Bressler Risk Blog

“Defence lawyer who slept with prosecutor stopped from testifying in conflict-of-interest motion” —

• “One of the two lawyers at the centre of a motion that could put an end to a cannabis trafficking case at the Montreal courthouse appeared before a Superior Court judge on Wednesday and was ready to testify, but he ultimately did not take the stand.
• “Defence lawyer Mathieu Rondeau-Poissant was in the courtroom before Superior Court Justice Gregory Moore, who is hearing evidence on a motion seeking to have a stay of proceedings placed on the charges filed against Bruno Desmarais, one of 10 men arrested in a Sûreté du Québec investigation dubbed Postcure.”
• “Weeks ago, Alice Bourbonnais-Rougeau, the lead prosecutor in Postcure, admitted to her superior in the Directeur des poursuites criminelles et pénales (DPCP) that she had intimate relations with Rondeau-Poissant late last year. She initially denied she and Rondeau-Poissant were anything more than friends, but ultimately confessed to her boss in June. She was told to work from home and to not handle any current cases.”
• “As part of his motion, Desmarais says Bourbonnais-Rougeau was potentially privy to defence strategy through the relationship and was therefore in a conflict of interest. If Moore rules that a stay of proceedings should be placed on the charges in Desmarais’s case, the same could apply for the other accused.”
• “Giuseppe Battista, a lawyer who is representing Bourbonnais-Rougeau, who has not appeared in court for the motion, said she is currently on sick leave until Nov. 30. When Moore asked the lawyers involved in the hearing if Rondeau-Poissant could testify on Wednesday, things became complicated.”
• “A prosecutor said the Crown could not call Rondeau-Poissant as a witness until the defence declares its evidence closed. Meanwhile, defence lawyers said Rondeau-Poissant should not testify until he has gone through evidence of messages he exchanged with the prosecutor. ‘I would like to see them before I take a stance on what can be disclosed,’ Rondeau-Poissant told the judge. Battista said reviewing the messages could take time and that it would be impossible to complete the process before the next scheduled court date on Friday.”
• “On Tuesday, Moore sentenced one of the men arrested in Postcure, Gerard Gauvreau, 59, of Oka, to a 12-month prison term to be followed by 12 months of unsupervised probation. In April, Gauvreau pleaded guilty to one count related to drug trafficking and a section of the Cannabis Act.”

“MSU hired lawyers with conflicting loyalties, Brenda Tracy says” —

• “A potential wrinkle has emerged in how Michigan State University is fending off a federal lawsuit filed by Brenda Tracy. The university has retained the multinational law firm Jones Day to defend against Tracy’s lawsuit, which alleges, among other things, that a trustee leaked her name to the media during a confidential investigation into former football coach Mel Tucker’s sexual harassment of her.”
• “Now, Tracy is claiming that Jones Day’s involvement in the suit represents a conflict of interest.”
• “The firm was previously hired by MSU to independently investigate whether someone associated with the university, including the trustees, leaked the existence of the investigation into Tucker or Tracy’s name. That probe, which ended in December 2023, was ultimately unable to conclude whether someone at MSU was behind the leak, and found no evidence that any trustee knew Tracy’s identity as the complainant before her name became public.”
• “That previous working relationship, Tracy said in an amended complaint filed Saturday in federal court, means that Jones Day has conflicting interests that would require the firm to discredit its own findings or undermine Tracy by ‘leveraging confidential information’ obtained during its previous investigation.”
• “Ethical standards in the legal profession require attorneys to avoid representing a client when the attorney’s responsibilities to another client, a former client or a third party can jeopardize the attorney’s ability to represent their client. Large firms like Jones Day, which has over 2,500 lawyers across 40 offices, are required to avoid conflicting loyalties within their firm. “
• “‘If one lawyer in a firm has a conflict, all the lawyers in the firm have a conflict, for the most part,’ said University of Illinois Chicago Law Professor Megan Bess. MSU’s decision to retain the same firm behind the initial investigation ‘eyebrow-raising,’ Bess said, though it’s unlikely that Jones Day has a material conflict of interest in the case. It’s possible that MSU simply picked the firm because its lawyers would be more familiar with the information relevant to the case, she said.”
• “One potential concern Bess raised was that the Jones Day attorneys could hypothetically use information they uncovered during the original investigation but never reported to aid their present-day defense.”
• “Terri Chase, the Jones Day attorney representing the university, did not respond to requests for comment before publication. Karen Truskowski, Tracy’s attorney, declined to comment.”
• “The filing also alleges that the university’s handling of Tracy’s complaint against Tucker was ‘heavily influenced’ by another conflict of interest: An apparent desire to satisfy MSU alum and superdonor Mat Ishbia.”
• “According to the filing, the Title IX Coordinator overseeing the investigation into Tracy’s complaint failed to inform Tracy that David Zacks, the now-deceased general counsel for a company owned by Ishbia, was representing Tucker in the investigation. That concealment, Tracy said, ‘created, at minimum, the appearance of donor-driven influence and institutional bias.'”
• “The amended complaint continues to accuse Trustees Rema Vassar and Dennis Denno, who are named as defendants in their official and individual capacities, of conspiring to retaliate against Tracy and interfere with her nonprofit and speaking venture. It asserts that the trustees’ actions furthering this conspiracy included ‘filing disparaging pleadings, leaking to media, and disclosing private facts.'”
  “Trustees Vassar and Denno did not respond to request for comment before publication.”

