Bressler Risk Blog

“Norton Rose Lawyers Accused of Accessing Confidential Material in Internal IT Probe” —

• “Over 20 associates and trainees at Norton Rose Fulbright’s South Africa offices had unauthorized access to confidential information, including sensitive documents and personal email exchanges between directors, according to sources familiar with an internal probe.”
• “In a statement shared with Law.com International, Norton Rose South Africa CEO Brent Botha confirmed that some of the employees accessed information about internal affairs but the matter has since been resolved. No client information was compromised, he said.”
• “According to sources, the management team held a brief meeting with a group of junior lawyers at the firm on October 28, where it gave those implicated in the IT probe until midday on November 1 to disclose the amount of information they accessed, the frequency of access and what they did with the information.”
• “‘There can be no excuse for reading something pertinently marked as confidential and which was not addressed to you,’ one of the firm leaders said during the meeting.”
• “The October 28 meeting was followed by a letter, seen by Law.com International, that came from the firm’s CEO and officially notified those implicated in the investigation of the window period for confession. ‘An internal investigation has confirmed that some associates and candidate attorneys indeed accessed information and directors’ non-matter folders over a projected period of time. We have an extensive list of who accessed what,’ the letter said.”
• “But some of the lawyers, who spoke on condition that they not be named, blamed the breach on the inadequacies of iManage, the document and email management platform for legal professionals acquired by the firm over two decades ago.”
• “Norton Rose bought a license for iManage’s full product suite in the early 2000s after it switched from rival software Hummingbird, citing the need for a robust system architecture and collaboration functionality.”
• “FileSite, a major collaborative function of the iManage package, gives staff access to their colleagues’ emails and folders—except when a digital lock is activated, according to Norton Rose employees. Some of the directors and other lawyers who are not tech-savvy do not usually activate the necessary privacy measures, they added.”
• “iManage declined to comment for this story.”

“Attys For Solar Co. Ex-CEO Should Be DQ’d, Plaintiffs Say” —

• “The lawyers representing the former CEO of a bankrupt solar energy company should be disqualified, attorneys for the plaintiffs in a suit against him said Wednesday, arguing that the firm had multiple conflicts of interest with its work as in-house counsel for the solar energy company and was intentionally delaying discovery because of its ‘obvious web of conflicting obligations.'”
• “New York-based business firm DarrowEverett LLP should not be able to represent Jayson Waller — founding CEO of Power Home Solar, now operating as Pink Energy —in a case related to claims that he defrauded customers by selling faulty solar systems, counsel for Michigan residents told a Michigan federal court Wednesday, because the firm’s ability to represent Waller is ‘severely undermined’ by its ties to Power Home Solar and its current bankruptcy proceedings.”
• “‘DE’s (faulty) interpretation of its obligations to the trustee has prevented it from assisting Waller in complying with his discovery obligations — to plaintiffs’ detriment,’ plaintiffs’ counsel said in a motion to disqualify.”
• “According to the motion, Waller’s counsel, led by DarrowEverett attorney David Sullivan, have been intentionally delaying discovery because of the firm’s complicated history with Power Home Solar, which is being accused of racketeering and wire fraud. The chairman of DarrowEverett, Zachary Darrow, was named chief legal officer to Power Home Solar in June 2021, according to the motion, and the firm represented the energy company in various arbitrations and litigations even predating that role.”
• “‘At minimum, that makes those lawyers, and likely the firm itself, key witnesses,’ the motion said. ‘But Darrow’s ‘direction’ of [Power Home Solar], potentially renders him an unnamed member of the RICO organization.'”
• “The suit, filed by Michigan residents Aaron Hall, Katherine Glod and Jeffrey Binder in November 2022, claims Pink Energy used aggressive and misleading sales tactics to sell them overpriced solar panel systems that either didn’t work or fell far short of the promised energy-saving benefit.”
• “Darrow was one of only four ‘C’-level executives listed on Power Home Solar’s website, according to the motion, and documents produced by other defendants in the case showed that Darrow was ‘responsible for leading all of Pink Energy’s legal and regulatory strategies, along with providing executive level oversight and enhancement of the company’s compliance and enterprise risk management programs.’ This meant, according to the motion, that he also had a direct role in the company’s marketing and advertising campaigns, which are alleged by class members to be fraudulent.”
• “The firm’s conflict deepened even further when, in addition to representing Waller, it also agreed to represent two nonparty witnesses who were being deposed in the case, former Trivest partner Dale Stohr, as well as his company MGG Investment Group LP, and Kevin Klink, a former PHS employee who is identified in Waller’s interrogatory responses as being in charge of PHS’ advertising campaigns.”
• “The firm’s representation of these witnesses is adverse with its representation of Waller, plaintiffs’ counsel say, because Waller has asserted in discovery that someone else other than him were responsible for Pink Energy’s marketing materials, which plaintiffs say is a direct contradiction of sworn testimony.”
• “‘Regardless, fraudulent advertisements are an essential aspect of the predicate acts of wire fraud at the heart of this case,’ the motion said. ‘Pointing the finger at other entities which either (1) are [DarwinEverett]; or (2) are owed duties by [DarrowEverett] complicates things yet further, requiring [DarrowEverett] to choose between loyalty to Waller on the one hand, and the trustee, Klink, their boss, and their law firm on the other.'”
• “DarrowEverett attorneys have filed a number of motions and requests for sanctions against plaintiffs’ counsel, all in an effort to stall discovery, the motion claims. Initially, the firm helped Waller file a motion for judgment on the case that challenged the facts of the suit and the state’s jurisdiction, which plaintiffs said were ‘made without any support and in direct contradiction of the truth.'”
• “Plaintiffs’ counsel claim that DarrowEverett is advising Waller against his better interests with all this stalling, and is instead protecting its own neck in regard to both Darrow and the firm’s involvement in the alleged fraudulent activity and, now, its representation of other witnesses. “
• “‘The delay, stonewalling, mudslinging, and disregard for the court’s directives in this case all share a common origin: DE’s conflicts of interest,’ the motion said. ‘As a result, there is only one way to remedy those ailments. DarrowEverett should be disqualified.'”

