Panduit Corp. v. All States Plastic Manufacturing Co., Inc.

This is an appeal from an order of the United States District Court for the Northern District of Illinois (No. 76 C 4012), entered by Judge Grady on September 16, 1983. The district court disqualified Robert Conte and the firm of Laff, Whitesel, Conte & Saret (the “Laff Firm”) from representing appellant, AH States Plastic Manufacturing Co., Inc. (“All States”). We reverse-in-part, vacate-in-part, and remand.

Background

The Laff Firm has been patent counsel for All States since prior to the inception of the instant case in late 1976. The instant suit involves the alleged infringement by All States of Panduit Corporation’s (“Panduit”) U.S. Patent Nos. 3,537,146 (the ’146 patent) and 3,660,869 (the ’869 patent). The claimed inventions relate to one-piece cable ties. These self-locking devices, molded from nylon, are designed to encircle and hold together a bundle of electrical wires or similar items.

Shortly before the filing of the instant suit, Bowthorpe-Hellermann, Ltd. (“Bowthorpe”), a British company that manufac *1568 tures and markets one-piece cable ties, filed suit against All States, charging infringement of its U.S. Patent No. 3,486,2o!. 1 Since the Bowthorpe lawsuit, also filed in the Northern District of Illinois, involves similar issues, all parties involved in these two lawsuits agreed to conduct joint discovery. The joint discovery has resulted in approximately 13 depositions and All States has received over 5,000 documents in each case. The joint discovery has been stayed pending the outcome of this appeal.

In addition, All States filed a counterclaim in the instant case in mid-1978, alleging that Panduit had conspired with Bowthorpe and Bowthorpe’s wholly-owned U.S. subsidiary, Tyton Corporation, to compete unfairly in violation of Sections 1 and 2 of the Sherman Act and Section 3 of the Clayton Act. Discovery on the counterclaim has been stayed pending resolution of the patent infringement issues. The Laff Firm is also representing All States in the Bowthorpe lawsuit. In addition, Judge Grady is presiding over both cases. 2

In July 1981, Panduit filed a motion to disqualify the Laff Firm. The motion is based on an alleged conflict of interest created by the merger on July 1, 1981, of the law firm of Robert F.I. Conte Ltd. with the Laff Firm, which brought Robert Conte into the firm. From 1965 to 1975, Conte was an attorney with Ladas & Parry in its Chicago office, working under an employment contract during the entire period. He became a “special partner” in 1972, which entitled him to certain perquisites, such as membership in the Union League Club of Chicago, but he did not share in the equity or management of the firm. Ladas & Parry specializes in international patent work and, at that time, also had offices in New York, Los Angeles, Paris, and London.

During 1969-1975, the Chicago office of Ladas & Parry was retained by Panduit’s counsel, David Vogel of Prangley, Dithmar, Vogel, Sandler & Stotland, to handle Panduit’s foreign patent work. The Panduit work amounted to several hundred thousand dollars for which Vogel was billed.

Prior to June 1, 1971, Ladas & Parry was not a law firm, but rather was a service organization for lawyers, doing business under the name Langner, Parry, Card and Langner. The firm, before and after 1971, prepared, filed, and prosecuted foreign patent applications through foreign associates. During the period 1969-1975, the firm filed approximately 170 Panduit applications, counterparts of seven U.S. applications; 29 counterparts of the ’146 patent and 23 of the ’869 patent.

In addition, Ladas & Parry was involved in inter partes patent proceedings between Panduit and Bowthorpe or a company related to Bowthorpe, such as patent oppositions where the validity of certain of Panduit’s foreign patent applications was contested. In the period 1969-1975, Panduit and Bowthorpe were involved in 17 adversarial patent proceedings overseas, at least a few of which were patent opposition proceedings involving counterparts of the subject patents.

Mr. John Chrystal, presently the senior partner in the Ladas & Parry Chicago office, has at all times been in charge of its work for Panduit. The firm continues to maintain foreign Panduit patent registrations, work which is not considered to involve any Panduit confidences. In the critical period prior to 1975, Chrystal was assisted on the Panduit matters by two other attorneys, Thomas Peterson and Richard Streit. Since Conte’s technical expertise was in chemical engineering, his work at Ladas & Parry primarily involved matters in the chemical field. While with Ladas & Parry, Conte was never assigned to or worked on any Panduit matters, never re *1569 viewed or studied any Panduit files or documents, and never met with any Panduit personnel. Nor is it asserted that he was ever consulted informally on any Panduit matter.

