Bressler Risk Blog

“From Guaranteed Comp to Ethics Screens, How Big Law Navigates the Revolving Door” —

• “As the revolving door between the government and Big Law picks up pace this year, law firms are hiring a series of lawyers hailing from the same federal agencies they are litigating against in client matters.”
• “To guard against ethical violations, law firms and laterals face several procedures and restrictions. From setting up ethics screens on some matters to ensuring laterals from the government aren’t compensated for certain matters, these restrictions can add up when firms have several laterals from the government.”
• “The ethics restrictions are one consideration when firms hire lawyers from the government. Those restrictions are coming more into focus as law firms are hiring more lawyers from the government this year, especially from the Justice Department.”
• “‘When firms do a profitability projection, they factor in the hands-off period for the person’s prior agency for a period of time,’ D.C.-based Garrison partner Dan Binstock said, speaking generally on firms hiring government attorneys.”
• “Firms such as Milbank; Weil, Gotshal & Manges; Kirkland & Ellis; Mayer Brown; Paul, Weiss, Rifkind, Wharton & Garrison; and King & Spalding, among others, have all added government talent this year. Each one of these firms is also litigating against or adversarial to the government in client matters.”
• “Firms need to take into account how long a government candidate will be restricted from handling certain matters or advising clients on cases before their agency, which can vary in years.”
• “For instance, when Milbank hired SEC enforcement chief Gurbir Grewal this year, the firm noted he had to wait at least a year before handling matters involving the agency. At the same time, Grewal, as one of the highest-profile lawyers from the government this year, was likely paid a competitive partner compensation package.”
• “If a former government attorney is hired as an equity partner, the firm will have to ensure that the attorney isn’t sharing in fees generated when he or she was in government, from a client matter involving the government.”
• “‘A defined guarantee is often the clearest answer,’ noted D.C.-based Garrison partner Amy Savage, in a prior Law.com interview. ‘There are some firms that will back out of the portion of the profits they are barred from receiving, but that’s a much more complicated structure, and so in my experience, at least, the guarantees have largely helped to address that issue.'”
  Lateral Moves”
• “The ethics restrictions are also factors for when government lawyers move to firms. For instance, a job search can impact when or if a recusal is triggered for a government attorney from a case they may be working or overseeing at their agency.”
• “Mayer Brown is far from the only firm hiring lawyers from agencies they are litigating against.”
• “For such situations, it’s become common for a government lateral’s new law firm to establish an ethical screen—which prevents lawyers with conflicts of interest from sharing confidential information with others—particularly to separate that attorney from cases the firm may be handling before their old agency.”
• “However, these ethical screens can come up later in the courtroom.”
• “The efficacy of a screen could be challenged ‘in litigation, where a judge will rule whether or not it’s proper or improper for the lawyer or law firm to participate. I’ve heard some of that, and I think that’s much more common than bar prosecutions,’ said Michael Frisch, ethics counsel at Georgetown University Law Center.”
• “In some cases, an opposing counsel can try to get a law firm or attorney thrown off from a case, arguing there is a conflict of interest, noted Gerzhoy, of HWG.”
• “Despite law firms having to address all the restrictions, it’s unusual to see firms or attorneys face disciplinary action for violating these ethics rules, legal experts say. Part of it may be that violations can be ‘very difficult to prove,’ Frisch said.”

US Office of Government Ethics just published: “Incoming Employees and Ongoing Interests in Representational Services: Common 18 U.S.C §§ 203 and 205(a)(1) Issues and Solutions” —

• “The U.S. Office of Government Ethics (OGE) is issuing this Legal Advisory to provide guidance for incoming employees to the executive branch who may receive compensation for certain representational services provided prior to or during their Government service. “
• “The potential for such problematic payments arises most commonly for individuals who are leaving law firms to accept executive branch employment, and particularly for those who will receive a partnership share based on the firm’s profits for the entire year, including the period when the individual is in Government service. “
• “This Advisory provides an overview of the elements of 18 U.S.C. § 203 followed by a review of commonly problematic payments under the statute and typical methods used to resolve these issues. The Advisory then provides an overview of the elements of 18 U.S.C. § 205(a)(1), identifies problematic payments, and offers solutions. Finally, attached to the Advisory are three job aids to assist in screening incoming employees for potential issues under these statutes; distinguishing the timing elements of the statutes; and identifying common problematic payments and solutions under 18 U.S.C. § 203.”
• “Example 1: An incoming employee to the Federal Government, Alex, is an equity partner in a law firm who is entitled to a certain percentage of the firm’s overall annual profits (partnership share). The law firm engages in representational services and is compensated for those services. The law firm calculates and pays partnership share income each year in January based on profits for the preceding calendar year. Alex plans to leave their law firm on June 30 and begin Government service on July 1. The law firm’s standard method of calculating partnership share income would raise 18 U.S.C. § 203 concerns because the calculation would include profits from representational services performed during the six-month period after Alex left the firm and began Government service, from July 1 to December 31.”
• “Example 3: Same facts as Example 1 involving Alex, an equity partner. In recognition of the fact that Alex will only work half of the year at the law firm, the law firm offers to calculate Alex’s standard partnership share at the end of the year using the profits for the full year, but discount it by 50% to reflect that they only worked at the firm for half the year. The firm’s discount of the partnership share income by 50% does not resolve the 18 U.S.C. § 203 issues because the pool from which Alex’s partnership share is calculated will include profits from representational services made for the entire year, including the period while Alex is a Government employee. “
• “Example 6: An incoming employee to the Federal Government, Casey, is an attorney on a pending case involving representational services.28 Casey’s law firm agreed to accept the case on a contingency fee basis, so the law firm and the attorneys on the case will receive payment from the client only if they are successful in the matter. The case is ongoing when Casey begins Government service. To avoid issues under 18 U.S.C. § 203, the law firm agrees to pay Casey based on the hours Casey worked on the case instead of the contingency fee. Because Casey’s interest in the case has been reduced to a sum certain and is no longer contingent on the outcome of the case, this arrangement resolves the 18 U.S.C. § 203 issues.”