“Former judge pays civil penalty for conflict of interest violation” —

• “Former Probate & Family Court Judge Lawrence Army Jr. has paid a $4,000 civil penalty for violating the conflict of interest law by appointing his father as a special master to sell a home in a divorce proceeding.”
• “The Ethics Commission on Sept. 23 announced a disposition agreement in which Army admits to the violations and waives his right to a public hearing.”
• “In December 2022, while filling in for a judge at Essex Probate & Family Court, Army presided over a divorce proceeding in which the previous judge had ordered the sale of the marital home, according to the Ethics Commission. Following a hearing in which the parties reported they had not agreed to the terms of the sale, Army appointed his father, Lawrence Army Sr., as a special master for the sale of the home and set his fee at $450 per hour.”
• “Army’s appointment of his father was contrary to a Supreme Judicial Court rule requiring such fee-generating appointments to be made in order from a court-maintained list of persons eligible for appointment. Not only was Army’s father not the next available person on the Essex court’s list; his name did not appear on the list at all, the Ethics Commission said. Army’s father’s office was also approximately 65 miles from the property to be sold.”
• “First Justice Frances Giordano vacated Army’s appointment in January 2023 and appointed a different special master to sell the home. As a result, Army’s father did not receive any fee from the appointment.”
• “The conflict of interest law prohibits state employees from participating in matters in which members of their immediate family have a financial interest. It also prohibits public employees from using or attempting to use their official positions to obtain valuable, unwarranted benefits for anyone. In the disposition agreement, Army admits to violating both of these prohibitions.”
• “The full text of the disposition agreement can be found here. “

“Ex-GOP attorney general candidate temporarily loses law license over inappropriate relationship” —

• “The Illinois Supreme Court has ordered former Republican Illinois attorney general candidate Tom DeVore’s law license suspended for 60 days, following a yearslong public feud involving his client-turned-girlfriend and the state’s attorney discipline board.”
• “The court’s order affirms a recommendation this spring by the Illinois Attorney Registration and Disciplinary Commission, which found ‘clear and convincing evidence’ that DeVore’s actions related to Riley Craig had broken several Supreme Court ethics rules.”
• “Craig, a Springfield salon owner, was one of the hundreds of clients DeVore represented in dozens of lawsuits challenging Gov. JB Pritzker’s COVID-19 stay-at-home orders. In 2022, DeVore unsuccessfully ran to unseat Attorney General Kwame Raoul.”
• “DeVore, a lawyer from downstate Greenville, began a romantic relationship with Craig after filing suit on her behalf in May 2020, according to ARDC documents. Though Craig’s litigation against the Pritzker administration was unsuccessful, their relationship continued for nearly three years.”
• “In his defense against the ARDC case, DeVore claimed that his work as Riley’s attorney ended by the time their romantic involvement began in late May or June 2020. The ARDC disputed DeVore’s timeline, pointing to continued attorney behavior in that case.”
• “DeVore also went on to represent Riley in three other legal matters — including her divorce — that summer. That ‘demonstrated an unbroken continuation of his attorney-client relationship,’ the ARDC ruled.”
• “The disciplinary panel began looking into DeVore’s behavior in 2021, and during that initial investigation, Craig said she was not a client when their sexual relationship began. She repeated that claim on social media while DeVore was running for attorney general in 2022.”
• “But in May 2023, a few months after Craig and DeVore broke up, she ‘threatened to change her story’ to the disciplinary panel so that DeVore would ‘lose his law license,’ according to the ARDC report.”
• “The disciplinary panel pointed out that ‘even consensual sexual activity between an attorney and a client constitutes an impermissible conflict of interest because the attorney’s emotional involvement with the client creates a significant risk that the attorney’s independent professional judgment will be impaired.'”
• “DeVore also got involved in Craig’s business venture to launch a hair product business, for which the pair took out $600,000 in loans in 2021. But in doing so, the ARDC found DeVore failed to provide ‘required safeguards’ for Craig.”
• “DeVore declined to comment on the court’s order to Capitol News Illinois. His law license will be suspended for 60 days beginning Oct. 10.”