“Protecting law firm data and reputation: A guide to cybercrime mitigation” —

• “Whether it is identifying ransomware, phishing schemes, and data breach threats, or rolling out robust cybersecurity measures, comprehensive risk management strategies, tabletop exercises, and heightened internal awareness campaigns, the goal is to arm you to protect your reputation and data, and most importantly, your clients.”
• “Law firms and their clients are facing an unprecedented rise in cybercrime, with 2024 being the biggest year yet for cybersecurity incidents. The American Lawyer and Bloomberg Law report that at least 21 law firms filed data breach reports to state attorneys general offices in the first five months of 2024, preceded by 28 law firm breach reports in 2023, and 32 in 2022 According to one survey, more than half of law firm respondents who experienced a security breach lost confidential client data — among the worst things that can happen to a law firm.”
• “To a cybercriminal, law firms are a treasure-trove of sensitive and confidential information, including IP, internal personnel and financial records, and business, financial, and personal client information. Cyberattacks have exposed vulnerabilities within law firms, leading to significant financial losses, reputational damage, and legal repercussions. Law firms have been subject to class-action lawsuits and have unknowingly contributed to insider trading that has cost companies millions of dollars—all because of cyberattacks.”
• “In a recent review of ransomware attacks:
  • 12 percent of attacks on law firms resulted in a lawsuit.
  • Of those, when you include the 25 percent of matters that were settled out of court, the law firm lost every time.”
  • Only 26 percent of law firms believe their firm is ‘very prepared’ to respond to cyber incidents.”
  • In one survey, 39 percent of law firm respondents reported awareness of a security breach in the last year, and56 percent lost confidential client data. Sixty percent identified the sophistication level of the attacks as the biggest challenge in reducing risk.
  • Law firms face an average ransom demand of $2.5 million, globally.”
• “While all cyberattacks are concerning, once you have reason to believe your law firm has been targeted, it’s important to differentiate between a cyber incident and a cyber breach. The consequences and necessary responses can vary significantly.”
• “Cyber incident (no data captured): A cyber incident refers to an event where a law firm’s security systems are compromised, but no sensitive data is captured or accessed by unauthorized parties. Examples include a successful denial-of-service (DoS) attack that temporarily disrupts operations or an attempted phishing attack that is caught by the firm’s security measures.”
• “While these incidents may not result in the direct loss of data. they still expose vulnerabilities that need to be addressed to prevent future breaches.”
• “Cyber breach (data compromised): A cyber breach, on the other hand, involves unauthorized access to sensitive or confidential information. This is the scenario that law firm IT departments fear the most. A breach can expose critical client data, such as Social Security numbers, financial records, HIPAA-protected personal information, or intellectual property.”
• “The legal, financial, and reputational fallout from a breach can be catastrophic, often requiring significant resources to manage the aftermath and restore trust with clients and stakeholders.”

“Expanding risks drive lawyers liability claims” —

• “The market for lawyers professional liability insurance remains stable, with rate increases mainly in the single digits and ample capacity available, but claims are rising, and law firms’ exposures are changing.”
• “As the corporate transactions on which large law firms provide legal services expand, lawyers’ liability exposures for issues such as conflict of interest and clerical errors are growing, experts say.”
• “Also, firms of all sizes are grappling with how to reap the benefits of generative artificial intelligence without jeopardizing client confidentiality.”
• “Law firms are facing increasingly large malpractice claims, said Eileen Garczynski, McLean, Virginia-based equity partner and senior vice president at Ames & Gough.”
• “According to the specialty brokerage’s most recent claims survey of major lawyers professional liability insurers, about 10 settlements of over $100 million occurred between 2020 and 2024.”
• “Conflict of interest was the most frequent cause of malpractice claims, followed by scrivener or clerical error claims.”
• “In one high-profile conflict of interest case, Dentons was hit with a $32.3 million verdict in Revolaze LLC v. Dentons US LLP, a patent case in which it represented the patent owner and another office of the firm had legal relationships with one of the alleged patent violators. An appeals court upheld the verdict in 2022.”
• “In the 14 years that Ames & Gough has conducted its survey, claims have closely tracked developments in the general economy, usually rising a couple of years later, Ms. Garczynski said. For example, claims of alleged malpractice related to tax advice rose in the years following significant tax code changes. In recent years, claims related to immigration law have grown in number.”
• “Looking ahead, the recent growth in cyberattacks could lead to malpractice claims related to client data, though increasingly lawyers professional liability insurers are inserting cyber exclusions in policies, Ms. Garczynski said.”
• “Medium-sized and large law firms are seeing more large malpractice claims as mergers and acquisitions and other transactions grow, and they are hitting high excess coverage layers, said Noreen Calisto, New York-based associate director, professional services practice, at Willis Towers Watson PLC.”
• “‘Law firms are doing more big transactions, and they’re so big, even a small error could result in significant exposure,’ she said.”
• “‘Some clients might ask for the firm to use AI because it could be a cost-cutting measure for searching documents and things like that, but they’re very careful when using it and in putting parameters around how their lawyers can access AI tools,’ said Maggie O’Donnell, Chicago-based chief client officer for professional services at Aon PLC.”
• “The market for lawyers professional liability insurance is largely stable, experts say. ‘There’s plenty of capacity in the market right now. Currently, there might be as much as $680 million of capacity for U.S. law firms to access,’ Ms. O’Donnell said.”
• “But with claims rising, underwriters are closely managing their capacity, she said. ‘As the deals firms work on get bigger, they may look to buy more capacity, but the markets are very careful about the capacity that they put out,’ Ms. O’Donnell said.”
• “‘Pricing has been moving up steadily, not double-digits but single-digits,’ since 2021, she said. And that trend will likely continue through year-end, she said.”

