Bressler Risk Blog

Steven W. Teppler is a partner and chair of the privacy and cybersecurity practice group and chief cybersecurity legal officer at Mandelbaum Barrett writes: “The Expanding Universe of Attorney Cyber Liability” —

• “Law firms face unprecedented cybersecurity threats, increasing in number and severity, which can result in significant liabilities. The legal profession, especially in New Jersey, is grappling with growing responsibilities to protect client data, third-party data, and employee information, all while complying with complex regulations. Breaches in cybersecurity not only expose firms to legal and financial repercussions but can also result in violations of professional responsibility.”
• “Law firms have become attractive targets for cybercriminals due to the highly sensitive information they manage, including trade secrets, financial data, health care and other personal information. The American Bar Association’s 2023 annual Cybersecurity Tech Report consistently highlights law firms’ vulnerabilities, noting that many are ill-prepared to defend against sophisticated cyberattacks. These attacks typically include phishing schemes, ransomware, and data breaches, all of which can expose a firm to liability.”
• “The duty of confidentiality is fundamental to the lawyer-client relationship. Rule 1.6 of the New Jersey Rules of Professional Conduct (RPC) requires lawyers to protect client information. If a lawyer’s failure to implement adequate cybersecurity measures results in a data breach, this could lead to a breach of confidentiality and potential malpractice claims.”
• “Liability becomes even more complex when a breach affects third-party data belonging to a client’s clients. For example, a law firm representing a corporation may have access to sensitive customer data or intellectual property. If this information is exposed during a breach, both the client and its customers or business partners could file lawsuits, expanding the firm’s liability.”
• “For instance, a firm representing a health care provider may have access to patient data subject to HIPAA protections (See 45 C.F.R. Section 160.101 et seq.). A breach involving personal health information (PHI) could trigger regulatory investigations, civil penalties, and lawsuits from affected individuals. The concept of ‘downstream liability’ is gaining traction, with courts increasingly willing to entertain claims from third parties whose data was compromised due to a firm’s cybersecurity failures.”
• “To protect against such risks, law firms should take these steps:
  • “Adopt comprehensive cybersecurity measures, such as encryption, secure communications, and regular employee training on data protection protocols.”
  • “Negotiate indemnification clauses in engagement letters, particularly when handling third-party data.”
  • “Encourage clients to adopt their own strong cybersecurity practices to reduce the firm’s overall risk profile.”
• “Provide clear communication with clients about cybersecurity practices to help limit liability in the event of a breach. For example:”
• “Cybersecurity Policies in Engagement Letters: Include a section in the engagement letter that outlines the firm’s cybersecurity policies and procedures. Informing clients upfront about how their data is handled sets clear expectations and may help limit liability if a breach occurs.”
• “Example: ‘Our firm uses industry-standard encryption protocols to secure client data in transit and at rest. We also employ two-factor authentication and regularly update our systems to protect against potential threats.'”
• “Cybersecurity Protocol Discussions During Client Meetings: During initial client meetings, lawyers should discuss the specific data security measures relevant to the client’s case, especially if sensitive or regulated data (such as health care information or financial records) is involved. This can include informing clients about the secure platforms the firm uses for document sharing and case management.”
• “Example: ‘For this matter, we will be using a secure cloud-based platform for document sharing, which complies with HIPAA standards due to the sensitive nature of the information. We will also assign limited access to specific team members to further protect your data.'”
• “Breach Notification Procedures: Clients should be informed about how they will be notified in the event of a cybersecurity breach. This ensures transparency and helps maintain client trust in a worst-case scenario. It also shows the firm’s preparedness to address any potential issues swiftly.”
• “Example: ‘In the unlikely event of a data breach, we have a rapid response plan in place. We will notify you within 24 hours of detecting a breach, provide an assessment of the potential impact, and outline the steps we are taking to address the situation.'”
• “Law firm employees, whether through negligence or malicious intent, can be a major source of cybersecurity risk. The rise of hybrid work arrangements has increased the chances that insider threats will compromise a firm’s data security. For example, an employee might inadvertently leak sensitive client information through unsecured email, or a malicious insider could steal confidential data for personal gain.”
• “To address these risks, law firms should implement strict policies on data access, secure device use, and data transmission. These policies typically include data access controls, multi-factor authentication and encrypted data transmission.”
• “Law firms must navigate an increasingly complex landscape of cybersecurity and data privacy regulations. New Jersey’s Data Breach Notification Law requires prompt disclosure of any breaches involving personally identifiable information (PII) N.J. Stat. Ann. Section 56:8-163—66 (2005); as amended (2019), and firms serving clients across multiple jurisdictions must comply with various state and federal laws, such as HIPAA and the Gramm-Leach-Bliley Act. (Pub. L. No. 106-102 (1999).”
• “Failure to comply with these laws can result in significant financial penalties and reputational damage. Law firms must conduct regular compliance audits and work closely with cybersecurity experts to ensure their policies meet the latest regulatory requirements.”
• “Violations of the New Jersey RPC related to cybersecurity breaches or exposure can lead to disciplinary actions by the New Jersey Supreme Court’s Office of Attorney Ethics. Depending on the severity of the violation, sanctions can range from a formal reprimand to suspension or even disbarment. Specifically, a lawyer who negligently fails to safeguard client data may receive a public reprimand, but a pattern of negligence or intentional disregard for cybersecurity obligations could result in more severe penalties, including suspension or disbarment.”

