses suffered by 1 Source were caused by “persons over whom Pinnacle had no control and for whom Pinnacle is not responsible.”
This defense strategy—attempting to shift blame entirely onto the former employees—was the key evidence of “materially adverse” interests.
The Court’s Analysis: Material Adversity Under Rule 1.9
Pinnacle argued that its position was not “materially adverse” to its former employee codefendants, suggesting they could pursue a common defense. The Supreme Court disagreed, focusing on Arkansas Rule of Professional Conduct 1.9(a), which bars a lawyer from representing a new client in a matter substantially related to a former client if that new client’s interests are “materially adverse” to the former client’s interests, absent written consent.
The Court referenced precedent, including *First American Carriers, Inc. v. Kroger Co.*, noting that even though the specific “appearance of impropriety” standard from older canons is no longer explicitly in the Model Rules, its spirit “pervades the Rules.”
The Court found that because the initial lawsuit alleged that the employees acted *at Pinnacle’s encouragement*, the question of relative fault between Pinnacle and the individuals would necessarily become a central point of litigation. If the employees were found liable, the question would immediately become: were they acting independently, or were they acting as agents of Pinnacle?
“Likewise, defendants in this case will be in an adversarial position as the issue of individual liability is litigated,” the opinion stated.
Furthermore, the fact that RMP itself had previously acknowledged “potential conflict[s] of interest” when withdrawing from representing Anthony and Sumpter undermined Pinnacle’s current position that no conflict existed. Because the interests of Pinnacle and the former employees were materially adverse regarding liability attribution, Rule 1.9 mandated the disqualification of their shared counsel, RMP.
Tactical Motives Dismissed
Pinnacle also suggested that 1 Source filed the motion to disqualify RMP purely for tactical advantage. The Supreme Court made clear that when reviewing disqualification orders, it applies an abuse-of-discretion standard to the circuit court’s ruling. The appellate court does not probe the motives of the party filing the motion; rather, it assesses whether the lower court erred in applying the rules of professional conduct. Since the circuit court correctly found a conflict under Rule 1.9, its decision to disqualify RMP was affirmed.
The decision upholds a strict interpretation of attorney conflict rules in Arkansas, ensuring that a law firm cannot represent a current client against the interests of former clients in the same, or substantially related, litigation, especially when fault allocation is at stake.