“GRSM50 Won’t Be Disqualified In Detroit Hotel Firing Suit” —

• “A Michigan federal judge has refused to disqualify Gordon Rees Scully Mansukhani LLP from representing an upscale Detroit hotel in a retaliation suit filed by three fired employees, but flagged the firm for being ‘negligent’ in its handling of discovery in the case.”
• “In an opinion Thursday, U.S. District Judge Linda V. Parker ruled that plaintiffs Maria Victoria Ferrer, Charles Lisée and Miya Shani Hooks can amend claims in their complaint, but rejected the bid to disqualify Gordon Rees as defense counsel. However, the judge ordered the firm’s client, The Detroit Club, to pay attorney fees the plaintiffs incurred in connection with its sanctions bid and in preparing summary judgment filings.”
• “‘This court cannot conclude that defendants engaged in ‘contumacious conduct,” Judge Parker said. However, certain ‘discovery violations appear to have been willful, at least on the part of defendants as opposed to their counsel,’ the judge said.”
• “Documents uncovered during discovery ‘reflect that defendants were aware of previous complaints of racism brought by Detroit Club employees, workers, and patrons,’ despite the club’s prior denial ‘that anything of the sort had ever occurred’ and its failure ‘to disclose electronic communications discussing these matters,’ the opinion said.”
• “‘Counsel, on the other hand, seems to have been simply negligent in overseeing defendants’ responses to plaintiffs’ discovery requests — for example, not providing sufficient guidance to defendants to locate relevant electronic documents responsive to plaintiffs’ discovery,’ the opinion said. ‘More importantly, however, there is no evidence to suggest that counsel was more involved.'”
• “The workers who filed the suit weren’t ‘significantly prejudiced’ by the discovery conduct, the judge said, and have now obtained the documents at issue, including ones the trio contend show that the club’s managers lied during depositions.”
• “‘To the extent the now-obtained discovery shows that a witness testified untruthfully at his or her deposition, the ability to present that falsehood to a jury to impeach the witness is a far more powerful weapon than most of the sanctions this court would be inclined to impose,’ Judge Parker said.”
• “The judge said she was not convinced that Gordon Rees should be booted as defense counsel, citing case law in saying that ‘disqualification is an extreme sanction reserved for ‘when there is a reasonable possibility that some specifically identifiable impropriety actually occurred.””
• “In this case, it isn’t clear whether ‘the failure to disclose the documents at issue was due to inadequate search terms, as opposed to defendants’ unwillingness to produce what was found,’ the opinion said.”

“Law Firm Hack Compromises Health System’s Patient Data” —

• “A hacking incident at Thompson Coburn, a Missouri-based national law firm that specializes in data breach law and other types of legal cases, has been breached itself. The law firm says the data breach affected an unspecified number of patients of a healthcare sector client, Presbyterian Healthcare Services in New Mexico, which has now suffered at least four breaches in five years.”
• “But two big unanswered questions is whether other Thompson Coburn clients were affected, or if all 305,088 individuals that the law firm reported to regulators on Nov. 4 as impacted are PHS patients.*”
• “Thompson Coburn, in a breach notice posted on Presbyterian Healthcare Services’ website, said the incident was first detected on May 29 when the law firm became aware of suspicious activity within its network. Presbyterian Healthcare Services operates more than 100 physician and specialty clinics and nine full-service hospitals across New Mexico. The group also offers individual, family, Medicare Advantage and state Medicaid health plans.”
• “Thompson Coburn said an unauthorized actor stole some files between May 28 and May 29. ‘A detailed review of the affected files was undertaken and through that review, we determined that certain protected health information related to certain patients of PHS was contained within those files,’ the law firm said.”
• “Thompson Coburn said so far there is no indication of identity theft or fraud stemming from the breach. ‘Upon becoming aware of this incident, Thompson Coburn promptly took steps to investigate the incident and implemented additional security enhancements to further protect against similar incidents,’ the notice said.”
• “So far, Thompson Coburn – which offers a long list of legal services, including data breach litigation in an array of industries besides healthcare – has not publicly disclosed whether other clients’ information was also potentially compromised in the incident. But some experts not involved in the Thompson Coburn hack suspect that could be the case.”
• “‘If the threat actor was inside their network, as it appears was the case here, it is certainly possible and perhaps even likely that they gained access to data of other Thompson Coburn clients,’ said Jon Moore, chief risk officer at privacy and consulting firm Clearwater. ‘At a minimum, a forensic analysis will be required and even that might not be able to determine with certainty what files or data the threat actor accessed.'”
• “In the meantime, there are a few reasons why this incident might not yet have resulted in additional breach notifications, Moore said. ‘For example, the primary responsibility for notification of individuals whose electronic PHI is breached resides with the covered entity. A business associate who suffers a breach of ePHI is typically only required to notify the covered entity whose information was impacted,’ he said.”
• “Another possibility is that Thompson Coburn is still working through the investigation of the incident to determine what other clients and individuals may have been impacted, Moore added.”
• “Of course, Thompson Coburn is not the only law firm to experience a data breach that results in a compromise of protected health information belonging to healthcare clients’ patients.”

New York: “Judicial Ethics Opinion 24-57” —

• “A judge may invite attorneys to his/her wedding, provided that the attorneys are not on trial before the judge at the time of the event. The judge may also invite members of law enforcement to the wedding. For two years after the wedding, the judge must disclose when a wedding guest appears in the judge’s court.”