“Treasure Hunter Urges Atty DQ In Fla. Shipwreck Suit” —

• “A member of an ocean salvage company urged a Florida federal court Wednesday to disqualify counsel applying to represent his opponent in a lawsuit over a claim to a Spanish galleon’s sunken treasure, saying the attorney previously represented the company in a separate dispute involving the same wreckage.”
• “Maritime Research & Recovery LLC member Daniel Porter brought a motion opposing the application of attorney David Concannon of Concannon & Charles PC to represent Carl Allen and Allen Exploration LLC, or AEX, in the U.S. District Court for the Southern District of Florida, claiming that he formerly represented MMR in a separate but similar dispute with another party over the wreckage of the Nuestra Señora de las Maravillas located in Bahamian territorial waters.”
• “‘Attorney Concannon is conflicted in this matter and thus disqualifiable according to the rules regulating the Florida Bar,’ the plaintiff’s motion stated. ‘Granting of pro hac vice status is not a right, it is qualified by the attorney seeking such admission to agree to follow all local rules. Attorney Concannon, before his motion was ripe, has failed in this regard.'”
• “In his complaint, Porter said he entered into a contract with the defendants to ‘educate, advise and implement’ an operation to salvage the sunken treasure on the Maravillas. In the contract, the parties agreed that they’d give a portion of all artifacts to the Bahamian government as a condition of Allen receiving a recovery permit and that the plaintiffs would receive 30% of the rest based on their efforts in the operation, according to the suit.”
• “The plaintiffs alleged in their suit that Allen and his company utilized their reputation and expertise to obtain a permit but never gave them a cut of the treasure.”
• “The plaintiffs claimed that Concannon was actively advising them in a dispute from another agreement, including providing legal strategies to defend against accusations levied by a person by the name of ‘Dr. E. Lee Spence,’ who said MRR violated the agreement it had between them. The contract between Spence and Porter was to search for debris from the Maravillas.”
• “But the defendants, who are based in Texas, brought a counterclaim against Porter and MRR, saying they never disclosed the prior agreement with Spence.”
• “‘Had they known about Porter and MRR’s contractual relationship with Spence, Mr. Allen and AEX never would have engaged in any discussions with Porter or MRR about the Maravillas or any other shipwreck on the Little Bahamas Banks,’ the counterclaim said.”

“Jones Day Jumps Back Into Trump-Related Litigation for GOP” —

• “Jones Day is edging its way into the legal fight to send Donald Trump back to the White House, even after the powerful Washington firm distanced itself from the former president.”
• “Jones Day lawyers on Monday asked the US Supreme Court to block Pennsylvania from counting certain provisional ballots. It’s one of several cases the firm is handling for the Republican National Committee, the party’s national arm.”
• “The firm was closely aligned with Trump in his first administration, sending partners to key positions in the White House and Justice Department. Its role in the run up to next week’s election shows Jones Day moving back closer into Trump’s orbit, despite opting out of working directly for his campaign this time around.”
• “‘It all comes down to whether the firm wants to accept the risk of reputational harm after reconsidering its earlier position,’ said Stephen Gillers, an NYU Law School professor who studies legal and judicial ethics. ‘It may have decided that any negative effect on its reputation, including in hiring and among some clients, is outweighed by the advantages of gaining the appreciation of a possible future Trump administration.'”
• “Jones Day is not the only law firm servicing the RNC. Dickinson Wright, which also has deep GOP ties, is representing the committee in a Michigan suit to block ballots from overseas voters.”

