On April 25, 2025, the Fourth Department issued a decision in McGuire v. The McGuire Group, Inc., 2025 NY Slip Op. 02468, holding that a party that has not been represented by a law firm lacks standing to move to dismiss the firm as conflicted, explaining:
A motion to disqualify another party’s attorney is addressed to the sound discretion of the trial court. A party bringing a disqualification motion has the burden of making a clear showing that disqualification is warranted. A lawyer may not both appear for and oppose a client on substantially related matters when the client’s interests are adverse. More specifically, rule 1.7 precludes an attorney from engaging in concurrent representation where the representation will involve the lawyer in representing differing interests, or there is a significant risk that the lawyer’s professional judgment on behalf of a client will be adversely affected by the lawyer’s own financial, business, property or other personal interests. Of course, establishing that there is a conflict of interest under the aforementioned circumstances presupposes that there is a current attorney-client relationship between the lawyer and the client seeking disqualification.
We also note the seriousness of a motion to disqualify a party’s counsel of choice. Disqualification of a law firm during litigation implicates not only the ethics of the profession but also the substantive rights of the litigants. Disqualification denies a party’s right to representation by the attorney of its choice. In short, disqualification is a severe remedy and should be limited to cases where counsel’s conduct will probably taint the underlying trial.
Here, we conclude that TMG did not satisfy the first part of the relevant disqualification test—i.e., an attorney-client relationship between TMG and HSE—and therefore TMG lacked standing to move to disqualify HSE. To establish standing, the movant must prove the existence of a current or prior attorney-client relationship between the moving party and opposing counsel. However, where, as here, the firm sought to be disqualified had never represented the moving party, that firm owed no duty to that party, therefore precluding any standing to seek disqualification.
It is undisputed that neither TMG nor its owner was ever directly represented by HSE. Thus, TMG seeks to establish that it has standing on a theory that it is a corporate affiliate of the facilities that were directly represented by HSE—i.e., essentially on a theory that TMG is the alter ego of the facilities. We reject that contention. In support of its argument that the facilities were corporate affiliates of TMG such that they had standing to disqualify HSE, TMG relied primarily on the Second Circuit’s decision in GSI Commerce Solutions, Inc. v BabyCenter, L.L.C. (618 F3d 204 [2d Cir 2010] [GSI]). In GSI, the Second Circuit affirmed the District Court’s order granting a disqualification motion, concluding that it was not an abuse of discretion. However, even assuming, arguendo, that the analytical framework of GSI applies here, a dispositive difference exists between GSI and this case, because there the court was evaluating whether there was a corporate affiliate conflict in the context of a wholly-owned subsidiary of the parent corporation. Here, on the other hand, we conclude that TMG is not the alter ego of the facilities. In contrast to GSI, the record conclusively establishes that the facilities are not owned by TMG and are separate legal entities from TMG. Indeed, the services agreement that forms the basis of the relationship between TMG and the facilities expressly states that TMG would remain, at all relevant times, an independent contractor, and that the facilities would, inter alia, retain all managerial and supervising responsibilities, and authority with respect to the operation of the facilities, and that all services rendered pursuant to the agreement shall be provided subject to the ultimate direction and control of the facilities. In short, unlike in GSI and the cases that it relies on, here there is simply no parent-subsidiary relationship to parse for purposes of disqualification.
TMG and the facilities structured their relationship in a particular way, with TMG seeking to set itself out as an independent contractor of the facilities. Courts have expressed concern that disqualification motions may be used frivolously as a litigation tactic when there is no real concern that a confidence has been abused. Here, we note indications that TMG was engaging in a litigation tactic by moving to disqualify HSE inasmuch as, inter alia, TMG waited months after the commencement of this action to call attention to the purported conflict, even though in the previous year, in a prior separate matter, there had been some discussions of a similar conflict.
(Internal quotations and citations omitted).