“No Ruling On Zeta DQ Bid After Second Marathon Hearing” —

• “A Houston judge declined Wednesday [9/25] to decide whether to disqualify Transocean’s counsel from Hurricane Zeta litigation following the second hearing on a former Arnold & Itkin LLP law clerk-turned-defense-lawyer’s work with the plaintiffs’ firm, indicating she needed time to figure out when the parties reasonably should have learned of the potential conflict of interest.”
• “Across two hearings this month spanning more than 12 hours, Transocean counsel from Ahmad Zavitsanos & Mensing PLLC and plaintiffs’ counsel from Arnold & Itkin presented differing views of the work that Karina Sanchez-Peralta of Ahmad Zavitsanos performed during a brief stint as a law clerk for Arnold & Itkin in late 2022.”
• “Harris County District Judge Rabeea Sultan Collier said at the end of Wednesday’s proceeding that one of the key questions she has been presented is at what point a conflict waiver should have been sought after Ahmad Zavitsanos added Sanchez-Peralta to the multidistrict litigation in March.”
• “Central to Arnold & Itkin’s disqualification bid is a memo Sanchez-Peralta created at the direction of Arnold & Itkin attorney Roland Christensen, who testified at length Wednesday. The memo, which is not publicly available, is connected to Dr. Henry Small, an orthopedic surgeon who treated some Zeta plaintiffs, though the two firms have presented different versions of what Sanchez-Peralta’s work entailed beyond those facts.”
• “Christensen testified Wednesday that he was contacted by Small in September 2022 for legal advice concerning a Texas Medical Board complaint filed against him, which was not publicly available.”
• “The firm has taken the position that Small’s conversation with Christensen created an attorney-client relationship that extended to Sanchez-Peralta when she worked on the memo, though whether the firm raised that argument adequately in its first disqualification motion has been contested by Ahmad Zavitsanos and questioned by Judge Collier.”
• “‘Before sharing any of the information with me that was confidential, I agreed to provide him [Small] legal services,’ Christensen said. ‘After that, I emailed Sanchez and asked her to come talk with me about the representation and gave her an assignment.'”
  “Christensen testified that Sanchez-Peralta performed legal work and represented Small ‘just like I did,’ adding that he told her Small’s name and other details about the complaint.”
• “But Sanchez-Peralta testified earlier this month that her assignment was ‘a copy-paste memo’ based on publicly available Texas Medical Board documents and complaint processes.”
• “Arnold & Itkin has said that it only became aware of Sanchez-Peralta’s conflict of interest in early September, when she texted an attorney on the plaintiffs’ team and said she would be updating the defense team’s exhibit list.”
• “Shortly after sending the text, Arnold & Itkin claims that Ahmad Zavitsanos submitted an exhibit that contained confidential information about the Texas Medical Board complaint that Small contacted Christensen about. Arnold & Itkin moved for disqualification a week later.”
• “But Shahmeer Halepota of Ahmad Zavitsanos said his opponent’s arguments had serious ‘credibility issues,’ beginning with what he said was the firm’s sole reliance on Christensen’s testimony for its disqualification bid.”
• “In its motion for disqualification, Arnold & Itkin repeatedly described Small as a witness. But in a reply filed a week later, he is described as a client of the firm.”
• “‘This is a shift that this court has specifically recognized, but it’s not the only shift,’ Halepota said.”
• “Arnold & Itkin, however, said Wednesday that Ahmad Zavitsanos was ‘feigning’ misunderstanding, claiming it only replied using the term ‘client’ because Ahmad Zavitsanos had argued that Sanchez-Peralta did not have confidential information connected to a client or former client and thus hadn’t violated the state’s professional rules.”
• “Halepota said additional ‘shifts’ include Arnold & Itkin’s use of the singular word ‘complaint’ across its motions in reference to Small, while Christensen insisted Wednesday that there were three complaints against Small — two of which are publicly available, and one of which is the complaint he learned about in 2022.”

“Baker McKenzie, Ex-Client Embroiled In Litigation Over Retainer Agreement Breach” —

• “A breach of contract lawsuit that is playing out in California state court raises issues about billing practices and disclosures in Big Law, as Baker McKenzie stands accused of breaching retainer agreement by not notifying its client when fees and costs reached a certain threshold.”
• “California-based workplace services company SBM Management Services alleges that the global giant violated a provision in a retainer agreement that required SBM to be alerted when the firm neared ‘specific spending milestones,’ in a suit that was refiled Monday in San Francisco County Superior Court after being initiated in Sacramento in February.”
• “Specifically, SBM claims that during the agreement period, Baker McKenzie failed to adhere to a requirement that the law firm would inform SBM when expended attorneys’ fees and costs reached $15,000 intervals.”
• “This included a situation in December 2021 in which Baker McKenzie allegedly incurred more than $200,000 in fees and costs without first communicating the charges to the plaintiff.”
• “SBM’s suit states that the company considered ‘in good faith’ waiving its right to a jury trial and submitting the fee dispute to binding arbitration, but that it ultimately declined to do so.”
• “Meanwhile, Baker McKenzie had filed a countersuit days after SBM first filed its complaint over claims that its former client breached the agreement itself when it failed to pay the law firm for legal services rendered. That suit seeks also seeks relief for unjust enrichment.”
• “The countersuit states that SBM did not initially contest itemized legal billings in one of the underlying complaints for which Baker McKenzie was providing defense work until ‘many months’ after the legal services were performed, and that SBM furthermore refused, in bad faith, to abide by the arbitration provisions in the parties’ fee agreement.”
• “In the countersuit, Baker McKenzie claims that it is owed more than $500,000 in unpaid fees, costs and late charges.”