When Conte left Ladas & Parry to form the firm of Kolar & Conte in 1976, he took substantial business with him, and he sued under his employment contract for moneys due, resulting in a settlement. In 1980 he organized the firm of Robert F.I. Conte Ltd., and, in July, 1981, he merged that practice with the Laff Firm.

Though the present litigation was filed in 1976, discovery was still being carried on in 1981. On June 18, 1981, All States served a subpoena on Ladas & Parry seeking all files maintained on behalf of Panduit. On July 10,1981, All States took the deposition of Richard Streit, a Ladas & Parry partner, in connection with these documents. Conte attended the Streit deposition with Charles Laff. No charge was made for his services because two others of the firm were attending. He attended, he states, to gain experience in such litigation techniques. Subsequently, Panduit’s counsel was informed by telephone that Conte was coming over to inspect the 170 Ladas & Parry files which had been produced at the Streit deposition. Conte testified he suggested that he make the inspection because he was familiar with Ladas & Parry’s filing system and could more quickly identify files that might contain more than routine matters. Having learned in the interim that Conte had been with Ladas & Parry during the period when that firm had been actively handling Panduit matters, Panduit’s counsel refused to permit Conte to inspect the files. In response to this objection, Mr. Laff informed Panduit’s counsel that Conte would no longer be involved in the case, and he has not been, except for preparing affidavits in connection with this motion. All States asserts he has been “screened” since that time. On July 27, 1981, Panduit filed a motion to disqualify the Laff Firm from further representation of All States.

District Court Proceeding

The district court initially determined that the matters handled by Ladas & Parry were substantially related to the present litigation. In an order dated November 16, 1982, the district court stated its preliminary impression that upon finding substantial relatedness, disqualification was required if only because of the appearance of impropriety. However, in light of the more recent Seventh Circuit decisions discussed infra, the court concluded that that ground was insufficient; that the court had to make a finding as to whether Conte had actual knowledge; that actual knowledge was presumed from the substantial relationship; and that All States had the burden of proving, clearly and effectively, that Conte had received no confidences. As a result, an evidentiary hearing was held for this purpose.

To show that Conte acquired Panduit confidences at Ladas & Parry, Chrystal testified that he, Conte, and other members of the firm regularly had lunch together at the Union League Club in Chicago. Chrystal and Conte dispute the frequency of the lunches but, at a minimum during 1972-1975, when Conte was a special partner, it would have been at least once a month.

Although he was unable to recall a specific instance or a specific topic discussed with Conte, Chrystal nonetheless testified that Panduit matters, especially the overseas patent opposition proceedings, were discussed frequently because it was unusual to have so many going on at one time. Chrystal’s testimony was generally corroborated by Thomas Peterson, although he too could not recall specifically that Conte was present at any of these discussions.

The district court ruled that any specific confidences known to Mr. Chrystal could not be disclosed, recognizing that this created a dilemma to All States with respect to proving that Conte received no confidences. However, Chrystal was permitted to identify general areas of confidences. In addition to the opposition matters, he recalled two others, one in 1969 relating to *1570 replacing a German associate whose work was not satisfactory and one relating to a French matter which was of public record. He could not remember passing on these confidences, or any other, to Mr. Conte. His testimony essentially was that he must have shared Panduit confidences with Conte because of the frequency of the lunches and because he was like a broken record repeatedly talking about the Panduit oppositions. His only specific recollection of consulting with Conte on any matter was asking him about how to bill on a time basis since Ladas & Parry, prior to organization as a law firm, simply charged flat fees for particular services.

Conte testified that he does not recall ever receiving any Panduit confidences while at Ladas & Parry. In addition, he testified that he has no present recollection of any Panduit confidences, if he received any, and that he has never communicated to anyone at the Laff Firm any Panduit confidences. Further, Mr. Laff testified that no Panduit confidences were received from Conte.