“Shipman & Goodwin Atty Dodges DQ In Waste Permit Case” —

• “A Connecticut Superior Court judge has refused to disqualify Shipman & Goodwin LLP attorney Joseph P. Williams from a lawsuit that started as a dispute over a $3 million transfer station performance bond, finding he is not a necessary witness to the remaining issues in the case.”
• “Judge Sheila A. Ozalis on Thursday [11/21] turned away Country Holding Co. LLC’s Sept. 23 motion to remove Williams as trial counsel for defendants Covanta Projects of Wallingford LLC and Covanta Energy LLC in litigation first brought in August 2021 arising from the sale of a waste-to-energy facility in Wallingford. Country Holding argued that Williams was involved in a ploy to force it to settle, leading to the facility’s closure in February amid the litigation.”
• “Country Holding alleged that the transfer station closed because of an agreement between the Covanta parties and an entity called Country Disposal Services LLC, which held the permit to operate the facility from the state Department of Energy and Environmental Protection, or DEEP. Country Disposal allegedly agreed not to turn over the permit to Country Holding without Covanta’s approval, and Covanta demanded a settlement, the disqualification motion said.”
• “‘A necessary witness is not just someone with relevant information; a necessary witness is someone who has material information no one else can provide,’ the ruling said. ‘It is clear to this court that attorney Williams is not a necessary witness on this subject matter, as the representatives or Country, Covanta and Country Disposal that participated in such discussions could easily provide such testimony.'”
• “In its Oct. 7 objection to disqualifying Williams, Covanta said, ‘Country’s grievance is with the substance of the settlement proposal, not attorney Williams’ transmission of that proposal in his capacity as counsel, who had no personal knowledge beyond conveying his client’s proposal.'”
• “During a Nov. 7 oral argument, Williams’ co-counsel Alison P. Baker, also of Shipman & Goodwin, said that removing him from trial would discourage other litigants from trying to settle claims and argued that his testimony would be protected by the litigation and attorney-client privileges.”
• “‘The court notes that at no time during the course of this case, prior to the entry of new counsel for Country, while the firm of Cummings and Lockwood was representing Country, did it raise the issue that attorney Williams was a necessary witness for trial and should be disqualified,’ the ruling said. ‘There is no reasonable basis that this court can find for Country to have waited until the eve of trial to have made this motion to disqualify and finds that the disqualification of attorney Williams would render a substantial hardship on Covanta.'”
• “The judge pointed out that Williams has served as counsel for Covanta since before the litigation started, and represents the entities on Country Holding’s appeal of her summary judgment decision. He also negotiated a settlement between Covanta, as guarantor, and the five municipalities to ‘compensate them for Country’s breaches of disposal agreements,’ according to the ruling.”

New York: “Judicial Ethics Opinion 24-62” —

• “Digest: Where a judge’s association with his/her former law firm ended less than two years ago, the judge must disqualify in a matter involving a current client of the judge’s former law firm, even if the party has not appeared in the matter. This disqualification is subject to remittal.”
• “Opinion: The inquiring judge’s connection with his/her former law firm ended less than two years ago. The judge has recently learned that one of the defendants in a case assigned to the judge is a current client of the judge’s former law firm. [1] After disclosure, plaintiff’s counsel requested that the judge recuse him/herself. The judge’s former law firm has no apparent involvement in the matter before the judge, as the law firm’s client, one of several defendants in the case, was served well over a year ago but has not appeared or filed a notice of appearance. Nor has any motion been made for default judgment against that defendant. The judge believes he/she can be fair and impartial, and asks whether disqualification is ethically required.”
• “A judge must always avoid even the appearance of impropriety (see 22 NYCRR 100.2) and act to promote public confidence in the judiciary’s integrity and impartiality (see 22 NYCRR 100.2[A]). A judge must disqualify him/herself in a proceeding in which the judge’s impartiality ‘might reasonably be questioned’ (22 NYCRR 100.3[E][1]).”
• “For two years from the date that the relationship between a judge and their former law firm completely ends, the judge is disqualified from all matters ‘involving a party the judge recognizes as a current or former client of the law firm, even though a different law firm is representing the client’ (Opinion 16-36; see also Opinion 17-100 [disqualification required for two years after representation of client ends or final payment to judge, whichever is later]).”
• “This defendant is a party to the action before the judge, notwithstanding its failure to appear, and is also a client of the judge’s former law firm in another case. As the judge is still within the two-year disqualification period for current and former clients of the judge’s former law firm, the judge is therefore obligated to disqualify him/herself, subject to remittal. [2]”
• “Remittal is a multi-step process which requires full disclosure on the record and the voluntary, affirmative consent of the appearing parties and (if represented) their counsel. First, the judge must fully disclose the basis for disqualification on the record (see 22 NYCRR 100.3[F]). Second, without participation by the judge, all the parties who have appeared and not defaulted, and their lawyers, must agree that the judge should not be disqualified (id.). Then, if the judge believes he/she will be impartial and is willing to participate, the judge may accept remittal of disqualification and preside in the matter. The agreement must ‘be incorporated in the record of the proceeding’ (id.).”
• “Although the inquiring judge here has made a disclosure, the parties that have appeared in the case do not ‘all agree’ that the judge should not be disqualified (22 NYCRR 100.3[F]). The judge is therefore disqualified.”