“Breaking News: Conflict of Interest Bombshell: Judge Invested in Ozy’s Victim Companies” —

• “Ozy Media founder Carlos Watson may not be going to prison after all. The federal judge who presided over his trial for securities and wire fraud conspiracy and identity theft and who scheduled Watson’s sentencing in December, may have to remove himself from the case for an unprecedented appearance of a conflict of interest.”
• “Watson, 55, who was convicted on all three financial fraud counts, faces a maximum sentence of 37 years, with federal sentencing guidelines ranging from 24 to 29 years, according to prosecutors.”
• “Watson’s attorney, Andrew J. Frisch, a former federal prosecutor, in a motion filed in federal court on Friday, made the shocking allegation that Judge Eric R. Komitee had significant investments through hedge funds in all three of Watson’s primary alleged corporate victims – Goldman Sachs, J P Morgan Chase, and Google.”
• “Watson’s motion demands Judge Komitee disqualify himself, vacate the conviction, and dismiss the original indictment against Watson.”
  Jury Conviction and Unreported Financial Conflicts”
• “In July, a Brooklyn jury convicted Watson for conspiring to defraud Goldman Sachs and JP Morgan Chase by falsely claiming Google and Live Nation were his Ozy Media company sponsors.”
• “Through four hedge funds managed by three asset management companies, Judge Komitee had active investments in all four of these Watson’s alleged victim companies, something the judge did not disclose during the trial.”
• “Komitee, one of, if not the wealthiest federal judges in America, has millions invested in hedge funds, which invest in Watson-victims Google, JP Morgan, and Goldman Sachs and other companies.Komitee began investing in the Watson victims’ stock through hedge funds before becoming a judge in 2018, during the time he worked as general counsel for Viking, one of the largest hedge funds in the world.”
• “It was not until after the trial – on October 2, 2024 – when Judge Komitee’s required annual financial disclosure for 2023 became available to the public. This prompted scrutiny into motives for what Watson’s trial attorney, Ronald Sullivan, called the most biased judge and unfair trial he had ever witnessed in more than 30 years of trial practice and decades as a Harvard law professor.”
• “The 2023 financial disclosure reveals that Judge Komitee, through hedge fund accounts worth more than $16 million, had money invested in the companies singled out by the US Attorney for the EDNY as Watson’s primary victims.”

“Conflict or Earned? Judge in Trump Cases Floated as Potential AG Pick” —

• “Donald Trump is considering U.S. District Judge for the Southern District of Florida Aileen Cannon as a nominee for the nation’s top prosecutor, according to numerous reports.”
• “ABC News first reported the former president, currently running for re-election, had named Cannon to a list of potential nominees for Attorney General, if he wins the election on Nov. 5.”
• “The news has sparked debate in the legal community for a number of reasons.On one hand, some say Trump recognized Cannon’s skillset when he appointed her to the bench long before she ever presided over any cases directly involving him. But on the other hand, some court watchers say awarding Cannon the top job would seem like a reward for her adjudication in Trump’s favor.”
• “In July, Cannon ruled that Trump’s federal classified documents trial be dismissed. She found Special Counsel Jack Smith’s ‘appointment violates the Appointments Clause of the United States Constitution.’ Smith is appealing that ruling.Cannon is also presiding over the case against Ryan Wesley Routh, the man accused of trying to assassinate Trump at a golf course in Florida. Court records suggest the judge was randomly selected for that case.”
• “But the question for some lawyers is whether the judge has a conflict—and if the reports of her consideration for a top job under a potential Trump presidency are true.”
• “Miami attorney Etan Mark of Mark Migdal & Hayden has a different take. ‘There’s something icky about a presidential candidate floating a promotion to a federal judge— in front of whom he was being prosecuted—if he succeeds in his reelection campaign,’ Mark said. ‘Presumably, Judge Cannon has the integrity to ignore these flirtations. Otherwise, if the rumors are true, she should recuse herself from any pending cases involving the former President.'”
• “Trump’s team has not publicly commented on the ABC News reports.”

“Interpath chair to step down over Deloitte ‘audit conflict’” —

• “A former chair of one of Britain’s biggest auditors is to step down as chairman of Interpath, the independent advisory firm, because of a potential conflict of interest involving its private equity backer’s choice of auditor.”
• “Sky News has learnt that Interpath, which has been engaged by billionaire Sir Jim Ratcliffe on his cost-cutting campaign since taking a stake in Manchester United Football Club, will announce this week that John Connolly is to leave.”
• “Mr Connolly, who has chaired the company since it was formed in 2021, is to hand the reins to Tamara Box, a former managing partner at the City law firm Reed Smith.”
• “Insiders said this weekend that Mr Connolly was stepping down because of the impending appointment of Deloitte as the global auditor of HIG Europe, Interpath’s private equity backer.”
• “Mr Connolly retired as senior partner and UK chief executive of Deloitte in 2011, but continues to receive a pension from the firm.”
• “One source said that he, Interpath and HIG had agreed that his departure would avoid any potential conflict of interest arising, and that HIG needed Deloitte to be conflict-free.”
• “The move is not without irony, given that Interpath’s formation was triggered by KPMG UK’s disposal of its restructuring arm amid growing obstacles posed by conflicts between large accountants’ audit and consulting operations.”

