Opponents of the proposed Atlantic Yards development in Brooklyn said a Supreme Court ruling yesterday is a signal that in future legal battles the courts will look favorably on their contention that the approval process is tainted.

Judge Carol Edmead ruled that the state’s leading development agency must immediately replace its outside counsel, David Paget, because of a conflict of interest. Mr. Paget worked for developer Forest City Ratner on the Brooklyn project for more than a year before the state hired him as an outside counsel to shepherd the application through the environmental review process.

Judge Edmead said Mr. Paget’s “dual roles” gave off a “crippling appearance of impropriety” to the public. Mr. Paget is a prominent environmental lawyer for the firm of Sive, Paget & Riesel, and has worked for the state on major development projects for more than 30 years.

State officials said they were considering their options and were undecided on whether to appeal the removal of Mr. Paget.

Officials representing the state and Forest City Ratner did not say whether the ruling would slow the developer’s $3.5 billion plan to build a basketball arena, about 16 commercial and residential towers, and a hotel on a 22-acre site in and around downtown Brooklyn.

Both sides of the debate have billed yesterday’s hearing, which lasted about three hours, as the opening salvo in a protracted legal battle over the project’s approval.

Opponents have charged the proposed development is out of scale with the surrounding community and will increase traffic and pollution while hurting the area’s economy, character, and diversity. But the developer and a number of elected officials, including the mayor, the governor, and the president of Brooklyn, said the project would bring jobs, housing, and increased tax revenues.

Judge Edmead avoided the larger issues at the heart of the Atlantic Yards debate. She ruled in favor of the developer and the state by denying the opponents’ request for an injunction to prevent the demolition of five properties in the site’s footprint.

A coalition of more than a dozen community groups and individuals opposed to the project, led by Develop Don’t Destroy Brooklyn, alleged that the demolition of the five properties was an effort by the developer to build momentum for the development by creating the public impression that the project was moving forward. They said the demolition was a way of sidestepping the ongoing environmental review process.

Yesterday, a lawyer representing Forest City Ratner, Jeffrey Braun, said the lawsuit was an attempt by the opponents to “hijack” the process. Mr. Braun said that the buildings must be demolished to mitigate a public safety threat and the need to avoid liability if they collapsed. He argued that it was within the rights of the developer to demolish the buildings.

Mr. Braun, said yesterday he was “very happy” with the court’s decision to allow the demolition to continue. Mr. Braun said no date had been set for demolition but that the buildings are a public safety risk to the people who live and work in the area. The state will soon release a final scoping document outlining the parameters for an environmental impact statement.

An attorney representing the project’s opponents, Jeffrey Baker, said he would scrutinize the scoping document to see if it had been “factually tainted” by Mr. Paget’s involvement.

A spokesman for Develop Don’t Destroy Brooklyn, Daniel Goldstein, said yesterday’s decision was more reason to question the state’s objectivity in judging the developer’s application.

“Today we were shown there was a conflict of interest,” Mr. Goldstein said. “The public is skeptical about this process and will continue to be skeptical about it.”