“Solar Co. Ex-CEO Attys Say DQ Request ‘Untethered To Facts‘” —

• “Lawyers representing the former CEO of a now-defunct solar energy company against fraud and racketeering claims have told a Michigan federal judge that their previous in-house work for the company is not grounds to disqualify them from the suit, calling the plaintiffs’ attempt to have them removed ‘untethered to facts’ and improperly delayed.”
• “In a response filed Wednesday, DarrowEverett LLP told U.S. District Judge F. Kay Behm of the Eastern District of Michigan that there was no conflict of interest and no precedent for removing it from representing William Jayson Waller against claims that he and the company, Power Home Solar LLC, now called Pink Energy, took part in a scam to sell vastly overpriced solar energy systems to Michigan residents.”
• “The suit names the solar company, Waller and Florida-based private equity firm Trivest Partners LP and its investment company, TGIF Power Home Investor, as defendants. The company filed for bankruptcy in October 2022, weeks before the proposed class action was filed.”
• “The plaintiffs’ arguments for having New York-based DarrowEverett removed hinge on ‘a nonexistent legal theory based on equally nonexistent facts,’ the firm argued. Though the firm provided ‘successive representation,’ first to the company and then to Waller, no conflict has arisen, it told the court.”
• “‘Moreover, even if the facts asserted by [the] plaintiffs could for some reason support disqualification of opposing counsel, [the] plaintiffs sat on that knowledge for over a year before acting,’ the firm added, ‘and their failure to raise the issue until now waives any arguable claim they could possibly have had.'”
• “DarrowEverett’s response follows a motion filed by the proposed class of Michigan residents claiming that they fell victim to the alleged fraud conspiracy, led by named plaintiffs Aaron Hall, Katherine Glod and Jeffrey Binder, who asked Judge Behm to remove the firm in a Nov. 6 motion citing ‘multiple conflicts of interest.'”
• “The plaintiffs accused DarrowEverett of ‘stonewalling’ discovery, a move they said could be attributed to numerous conflicts, including that firm chair Zachary Darrow, with assistance from other firm lawyers, worked as a C-suite officer and chief counsel for the solar panel company.”
• “The firm’s inside involvement means its attorneys are witnesses in the action, the motion claimed, with Darrow potentially an ‘unnamed member of the RICO organization.'”
• “Plaintiffs further argued that since the firm has a fiduciary obligation to Power Home Solar’s bankruptcy trustee, its representation of Waller, whose ‘interests in this case are materially adverse to those of PHS,’ represents a conflict.”
• “But DarrowEverett told Judge Behm that Power Home Solar is not a party to the suit, and that ‘no entity with which DarrowEverett has or has had an attorney-client relationship is seeking the firm’s disqualification.'”

“Ga. Law Firm Faces DQ Bid Over ‘Hopeless’ FCA Case Conflict” —

• “The former employee of a tool company has called on a Georgia federal court to disqualify Smith Gilliam Williams & Miles PA and one of its attorneys from representing the company in his False Claims Act case because another firm attorney represented him in a domestic matter.”
• “In a motion to disqualify filed Monday, plaintiff Jim Southard asked that Smith Gilliam and its attorney Matthew Tyler Smith be barred from representing defendant Kipper Tool Co. They have a ‘hopeless’ conflict of interest because Southard used the firm in a ‘domestic relations’ case that ended just last week, Southard argued.”
• “‘Here, the conflict is clear, and the prejudice is unmistakable. To represent plaintiff in the domestic relations matter, SGWM obtained detailed and intimate information about plaintiff’s personal life as well as information about his financials, personal assets, and properties. These details could be advantageous to SGWM in zealously representing Kipper Tool against Plaintiff in the FCA matter,’ Monday’s motion states.”
• “Southard is involved in a yearslong dispute with his former employer. He began working at Kipper Tool in 2003 in its warehouse and worked his way up to a sales representative position, ultimately earning the title of strategic business unit leader before he resigned in 2014, according to court documents.”
• “During his time with the company, Southard became aware that Kipper Tool was routinely failing to provide the government with better prices than nongovernment customers, as is required under a multiple award schedule, or MAS, contract. Southard said he brought the issue up to the company’s vice president of sales.”
• “In August 2015, Southard filed his False Claims Act complaint on behalf of the United States. After eight years of investigation, the government declined to intervene in the case, unsealing it to move forward in May 2023, according to court documents.”
• “Southard’s issue with Smith Gilliam began in July when he retained another attorney at the firm for his domestic matter. The firm is made up of 12 attorneys and is headquartered in Gainesville, Georgia.”
• “He didn’t realize that his attorney in the domestic matter, Kelly Anne Miles, was also a named partner at Smith Gilliam until he visited the firm’s office to attend a mediation on Oct. 23 for his domestic case.”
• “While there, he noticed that Smith opened the door for him, according to the motion.”
• “On Oct. 24, Southard’s attorneys in the FCA matter, including Sarah Chu, learned from Southard that he had retained Miles. Chu responded by sending an email to Smith to inform him of the conflict of interest and ask for his position on the conflict of interest.”
• “‘While there are some circumstances when it would be permissible for the client to provide its informed consent to waive a conflict, here there are conflicts that run so deep they cannot be waived,’ Southard’s motion states.”

