In 2020, attorneys Jennifer McGrath and Darren Kavinoky formed McGrath Kavinoky LLP for a single purpose: to represent victims of sexual abuse by Dr. James Heaps, a gynecologist at UCLA. Jane Doe 1 retained the firm in January 2020, at which point it already represented at least 36 former Heaps patients. Jane Doe 2 retained the firm in February 2021; five weeks later the firm told her it represented 180 patients. The firm ultimately represented 312 clients in separate but coordinated cases against Dr. Heaps and UCLA.
In January 2022, the firm told Does 1 and 2 it had tentatively reached an aggregate settlement. Both agreed. The court appointed retired judges to allocate the $374.4 million global settlement; Doe 1 received $1.4 million and Doe 2 received $1.7 million, less the firm’s contingency fee and costs.
In June 2024, Does 1 and 2 sued the firm and its named partners (collectively, McGrath Kavinoky), asserting professional negligence, breach of fiduciary duty, fraudulent misrepresentation, fraudulent concealment, breach of contract, breach of the implied covenant, and an accounting. They alleged they were among the most severely harmed victims, that the lawyers had promised individualized handling and made specific high-value promises about their cases, that they were “bullied” into the settlement through an improper allocation process — and, critically, that the firm never disclosed, or obtained informed written consent to, the conflicts of interest inherent in representing many clients who would compete for shares of a single settlement.
McGrath Kavinoky moved to compel arbitration under arbitration clauses in its engagement agreements. Does 1 and 2 opposed, arguing the firm violated rule 1.7(b) of the Rules of Professional Conduct — which bars representing a client where there is a significant risk the representation will be materially limited by the lawyer’s duties to another client, absent informed written consent — and that this violation rendered the agreements, including their arbitration clauses, unenforceable.
The trial court denied the motion to compel arbitration. It found that when the plaintiffs signed their retainers, the likelihood of a conflict was high: the firm represented dozens of clients with claims against the same defendant, litigated them in the aggregate toward a global settlement, and so placed each plaintiff in competition with every other for a slice of the recovery. The firm’s failure to disclose that conflict invalidated the retainer agreements and the arbitration clauses within them. McGrath Kavinoky appealed.
The Court of Appeal affirmed the order denying arbitration in the published case of Jane Doe 1 et al. v. McGrath Kavinoky LLP et al. -Case No. B343201 (June 2026). The decision is certified for publication because it resolves a question of first impression in California: whether a lawyer violates rule 1.7(b) — and thereby voids the engagement agreement — by representing multiple clients suing the same defendant for similar injuries without obtaining informed written consent at the outset. The court held that the rule in the 2018 Sheppard, Mullin Supreme Court opinion applies, even though Sheppard involved an actual conflict and this case involves a potential one.
In Sheppard, Mullin, Richter & Hampton, LLP v. J-M Manufacturing Co., Inc. (2018) 6 Cal.5th 59, the Supreme Court held that when a lawyer enters an engagement agreement in violation of an ethical rule, the entire agreement — including its arbitration clause — is unenforceable as against public policy. Citing Civil Code section 1667, the Court reasoned that a contract is unlawful if it is contrary to an express provision or policy of law, and that the Rules of Professional Conduct are not merely guidance for the bar but an expression of public policy protecting the public. Crucially, where grounds exist to void the entire contract, those grounds also vitiate the arbitration clause and prevent severance.
Rule 1.7(b) was violated at the outset. The court held substantial evidence supported the trial court’s finding that a conflict was highly likely when the plaintiffs signed on. Two lawyers who formed a firm specifically to pursue Heaps’s former patients could reasonably be inferred to have intended to represent as many as possible and to resolve them through an aggregate settlement — which is exactly what occurred, only eleven months after Doe 2 signed the retainer agreement. From the start there was a significant risk that clients would disagree about settling, that the defendants might condition any deal on a high participation rate, and that the clients would necessarily compete for their shares — meaning the firm’s ability to advocate for each was materially limited by its duties to the others. Lacking informed written consent, the firm violated rule 1.7(b), which under Sheppard voided the agreements.
The court drew heavily on persuasive authority in an area with no direct California precedent, including ethics opinions and commentary recognizing that conflicts inhere in collective representation. It cited the Bar Association of San Francisco’s Formal Opinion 2017-1 (Sept. 2017), ABA Formal Opinion No. 06-438 (Feb. 10, 2006), and scholarship by Erichson (Beyond the Class Action (2003) 2003 U.Chi. Legal F. 519) and Moore (Ethical Issues in Mass Tort Plaintiffs’ Representation (2013) 81 Fordham L.Rev. 3233), all for the proposition that such conflicts must be disclosed and consented to at the outset of the representation. It also pointed to Bridgepoint Construction Services, Inc. v. Newton (2018) 26 Cal.App.5th 966, where disqualification was proper because multiple clients sought the same damages from a single pool.
The court rejected each of McGrath Kavinoky’s distinctions. It declined to apply Brawerman v. Loeb & Loeb LLP (2022) 81 Cal.App.5th 1106 — where the illegality lay in performance of a retainer by an unlicensed attorney rather than in entering it — because here the violation occurred upon entering the agreements without consent. It rejected the argument that Sheppard reached only actual conflicts, noting rule 1.7 requires informed written consent for both actual (rule 1.7(a)) and potential (rule 1.7(b)) conflicts, and that Sheppard’s rationale applies equally to both. It dismissed the concern that this invites improper “post-hoc” hindsight inquiry, observing that trial courts routinely sit as triers of fact in deciding arbitration motions and are well-equipped to assess whether a significant risk existed at an earlier time. It also clarified that Sheppard expressly left open only the enforceability of blanket advance conflict waivers — an issue not present here, since the firm never claimed to have obtained one.
Arbitration could not be severed. The court held McGrath Kavinoky forfeited its severance argument by not raising it below, and that it failed on the merits regardless: under Sheppard, when an entire contract is void for illegality, the arbitration clause falls with it. The court distinguished the firm’s cited severance and fraud-in-the-inducement cases — including Ericksen, Arbuthnot, McCarthy, Kearney & Walsh, Inc. v. 100 Oak Street (1983) 35 Cal.3d 312 — because those involved either severable provisions in otherwise valid contracts or claims of fraudulent inducement, not a claim that the entire agreement was illegal and void as against public policy.