David Kluft asks: “Do I have to tell my client who my other clients are if there is no conflict?” —

• “An IL company found out that that a departing employee, who was in the process of starting a competing entity, had been in touch with the company’s outside counsel law firm.”
• “The company asked the law firm what was up, and the firm stated that it did not represent the departing employee in any matter adverse to the firm, but ‘if you are also asking the broader question of whether we represent [her] on other matters, I cannot answer that.'”
• “The company later sued the firm on theories of fraudulent misrepresentation (falsely claiming there was no adversity) and fraudulent concealment (not disclosing whether they represented her at all).”
• “The 7th Cir. Affirmed dismissal of the fraudulent concealment allegation, because there was no duty to disclose the identity of one client to another absent a conflict. The Court also affirmed summary judgment against the fraudulent misrepresentation allegation, because the firm had not been paid any attorneys’ fees after the alleged misrepresentation so there was no harm.”
• Decision: here.

“State Bar Launches Mandatory Client Trust Account Compliance Reviews” —

• “The State Bar of California launched its mandatory Client Trust Account Protection Program (CTAPP) compliance review today. Beginning September 29 through October 31, 2025, the State Bar will randomly select and notify 100 attorneys representing a cross-section of the attorney population to complete a CTAPP compliance review for reporting year 2024. “
• “Prior to launching the mandatory program, the State Bar conducted a voluntary compliance review pilot to test procedures and received direct attorney feedback on the voluntary review. The State Bar issued an open call for volunteers in April 2024. Over 300 firms applied to participate, and 21 firms were selected to represent various practice sectors, firm sizes, and trust account recordkeeping methods. Voluntary compliance reviews began in February 2025 and were completed in August 2025. Eighteen firms completed the process. “
• “‘The voluntary pilot program gave us valuable insights that shaped the compliance review process, making it more effective for both attorneys and the State Bar,’ said Steven Moawad, Special Counsel in the Division of Regulation, which is in charge of CTAPP. ‘By launching the mandatory reviews, we’re taking an important step toward strengthening client trust account practices statewide and deterring public harm before it occurs.'”
• “For more information, visit CTAPP Compliance.”

“Navigating Privilege Risks in the Age of AI: Practical Guidance for Legal Teams” —

• “As tools using generative artificial intelligence (AI) become more integrated into legal workflows, they introduce new and complex risks to attorney-client privilege, confidentiality, and discoverability. Data retention practices, unclear usage protocols and even routine interactions with AI tools can inadvertently expose confidential communications and compromise critical legal protections.”
  “AI Data Retention and Disclosure Risks: Generative AI platforms often retain user inputs and outputs for training purposes, and if privileged or confidential client information is entered into public or nonsecure AI tools, it may be stored and become discoverable in later litigation. AI platforms that don’t have clear data-handling policies or maintain weak security practices increase the risk.”
  “Mitigation Strategies: Use private, non-training AI tools, which typically do not employ user interactions to train their algorithms or store content beyond the immediate session, thus greatly reducing the risk that privileged information might be accessed… Avoid inputting privileged information into AI platforms. Rigorously evaluate AI tools to ensure they do not retain or share sensitive data. “
• “Legal teams should carefully assess when and how AI-powered tools are used in situations involving attorney-client privilege. To maintain privilege, four elements must be present: (1) a communication (2) made in confidence (3) between privileged persons (i.e., attorney or client) (4) for the purpose of obtaining or providing legal advice. One of the most common ways that privilege can be lost is if the confidential communication is voluntarily disclosed to a third party outside the attorney-client relationship.”
• “There are also many ways that attorneys and employees using AI can inadvertently waive attorney-client privilege. For example, companies may upload confidential documents to public-facing chatbots to query the documents and identify key information or use AI-powered notetakers to summarize otherwise privileged meetings, potentially exposing sensitive content to third-party platforms.”
• “A cautionary example is the Otter.ai litigation in the Northern District of California. This summer, Otter.ai became the subject of a class action complaint alleging that the company violated federal and state privacy laws by using features that automatically joined virtual meetings on platforms like Zoom and Teams to record and transcribe conversations without the participants’ knowledge or consent. It further alleges that Otter.ai used these recordings to train its AI machine learning models.”
• “The lawsuit underscores the critical need for organizations to fully understand the functionalities of AI-powered tools before deploying them in sensitive contexts. Companies that use automatic notetakers may inadvertently jeopardize attorney-client privilege by allowing privileged conversations to be transcribed and potentially used to further train AI models.”
• “Courts may view the use of such tools as a voluntary disclosure to a third party, waiving privilege. As the Restatement (Third) of Law Governing Lawyers makes clear (§79 cmt. g (2000)): ‘The disclosing person need not be aware that the communication was privileged, nor specifically intend to waive the privilege.'”
• “Another area that lawyers should consider is the discoverability of AI prompts, responses and generated content. Courts may not grant privilege to AI-generated content, particularly if the platform is accessible to the public. User prompts that produce such responses are generally considered nonprivileged since the initial communication does not involve an attorney.”
• “However, lawyers often maintain records of the prompts they use with AI, which may involve work product protection concerns. Courts typically protect work product that reflects a lawyer’s choices about intrinsically unprotected items, such as witnesses selected for interviews or documents chosen for client preparation. For example, a lawyer’s curated set of cases may be exempt from discovery by opposing parties, and stored AI prompts and responses may be treated as legal work product.”
• “When integrating AI tools into an organization’s workflows, many legal departments lack formal policies and protocols governing AI use in privileged contexts. This creates inconsistency in practice and heightens the risk of inadvertent waivers of attorney-client privilege or work product protections. To reduce this risk, legal teams should develop tailored guidance that reflects the organization’s risk tolerance, regulatory obligations and the specific AI tools in use.”
• “By staying informed and engaged, legal teams can better anticipate changes, adapt policies and safeguard privileged information in an increasingly complex AI environment”