“New term, same ethics problems: Gorsuch’s ties to oil billionaire reignite calls for court oversight” —

• “As a new Supreme Court term dawned this week, so did new questions about the justices’ ethical standards, this time focusing on Justice Neil Gorsuch’s ties to an oil billionaire.”
• “The Donald Trump appointee is being called to recuse from an environmental case on the high court’s docket, Seven County Infrastructure Coalition v. Eagle County, Colorado, because of his cozy relationship with Philip Anschutz. The owner of Anschutz Exploration Corporation stands to benefit heavily if the court greenlights an 88-mile oil and gas rail line in Utah. “
• “‘The cozy relationship between Philip F. Anschultz and Justice Gorsuch far surpasses the standard of ‘reasonably questioned impartiality’ for the federal recusal statute,’ watchdog group Accountable.US and others wrote in a letter to Chief Justice John Roberts on Thursday. ‘This relationship that creates a conflict of interest is just the latest example of countless violations in the yearslong Supreme Court ethics crisis.'”
• “The letter signed by just over a dozen advocacy groups highlighted the consequences of the court’s stagnation on this issue. After years of ethical scandals surrounding the justices, there are still many open questions over when the justices need to recuse and how that decision is made.”
• “‘It certainly seems emblematic of the broader problem of there not being a specific and descriptive code of conduct that the justices need to follow that’s enforceable in any way,’ Sarah Turberville, the director of The Constitution Project, said in an interview. ‘Perhaps in this case, it’s illustrative of the need for an ethics council who’s available to really provide specific guidance to the justices.'”
• “Gorsuch served as counsel to Anschutz and his companies in the early 2000s. The Trump appointee has detailed annual hunting retreats on Anschutz’s estates and even bought an investment property with Anschutz business associates.”
• “Accountable.US says rolling back the law would lower Anschutz’s regulatory costs and drive up its profits. The watchdog argued that Gorsuch’s relationship with Anschutz creates questions around the justice’s impartiality — the standard for recusal under the federal statute. “
• “While the advocacy groups claim Gorsuch’s recusal is warranted, the justice himself will be the one to decide whether he hears the case.”
• “Gabe Roth, executive director at Fix the Court said recusal calls on Justices Clarence Thomas and Samuel Alito presented much clearer conflicts. The same can’t be said here.”
• “‘It’s a little bit more attenuated, and it would be worth having someone file a complaint to a neutral body that could then look into this, that would have the resources to call up, or that would have the authority to call up Gorsuch,’ Roth said.”
• “It’s been almost two decades since Gorsuch worked as outside counsel for Anschutz’s company, and currently there’s no public accounting of their relationship after 2017.”

