Analytica, Incorporated v. Npd Research, Inc.

708 F.2d 1263 (7th Cir. 1983)

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Nature of the Case

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Facts

Malec went to work for D. D was closely held, and Malec was eventually a 10% owner. His two co-owners, in recognition of Malec's substantial contributions, decided to give him another 10 percent of the company. They told Malec to find a lawyer who would structure the transaction. Malec hired Fine, a partner in Schwartz & Freeman. The value of the stock, plus the cash, would be taxable income to Malec and a deductible business expense to the corporation. Fine fixed a value which the corporation adopted. Fine billed D for his services and D paid the bill, which came to about $850, for 11 1/2 hours of Fine's time plus minor expenses.

Relations between Malec and his co-owners were deteriorating, and in May 1977 Malec left the company and sold his stock to them. His wife, who also had been working for D since 1972, left D at the same time and within a month had incorporated P to compete with D. P retained Schwartz & Freeman as its counsel. Schwartz & Freeman complained to the Federal Trade Commission, charging that D was engaged in anticompetitive behavior. P brought suit against D, and it authorized Schwartz to engage Pressman and Hartunian as trial counsel. D moved to disqualify both law firms. The judge disqualified both firms and ordered Schwartz to pay D's fees and expenses. P has not appealed the orders of disqualification; the law firms have.