David Kluft asks: “If Clients A & B are related, can I reveal Client A’s Confidential Information To Defend Myself Against Client B’s Malpractice Suit?” —

• “A WA attorney separately represented a Father and Son various legal matters. At some point, the lawyer also borrowed money from the Father and the loan was forgiven. After the Father died, the Father’s estate sued the lawyer for breach of fiduciary duty, presumably with the goal of winding back the loan forgiveness.”
• “The lawyer wanted to prove that the attorney client relationship with the Father ended before the loan, but in order to do that he needed to produce confidential information from the Son’s file, over the objection of the Son, who along with other relatives was supporting the estate’s case.”
• “The lawyer claimed disclosing the Son’s files qualified for the self-defense exception in Rule 1.6(b)(5), which allows a lawyer to disclose confidential information ‘to establish a claim or defense on behalf of the lawyer in a controversy between the lawyer and the client… or to respond to allegations in any proceeding concerning the lawyer’s representation of the client.'”
• “The WA Ct. of Appeals disagreed, holding that disclosure of the Son’s confidential information was not covered by the exception because the relevant “client” for purposes of the exception was the estate, not the Son, and there technically was no controversy with the Son.”
• Decision: here.

“Using Military Lawyers as Immigration Judges is Ill-Advised and Potentially Illegal” —

• “It violates individual rights and is an inappropriate use of the military. The Trump administration’s reported authorization of 600 military lawyers to act as temporary immigration judges would deprive immigrants of a fair hearing and further erode the line between the military and civilian government.”
• “This is true regardless of the professionalism of the military lawyers. Immigration judges are specially trained administrative judges in the Department of Justice who oversee deportation hearings. In late August, the DOJ issued a rule allowing ‘any attorney’ to be selected as a temporary immigration judge, eliminating the previous requirement that temporary judges have years of adjudicatory, litigation, or immigration experience. Multiple news reports on the Trump administration’s authorization of the use of military lawyers followed in early September.”
• “In addition, ethical rules are fundamental to the rule of law, but the legal and ethical obligations of military lawyers and immigration judges are in tension. By regulation and guidelines, immigration judges are obligated to be impartial. Military lawyers would be bound by those same rules while serving as immigration judges, but even when sent to the DOJ, JAGs remain bound to follow the Uniform Code of Military Justice which requires JAGs to obey a lawful order. Failing to do so risks career consequences or even court martial. That obligation raises questions about whether JAGs would be placed in a position where it would be impossible to be truly impartial.”
• “Moreover, under military ethics rules, JAGs can’t act in a way that is prejudicial to the administration of justice, nor can they represent clients with a conflict of interest. If a military attorney’s usual job is to represent the military as a prosecutor or adviser, simultaneously working for a temporary period as a judge — who does not represent the government — potentially puts the officer in a precarious ethical bind.”
• “A JAG’s legal and ethical obligations to follow orders make it challenging to provide a truly fair hearing to the immigrants in their courtroom, a conundrum with constitutional implications.”