“Judge Recuses Herself From Antitrust Case Against Top Colleges” —

• “A federal judge has recused herself from a financial aid conspiracy case against 40 private colleges, saying she and her family members are ‘involved with one or more of the university defendants.'”
• “Judge Sharon Johnson Coleman of the US District Court for the Northern District of Illinois on Oct. 18 filed a request for reassignment in the case, which accuses the College Board and 40 private universities of engaging in a scheme tied to financial aid that violates US antitrust law. The case has been reassigned to Judge Sara L. Ellis.”
• “Judge Andrea R. Wood of the US District Court for the Northern District of Illinois recused herself last month from a settled antitrust class action brought by homeowners over realtor commission payments, citing the spouse of a distant relative who is a partner in a law firm representing one of the defendants.”
• “In April, Judge Michael Farbiarz recused himself from the Justice Department’s antitrust suit against Apple Inc. citing a rule barring federal judges from overseeing cases in which their impartiality ‘might reasonably be questioned.'”
• “Federal law requires judges to disqualify themselves from cases when they have a conflict of interest, such as appearance of impartiality, actual bias, or personal knowledge of disputed evidentiary facts.”

“DOJ Seeks Jackson Walker’s Partnership Agreement in Ethics Probe” —

• “Jackson Walker LLP should be forced to hand over its partnership agreement as part of a probe into whether the firm should’ve disclosed a relationship between a bankruptcy judge and one of its attorneys, a Justice Department unit said.”
• “The agreement would reveal whether the Texas firm’s partners could have removed former firm partner Elizabeth Freeman after they learned of her relationship with ex-judge David R. Jones, the Justice Department’s bankruptcy monitor, the US Trustee, told the US Bankruptcy Court for the Southern District of Texas on Monday.”
• “‘Jackson Walker’s Partnership Agreement represents potentially the only contractual basis for what its partners, including Freeman and management, legally bound themselves to do,’ the US Trustee said in a motion to compel.”
• “The request was made as part of the US Trustee’s challenge to as much as $23 million in fees Jackson Walker collected in cases involving Jones while it employed Freeman. The US Trustee has said Jackson Walker should have disclosed the relationship.”
• “The firm said it retroactively reduced Freeman’s compensation by almost $79,000 for 2021 through November 2022—the share of partnership profits from cases she worked on in front of Jones, according to court documents filed Monday.”
• “The partnership agreement could reveal whether Jackson Walker took inadequate steps to remove Freeman from the firm or cases Jones worked on, or if Jackson Walker ‘waited months for Freeman to voluntarily act,’ the US Trustee said.”
• “The agreement would disclose what duties Freeman and firm management had, whether they failed to follow those rules, and whether and how Freeman could have been let go for cause, the motion said.”
• “If Freeman had authority to act on behalf of the whole firm, that could show that her actions should be imputed to all of Jackson Walker, the US Trustee said. The agreement would also allow the US Trustee to determine whether Jackson Walker ‘knowingly continued to accept the financial benefit of cases heard or mediated by Jones,’ the US Trustee said.”
  “Jackson Walker has said the US Trustee should be able to find the answers it seeks in depositions it’s taken.”
• “Attorneys for Jackson Walker didn’t immediately respond to a request for comment Tuesday. The firm has previously said Freeman lied to it about the full extent of her relationship with Jones, and has maintained that it didn’t violate any ethical rules or disclosure obligations.”
• “The US Trustee has said some Jackson Walker employees made efforts to seal documents alleging a relationship and that at least three employees knew about the relationship.”