“Law firm Gibson Dunn squares off with crypto client over work for Tether” —

• “Gibson, Dunn & Crutcher is caught up in a court battle with its own client Swan Bitcoin, after the law firm hired a lawyer who represents rival cryptocurrency company Tether.”
• “Swan sued Gibson Dunn for legal malpractice on Friday in Los Angeles Superior Court. It said the firm was improperly trying to drop Swan as a client in a federal trade secrets lawsuit against former Swan employees who formed their own company with Tether’s financial backing.”
• “Gibson Dunn formally asked to withdraw from the trade secrets case in a Sunday court filing. There has been ‘a complete breakdown’ in its relationship with Swan, the firm said, citing the legal malpractice lawsuit and alleging that Swan refused to pay its legal fees.”
• ‘The filing said Swan had demanded $18 million not to oppose Gibson Dunn’s bid to withdraw. ‘Gibson Dunn cannot continue to represent Swan under these conditions,’ the firm told U.S. District Judge Michelle Williams Court in Los Angeles.”
• “In the state court malpractice case, Swan on Monday asked a judge to enter a temporary restraining order that would prohibit Gibson Dunn from dropping it as a client. ‘As stated in our complaint, we believe Swan’s treatment here has been highly inappropriate,’ Dave Wollmuth, a lawyer for Swan, said in a statement.”
• “Gibson Dunn, on Swan’s behalf, sued Tether-backed Proton Management and several of its employees in September, alleging they misappropriated thousands of documents containing Swan’s proprietary information and sought to push Swan out of the joint venture with Tether. The lawsuit did not name Tether as a defendant.”
• “As Gibson Dunn was representing Swan, it was also in the process of hiring prominent trial lawyer Barry Berke and four other white-collar defense lawyers from Kramer Levin Naftalis & Frankel. Berke is ‘one of Tether’s regular outside litigation attorneys,’ Swan said. Federal court records show Berke was representing Tether in at least one lawsuit.”
• “Swan said one of its Gibson Dunn lawyers called its CEO days before the firm announced Berke’s hire in October. The lawyer warned Swan it would need to find new counsel because it was about to hire an attorney whose current clients conflicted with Swan.”
• “In a Nov. 6 letter to Gibson Dunn, Swan said it would oppose Gibson Dunn’s exit from the lawsuit and demand that it either drop Tether as a client or ‘disassociate itself from Mr. Berke and other laterals representing Tether.'”

Detailed analysis from several lawyers at McCarthy Tétrault: “Court Of Appeal For Ontario Clarifies The Standard For Determining Arbitrator Conflicts Of Interest: Aroma Franchise Company, Inc V. Aroma Espresso Bar Canada Inc., 2024 ONCA 839” —

• “In March 2023, the Ontario Superior Court of Justice issued its ruling Aroma Franchise Company Inc. v. Aroma Espresso Bar Canada Inc. regarding the duty of disclosure of potential conflicts of interest for arbitrators. That decision had a significant impact on arbitration practice for both arbitrators and counsel. Justice Steele set aside an award because the arbitrator had accepted a separate, unrelated mandate for the law firm of one of the parties to the arbitration before him. The ruling resulted in the proliferation of ‘Aroma letters’ by arbitrators to preclear unrelated mandates for the same lawyers or law firms.”
• “On November 19, 2024, the Court of Appeal for Ontario overturned Justice Steele’s decision and clarified the standards for disclosure and whether an award should be set aside due to a reasonable apprehension of bias.”
• “The Superior Court decision by Justice Steele is described in our previous blog post. In brief, David McCutcheon was retained to arbitrate a franchise dispute (the ‘MFA Arbitration’) between an Aroma franchisee and Aroma arising out of a Master Franchise Agreement (the ‘MFA’). The MFA directed that the parties ‘shall jointly select one (1) neutral arbitrator from the panels of arbitrators maintained by the ADR Institute’ who ‘must be either a retired judge, or a lawyer experienced in the practice of franchise law, who has no prior social, business or professional relationships with either party.’ The arbitrator confirmed that he had no conflicts and that he believed he met the criteria for appointment.”
• “Sotos was the law firm that acted for the franchisee in the MFA Arbitration. Seventeen months into the MFA Arbitration, but 15 months before the award was released, the lead Sotos lawyer asked the arbitrator if he would arbitrate a different dispute between a different Sotos’ client and a third party (the ‘Sotos Arbitration’). The arbitrator accepted the Sotos Arbitration without disclosing to the franchisor that he had been approached by Sotos or had agreed to it. The arbitrator issued a Final Award in the MFA Arbitration finding that the franchisor had wrongfully terminated the MFA and awarded substantial damages to the franchisee.”
• “After the final award, the franchisor learned about the arbitrator’s involvement in the Sotos Arbitration. The franchisor successfully applied to set aside the award. Justice Steele directed a new arbitration before a different arbitrator. She held that Mr. McCutcheon was required to disclose that he was being engaged for the Sotos Arbitration and that his involvement in it without disclosure gave rise to a reasonable apprehension of bias, fatally tainting the MFA Arbitration. In reaching that conclusion, Justice Steele gave considerable weight to correspondence between the franchisor’s counsel prior to Mr. McCutcheon’s appointment explaining their relationships with potential arbitrators and asking questions about opposing counsel’s relationships with arbitrators. This correspondence was not provided to Mr. McCutcheon.”
• “In a unanimous decision written by Justice Zarnett, the Court of Appeal for Ontario allowed the appeal and set aside the decision of Justice Steele. The Court of Appeal held that the governing principles for assessing issues of disclosure and bias must be based on the applicable legislative framework.”
• “The Aroma arbitration was governed by the Model Law, which is a schedule to the International Arbitration Act (Ontario). Article 12(1) of the Model Law requires an arbitrator to disclose—before appointment and as the arbitration proceeds—any circumstance likely to give rise to justifiable doubts about the arbitrator’s impartiality. Article 12(2) permits a challenge to the arbitrator or the award that was made if circumstances exist that give rise to justifiable doubts about the arbitrator’s impartiality, as long as the person making the challenge was unaware of the circumstances when they participated in the arbitrator’s appointment.”
• “Zarnett J.A. explained that the following principles govern disclosure under Article 12(1) and set aside applications for justifiable doubts about arbitrator impartiality.”
• “The Court held that application judge erred by placing substantial weight on the parties’ subjective expectations about disclosure of engagements based on the correspondence their counsel exchanged before the arbitrator was approached and appointed. In that correspondence, counsel explained their relationships with potential arbitrators and asked questions about opposing counsel’s relationships. Effectively, the application judge’s approach turned an objective test into a subjective one.”
• “General Standard 3(a) of the IBA Guidelines requires the arbitrator to disclose facts or circumstances that may ‘in the eyes of the parties’ give rise to doubts about the arbitrator’s impartiality or independence prior to accepting the appointment or thereafter. The IBA Guidelines set out a red/orange/green stoplight system for when an arbitrator should act or not act. The Court of Appeal held that ‘the IBA Guidelines are not a legal standard’, and differ from the Model Law by prescribing a subjective, rather than objective, standard.”
• ” ‘Justifiable doubts’ about an arbitrator’s impartiality under Article 12(2) is synonymous with reasonable apprehension of bias.”
• “The Court of Appeal affirmed the decision of Mew J. in Jacob Securities that the test for judicial bias applies to the Model Law. The apprehension of bias must be reasonable, held by a reasonable and right-minded person. The test is ‘what would an informed person, viewing the matter realistically and practically—and having thought the matter through—conclude. Would he think that it is more likely than not that the [arbitrator], whether consciously or unconsciously, would not decide fairly.’ Committee for Justice and Liberty et al. v. National Energy Board et al., [1978] 1 S.C.R. 369, at p. 394.”
• “The Court also distinguished Aroma from Aiteo Eastern E & P Company Ltd. v. Shell Western Supply and Trading Ltd. & Ors, [2024] EWHC 1993 (Comm). In Aiteo, when the arbitrator was appointed, she made disclosure of two prior engagements as an arbitrator by Freshfields, the solicitors acting for Aieteo’s opponents. However, she failed to disclose a ‘relatively recent’ engagement by Freshfields to give expert advice to a different client. And while the arbitration was ongoing, the arbitrator failed to disclose a second and third engagement with Freshfields to provide expert opinions.”
• “The Aroma appeal clarifies the standards applicable to determining whether justifiable doubts over impartiality or a reasonable apprehension of bias by an arbitrator exist. This clarification is important for counsel and arbitrators, particularly as law firms frequently engage the same arbitrators for different disputes.”
• “Aroma explains that if a party or their counsel has particular concerns about an arbitrator taking on other mandates during the course of the arbitration, those concerns should be identified and clearly disclosed to the arbitrator and opposing counsel prior to the potential engagement. Alternatively or in addition, the parties can incorporate a more stringent standard for disclosure of potential conflicts, such as the subjective test set out in the IBA Guidelines.”