“Lawyers reject ‘high risk’ rating for money laundering” —

• “Classifying legal services providers as ‘high risk’ for money laundering is wrong, anti-money laundering specialists told the Law Society’s economic crime conference last week – amid concern over HM Treasury proposals to bolster the AML regime.”
• “Legal services providers were assessed as high risk for money laundering in the 2017, 2020 and 2025 national risk assessments published by the Home Office and HM Treasury. The latest assessment states that law firms are attractive to criminals ‘due to perceptions of the sector’s integrity’.”
• “However, at this week’s conference, Marcus Thompson, a partner at Kirkland & Ellis International who assists corporate clients on anti-money laundering, said he disagreed with the rating. ‘The whole point of becoming a lawyer is the rest of society rightly regards lawyers as people of integrity… who act at a standard above most people in society,’ Thompson said.”
• “Thompson acknowledged that some sectors of the legal economy are more vulnerable than others, but ‘that does not justify the National Risk Assessment of lawyers being at highest risk of money laundering. I think that’s too simplistic’.”
• “Amy Bell, chair of the Society’s economic crime taskforce, said law enforcement agencies have been asked to share examples of where they believe solicitors could have prevented criminals from using their services. ‘Until we have seen that data, it is difficult to say, ‘Watch out for this’,’ Bell said.”
• “Meanwhile, the Society is expected to push back on Treasury proposals that would require banks to take ‘reasonable measures’ to understand the purpose of the pooled client account, gather sufficient information about each client’s business and assess the risk associated with the account.”
• “Simmons & Simmons partner Amasis Saba, a member of the Society’s taskforce, said the onus will fall on banks to be comfortable about who the beneficial owners are, which could include counterparties. ‘This is an area the Law Society will be pushing back on… Your teams are going to get battered by requests. If you have multiple banks, [that means] multiple requests,’ Saba said.”

“Federal Court Addresses Standing to Bring Disqualification Motion under Former Client Conflict Rule” —

• “The federal district court in Seattle recently highlighted a key procedural requirement for most disqualification motions based on asserted former client conflicts: The party bringing the motion must show that they were, in fact, a former client of the lawyer or law firm targeted. “
• “Thompson v. Seattle Public Schools, 2025 WL 2654650 (W.D. Wash. Aug. 8, 2025) (unpublished), involved employment discrimination claims against the defendant school district. The lead lawyer for the school district had earlier investigated employment claims by the plaintiff against another local school district. The plaintiff argued that the lawyer’s earlier investigation constituted a former client conflict under RPC 1.9 that warranted disqualification.”
• “The court noted that regardless of whether the two matters shared any common facts, the plaintiff lacked standing to bring a disqualification motion against the lawyer because the plaintiff had never been a client of the lawyer. The court reasoned that RPC 1.9 on its face is predicated on the fact that the lawyer or law firm involved had formerly represented the client. Disqualification motions for conflicts, in turn, are ordinarily reserved solely for current or former clients of the law firm involved—usually framed under the procedural requirement of ‘standing.’ Lacking that here, the court denied the motion. The court also later denied reconsideration at 2025 WL 2653675 (W.D. Wash. Sept. 16, 2025) (unpublished). “
• “Although Thompson is an ‘unpublished’ decision, the federal court in Seattle discussed standing in the disqualification context for conflicts generally in the relatively recent reported decision of United States Fire Insurance Company v. Icicle Seafoods, Inc., 523 F. Supp.3d 1262 (W.D. Wash. 2021).”

“Rate Sensitivity, Conflicts Continue to Loom Over Big Law IP Practices” —

• “The exit of 21 intellectual property litigators from Ropes & Gray for Sheppard, Mullin, Richter & Hampton last week is one of the latest group moves in the practice area this year, as some law firms decide to step back from the practice while others are taking advantage of recruiting top talent in a shifting Big Law environment. Among a number of IP litigator moves in the past year, Weil, Gotshal & Manges picked up at least six IP litigators from Latham & Watkins, and two IP Willkie Farr & Gallagher IP litigators moved to Gemini Law, a boutique based in New York.”
• “Some observers point to increasing client demand in some corners of IP law for law firms that already have built-out practices and intersecting practices for blue-chip clients. Still others point to potential conflicts or higher billing rate pressure in some IP litigation, compared with other Big Law practices, leading many IP lawyers to move to smaller or slightly less profitable law firms. IP litigators have said that charging elevated premiums to IP clients has forced some attorneys to abandon their firms for ones that allow for lower rates.'”
• “Besides rate pressure, conflicts may also prompt firms to step back more from IP litigation, said law firm consultant Lisa Smith, a principal with Fairfax Associates.'”
• “‘Firms are taking a look at IP from a couple of perspectives. Certainly, one is a rate perspective. Some of the prosecution work, in particular, is not always a fit for an Am Law 50 firm. The litigation is still a desirable practice, but conflicts get in the way. That’s where we see it just doesn’t fit,’ she said.'”
  Conflicts can arise easily, she said, because IP litigation often involves going after competitors in a particular industry sector, so it can be problematic for a firm that represents multiple companies in a sector.'”
• “William Munck, global managing partner of Dallas-founded technology firm Munck Wilson Mandala, said ‘nobody is backing off IP litigation,’ and his firm is seeing as much as it always has.’ However, he acknowledged seeing practice groups move from a ‘mega-firm’ to a smaller firm, because they can compete with lower leverage and the efficiency of using AI. ‘With AI tools, firms like ours can now compete with any project that’s out there,’ he said.'”