“Pre-Bankruptcy Texts Deepen Ethical Concerns About Ex-Judge” —

• “Recently revealed texts highlighting a Houston attorney’s apparent interactions with a former bankruptcy judge whom she was dating have added more fuel to the fire amid allegations that their relationship led to improper communications about cases he oversaw.”
• “The texts offer a peek at how Elizabeth Freeman, a partner at Jackson Walker LLP at the time, characterized to her firm colleague her discussions of Chapter 11 cases with David R. Jones, her boyfriend and then-judge for the US Bankruptcy Court for the Southern District of Texas.”
• “And while they don’t necessarily confirm improper, ‘ex parte’ communications, the texts do raise fresh concerns over whether he should’ve recused himself from cases involving Jackson Walker, as well as the ability of distressed corporations and their advisers to hand-pick their bankruptcy judge to secure the outcomes they want.”
• “Freeman’s texts reveal planning over filing JCPenney’s sprawling Chapter 11 case in Jones’ court. On May 12, 2020, three days before the bankruptcy filing of the storied American retailer, Freeman told her Jackson Walker colleague that she had ‘talked to Jones’ and ‘he’s got us,’ according to texts displayed in records viewed by Bloomberg Law.”
• “Freeman told her colleague that there were ‘too many fights’ in the JCPenney case, where Jackson Walker served as local counsel to the company’s lead bankruptcy lawyers at Kirkland & Ellis LLP, and that it couldn’t afford a ‘process hawk,’ referring to Jones’ judicial colleague and friend, Judge Marvin Isgur.”
  Impartial”
• “The texts highlight ongoing questions over how Jones could have been ‘impartial,’ said Judith Fitzgerald, an attorney with Tucker Arensberg PC and a former bankruptcy judge.”
• “‘This type of behind-the-scenes conduct is an embarrassment to, if not an indictment of, a judicial system which promises litigants access to justice and adjudication by fair and impartial judges,’ Fitzgerald said. ‘A courtroom should present a level playing field for the issues raised, not one that pre-handicaps the outcome.'”
• “Bankruptcy rules require attorneys to refrain from communications with the court concerning matters affecting a particular case, said bankruptcy expert Lynn LoPucki, a professor at the University of Florida Levin College of Law and longtime critic of forum shopping. If Freeman talked to Jones about the JCPenney case, she violated the rule, he said.”
• “The texts don’t seem to pass ‘the smell test,’ said Brya Keilson, a Morris James LLP partner and former trial attorney for the Office of the US Trustee. But she cautioned that it’s not clear from the texts whether others also talked to Jones before the case.”
• “‘It’s not obviously: ‘Yes, this is ex parte, this is a conversation between the judge and only one party,’’ Keilson said. ‘But it certainly could be, and that’s never a good position in to be in to be discussing something that could be taken as that.'”
• “Georgetown University law professor Adam J. Levitin said the pre-bankruptcy communications between Freeman and Jones aren’t ex parte communications. There was no bankruptcy filed, so there was no case with parties, he said.”
• “And while the texts seem to counter Jones’ claims that they didn’t discuss their mutual cases, the level of harm isn’t fully clear.”
• “In a court hearing over the US Trustee’s motions to disgorge Jackson Walker’s fees in August, Jones’ attorney, Benjamin I. Finestone of Quinn Emanuel Urquhart & Sullivan LLP, said there were no ex parte communications about the substance of any case Jones was involved in.”
• “But formal labels don’t matter as much as the ethics do, Levitin said. The communications violate the Code of Conduct for United States Judges, which says judges can’t consider communications concerning an ‘impending matter that are made outside the presence of the parties or their lawyers,’ Levitin said.”
• “‘The Freeman texts illustrate that debtors don’t pick judges because of their skill or experience,’ Levitin said. ‘They pick them because they anticipate favorable treatment.'”

For even more, see: “Jackson Walker Lawyer Texts Reveal Anger Over Judge Romance“

“Miami State Court Disqualified Attorney, Co-Counsel Over Conflict of Interest” —

• “A state court in Miami has entered an order disqualifying an attorney and his co-counsel from a litigation matter. The judge found that the attorney’s testimony would ‘inevitably require him to challenge the very contract he drafted’ for the defendant, a former client.”
• In 2019, four years before this litigation, Fetes, which is represented by Jonathan Osborne and Frank A. Florio from Gunster, asked Zarraluqui to assist with revising and finalizing its event contract, working alongside Fetes’ president, JC Miranda, to mark up the document.”
• In April 2023, Zarraluqui began assisting the Knights of Columbus in litigation against Fetes without disclosing his prior work for the defendant. He was actively involved in the Knights of Columbus’ strategy, playing a key role in shaping its claims against Fetes and participating in all aspects of the litigation.”
• The judge, in disqualifying Zarraluqui, wrote that ‘while the plaintiff refused to stipulate that the event contract and related issues are central to both Zarraluqui’s work for Fetes and his current work for the plaintiff, the plaintiff did stipulate that they are an aspect of this litigation.'”
  “But the disqualification’s ruling was not just for Zarraluqui. Since ‘Zarraluqui and the Martinez-Cid Firm could not have worked more closely together’ and ‘Zarraluqui admitted that every decision made by the Martinez-Cid Firm concerning this litigation is made in consultation with him,’ Judge Thomas also disqualified the Martinez-Cid Firm under Florida Bar Rules 4-1.9 and 4-1.10.”
• Jarvis highlighted that Judge Thomas ruled that ‘the fact that attorney Zarraluqui did not have an engagement letter with Fetes does not limit the scope of his representation,’ and ‘the fact that Zarraluqui was not paid by Fetes does not affect their attorney-client relationship.'”

