Substantial Relationship Test California
In Flatt v. Superior Court (1994) 9 Cal.4th 275, the Supreme Court explained the substantial relationship test as follows: "The 'substantial relationship' test mediates between two interests that are in tension in such a context -- the freedom of the subsequent client to counsel of choice, on the one hand, and the interest of the former client in ensuring the permanent confidentiality of matters disclosed to the attorney in the course of the prior representation, on the other.
Where the requisite substantial relationship between the subjects of the prior and current representations can be demonstrated, access to confidential information by the attorney in the course of the first representation (relevant by definition to the second representation) is presumed and disqualification of the attorney's representation of the second client is mandatory; indeed, the disqualification extends vicariously to the entire firm."
"When disqualification is sought because of an attorney's successive representation of clients with adverse interests, the trial court must balance the current client's right to the counsel of its choosing against the former client's right to ensure that its confidential information will not be divulged or used by its former counsel." (City and County of San Francisco v. Cobra Solutions, Inc. (2006) 38 Cal.4th 839, 846.)
An attorney's duties to his client of both confidentiality and loyalty preclude him from later agreeing to represent an adversary of the attorney's former client unless the former client provides an informed written consent waiving the conflict. (Id. at p. 847.)
"If the attorney fails to obtain such consent and undertakes to represent the adversary, the former client may disqualify the attorney by showing a '"substantial relationship"' between the subjects of the prior and current representations." (Ibid.)
In cases where the potential conflict is one that arises from the successive representation of clients with potentially adverse interests, "the courts have recognized that the chief fiduciary value jeopardized is that of client confidentiality." (Flatt v. Superior Court (1994) 9 Cal.4th 275, 283.)
Thus, when it is demonstrated that the subjects of the two representations are substantially related, "the need to protect the first client's confidential information requires that the attorney be disqualified from the second representation." (SpeeDee Oil, supra, 20 Cal.4th at p. 1146.)