The ABA asks: “May a Defense Lawyer Cross-Examine a Former Client?” —

• “During the course of representing a defendant, a defense lawyer may discover that they previously represented a prosecution witness in a prior, unrelated criminal case. Especially for public defenders, this is not an uncommon occurrence. For example, a lawyer has a new client charged with assault and later learns that a former client, whom the lawyer represented in an unrelated burglary case two years earlier, is named in the police report as a key witness. In such a situation, may the lawyer cross-examine the former client? Some authorities say no, while others say a defense lawyer may, if certain conditions are met. In this column, we analyze the different approaches and conclude with our position.”
• “The National Association of Criminal Defense Lawyers (NACDL) maintains a defense lawyer should never be allowed to cross-examine a former client in an unrelated matter. An NACDL policy position states that the primary concerns are the duty of loyalty to current and former clients, the use of confidential client information against the former client, and avoiding an appearance of impropriety. Some ethics opinions and courts recognize a mandate to avoid appearance of impropriety being inherent in the duty of loyalty under the Sixth Amendment, even if the applicable ethics code contains no such ban. For example, State Bar of California Formal Ethics Op. 1980-12 (1980), which adopts the categorical ban, explains that even if defense counsel believe they do not have confidential information that could be used against the former client, the former client would likely be concerned and think otherwise. The opinion states that ‘[a]ttorneys involved in the administration of justice must avoid as much as possible the appearance of impropriety as well as impropriety in fact.'”
• “Wisconsin Ethics Op. EF-20-02 (2020) addresses the consent of both the current and former clients. In considering whether a public defender could cross-examine a former client, the opinion states that one must first determine if it is reasonable to assume that the attorney has confidential information that would be helpful in cross-examining the former client. The opinion considers a hypothetical involving a public defender representing a client charged with robbery when a former client, whom the lawyer had represented in felony drug cases, is a prosecution witness. The opinion states that it would be reasonable to assume that the lawyer had access to former client information, such as substance abuse issues, that would be useful in cross-examining the former client. In this scenario, the opinion states that continued representation of the current client ‘is theoretically possible’ if there is informed consent of the current and former clients. Consent of the current client is required under Rule 1.7(a)(2) due to the ‘significant risk that the representation of one or more clients will be materially limited by the lawyer’s responsibilities to . . . a former client.’ Consent of the former client is required under Rule 1.9(c)(1) in order for the attorney to use the confidential information against the former client. While the opinion states that consent of the former client is theoretically possible, it is doubtful that ‘the former client would consent to the disclosure of information relating to the representation to attack her credibility.'”
• “We believe the categorical ban on cross-examining a former client whom the attorney represented in an unrelated matter is the best approach for a number of reasons. First, the approach that would permit such cross-examination if only the former client consents ignores the lawyer’s duties to the current client. The current client’s representation could still be materially limited by the lawyer’s responsibilities to the former client. It is too difficult to determine if the attorney has information learned in the representation of the former client that the attorney may decide not to use against the former client in cross-examination, thereby undercutting adequate representation of the current client. We also believe that consent of only the former client is unrealistic. A former client could not give informed consent unless an independent lawyer advises the former client of the risks of being cross-examined by their former lawyer, whose goal will be to undermine their testimony and discredit them. We think it is unrealistic to have an independent lawyer advise the former client. Who would bear the cost of having such independent representation for the former client? Surely, it could not be the current client, nor would such assistance of counsel be required by the Sixth Amendment.”
• “Second, the approach that would permit cross-examination of a former client if both the former and current clients give informed consent is impractical. As stated previously, consent of the former client is unrealistic. In addition, consent of the current client is impractical. As the cases adopting the categorical ban on cross-examining a former client demonstrate, there will be a presumption that the attorney has learned confidential information that should be used against the former client. Courts are not likely to accept the consent of the current client, concerned that there would likely be an ineffective assistance of counsel claim down the road if the current client is convicted.”

“Federal courts warn of e-filing scam targeting attorneys” —

• “The Administrative Office of the U.S. Courts has issued an alert warning that attorneys across the country are being targeted with fake electronic filing notifications in emails purporting to come from the federal judiciary’s Case Management/Electronic Case Files system.”
• “According to the U.S. Judiciary’s IT Security Office, the fake notices of electronic filing prompt recipients to reply immediately. Recipients are then sent an email containing a link to access fake case documents that direct users to a malicious website.”
• “To avoid becoming a victim of the scam, the office advises lawyers to always validate cases and case documentation directly through their local federal court’s CM/ECF system, adding that they should never download attachments or click on links from unofficial or questionable sources.”

“Quinn Emanuel Faces DQ Bid For Musk-Dogecoin Deal Leak” —

• “Dogecoin investors want Quinn Emanuel Urquhart & Sullivan LLP to be disqualified in their case against Elon Musk and Tesla Inc. because the law firm and its attorneys publicly disclosed a confidential settlement offer in the contentious lawsuit.”
• “In a document filed in New York federal court Thursday, an attorney for the plaintiffs asked that the firm and its lawyers be disqualified and sanctioned after submitting the letter to the official court docket. Because of Quinn Emanuel’s actions, the plaintiffs are asking for $350,000 in sanctions, damages and legal fees.”
• “‘By these ethical violations, Alex Spiro, his co-counsel Sarah Concannon and Brenna Nelinson, and Quinn Emanual have demonstrated a willingness to fight dirty that threatens to significantly taint the trial of this case,’ the plaintiffs said.”
• “In the underlying case, the plaintiffs allege that Musk, Tesla’s CEO, engaged in market manipulation that allowed him and the company to turn a profit on Dogecoin, a meme-themed cryptocurrency.”
• “The two sides have been slugging it out in court since the plaintiffs filed their initial complaint in June 2022, including previous motions to disqualify each other’s attorneys that U.S. District Judge Alvin K. Hellerstein denied in December.”
• “Hellerstein disposed of the spat, which has spanned several months and hundreds of pages of back-and-forth legal filings between plaintiff attorney Evan Spencer and his opponents. The judge also granted Musk and Tesla’s request to dismiss the proposed class action complaint while leaving the door open to refiling it after it has received some editing.”
• “Quinn Emanuel, Musk and Tesla claimed the lawsuit was so riddled with obvious legal and factual errors that it should be thrown out.”
• “On the other side, Spencer and the investors accused Quinn Emanuel of leaking a letter Spiro, who is representing Tesla and Musk, sent to Spencer — and that harshly criticized the lawsuit — to the New York Post. They later filed an amended complaint to revive the lawsuit.”
• “‘Mr. Spencer was alerted to the article by one of his clients in this case and needed to perform considerable damage control. Both parties then moved for sanctions, and the Court denied both motions, but stated that it would address the issue again if private materials were made public in the future,’ according to Thursday’s filing.”