“Not parties in interest: Law firm dodges co-trustees’ malpractice lawsuit” —

• “A malpractice lawsuit brought by co-trustees and personal representatives of a trust and estate against a law firm was properly dismissed where the trust and estate were not real parties in interest, a Michigan Court of Appeals panel has ruled.”
• “‘Because [the law firm] represented only [the co-trustees and personal representatives] in their fiduciary capacities, the trust and the estate cannot assert malpractice against [the law firm],’ the appellate judges wrote.”
• “Richard and Eddie signed an engagement letter with McDonald Hopkins. The agreement, directed to Richard and Eddie in their capacity as trustees, stated the firm would be acting ‘as your legal counsel regarding the estate and trust matters of Robert E. Whitton.'”
• “In the first three years of operating TMX, Richard and Eddie each took more than $1 million in compensation. They did not seek advice from the law firm, instead consulting with TMX’s accountant. They also took 1 percent of the value of the trust as an annual fiduciary fee.”
• “The probate court removed Richard and Eddie as fiduciaries, concluding a breach of fiduciary duty occurred. Richard and Eddie fired McDonald Hopkins and eventually settled with Pfankuch. Richard and Eddie then sued the law firm on behalf of the trust and estate, alleging legal malpractice and breach of fiduciary duty. The law firm moved for summary judgment, arguing that certain claims were time-barred and that the trust and estate did not have standing because it lacked an attorney-client relationship with the firm.”
• “Siding with the law firm, the Oakland Circuit Court granted the motion. Richard and Eddie appealed. The brothers argued that the trial court erred by granting summary disposition based on its conclusion that the estate and trust were not the real parties in interest and lacked standing to bring a legal malpractice claim against the law firm. The appellate judges disagreed.”
• “‘The plain language of MCL 700.3715(1)(w) and MCL 700.7817(1)(w) establishes an attorney hired by a personal representative or trustee represents the personal representative or trustee, and the attorney does not have an attorney-client relationship with the estate or the trust,’ they wrote. “

“McKinsey faces Republican calls for probe into China ‘conflicts’” —

• “Leading Republican lawmakers have called for a US justice department investigation into whether McKinsey violated federal law by failing to disclose potential conflicts of interest between its work in China and for the Pentagon.”
• “In a letter to US attorney-general Merrick Garland, seen by the Financial Times, the head of the House select committee on the Chinese Communist party and two US senators said McKinsey appeared to have breached government contracting rules and misled Congress.”
• “The demand for an investigation raises political pressure on the consulting firm, whose extensive work for the US military has been in the crosshairs of Republican lawmakers who argue that McKinsey’s simultaneous work in China represents a risk to US national security, something the firm denies.”
• “It also adds to challenges facing the consulting group that range from the fallout from its work for opioid producer Purdue Pharma, which has led to a criminal investigation by the Department of Justice and hundreds of millions of dollars of legal settlements, to a slowdown in the consulting sector that has left it looking to ease out its least productive staff.”
• “McKinsey has won almost half a billion dollars of business from the US Department of Defense since 2008, according to public disclosures. Procurement laws and the details of specific contracts require it to disclose potential conflicts of interest.”
• “The lawmakers said McKinsey’s work for Chinese state-owned enterprises including China Communications Construction Company — which has been blacklisted by the US Department of Commerce for helping Beijing build military bases in the South China Sea — represented at least a potential conflict of interest that should have been disclosed, along with details of how McKinsey mitigated any conflict. They said this was also the case with work for the Chinese central government that McKinsey had revealed in unrelated US legal filings.”
• “McKinsey declined to comment. It has previously said that its policies on disclosing organisational conflicts of interest adhere to federal laws.”

Excellent piece from Matthew Henderson at Hinshaw: “Law Firm Best Practices to Mitigate the Increasing Risk of Attorney Disqualification Motions” —