After hearing the parties’ testimony, and an expert’s testimony regarding All States’ possible expense, if it were to change counsel, the trial judge stated:

My decision is governed primarily by the decision of the Seventh Circuit in Freeman v. Chicago Musical Instrument Company [689 F.2d 715 (1982)] * * *.

•fc * * * Sfc *

I have already held in my order of November 16, 1982, that there is a substantial relationship between the matters which were being worked on by Ladas & Parry and the subject matter of the instant lawsuit. The mere appearance of impropriety which I was prepared to hold existed in this case without even going to the question of whether there was any actual imparting of confidential information is, under the Freeman case, insufficient to warrant disqualification. There must be more than the mere appearance of impropriety. There must be actual possession of confidential information by the attorney whose disqualification is sought.

Such actual possession of confidential information is presumed to exist upon a showing of the substantial relationship. However, this presumption can be rebutted. The attorney whose disqualification is sought has the burden of rebutting the presumption. Under the Freeman case, that attorney has the burden of, quote, “clearly and effectively,” closed quote, rebutting the presumption.

What is it that he must rebut? He must rebut the presumption that he had confidential information, or, in other words, he must prove that he did not have knowledge of the confidences of the client.

It is important to note that the burden is not simply that of proving that there is no present recollection of any confidences of the client. Indeed, that distinction is pivotal in this case. What the attorney must prove is that he never received any confidential information whether or not he presently remembers either the confidential information or whether he received it.

* * * # * *

This case really turns on the burden of proof. If it were Panduit’s burden to prove that Conte received and presently retains confidential information, Panduit would lose. That, however, is not the burden. It is All States’ burden to prove that Conte never received confidential information in the first place, and I find that the evidence does not clearly and effectively establish that proposition.

In summary, the district court made the following four findings of fact:

One, All States has not proved clearly and effectively that Conte never received any confidential information concerning matters relevant to this case while he was with the firm of Ladas & Parry.

Secondly, All States has proved clearly and effectively that Mr. Conte has no present recollection of any such confidential information.

*1571 Third, All States has proved clearly and effectively that Mr. Conte has not communicated to anyone at the Laff Firm any confidential information concerning Panduit which he may have received while at the Ladas & Parry firm. [Emphasis added.]

Fourth, All States has not proved clearly and effectively that there is no possibility of an inadvertent use of such confidential information by Mr. Conte should he at some time in the future recollect that information.

On the basis of these findings, the district court concluded that Conte and the Laff Firm must be disqualified as counsel for All States. It also noted that the disqualification imposed a very substantial economic hardship on All States in light of the testimony that it would take at least $30,000 for new counsel to acquire the necessary knowledge in order to adequately represent All States. Moreover, the trial judge believed that the likelihood of actual prejudice to Panduit, if the Laff Firm remained as counsel, would be very slight.

All States urged that the court allow the Laff Firm to continue under an order that screened Conte from the case. In denying that remedy the court reasoned that it could not possibly find as a matter of fact that Conte had not already inadvertently passed on some confidence.

Because the court felt “there is some likelihood that the Court of Appeals will disagree with my findings and conclusions”, and “in the interest of doing the least harm to anyone,” it ordered the Laff Firm to do no more work on the case until the disqualification matter was resolved on appeal and stayed proceedings.

Issues

1. Whether or not this court has jurisdiction to review the disqualification order?

2. Which law to apply in this case?

3. Whether or not the district court erred in disqualifying Robert Conte and the Laff Firm from further representation of All States?

OPINION

I

Jurisdiction

As a threshold matter, Panduit argues that the district court’s order is not appealable under 28 U.S.C. § 1295(a)(1) (1982). 3 It asserts, citing the recent case of Flanagan v. United States, — U.S. -, 104 S.Ct. 1051, 79 L.Ed.2d 288 (1984), that a pre-trial grant of a motion to disqualify counsel is interlocutory and is, therefore, not an immediately appealable final decision. We disagree.