“‘It’s created an internal shitstorm’: turmoil at UK law firm accused of ‘whitewashing’ Saudi World Cup report” —

• “When the Saudi crown prince locked nearly 400 of his country’s most powerful people in a luxury hotel in 2017 and stripped them of their fortunes, a UK law firm allegedly played a significant role.”
• “On the orders of Mohammed bin Salman, Clifford Chance – a ‘magic circle’ legal giant with headquarters in London – was reported to have facilitated the forced transfer of assets from a Saudi TV station to the government. In total, assets worth $100bn were taken from the detainees, who included political rivals of Prince Mohammed. Some were allegedly beaten, deprived of sleep and held in stress positions.”
• “Seven years on from the infamous purge at the Ritz-Carlton in Riyadh, Clifford Chance – whose global revenues rose 9% to £2.3bn in the last financial year – has expanded in Saudi Arabia to become an ‘unrivalled legal powerhouse’, according to its website. It boasts large government clients, including key ministries and the sovereign public investment fund. In 2023, after a legal change, its Saudi arm, AS&H Clifford Chance – a joint venture with a local firm – became one of the first foreign firms approved to practise law.”
• “Only last month, it was named Saudi law firm of the year at a glitzy awards ceremony in Dubai.”
• “Now the firm’s long-running links to the Saudi regime are facing scrutiny after it was commissioned to produce an ‘independent’ assessment of Saudi Arabia’s human rights record as part of the country’s bid to host the 2034 Fifa World Cup – a report that has been roundly condemned as a ‘whitewash’.”
• “The Observer understands that at least one other law firm approached to conduct the assessment refused because of reputational concerns and fears over conflicts of interest.”
• “But the Saudi arm of Clifford Chance – whose recent work also includes overseeing a multibillion-pound football stadium deal for two clubs in the Saudi Pro League – agreed. The appointment is understood to have been signed off by Fifa, world football’s governing body.”
• “Required as part of Fifa’s bidding process, the assessment was supposed to give an independent and unbiased picture of the human rights context in the kingdom. UN guiding principles, which Fifa says it abides by, say such assessments should ‘include all internationally recognised human rights as a reference point’.”
• “But documents seen by the Observer show that AS&H Clifford Chance agreed to severely limit the scope of its report after a request from the Saudi Arabian Football Federation (Saff), which again was approved by Fifa.”
• “The restrictions mean the report only looked at human rights that are recognised in Saudi Arabia – rather than those recognised globally – and were considered relevant by the Saudi football federation.”
• “Across 39 pages, there is no mention of discrimination against LGBTQ+ people in Saudi Arabia, the criminalisation of same-sex sexual activity, controls on freedom of expression and the prohibition of trade unions or forced evictions, such as during construction of the mega-city Neom. In the methodology notes for the report, AS&H Clifford Chance says the scope was ‘determined by Saff in agreement with Fifa’. The notes also reveal the review was completed after only six weeks of desk work and relied solely on interviews with government ministries. Human rights groups and those affected by alleged abuses, such as migrant workers, were not consulted.”
• “The firm is known for its pro bono and human rights work, and one of its partners co-chairs the Business and Human Rights Lawyers Association. But according to people familiar with the assessment, key staff with relevant expertise were not consulted. ‘It’s created an internal shitstorm,’ a source said.”
• “Another said: ‘It’s a shoddy piece of work. It would have been a mistake for anyone credible to take on this task given the parameters were scoped so narrowly. Given the conditions attached, there was no way to do it in an ethical way.'”
  “The revelations also risk undermining the firm’s pledge to champion LGBTQ rights. In 2023, Clifford Chance was ranked as one of the world’s best LGBT employers in Stonewall’s global workplace equality index, which recognises organisations that have ‘taken steps to advance LGBT equality across their global locations’.”
• “The fallout also raises wider questions for Fifa about the integrity of Saudi Arabia’s World Cup bid as a vote to confirm the kingdom as 2034 host approaches… It declined to comment on the Clifford Chance report but said it planned to publish an evaluation of Saudi Arabia’s bid, including the human rights assessment, before the congress meeting.”

“DLA Piper Exhibited ‘Far From Exemplary Conduct’ in Patent Infringement Case, Judge Finds” —

• “A federal judge has ruled that DLA Piper can continue representing a plaintiff in a patent infringement dispute even though the firm also counsels the defendant’s parent company, in a case that could have implications for Big Law when it comes to identifying and disclosing conflicts of interest.”
• “In an October 23 decision, U.S. District Judge Maryellen Noreika, of the District of Delaware, agreed with a report by a special master that recommended denying a defense motion to disqualify DLA Piper as plaintiffs’ counsel. But the judge also admonished DLA Piper for its ‘far from exemplary conduct’ in handling the matter.”
• “The motion for disqualification was made by Nick Groombridge, an attorney representing defendant TeneoBio Inc., a biotech company, which sought to disqualify DLA Piper from being adverse to it in the patent infringement litigation because TeneoBio is a wholly-owned subsidiary of Amgen, which acquired TeneoBio in October 2021.”
• “DLA Piper represents the plaintiffs, who include Harbour Antibodies BV, another biotech company.”
• “The special master, also a former federal judge from Delaware, had found that DLA Piper’s representation of Amgen in unrelated matters didn’t automatically mean that DLA Piper also represents TeneoBio, the subsidiary. She had found that the record was unclear as to whether DLA Piper’s representation of Amgen included representation of its affiliates.”
• “However, the special master later determined that DLA Piper’s representation of Harbour against TeneoBio in the current litigation appears likely conflictual, although she found that the conflict was ‘thrust upon’ DLA Piper because the conflict didn’t exist at the time DLA Piper agreed to represent Harbour in the litigation.”
• “While the judge affirmed the special master’s recommendations, and permitted DLA Piper to continue with its representation of the plaintiff, she noted in her opinion that the burden of proving the ‘thrust upon’ doctrine rests with the party possessing the conflict—in this case, the plaintiffs—and not TeneoBio, as the special master had found.”
• “The judge noted that case law on the ‘thrust upon’ doctrine is fairly sparse, although she found that ‘similar legal frameworks as well as other district courts’ applications of the ‘thrust upon’ doctrine support the conclusion that it was DLA’s burden to prove the ‘thrust upon’ doctrine applied.'”
• “‘We don’t think it’s appropriate for law firms to say, ‘Well, even though I represent you, I could sue your subsidiary,” said Nicholas Groombridge, who represents TeneoBio. ‘I think that the ruling here is very much a recognition of that right,'”
• “Given increased M&A activity in the corporate world, this scenario may become more common since ‘there just aren’t that many players in some industries,’ Groombridge said.”
• “In her ruling, Noreika wrote that DLA Piper cannot benefit from the ‘thrust upon’ doctrine because the conflict did not arise through no fault of the law firm, but rather the ‘representation of adverse interests occurred when [DLA] investigated, drafted, and filed the complaint in this case.'”
• “‘It is evident DLA knew that its representation of Harbour could materially impact its client, Amgen, because DLA wrote in the complaint for this action that Amgen had acquired TeneoBio for ‘more than $2.5 billion,’ Noreika wrote. ‘Although it is true that a lawyer is not per se prohibited from representing a party adverse to the subsidiary of a corporate client, the duties of loyalty and confidentiality require that the lawyer take affirmative steps to ensure that the line has not been crossed.'”