Always with thanks for his work, here’s some of the latest from Bill Freivogel:

Chian v. Meng, No. HHD-X03-CV-22-6165940-S (Conn. Super. Ct. Hartford Dist. Oct. 30, 2024).

• “Plaintiff had donated $1.9 million to a Chinese-oriented religious organization for purchase of real estate. In this case Plaintiff is claiming Defendant wrongfully obtained ownership of the property. Plaintiff moved to disqualify Defendant’s lawyer (‘Lawyer’) in this case.”
• “In this opinion the trial court granted the motion. Lawyer had handled the original property purchase and was involved in the conveyance to Defendant. In a lengthy analysis of Connecticut cases the court concluded it was ‘patently clear’ the earlier conveyances and this case are substantially related.”

Hill v. SHR Luxury Condo. Assoc., Inc. No. 09-22-00339-CV (Tex. App. 9th Dist. Nov. 14, 2024).

• “Trial Court denied a motion to disqualify because the movant waited eleven months, and until one month before trial, to make the motion. In this opinion the appellate court affirmed.”

Gil-White v. Alterna Capital Partners, LLC, No. 655864/2023 (N.Y. Sup. Ct. N.Y. County Oct. 25, 2024).

• “Plaintiffs, represented by Law Firm, have sued five defendants for ‘conspiracy to seize’ Plaintiffs’ oil rigs. Defendants include AMA Capital and Paul Leand. Earlier, in 2023, Plaintiffs, represented by Law Firm, filed, in Florida, a nearly “identical” case against all Defendants (but, not Leand).”
• “In the Florida case, Defendants moved to disqualify Law Firm, because Law Firm was representing AMA in an unrelated arbitration. The Florida court granted the motion. This opinion deals with Defendants’ motion to disqualify Law Firm in this case. This motion raised issues of jurisdiction and preclusion. We are skipping those.”
• “In this opinion the court found New York Rule 1.7 (current client) applied. Law Firm attempted to avoid that finding by noting it had previously dismissed AMA in the Florida case, and terminated its relationship with AMA. This court said ‘nothing doing’ because it looked to the relationship when Law Firm first sued AMA in Florida. The court found a conflict regarding Leand because Leand was head of AMA, and said ‘it follows’ disqualification must extend to all Defendants.”