This court has jurisdiction of an appeal from a final decision of a district court pursuant to section 1295(a)(1). Since a motion to disqualify counsel is not one of the enumerated interlocutory orders that are appealable as of right under 28 U.S.C. § 1292(a) 4 and this court has yet to have *1572 jurisdiction under 28 U.S.C. § 1292(b), 5 the grant of such a motion is appealable only if deemed final under certain exceptions such as the “collateral order” doctrine established by Cohen v. Beneficial Industrial Loan Corp., 337 U.S. 541, 69 S.Ct. 1221, 93 L.Ed. 1528 (1949). See Freeman v. Chicago Musical Instrument Co., 689 F.2d 715 (7th Cir. 1982). See generally 9 Moore’s Federal Practice ¶ 110.13[10] (2d ed. 1983).

Although the Flanagan decision is relevant to our threshold question, it is nonetheless not determinative. The fundamental difference between Flanagan and the instant case is that the former is a criminal case whereas the latter is civil. The policy considerations regarding piecemeal appellate review in a criminal case are explicated in Flanagan. The Court recites the balance between the strong interest of an accused to have a speedy resolution of the charges against him as guaranteed by the Sixth Amendment and the societal interest in providing speedy trials in order to reduce the load in court dockets, detention facilities, etc. In light of these concerns, the Court permits interlocutory review of only three categories of criminal cases under the “collateral order” exception; 6 a grant of a motion to disqualify counsel is not one of them. Thus, the rationale for denying review of a grant of a motion to disqualify counsel in a criminal context, such as the concerns for speedy trials, is inapplicable in a civil case. Cf. Firestone Tire & Rubber Co. v. Risjord, 449 U.S. 368, 101 S.Ct. 669, 66 L.Ed.2d 571 (1981). 7

cept where a direct review may be had in the Supreme Court;

(2) Interlocutory orders appointing receivers, or refusing orders to wind up receiver-ships or to take steps to accomplish the purposes thereof, such as directing sales or other disposals of property;

(3) Interlocutory decrees of such district courts or the judges thereof determining the rights and liabilities of the parties to admiralty cases in which appeals from final decrees are allowed.

The Court of Customs and Patent Appeals, one of our predecessor courts, has ruled that a grant of a motion to disqualify counsel is an immediately appealable decision. Ah Ju Steel Co. v. Armco, Inc., 680 F.2d 751, 753 (CCPA 1982). 8 This result has also been reached in the Seventh Circuit. See Freeman, supra. Accordingly, the order disqualifying counsel before us in this case is immediately appealable.

II

Choice of Law

After considering the jurisdictional question, we must then decide the choice of law question. In our recent opinion of Litton Systems, Inc. v. Whirlpool Corp., 728 F.2d 1423, 1445, 221 USPQ 97, 110-11 (Fed.Cir.1984), we noted, sua sponte, the choice of law question in relation to pendent matters, but found it unnecessary to decide that question. 9 In the instant ap *1573 peal, we again note, and decide, the choice of law question in relation to procedural matters that do not pertain to the patent issues.

As stated in 28 U.S.C. § 1295(a), 10 this court has exclusive jurisdiction of, inter alia,

an appeal from a final decision of a district court if the jurisdiction of that court was based, in whole or in part, on section 1338[ 11 ] of this title

Since our jurisdiction to review a district court’s decision is predicated on the presence of a bona fide patent claim in that action, we, naturally, have the exclusive jurisdiction to review any other matters which were tried below. One of such other matters is disqualification of counsel.

We recognize, as did Congress, the unique jurisdictional grant of this court —specific, nationwide subject matter jurisdiction. This jurisdictional grant, however, places practitioners and district courts in a unique posture: they are accountable to two different courts of appeals. Such a posture raises questions relating to stare decisis and certainty in the law. See generally 1 B Moore’s Federal Practice 110.402[1]. Since a district court is bound by the law of its circuit, see Hasbrouck v. Texaco, Inc., 663 F.2d 930, 933 (9th Cir.), cert. denied, 459 U.S. 828, 103 S.Ct. 63, 74 L.Ed.2d 65 (1982), a district court exercising jurisdiction pursuant to 28 U.S.C. § 1338 is bound by the substantive patent law of this circuit. The requirement to obey the law of its circuit causes practitioners and district judges, in general, to follow the substantive patent law as set forth by this court in “patent” cases and to follow the “general” laws as set forth by their regional circuit court in non-patent cases. That requirement, however, is the result that Congress sought to achieve in creating the Federal Circuit.