“Blank Rome Faces DQ Bid Over Alleged Tampering” —

• “An attorney suing three lawyers from Blank Rome LLP wants the firm’s other attorneys disqualified from representing their colleagues, accusing them of improperly contacting a plaintiff’s expert witness to intimidate him into no longer participating in the case.”
• “Plaintiffs Veronica Turner, a lawyer, and her husband, Kevin Turner, moved to disqualify Blank Rome attorneys Thursday [9/26] from representing their colleagues James T. Smith, Rebecca Ward and Heidi G. Crikelair. Veronica Turner also asked a Pennsylvania federal court for sanctions against the attorneys for their interactions with expert witness Dr. Richard S. Goldberg.”
• “‘The improper contacts with Dr. Goldberg require severe sanctions, particularly if (as it appears at the time of this writing) they have caused Dr. Goldberg to cease his involvement in this matter and left plaintiff without a psychiatric expert,’ Turner said Thursday in her motion.”
• “The attorneys Turner is seeking to have tossed from the suit are Brian Paszamant and Jeffrey Rosenthal, as well as Blank Rome itself, according to the motion.”
• “Turner is suing the three lawyers as well as aircraft motor manufacturer Avco and its parent company, Textron Inc., for retaliation after she switched from corporate defense to the plaintiffs bar. She previously represented Avco Corp.’s Lycoming Engines division in ‘major aircraft crash litigation,’ representation that had lasted from 2005 through November 2017.”
• “Goldberg is a psychiatrist who was retained to perform a forensic psychiatric examination of Turner. She argued that counsel for the three attorneys contacted Goldberg, left him a voicemail and even spoke to his office about the status of Turner’s case file.”
• “Turner said her attorneys were not advised of the contacts with Goldberg. Additionally, Turner argued that Blank Rome served Goldberg with an invalid short-notice subpoena.”
• “Since then, Turner’s team has tried several times to schedule a deposition with Goldberg, but he’s stopped responding to them.”
• “‘Plaintiffs believe the aforesaid ex parte contacts with Dr. Goldberg were intended to intimidate him and to drive him to cease his involvement in the instant case. They regrettably appear to have succeeded,’ the motion said.”

“WEBINAR: 2024 Legal Ethics Year in Review” —

• Thursday, December 12, 2024 @ 1 PM ET
• “Join Holland & Knight and our colleagues with Adams and Reese for a free one-hour review of the most important developments of the last year (or so) in legal ethics and lawyering.”
• “They will distill practical guidance from ethics opinions and case law from all over and review what lawyers should know to protect their clients and themselves and practice more effectively.”
• Topics will include:
  • New Law developments and lawyer regulatory reform
  • Ethical (and unethical) witness preparation
  • The latest cases on advance waivers of conflicts of interest
  • The first lawyers disciplined for falling for wire transfer frauds
  • Ethical (or unethical) deception in investigations
  • Using artificial intelligence (AI) ethically and responsibly
  • Continuing lawyer cybersecurity dangers
• Lucian and Trish promise more ethics fun in an hour than lawyers should be allowed to have.

“Nelson Mullins Can’t Beat DQ In Foreign Exchange Fraud Suit” —

• “A Florida state appeals court panel unanimously sided with a trial court Friday in deciding that Nelson Mullins Riley & Scarborough LLP can’t represent the defendant in a lawsuit accusing him of duping the plaintiff into doing business with online foreign exchange platform FxWinning Ltd. because the firm previously represented the plaintiff in a ‘substantially related’ suit against the company.”
• “Jay Katari was represented by Nelson Mullins when he and others sued now-defunct Hong Kong-based FxWinning in Miami-Dade County in 2023 for allegedly defrauding them out of more than $80 million, according to case filings. In a separate lawsuit he later filed in Palm Beach County, Katari sued Arthur Percy, whom he accused of fraudulently inducing him to do business with FxWinning.”
• “Percy hired Nelson Mullins to defend him in the Palm Beach case, prompting Katari to seek the law firm’s disqualification based on its prior representation of him in the Miami-Dade case.”
• “‘The present action and the prior action are undeniably substantially related, as the fraudulent scheme that lies at the heart of the prior action is also central to the present action: Katari has alleged that Percy fraudulently induced Katari into investing significant amounts of money with FxWinning,’ Katari argued in a June filing with the Florida appeals court. ‘Simply put, the present action alleges that Percy induced Katari to enter into the contract with FxWinning which gave rise to the prior action. Disqualification was the proper remedy.'”
• “Nelson Mullins had argued that the case in Miami-Dade County was based on FxWinning’s terms and conditions and that it was unrelated to an agreement between Katari and Percy. The law firm further argued that Katari had participated in discovery in the Palm Beach case and thus had waived any objection to Nelson Mullins’ representation of Percy.”