Another interesting find from David Kluft: “Can the whole DOJ be disqualified if different government agencies have adverse interests?” —

• “A VA relator filed a qui tam action alleging illegal activities by five defense contractors and the Department of Defense in how contracts were awarded.”
• “He argued that the Attorney General should be disqualified from intervening on behalf of the United States, because it had obligations to both the U.S. Treasury (which was harmed by the illegal activities) and to the DOD (which he alleged was in on the illegal activities).”
• “The Court rejected the argument because the United States was a single client for conflict analysis. Also, the relator failed to identify a particular government attorney with this conflict, and in any case DOJ attorney conflicts are not imputed to the entire DOJ.”
• Decision: here.

New York State Bar “Opinion 1284 (09/16/2025) Multi-Jurisdictional Practice; Referral Fees; Division of Fees” —

• Topic: Multi-Jurisdictional Practice; Referral Fees; Division of Fees
• Digest: Lawyers admitted in New York and a foreign jurisdiction who associate with a lawyer admitted only in the foreign jurisdiction may divide a fee with that lawyer because Rule 1.5(g) explicitly permits lawyers associated in the same law firm to share fees. But the New York-licensed attorneys in the firm must exercise supervision pursuant to Rule 5.1 over the non-New York partner to the extent such partner’s conduct implicates the New York Rules of Professional Conduct.

“A New Wrinkle in AI Hallucination Cases: Lawyers Dinged for Failing to Detect Opponent’s Fake Citations” —

• “A new decision from the California Court of Appeals adds an intriguing dimension to the growing body of AI hallucination sanctions cases, raising the question of a lawyer’s duty to detect fabricated, AI-generated citations — not in the lawyer’s own filings, but in an opponent’s.”
• “While the court did impose a $10,000 sanction on the attorney who filed two appellate briefs containing fake citations, it also declined to award attorneys’ fees or costs to the opposing counsel, because of counsel’s failure to report the fake citations to the court or even to detect them. That makes this what may be the first judicial decision to touch on on whether lawyers have a duty to detect and report their opponents’ AI-generated fake citations.”
• “The attorney, Amir Mostafavi, used ChatGPT and other AI tools to ‘enhance’ his appellate briefs, then failed to verify the citations before filing. The court found that 21 of 23 case quotations in his opening brief were fabricated, along with many more in the reply brief. Some cases did not discuss the topics for which they were cited, and others did not exist at all.”
• “‘Nearly all of the legal quotations in plaintiff’s opening brief, and many of the quotations in plaintiff’s reply brief, are fabricated,’ the court said.”
• “But what makes Noland unique is the court’s explicit decision not to award attorneys’ fees to the opposing counsel, despite finding the appeal frivolous and despite opposing counsel’s request for such an award. The court explained:”
• ” ‘We decline to order sanctions payable to opposing counsel. While we have no doubt that such sanctions would be appropriate in some cases, in the present case respondents did not alert the court to the fabricated citations and appear to have become aware of the issue only when the court issued its order to show cause.'”
• “Although the court did not elaborate beyond that statement, its reasoning raises the question: What is the role of opposing counsel in policing AI hallucinations? Put another way: What is a lawyer’s responsibility to detect and report an opponent’s use of hallucinated citations?”
• “The court appears to suggest that had opposing counsel spotted the fake citations and alerted the court, they might have been entitled to be awarded sanctions. Conversely, their failure to detect the fabrications made them undeserving of compensation.”
• “But in the AI era, could it be that lawyers have a heightened responsibility to check their opponents’ citations? Does the responsibility now extend not just to the lawyer’s clients, but to the courts?”
• “It is fair to say, I think, that the Noland court’s denial of attorney fees to defendants who failed to spot obvious fabrications hints at an evolving standard of professional competence.”
• “In denying opposing counsel’s request for attorneys’ fees, the Noland court appeared to fault counsel on two counts: their failure to alert the court to the fabricated citations, and their failure to even notice them in the first place.”
• “The Noland court’s decision seems to suggest that, at minimum, lawyers who spot AI hallucinations and alert the court may be rewarded (or at least may be eligible to be reward), while those who miss them may not be entitled to fee-shifting even when the opposing brief is ultimately sanctioned.”
• “While Noland appears to be the first case to explicitly address opposing counsel’s role in detecting AI hallucinations, it likely won’t be the last. As AI-generated fake citations become more sophisticated and potentially harder to detect, courts will need to develop clearer standards about what level of diligence opposing counsel should exercise.”
• Decision: here.