Such obedience, however, creates a problem that was possibly unforeseen by Congress. That problem is which law must a district court apply in matters that are procedural in nature such as the attorney disqualification question in the instant case. In a case where this court does not have appellate jurisdiction, the district court would be deciding that question in light of the law of its regional circuit court. Since we have jurisdiction to review all matters in a case that is appealable to us, the district court would then be obligated to decide that question in light of our precedents. Such bifurcated decisionmaking is not only contrary to the spirit of our enabling legislation but also the goal of the federal judicial system to minimize confusion and conflicts.

Since our enabling statute fails to enunciate any guidance for this question, an analysis of the legislative history must be made. United States v. John C. Grimberg Co., 702 F.2d 1362 (Fed.Cir.1983) (in banc).

The purpose of this court’s enabling act, the Federal Courts Improvement Act of 1982 (the “FCIA”), Pub. L. 97-164, 96 Stat. 25, is to provide:

[A] forum that will increase doctrinal stability in the field of patent law. *1574 Based on the evidence it had compiled, the Hruska Commission singled out patent law as an area in which the application of the law to the facts of a case often produces different outcomes in different courtrooms in substantially similar cases. Furthermore, in a Commission survey of practitioners, the patent bar indicated that uncertainty created by the lack of national law precedent was a significant problem * * *.

* * * * * *•

The testimony received by the committee also supported the basic objective of providing for uniformity of doctrinal development in the patent area. * * *

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The creation of the Court of Appeals for the Federal Circuit will produce desirable uniformity in this area of the law.

S.Rep. 97-275, 97th Cong., 1st Sess. 5, reprinted in 1982 U.S.Code Cong. & Ad.News 11, 15.

It is, therefore, clear that one of the primary objectives of our enabling legislation is to bring about uniformity in the area of patent law. “[T]he central purpose [of the FCIA] is to reduce the widespread lack of uniformity and uncertainty of legal doctrine that exist in the administration of patent law.” H.R. Rep. 97-312, 97th Cong., 1st Sess. 23. This court was created, as contemplated by the Congress, to achieve uniformity and to reduce uncertainties in this area. This court, thus, has a mandate to achieve uniformity in patent matters.

The fundamental underpinning for uniformity was Congress’ abhorrence of conflicts and confusion in the judicial system. That was the underlying motivation for the creation of this court, and it must remain the spirit and guiding principle of this court. We must, therefore, be cognizant of the guidance provided by the legislative history and the underlying Congressional motivation as we resolve the choice of law question.

In addition to the guidance provided by the legislative history, we must resolve this choice of law question by considering the general policy of minimizing confusion and conflicts in the federal judicial system. Where, as here, a procedural question 12 that is independent of the patent issues is in dispute, practitioners within the jurisdiction of a particular regional circuit court should not be required to practice law and to counsel clients in light of two different sets of law for an identical issue due to the different routes of appeal. An equal, if not more important, consideration is that district judges also should not be required to decide cases in this fashion. For instance, practitioners and district judges in the Seventh Circuit should not be saddled with two different sets of requirements regarding attorney disqualification, one for cases appealed to the Seventh Circuit and one for cases appealed to this court. 13 The possibility of different requirements should be minimized especially where a dispute is totally unrelated to patent issues and the resolution of that dispute does not impinge on the goal of patent law uniformity. The standard for attorney disqualification, relating to a district court’s power to supervise and to conduct local operating procedure, should not be different just because the reviewing path on such matter is different.

We, therefore, rule, as a matter of policy, that the Federal Circuit shall review procedural matters, that are not *1575 unique to patent issues, under the law of the particular regional circuit court where appeals from the district court would normally lie. 14 This policy is within the intent and spirit of not only our enabling statute but also the general desire of the federal judicial system to minimize confusion and conflicts. Since our mandate is to eliminate conflicts and uncertainties in the area of patent law, we must not, in doing so, create unnecessary conflicts and confusion in procedural matters 15 .