New from The Supreme Court of California on judicial disqualification motions and timeliness: “NORTH AMERICAN TITLE CO. v. SUPERIOR COURT S280752” —

• “This case requires us to interpret various statutes governing the disqualification of judges. In particular, we consider what we refer to as a timeliness requirement set forth in Code of Civil Procedure section 170.3, subdivision (c)(1) (section 170.3(c)(1)),1 and a nonwaiver provision set forth in section 170.3, subdivision (b)(2) (section 170.3(b)(2)).”
• “The timeliness requirement of section 170.3(c)(1) provides that a party who seeks to disqualify a trial court judge by filing a verified statement of disqualification must do so ‘at the earliest practicable opportunity after discovery of the facts constituting the ground for disqualification.’ “
• “The nonwaiver provision of section 170.3(b)(2) provides that, notwithstanding a party’s general ability to waive a disqualification, ‘[t]here shall be no waiver of disqualification if the basis therefor’ falls into one of two categories, one of which is that ‘[t]he judge has a personal bias or prejudice concerning a party’ (§ 170.3, subd. (b)(2)(A)).”
• “‘We granted review to decide whether the nonwaiver provision precludes application of the timeliness requirement when a party alleges that a judge is disqualified due to bias or prejudice concerning a party. The Court of Appeal held that it does.'”
• “According to the Court of Appeal, the nonwaiver provision must be read ‘to prohibit all forms of waiver, including implied waiver due to untimeliness.’ (Id. at p. 982.) Under the court’s reading of the statute, a party alleging bias or prejudice cannot ‘waive[]’ its right to seek judicial disqualification (ibid.), even when the claim is asserted long past the point of ‘discovery of the facts constituting the ground for disqualification’ and, for that reason, is not required to assert its claim of judicial bias ‘at the earliest practicable opportunity.'”
• “We disagree with the Court of Appeal’s interpretation of the statute. It conflates the concepts of waiver and forfeiture, and it extends the statute’s prohibition on waiver to scenarios where forfeiture based on failure to comply with the timeliness requirement may properly be found.”
• “We thus agree with appellants and Real Parties in Interest Carolyn Cortina et al. (Real Parties in Interest) that the nonwaiver provision is limited to the process of judicial self- disqualification, and it is inapplicable when a party seeks disqualification by filing a written verified statement of disqualification.”
• “When a party seeks disqualification, the statute’s timeliness requirement contemplates that the litigant may forfeit the right to seek disqualification by failing to file a statement of disqualification ‘at the earliest practicable opportunity after discovery of the facts constituting the ground for disqualification.’ (§ 170.3(c)(1).) The statute’s nonwaiver provision has no effect on the separate issue of forfeiture in this context.”
• “We therefore hold section 170.3(c)(1)’s timeliness requirement — that a statement of disqualification filed by a party ‘shall be presented at the earliest practicable opportunity’ — applies even when the alleged basis for disqualification is that ‘[t]he judge has a personal bias or prejudice concerning a party’ (§ 170.3, subd. (b)(2)(A)). On this basis, we reverse the Court of Appeal’s judgment and remand the case for that court to consider in the first instance whether the statement of disqualification filed by North American Title Company (Petitioner) was timely.”

And the latest conflicts cases spotted by Bill Freivogel:

• Empire Trust, LLC v. Cellura, 2024 WL 4573989 (S.D.N.Y. Oct. 24, 2024).
  • “Douglas Dollinger represents Plaintiff, Empire Trust in this civil fraud case against Defendant, Joseph Cellura. Dollinger currently represents Cellura in a related fraud case. Defendants moved to disqualify Dollinger in this case. In this opinion the court granted the motion to disqualify.”
  • “The court described Dollinger’s arguments against disqualification as ‘scattershot distractions.’ At one point Dollinger argued that his own client did not have the attorney-client privilege. The judge’s reaction was priceless: ‘Think about that for a moment.'”
•  Harbour Antibodies BV v. Teneobio, Inc., 2024 WL 4554855 (D. Del. Oct. 23, 2024).
  • “Law Firm represents Harbour against Teneobio (‘T Inc’) in this patent-related case. Shortly before Law Firm filed this case, T Inc was acquired by Amgen. Amgen is a client of Law Firm. T Inc moved to disqualify Law Firm in this case. The court referred the matter to a Special Master (‘SM’). The SM filed a report recommending the motion to disqualify be denied.”
  • “In this opinion the court adopted the report and denied the motion. The court agreed with the SM’s view a Rule 1.7(a) conflict exists, but also agreed with SM justice would best be served by allowing Law Firm to continue. This could have gone either way and is of doubtful precedential value. So, we see no gain in an extended discussion of the arguments.”
  • “If you want tips on how to defeat such a motion in the face of a conflict, take a look at the opinion. Warning; The court discusses a ‘thrust upon’ theory in the context of this case. In our 30 years of work in this area, ‘thrust upon’ has been a feature in some ‘hot potato’ cases, but never as here.”
• M.D. v. S.D., No. 126,599 (Kan. App. Oct. 18, 2024).
  • “We recently wrote of a Canadian case in which the appellate court upheld a trial court’s disqualification of a father representing his son, because the father could not provide objectivity in the representation, Bergeron v. Assemblee parlementaire des étudiants du Quebec Inc., 2024 QCCA 1264 (CanLII) (Ct. App. Que. Sept. 27, 2024). That was a unique holding in Canada.”
  • “We pointed out that we had not seen such a holding in the U.S. Well, we’ve come close with this one, ‘a contentious divorce custody dispute.’ Father and Mother are fighting over custody of four children in, some would day ‘the most contentious case in Johnson County family court.’ Father’s father (‘Grandfather’) attempted to represent Father in this case. The trial court disqualified Grandfather. In this opinion the appellate court affirmed. Both courts relied primarily on Rule 3.7, because Grandfather had testified early on in this case and is likely to do so again. Neither court mentioned material limitation concepts under Rule 1.7, but it would not have been much of a reach to do so.”
• Via Appia, LLC v. OP Devel., Inc., No. F087160 (Cal. App. Unpub. 5th Dist. Oct. 21, 2024).
  • “Defendants moved to disqualify Plaintiffs’ law firm (‘P Firm’) because P Firm had consulted with, and tendered as Plaintiffs’ expert, an individual, with whom Defendants’ lawyers had earlier consulted about this case. The trial court disqualified both the consultant and P Firm. In this unpublished opinion the appellate court affirmed. The court relied heavily upon a leading case, Shadow Traffic Network v. Super. Ct., 24 Cal. App. 4th 1067 (1994). The analysis is highly fact-specific, and limited to California appellate cases, but is a good review of how far a lawyer may go in messing with the other side’s expert.”