Attorney Ethical Duties

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7^th Circuit Court of Appeals

Case Name: W. Mac Naughton v. Asher Ventures, LLC

Case No.: 22-2691

Officials: Ripple, Scudder, and Lee, Circuit Judges

Focus: Attorney Ethical Duties

Mac Naughton, an attorney from New Jersey, initially represented Harmelech in a lawsuit against RMG. However, after Harmelech failed to pay his legal fees, Mac Naughton acquired the rights to the unpaid portion of a settlement judgment from RMG. Subsequently, he filed multiple actions against Harmelech, aiming to collect the judgment and even sought to challenge Harmelech’s conveyance of his home to his son in Highland Park. In response, Harmelech moved to disqualify Mac Naughton based on New Jersey Rule of Professional Conduct 1.9(a), which prohibits lawyers from representing a client in a substantially related matter where their interests conflict with those of a former client.

Judge Holderman ruled in favor of Harmelech, prohibiting Mac Naughton from acting as counsel in any efforts to collect the RMG Judgment. Despite this ruling, Mac Naughton persisted in prosecuting the matter and filed similar actions before different judges. As a result, the Highland Park action was dismissed as a penalty for Mac Naughton’s defiance of the court order. The Seventh Circuit also upheld the dismissals of four other cases.

In another attempt to circumvent the Holderman Order, Mac Naughton sued Harmelech, alleging a fraudulent stock transfer in connection with the RMG Judgment collection. However, the Seventh Circuit also affirmed the dismissal of this lawsuit, considering it as yet another effort to avoid the consequences of the Holderman Order. Mac Naughton argued that he did not violate Rule 1.9(a) and expects a New Jersey proceeding to vindicate him. Nevertheless, this dismissal was solely based on the Holderman Order, not Rule 1.9(a).

Regardless of whether Mac Naughton breached his ethical duties as a New Jersey lawyer, he has a fundamental obligation to comply with orders issued by Seventh Circuit courts. The appeal was deemed frivolous, and the court believes that sanctions are warranted.

Decided 08/03/23

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