The exact parameters of this ruling will not be clear until such procedural matters are presented to this court for resolution.

Although the adoption of this policy could on occasion require this court to reach disparate results in procedural matters in light of disparate viewpoints from the regional circuit courts, it is nonetheless preferable for the twelve judges of this court to handle such conflicts rather than for countless practitioners and hundreds of district judges to do so. The task of deciding issues in light of different laws is no worse than the existing duty of federal judges to decide diversity cases or pendent state matters in view of state law. Reviewing pendent matters in light of state law is part of this court’s jurisprudence. 16

This policy, however, does not preclude this court from following existing or creating new law regarding any and all matters in cases where this court has exclusive jurisdiction over all appeals from a particular court. See 28 U.S.C. §§ 1295(a)(3) and 1295(a)(5) (1982). For example, the attorney disqualification standard enunciated in the Ah Ju Steel case is applicable for this court as well as the Court of International Trade and the Claims Court. We may, in future cases, alter or extend the Ah Ju Steel standard irrespective- of our views in this case or other cases if they are from forums within our exclusive jurisdiction over all appeals from a particular court. The viewpoints regarding attorney disqualification that we take in the instant case do not preclude us from taking a contrary viewpoint when deciding the identical issue in a case where we have exclusive jurisdiction over all appeals from a particular court.

When we review procedural matters that do not pertain to patent issues, we sit as if we were the particular regional circuit court where appeals from the district court we are reviewing would normally lie. We would adjudicate the rights of the parties in accordance with the applicable regional circuit law. Accord, In re International Medical Prosthetics Research Associates, Inc., 739 F.2d 618 (Fed.Cir.1984). Cf. Guaranty Trust Co. v. York, 326 U.S. 99, 108-9, 65 S.Ct. 1464, 1469-70, 89 L.Ed. 2079 (1945) (for diversity jurisdiction purposes, a federal court is, in effect, only another court of the state). Where the regional circuit court has spoken on the subject, we must apply the law as stated. Cf. Erie Railroad Co. v. Tompkins, 304 U.S. 64, 78, 58 S.Ct. 817, 822, 82 L.Ed. 1188 (1938). Where the regional circuit court has not spoken, we need to predict how that regional circuit would have decided the issue in light of the decisions of that circuit’s various district courts, public policy, etc. Cf. Commissioner v. Estate of Bosch, 387 U.S. 456, 465, 87 S.Ct. 1776, 1782, 18 L.Ed.2d 886 (1967); Jones & *1576 Laughlin Steel Corp. v. Johns-Manville Sales Corp., 626 F.2d 280, 285 (3rd Cir.1980); Gates Rubber Co. v. USM Corp., 508 F.2d 603 (7th Cir.1975); Warren Brothers v. Cardi Corp., 471 F.2d 1304 (1st Cir.1973).

Accordingly, in order not to violate the spirit of our enabling legislation and in order to minimize confusion and conflicts, we shall decide the disqualification order of the instant appeal in light of Seventh Circuit law.

Ill

Disqualification

The remaining issue is whether or not the district court erred in disqualifying Robert Conte and the Laff Firm from further representation of All States.

A. Policy Considerations Underlying Disqualification

Attorney disqualification of counsel is a part of a court’s duty to safeguard the sacrosanct privacy of the attorney-client relationship which is necessary to maintain public confidence in the legal profession and to protect the integrity of the judicial process. Freeman, 689 F.2d at 721. Where, as here, an attorney of a law firm that represents a party was at one time in a law firm that represented the adverse party, ethical concerns regarding the attorney-client relationship are raised. 17 Such concerns involve the fundamental principle that an attorney shall maintain the confidentiality of the information that he had obtained from a client. Freeman, supra. This principle is embodied in Canons 4 and 9 of the ABA Code of Professional Responsibility. 18 In performing this duty, the Seventh Circuit has “emphasized the delicacy of the balance that must be maintained between the right of confidentiality and the prerogative of a party to proceed with counsel of its choice.” Schiessle v. Stephens, 717 F.2d 417, 420 (7th Cir.1983).

