A Delaware court recently declined to grant a motion to disqualify a law firm based on an alleged conflict of interest due to a prior consultation with one of the parties. In Deel, Inc. v. People Center, Inc., 2026 WL 313505 (Del. Super. Feb. 5, 2026), the Delaware Superior Court applied Rule of Professional Conduct 1.18 to determine that one attorney’s prior contact with an adverse party did not disqualify his entire law firm primarily because the prior consultation did not “prejudice the fairness of the proceedings.”
Background
Two years before the complaint was filed, the CEO of Deel Inc. was introduced to a partner at the law firm involved to discuss prospective litigation. Deel claims the consultation involved potential litigation against the defendant in the instant matter. The law firm conducted a conflict check prior to the consultation and had a preliminary call with Deel’s executives, requesting only minimal information to clear conflicts. After the law firm established that no conflicts existed, the CEO had a longer call with the firm, during which the CEO claims to have disclosed sensitive information about Deel’s strategies and operations.
In March 2025, the firm filed a lawsuit in California on behalf of People Center Inc. against Deel, alleging theft of trade secrets. Deel raised concerns about the firm’s representation of People Center, leading to the implementation of an ethical screen over the individual attorney involved.
Deel filed the Delaware suit in April 2025, and the firm entered its appearance for People Center. Deel alleged a violation of Rule 1.18 of the Delaware Lawyers’ Rules of Professional Conduct and requested that the firm withdraw. The firm maintained no attorney-client relationship was established with Deel and that the individual attorney who spoke to Deel two years earlier was screened from the case.
Court’s Holding
Deel filed a motion to disqualify the firm in July 2025. The court denied the motion, finding no clear conflict under Rule 1.18. The court held that disqualification is only appropriate when representation frustrates the fairness of the proceedings and that it should not be liberally granted. The court determined that Deel did not demonstrate by clear and convincing evidence that a violation of the rules of professional conduct tainted the fairness of the proceedings. That is the standard in Delaware for motions to disqualify because violation of ethics rules alone will typically not suffice. In Delaware, trial courts are generally not empowered to police violations of legal ethics. That is the province of the Delaware Supreme Court.
Court’s Reasoning
The court denied the motion to disqualify the law firm from representing People Center based on the following reasoning:
- Screening of the individual attorney: The law firm implemented an ethical screen over the attorney who had the initial consultation with Deel. He was screened from any participation in the matter and was not receiving any fees from the litigation against Deel. The firm also provided written notice to Deel about the steps taken to ensure no improprieties, which included the attorney not sharing any information from his consultation with Deel.
- Nature of the consultation: The court found that the consultation between the individual attorney and Deel in September 2023 concerned a different matter than the current litigation. A redacted email from September 22, 2023, was reviewed in camera and supported People Center’s argument that the consultation was not related to the current litigation.
- Rule 1.18 exceptions: The court determined that Rule 1.18 of the Delaware Lawyers’ Rules of Professional Conduct was not violated because the second exception applied. This exception allows representation if the lawyer who received the information took reasonable measures to avoid exposure to more disqualifying information than necessary and the disqualified lawyer is timely screened from any participation in the matter.
- Lack of significant harm: The court concluded that even if the information obtained during the consultation triggered Rule 1.18, it was unlikely to be significantly harmful or prejudicial to Deel in the current action. The claims involved events that took place after the consultation or were time-barred under Delaware law.
- No direct relation to current action: Deel failed to demonstrate that the matters discussed in the consultation were directly related to the current action. The court noted that the challenged counsel never conducted any work for Deel and the matters were not directly related or substantially similar.
Rule 1.18 restricts a lawyer who has learned information from a prospective client from representing another client “with interests materially adverse to those of a prospective client in the same or a substantially related matter if the lawyer received information from the prospective client that could be significantly harmful to that person in the matter”—unless an exception applies.
One of the exceptions in Rule 1.18(d) applies if the lawyer who received the information “took reasonable measures to avoid exposure to more disqualifying information than was reasonably necessary to represent the client”—and two other conditions are satisfied. First, the “disqualified lawyer is timely screened from any participation in the matter and is apportioned no part of the fee therefrom.” Second, “written notice is promptly given to the prospective client.”
The court determined that an exception applied based on the facts of this case. The court noted the paucity of case law on Rule 1.18 in Delaware but referred to Comment 1 to Rule 1.18, which emphasizes that prospective clients do not receive the full panoply of protections afforded to full-fledged clients.
Importantly, even if Rule 1.18 were to have been violated, that alone would not require disqualification. Such a remedy would also require a demonstration by clear and convincing evidence that the violation taints the judicial proceedings and threatens its legitimacy. That test was not met.
The Deel case should be compared with a recent ruling of the Delaware Court of Chancery involving two equal owners of an LLC who were also the only two members of the governing board of the LLC. The Court in Kundrun v. AMCI Group, LLC, C.A. No. 2025-0570-LM-JTL, Order (Del. Ch. Oct. 22, 2025), was presented with an issue of first impression in Delaware: What role could the entity’s counsel play if the board was deadlocked? In this books and records action, the court reasoned that the case presented a bilateral dispute between the two owners. Thus, company counsel could not argue any positions adverse to either of the equal owners. Although not disqualified per se, company counsel could not advance its own independent arguments without the consent of both equal owners of the LLC. See generally Rule 1.13 (regarding who speaks for the client when the client is an entity).
These situations require nuanced analysis, and specific facts are often determinative. The takeaway is to clearly identify the client, as well as the scope and boundaries of representation, and to fully examine whether a client’s interests are protected or prejudiced by conflicting loyalties.