Kneeshaw v. Super. Ct., No. G064831 (Cal. App. Unpub. 4th Dist. Nov. 7, 2024).

• “In this unpublished opinion the appellate court reversed a trial court’s exclusion of Plaintiff’s expert. The trial court had noted the expert was a “distant” relative of Plaintiff and Plaintiff is paying the expert. The appellate court said, in effect, all that was grist for cross-examination.”

“Clifford Law Sues Ex-Partner For Allegedly Poaching Clients” —

• “An Illinois firm specializing in personal injury and wrongful death cases has accused a former partner of stealing clients when he left the firm in February and not making appropriate arrangements for his former firm to get fees for certain cases.”
• “In a Thursday complaint in the Circuit Court of Cook County, Clifford Law Offices PC said its former nonequity partner, Jack J. Casciato, took files from certain cases the firm was engaged in ‘without securing an agreement as to’ the firm’s ‘proprietary interest.'”
• “‘At the heart of this matter are seven known cases for which plaintiff CLO seeks a declaratory judgment from the court as to its proprietary interest and its proper compensation,’ the complaint says.”
• “Clifford Law also seeks an ‘equitable accounting and damages for breach of fiduciary duty, conversion, interference with a contractual relationship’ related to ‘two recently uncovered cases.'”
• “Casciato, who joined Clifford Law in 2018, left in February to start a new firm, the complaint says. He resigned ‘suddenly’ via email, according to the complaint.”
• “Clifford Law contends Casciato ‘conceived of and took all necessary steps to establish a new law firm which began operation on the very day he gave his resignation via email suddenly and without notice.'”
• “‘For a yet unknown period of time before his resignation, defendant Casciato engaged in a scheme to build up a stable of cases that he would bring along to his new firm,’ the suit alleges.”
• “Clifford Law says Casciato convinced clients to leave for his new firm, delayed at least one case so he could file it as his new firm and misled Clifford Law about the status of certain cases.”
• “‘Without knowledge of the aforesaid efforts, plaintiff CLO made accommodations to see to the orderly transfer of case files that defendant Casciato indicated he wanted to bring to his new firm,’ the complaint says. ‘Plaintiff CLO further sought to negotiate in good faith the appropriate division of attorney’s fees on those cases.'”
• “However, Clifford Law contends its former attorney’s ‘misconduct is still being uncovered through an effort to piece together his cryptic communications and activities for a period of months before his sudden resignation via email.'”
• “At issue are seven cases Casciato asked to take to his new firm involving clients who signed a contingency fee representation agreement with Clifford Law, according to the suit.”
• “After the clients in those cases told Clifford Law they would be ending their relationship with the firm and following Casciato to his new firm, communications between the parties commenced as to how Clifford Law would be compensated, according to the complaint. Clifford Law contends that per policy, it ‘is entitled to a percentage of the attorney fees on each case that ultimately leaves with the departing attorney.'”

“Breaking: City of Fairfax school board fires lawyer for conflict-of-interest while coaches say they may forfeit games with Hayfield” —