In determining Seventh Circuit disqualification law, we must look not only at what the court has said, but equally importantly, at how the court has applied its view of the law to the facts of particular cases. Fortunately we have the benefit of a recent Seventh Circuit case heard in Banc, Novo Terapeutisk Laboratorium A/S v. Baxter Travenol Laboratories, Inc., 607 F.2d 186, 206 USPQ 769 (7th Cir.1979), which, obviously, is controlling. In Novo, the facts in support of disqualification were at least as strong as those before us; nevertheless a disqualification order was set aside. More recently, a panel of the Seventh Circuit in Freeman set aside a disqualification order as a matter of law on the ground that the principles in Novo had not been properly applied. The results, as well as the language, in these recent cases indicate that the Seventh Circuit considers the right of a party to select counsel of his choice to be a matter of significant importance, which will not be disturbed unless a specifically identifiable impropriety has occurred. See also Whiting Corp. v. White Machinery Corp., 567 F.2d 713 (7th Cir. 1977) (no disqualification). A disqualification order discredits the bar generally and the individual attorneys particularly. Thus, while there can be no hesitation to disqualify where impropriety has occurred, as in the cases cited by the parties upholding disqualification— namely, Schiessle v. Stephens, 717 F.2d 417 (7th Cir. 1983) and LaSalle National Bank v. County of Lake, 703 F.2d 252 (7th Cir.1983), judges must exercise caution not to paint with a broad brush under the mis *1577 guided belief that coming down on the side of disqualification raises the standard of legal ethics and the public’s respect. The opposite effects are just as likely — encouragement of vexacious tactics and increased cynicism by the public.

When applying Seventh Circuit attorney disqualification law, we must recognize, as does that circuit, that:

[Disqualification, as a prophylactic device for protecting the attorney-client relationship, is a drastic measure which courts should hesitate to impose except when absolutely necessary. (Emphasis added.)

Freeman, 689 F.2d at 721. Furthermore, motions for attorney disqualification “should be reviewed with extreme caution for they can be misused as techniques of harassment.” 689 F.2d at 722. Most importantly, a court must be “guided by the awareness of the delicate balance which must be maintained between the right of an individual to retain counsel of his free choice and the necessity that the Court uphold ... ethical standards____” Whiting Corp., 567 F.2d at 715 (emphasis added).

B. Presumptions Underlying Disqualification

In ruling on a disqualification motion directed to an individual and a firm, all cases which we have reviewed in the Seventh Circuit show that the court analyzes disqualification of the firm separately from the individual and carefully weighs each step in each disqualification. However, the movant for disqualification has several presumptions working in his favor.

First, proof by the movant of a base fact, the existence of a so-called “substantial relationship” between past work and the suit at hand, gives rise to a presumption that an attorney who actually did the past work received confidences relevant to the present litigation. Second, there is a presumption that attorneys within a firm share each other’s confidences, so that knowledge will be imputed from one to the other.

In the decision under review, no clear distinction was drawn between the above two presumptions. Indeed, Panduit’s brief totally confuses the two, invoking the presumption arising from a substantial relationship, and the extremely strict burden of proof to overcome it, directly against Conte. The district court also inextricably intertwined the two presumptions into a single presumption against Conte. The case before us, however, does not fit into the simple pattern of an attorney who had worked on Panduit matters moving to another firm, which would make the case comparable to the above cited LaSalle ease, for example. Panduit’s analysis would be apropos only if Chrystal rather than Conte had moved to the Laff Firm. Proof of the substantial relationship here gave rise to a presumption against Chrystal, not Conte. Moreover, Chrystal and the client Panduit are not in an adversarial relationship (Cf. Novo, 607 F.2d at 197). Chrystal’s knowledge is being imputed to Conte. Freeman, 689 F.2d at 723. No Panduit confidences could have been obtained by Conte as a result of work by him on Panduit matters since he never performed such work. Further, the district court held that Panduit failed to prove that Conte actually received any Panduit confidences. Nevertheless, based on the fact that Conte and Chrystal were in the same firm, confidences have to be imputed from Chrystal to Conte unless Conte effectively rebutted the sharing presumption.

A presumption of having received confidences from having worked on relevant related matters is difficul