We’re in the home stretch for the 2025 risk compensation survey.

We have 80+ participants and 430+ data points. 

I am still holding the “end of September” deadline, as it takes a few weeks to generate and distribute reports. That means this closes next week.

(If you need help or have questions, please feel free to reach out to me directly!)

If you haven’t participated yet and would like to receive a copy of the eventual report / personal benchmark, please do!

• Background details on the survey are here, in case you missed that update (or the big, bold reminder in the daily emails).
• A direct link to the survey is: here.
• And for those of you who want to help, please do pass on details to your internal and external colleagues, and feel free to like/re-share our LinkedIn post (for the few risk professions who aren’t already reading the blog)

Thanks for reading. Regular risk updates will be back tomorrow!

David Kluft notes: “If the judge exchanged a chocolate cake recipe with opposing counsel’s mom, can I get her recused?” —

• “In a TN civil bench trial, the transcript began with a partial conversation between defense counsel and the judge about a chocolate cake recipe, and a strange reference by the judge that she had already ‘told [plaintiff’s counsel] about the chocolate cake recipe,’ followed by laughter.”
• “The ‘chocolate cake recipe’ conversation was referencing the fact that the judge’s son and defense counsel were best friends as children in the 1980s, and the judge had exchanged a cake recipe with defense counsel’s mom, but then the families fell out of touch.”
• “This relationship was apparently disclosed prior to trial, but it was not captured on the transcript. Plaintiff did not move to recuse before trial, but did so after he didn’t like the judgment. Plaintiff claimed that bringing up the chocolate cake recipe relationship 10 seconds before trial started was essentially an unfair ambush that caught him unaware.”
• “On appeal, the TN Supreme Court affirmed denial of the recusal motion, holding that the plaintiff did not timely move for recusal, that the mere existence of a friendship between a judge and a lawyer is not enough for recusal, and that a friendship between the judge’s son and defense counsel that ended thirty years earlier was not enough to raise a legitimate question about the judge’s impartiality.”
• Decision: here.

“Some law firms that cut deals with Trump take cases opposing his administration” —

• “When nine U.S. law firms struck agreements with President Donald Trump in March and April to head off a crackdown on their business, it prompted broad concern that the deals would deter them from taking cases against his policies. Months later, at least four of them are involved in lawsuits opposing Trump’s administration in cases involving transgender rights, immigration, tariffs and wind power, court records show.”
• “The four firms are Latham & Watkins; Willkie Farr & Gallagher; Skadden, Arps, Slate, Meagher & Flom; and Milbank. They represent clients that have sued the administration since May, after the agreements were reached.”
• “It is unclear whether these four firms or others may still be steering clear of certain cases for fear of drawing Trump’s ire or imperiling their agreements with the Republican president. Some legal experts said law firms may be wrestling with competing pressures, since representing clients against the government is a key driver of business and prestige.”
• “‘A lot of litigation is opposed to the federal government,’ said Michael McCabe, a business lawyer who advises other attorneys on ethics matters. ‘All of that work is an important part of a law firm economy.'”
  “A Reuters investigation in July found that dozens of major law firms, wary of retaliation, have broadly scaled back pro bono work, workplace diversity initiatives and litigation that could place them in conflict with Trump. Reuters also found that top firms had pulled back from litigation against the U.S. government.”
• “Legal industry experts said the lawsuits involving the four firms that have reached agreements with Trump include the kinds of matters large firms cannot easily give up, serving important clients or spearheaded by key lawyers at the firms.”

David Kluft asks: “If opposing counsel needs to prove my income in 2023, and she learned my income while representing me in 2021, does she have a conflict?” —

• “An AL lawyer briefly represented a man in a lease dispute in 2021. In 2023, the lawyer represented a party adverse to the same man in a custody and child support trial. The man moved to disqualify the lawyer because, although the lease dispute was otherwise unrelated to the custody dispute, the lawyer did learn information about the man’s income in 2021, and his income was relevant to the issue of child support.”
• “The Court of Appeals acknowledged that this might have created a former client conflict of interest under Rule 1.9. However, it turns out the man changed jobs in between the two cases, so anything the lawyer knew about his income back in 2021 had become irrelevant. Motion denied.”
• Decision: here.