• “Amid an outcry from local students, football players, and parents, the school board for the City of Fairfax—not the county—fired local attorney John Cafferky and his law firm, Blankingship & Keith, as its board counsel at a hastily called meeting late Sunday morning, citing a conflict of interest in the Hayfield Secondary School recruiting scandal, Fairfax City school board officials told the Fairfax County Times.”
• “What’s more, City of Fairfax School Board Chair Carolyn Pitches sent Fairfax County Public Schools board members a scathing letter on Sunday calling for an ‘external firm to conduct a comprehensive, unbiased investigation’ into the football scandal so that there could be ‘fairness, transparency, and accountability’ in the matter.”
• “The coaches wrote, ‘After thorough discussions and careful deliberation, we are united in considering various actions to include, but not limited to, a forfeiture of the playoffs should the ineligible team remain in the playoffs. This decision does not come lightly, as we understand the disappointment and ramifications for our athletes and supporters. However, we believe this course of action is necessary to uphold the principles of fairness and accountability that we are entrusted to teach. We are currently consulting with our parents, our community, and our players – specifically our seniors who have the most to lose.'”
• “The dramatic actions follow mounting criticism of the FCPS school board and Cafferky’s role in representing Hayfield’s parents and players in a legal effort to overturn a postseason ban on Hayfield’s football team. In late October, the Virginia High School League (VHSL) imposed the ban after concluding that Hayfield violated athletic rules by allegedly recruiting athletes from neighboring Prince William County’s Freedom High School.”
• “Fairfax High School, which is governed by the City of Fairfax School Board, was one of the eight teams impacted. Parents and community members soon started calling school board members, raising concerns about the school board lawyer’s alleged conflict of interest. On Saturday, local coaches met to discuss the next steps, and parents also met in heated discussions.”
• “The City of Fairfax’s decision to sever ties with Cafferky underscores growing concerns about potential conflicts and entanglements between Cafferky’s role as a representative for school boards, including Fairfax County Public Schools, and his legal representation of Hayfield football families embroiled in this recruiting scandal.”
• “The controversy dates back to Feb. 16, when Hayfield Principal Darin Thompson and Hayfield’s athletic director, Monty Fritts, named Darryl Overton, a former Freedom High School security guard and state championship-winning football coach, to lead the school’s football program. According to sources, Thompson and Fritts blindsided the school’s well-liked and popular coach, with the news they weren’t going to renew his contract. “
• “Shortly after that, VHSL said in its investigative report that an influx of student-athletes transferred to Hayfield, some from Overton’s previous school, Freedom High, others from private schools in the area, and another set from middle schools that weren’t feeders to Hayfield. This triggered an investigation by the VHSL, which enforces regulations against recruiting practices deemed unethical or unfair ‘proselytizing.’ The league concluded that Hayfield’s actions violated these rules, imposing a two-season ban on postseason play.”
• “At the heart of the issue is whether Hayfield engaged in inappropriate recruiting practices or if the VHSL’s actions were an overreach that unfairly targeted the school. In August, Fairfax County Public Schools Reid cleared the school principal, student activities director, and coach of wrongdoing, but VHSL pressed on with its investigation. “
• “The stakes are high, as the outcome of this legal battle could have lasting implications for student-athletes, coaches, and the broader community.”
• “For the parents, coaches, and students rallying to reverse the ban, their fight represents a broader struggle for transparency and accountability in the governance of high school sports—a fight that shows no signs of letting up. As the clock ticks down to the next scheduled hearing and with playoffs looming this Wednesday, the determination on both sides remains fierce.”

“Exploration Co. Opposes Atty DQ Bid In Fla. Shipwreck Suit” —

• “An exploration company being sued by an ocean salvage operation in a dispute involving a sunken Spanish galleon is pushing back on a bid to have its would-be attorney disqualified, claiming procedural rules haven’t been followed and that there is no conflict warranting the lawyer’s exclusion.”
• “Carl Allen and his company, Allen Exploration LLC, or AEX, said in a Tuesday filing that plaintiffs Daniel Porter and Maritime Research and Recovery LLC have never been represented by attorney David Concannon of Concannon & Charles PC in connection with the wreckage of the Nuestra Señora de las Maravillas located in Bahamian territorial waters as MRR has claimed.”
• “‘When he was retained by AEX and Mr. Allen, Mr. Concannon had never met Porter, nor had he ever heard of Porter or MRR,’ AEX said in opposition to Concannon’s disqualification. ‘Any assertion that Mr. Concannon represented or advised Porter and/or MRR regarding the central issue in this litigation — that is, whether Porter and/or MRR entered into an oral agreement with Mr. Allen and AEX in August 2021 to divide artifacts — is untrue.'”
• “While Concannon may have had discussions with Porter and MRR regarding another party’s potential claim to any recovered items, ‘he told them he could not represent them because he already represented Mr. Allen and AEX and there was a potential conflict of interest,’ the memorandum said.”
• “Allen and AEX also fault Porter and MRR for failing to respond within the appropriate time frame to Concannon’s motion to appear pro hac vice in the Southern District of Florida and argued that the court is free to grant the motion as unopposed. They further argued that Porter and MRR did not make the required ‘good faith effort’ to ‘meet and confer’ regarding their motion to disqualify.”
• “‘Instead, plaintiffs’ counsel, Jason Wandner, sent two very antagonistic emails to Mr. Concannon on October 21, 2024, when he knew the undersigned counsel was in trial and could not participate in any communications, and he never provided a time or date when the parties could meet and confer prior to filing plaintiffs’ motion and seeking the court’s intervention,’ AEX said Tuesday. ‘Defendants heard nothing further until they received this motion from the court’s electronic filing system. Accordingly, the court is free to disregard and/or strike plaintiffs’ motion and treat defendants’ motion as unopposed.'”
• “According to Allen and AEX’s opposition to disqualify him, Concannon had limited discussions with Porter after learning of his agreement with Spence to determine if his clients — Allen and AEX — had any liability because of the Spence agreement.”
• “‘During this conversation, and at all times material hereto, Mr. Concannon made it clear to Porter that he represented AEX and Mr. Allen, not Porter or MRR, and he was trying to ascertain what risk AEX and Mr. Allen had to claims being asserted against them by Dr. Spence,’ Allen and AEX said.”
• “In their counterclaim to Porter’s and MRR’s complaint, Allen and AEX said that, ‘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.'”
• “Porter and MRR claim they are still owed millions of dollars for their share of the recovered treasure that was approved by the Bahamian government, in addition to other groups of recovered items that have yet to be reviewed.”