• “It seems as though every day, there is a story in the legal news about a well-known law firm facing a disqualification motion. While disqualification motions are being filed more frequently, that is only half the story.”
• “Such motions are often filed under seal, either by counsel seeking to avoid publicity or clients who do not want to air their dirty laundry (such as employment discrimination claims, white-collar criminal matters, etc.) in a public forum. Additionally, law firms may quietly withdraw when initially faced with a well-grounded disqualification motion.”
• “When a lateral partner moves to a competitor, there is a risk that the partner’s former clients, who may become adverse to the new firm, may file disqualification motions. However, the risk may not be realized unless the new client engages in litigation with the lateral partner’s prior client, possibly months or years later.”
• “The risk of disqualification motions can be considerable for clients engaged in high-stakes litigation. This includes losing their counsel of choice, who are familiar with the case, and having to retain successor attorneys to get up to speed in a complex matter.”
• “Disqualification can likewise lead to a claim for legal malpractice or breach of fiduciary duty, as illustrated in the April 2022 decision of RevoLaze LLC v. Dentons in the Eighth Appellate District of the Ohio Court of Appeals[2]. In the Dentons case, the law firm’s primary sin was allegedly not telling the client about the risk of disqualification early in the attorney-client relationship.”
• “From a risk management perspective, even when a law firm concludes that a conflict does not exist, it should consider disclosing any issue to the client, which could potentially trigger a disqualification motion. It should also explain that while the firm does not believe a conflict exists, the firm wants the client to be aware of the issue and offer to discuss any questions or concerns the client may have. That step prevents the client from later claiming that had it known of a conflict, it would have made a different decision.”
• “To reduce the risk of disqualification motions, some law firms proactively include advance conflict waivers in their engagement letters. Such waivers are more likely to be effective when working with a sophisticated client.”
• “Another risk management best practice is to identify and analyze potential conflicts of interest at the onset of the attorney-client relationship. This is often a labor-intensive process but a valuable risk mitigation measure. It involves reviewing attorney time records and interviewing lawyers to determine the scope of the prior representation and what confidential information the attorneys and law firm may possess.”
• “Given that concurrent and former conflicts of interest are imputed to entire law firms, it is also prudent to have robust screening protocols to ensure that lawyers with potential conflicts cannot access confidential client information on a law firm’s server. Disqualification may be avoided where a law firm can demonstrate that it promptly and carefully screened allegedly conflicted counsel.”
• “However, states take different approaches to lateral attorney conflicts, so law firms must be familiar with the imputation rule in the particular jurisdiction in which the lateral practices.”

“From Roadblock to Opportunity: Rethinking Client Conflict Processes in Lateral Partner Recruiting” —

• “After a robust search, the Am Law 200 firm zeroed in on a perfect lateral partner candidate—a respected litigator with a substantial client base. Over the next several weeks, interviews commenced, questionnaires were completed, and both the firm and the partner were confident that they had found the right fit. But as they approached the finish line, a problem emerged: a conflict with one of the incoming partner’s key clients. What had seemed like a done deal suddenly became complicated.”
• “This sort of scenario is common in law firms today. In my experience as a legal recruiter, client conflict issues, often discovered at the ‘eleventh hour’ of a search, too often complicate, if not completely derail, the hiring process of a lateral partner. There is obviously no way to avoid these issues altogether, but law firms can and should take proactive steps, such as tackling conflicts earlier and more thoroughly during the recruiting process, to address these challenges and realize the potential of their promising new hire.”
• “No matter how diligently a firm and a candidate approach the issue, conflicts can present a significant hurdle in lateral partner recruitment. However, when potential conflicts are left largely unaddressed until the end stages of a search, it compounds the problem.”
• “Indeed, the late identification of conflicts adds considerable stress and work to an already demanding hiring process for both lateral candidates and law firms. Moreover, in some cases, despite early identification of a potentially problematic conflict, the parties move forward with the vetting process on the assumption that they’ll be able to resolve the issue later. This often results in (i) a last minute implosion of the hiring process because the conflict cannot be resolved to the satisfaction of the potential new partner or (ii) a conflict within the firm when the time arrives to actually resolve the issue, hampering the new partner’s ability to bring work in from a key client, thereby undermining the lateral partner’s bottom line and the firm’s business case for the lateral hire.”
• “Another complication with conflicts in recruiting is the wide variation in how law firms approach conflict policies. Some firms take a broad view of conflicts, erring on the side of caution and potentially limiting opportunities for new lateral hires. These firms may prioritize existing client relationships and partner preferences, even when creative solutions could resolve perceived conflicts. On the other hand, some firms adopt a narrower interpretation, actively seeking ways to navigate conflicts through client waivers, ethical walls, or other mechanisms. This disparity in approach can significantly impact a lateral partner’s ability to transition their practice successfully and highlights the need for clear communication about conflict policies early in the recruitment process.”
• “The handling of client conflicts in lateral partner recruitment often reveals deeper cultural and strategic issues within law firms. Two key challenges stand out: the collaboration disconnect and the misalignment between recruitment messaging and business operations.”
• “In an ideal scenario, the relationship partner for the existing client would work cooperatively with the new partner to find a solution, such as obtaining a conflict waiver. Unfortunately, this is not always the way it works out. Some partners may be reluctant to approach their long-standing clients about waivers, fearing it might jeopardize the relationship or impact their ‘credit,’ which could impact compensation.”
• “Another client conflict challenge arises when there is a disconnect between a firm’s recruiting efforts and its business operations. This misalignment, stemming from a lack of early coordination between the recruitment team and key operational stakeholders, leads to conflicts being addressed too late or with insufficient urgency. This, in turn, often results in unfulfilled expectations about conflict resolution that can derail the hiring process at the offer stage or cause problems at the early new hire phase.”
• “To effectively navigate the complexities of client conflicts in lateral partner recruitment, law firms should consider implementing the following strategies: Early Conflict Identification… Initiating preliminary conflict checks early in the recruitment process with a lateral candidate… standardizing the conflict check procedure across law firms. The legal industry could benefit greatly from developing and implementing a universally accepted form specifically for conflict disclosure.”