“Uvalde CISD votes to keep law firm amid conflict of interest concerns” —

• “The Uvalde Consolidated Independent School District voted to continue to use legal services from a law firm that also represented a former officer facing charges in connection with the Robb Elementary shooting, despite concerns of a conflict of interest.”
• “On Monday night, the UCISD board voted to continue to use Thompson & Horton legal services, as assigned by the district. The board also authorized the superintendent to obtain an independent ethics attorney to review ‘any actual or potential conflict of interest’ related to the Robb Elementary litigation.”
• “In addition, the board passed a motion to waive attorney-client privilege to the independent attorney to produce Thompson & Horton’s conflict of interest ethics analyst.”
• “‘We’ve been trying to do what’s right, but you’re only as good as your legal team,’ trustee Jesse Rizo said. ‘We’ve been failed…time and time again.'”
• “Walsh Gallegos represented the district during a lawsuit from KSAT and other media organizations to make the records public, as the district had sought to withhold documents and information connected to the massacre. Two teachers and 19 students died in the shooting on May 24, 2022.”
• “Court records show that Thompson & Horton attorneys represented former UCISD officer Adrian Gonzales and current UCISD board Vice President JJ Suarez in a separate federal lawsuit related to the shooting filed by several families of the victims.”
• “The school board voted to release all records in July and end the lawsuit after a Texas appeals court ruled in favor of KSAT and the other news outlets.”

“Private Equity Deals Leave State Accounting Boards on Sidelines” —

• “State regulators are sounding the alarm as private equity-backed accounting firms test the limits of longstanding rules and laws designed to protect the objectivity of licensed CPAs. Firms that have cut PE deals rely on a complex legal structure that has touched off a cascade of ethics and professional conduct concerns. State regulators fear the evolving ownership models could erode the value of professional accounting licenses and ultimately undermine the capital markets that depend on auditors’ work.”
• “State laws hamper regulators’ ability to oversee the new arrangements because of the narrow scope of firm licensing requirements—a gap some state boards aim to close.”
• “‘It’s a very profit-driven, short-term ownership structure,’ said Haley Lyons, chair of the Oregon Board of Accountancy. ‘How do we ensure long-term relationships for members of the public? How do we ensure quality standards are upheld over time?'”
• “The effort to bolster oversight comes as a rising number of US accounting firms have cut deals with third party investors in the last six years, with nearly half of the top 30 firms now at least partially owned by private equity.”
• “The volume and speed of the ownership overhauls has caught boards of accountancy flat-footed as they look to enforce state ownership and ethics requirements for licensed CPA firms meant to ensure companies and private individuals work with a dependable, independent accountant.”
• “Firms themselves are looking for more guidance. Grant Thornton Advisors LLC, one of the biggest US firms with private equity ownership, said in its latest transparency report that it put in place its own safeguards to ensure its auditors make critical decisions regarding promotions, staffing and its client roster. But the firm and others are calling for updated conflict of interest rules to help manage a complex mix of threats to their independence.”
  “The largest private equity-backed accounting firms operate nationwide and are licensed in multiple states, making it harder for individual states to police requirements that at least 51% of a registered firm’s owners are credentialed CPAs. In some cases, regulators don’t know that a firm has new non-CPA owners.”
• “The difference for private equity-backed firms is they have a contractual agreement spelling out what the firm has to achieve in order to earn periodic payments from the outside investors, said Joe Tarasco, CEO of Accountants Advisory Group LLC.”
• “Industry watchers fear the profit targets common among private equity-backed businesses might encourage auditors to take shortcuts or accept work that falls outside their qualifications.”
• “State accounting boards are also monitoring an industry ethics committee that is working to provide clearer guidance as firms navigate potential conflicts of interest among their auditors, the PE-backed business, and the universe of companies also held by their outside investors.”
• “An initial proposal from the American Institute of CPAs ethics body doesn’t go far enough to address the pressures CPAs will face to meet their investors’ demands, state regulators have told the committee.”
• “‘The guidance cannot resolve a fundamental structural issue: the inherent conflict between private equity investment objectives and professional independence requirements,’ the Washington State Board of Accountancy in a letter to the committee. The board didn’t respond to a request for comment.”
• “Firms should set up a framework to preserve the independence of their accountants before any deals close, Grant Thornton said in a statement to Bloomberg Tax.”
• “Many state regulators want to see the ethics committee’s approach before revising their own licensing requirements.”
• “‘I haven’t seen a case where the existence of private equity on the attest side of an audit practice has resulted in a negative impact,’ said Mullen, who serves on the Virginia board. ‘This is not to say that we will wait until that problem occurs. We won’t.'”