“The Ethics of Freelance Lawyering, Part 2: Conflicts of Interest and Duty to Preserve Client Confidences” —

• “If a freelance attorney temporarily works on a matter, that firm’s client is the temporary attorney’s client for purposes of conflicts of interest. Because temporary attorneys often work for multiple firms simultaneously, it is crucial that both the temporary attorney and the firm routinely monitor conflicts.”
• “Every freelance attorney is required to maintain accurate records of their actual conflicts so they can properly clear conflicts for every new matter. COPRAC 1992-126 states, ‘To facilitate identification of conflicts, the contract attorney should maintain a personal record of clients and firms for whom he/she has worked, in addition to a general description of the work performed for the clients. The firm engaging a contract attorney has the most direct obligation to maintain an accurate record of the contract attorney’s work for each of its clients and to monitor for conflicts on a routine basis.'”
• “COPRAC Opinion 1992-126 indicates potential for a conflict if the attorney had a ‘substantial relationship’ and obtained ‘confidential’ information during the course of his or her representation of that client. While temporary attorneys typically do not obtain confidential client information to amount to a “substantial relationship,” all attorneys must take care to avoid engagements adverse to a current or former client’s interests, especially if a prior relationship presumes knowledge of that client’s confidential information.”
• “A better rule is simply for freelance attorneys to maintain accurate records of matters and clients, and to take care to avoid working on any other matter adverse to current and former clients.”
• “Firms and freelance attorneys must take special care to avoid imputed conflicts of interest, which create an obligation to clear all conflicts, including those beyond the freelance attorney’s assignments with the firm. The key question is whether the law firm’s conflicts are imputed to the temporary attorney, and vice versa.”
• “The answer generally depends on the closeness of the relationship, and under ABA Formal Opinion No. 88-356, whether the temporary attorney is “deemed associated” with the firm such that knowledge of and access to the firm’s clients’ confidential information is presumed. If the attorney is ‘deemed associated” with the firm, then the firm’s conflicts are imputed to the temporary attorney and vice versa.'”
• “A lawyer who is ‘of counsel’ at a law firm must pay special attention to the ethical implications that the ‘of counsel’ designation creates—specifically with respect to imputed conflicts. Unlike the case-specific conflict analysis for an independent contractor, an ‘of counsel’ lawyer in California is deemed part of the law firm for conflict purposes.”
• “Under this single de facto firm analysis, current and former clients of every firm lawyer and the ‘of counsel’ attorney become relevant to all the lawyers’ respective ethical obligations and potential disqualifications. Therefore, when accepting new projects from other law firms, a lawyer who has an ‘counsel’ relationship with Firm A must run each new matter for Firm B through Firm A’s conflict system. Many freelance lawyers avoid the ‘of counsel’ designation in order to avoid imputed conflicts.”
• “When a law firm hires a freelance attorney, it may need to disclose a client’s confidential information for the freelance attorney to adequately assist with the matter. The freelance attorney bears the burden of non-disclosure regarding secrets learned during her involvement with the representation, while the law firm has the obligation to screen the freelance attorney from client secrets unrelated or unnecessary to a particular project.”

“Nixon Peabody sues law firm for allegedly luring away its clients without cut of contingency fee” —

• “Nixon Peabody has filed a lawsuit alleging that its clients were improperly lured away by personal injury law firm Shaheen & Gordon through use of ‘scare tactics’ and false promises.”
• “The two firms allege that Shaheen & Gordon ‘improperly enticed’ their clients to switch firms before submitting their claims to a settlement fund, according to Law.com. The clients were survivors of abuse at the Sununu Youth Services Center.”
• “Thirty-five clients jumped to Shaheen & Gordon between February 2023 and June, the suit says.”
• “Nixon Peabody and Rilee & Associates say they spent thousands of hours representing victims and setting up a settlement fund with state legislators. Their original fee agreement called for attorney fees amounting to 40% of gross recoveries along with costs. The two firms say they have been cut out of Shaheen & Gordon’s client recoveries.”
• “Shaheen & Gordon allegedly told survivors that the firm could obtain the highest damages award to which they are entitled by submitting their claims to the settlement fund, according to Law.com’s description of the suit allegations. That is not necessarily the case, the suit says.”
• “Shaheen & Gordon gave this statement to the ABA Journal: ‘Shaheen & Gordon has reviewed the complaint and denies the allegations. Clients are not the property of their lawyers, and they are free to hire counsel of their own choosing. Shaheen & Gordon has attempted to cooperate with Nixon Peabody but has not received any specific demands or proposals. We are truly surprised by this lawsuit and do not intend to litigate it in the press.'”