Bressler Risk Blog

“2nd Circuit Orders Pillsbury to Repay $3.6M Fraud-Funded Retainer” —

• “The U.S. Court of Appeals for the Second Circuit has affirmed an order requiring Pillsbury Winthrop Shaw Pittman to turn over more than $3.6 million from a $4 million retainer, holding that the firm violated an asset freeze by using a convicted technology executive’s fraud proceeds to defend him in proceedings stemming from the scheme.”
• “The unanimous panel upheld U.S. District Judge Richard Berman’s order requiring Pillsbury to deposit $3,612,601.76, plus any gains, with the court. That was the amount remaining when the firm learned of the freeze in September 2020.”
• “Pillsbury argued that the $4 million became its property when it received the money as an advance-payment retainer, nine days before the freeze was imposed. The panel found the money was covered regardless of who owned it because Pillsbury held it for Rogas’s benefit.”
• “Rogas co-founded NS8, which offered fraud-detection software to e-commerce merchants. According to the SEC, he falsified the company’s bank statements every month for 2½ years, allowing NS8 to overstate its revenue and raise approximately $149 million from investors.”
• “The SEC began investigating NS8 after receiving an anonymous employee tip in July 2019. It subpoenaed NS8 and Rogas that November and again in March 2020, but Rogas continued falsifying bank statements through June, according to the opinion.”
• “A Sept. 2 engagement letter called for a $15,000 replenishing retainer. On Sept. 9, PhutureCorp wired Pillsbury $4 million.”
• “The Second Circuit said no engagement letter documented the larger payment. A Sept. 14 amendment continued to describe the $15,000 arrangement without mentioning the $4 million.”
• “Pillsbury learned of the freeze on Sept. 18, when approximately $3.61 million remained. The firm argued that the order did not reach the money because the retainer became Pillsbury’s property when it was deposited into the firm’s operating account as an advance payment for legal services.”
• “The panel disagreed, finding that Pillsbury held the money for Rogas’s benefit to finance his defense. It also traced the retainer to the fraud: PhutureCorp had received $10 million of Rogas’s profits from NS8’s stock repurchases.”
• “Judge Amalya Kearse wrote that Pillsbury violated the freeze by using profits Rogas received from his fraud ‘to defend him in the government’s actions against him for that fraud.'”
• “The SEC said it did not learn of the $4 million retainer until September 2022, nearly two years after the freeze was imposed. A Pillsbury response to the commission’s request for Rogas’s financial information listed $3.61 million as his ‘Unencumbered Asset’ held at ‘Pillsbury (Escrow).'”
• “A May 2024 Justice Department letter said prosecutors told Pillsbury during November 2020 phone calls that the retainer contained fraud proceeds and should not be used for legal fees. Without conceding the accuracy of DOJ’s information, Pillsbury ‘agreed not to further dissipate’ the approximately $3.7 million remaining.”
• “By February 2024, the Justice Department understood that Pillsbury had billed approximately $2 million against the retainer. Pillsbury partner William Sullivan told Berman at a July hearing that the firm had continued billing and exhausted it. The opinion does not say when the firm resumed drawing on the funds or why it did so after its 2020 agreement with the Justice Department.”

For those like me, who need some context for the following story, vai Wikipedia :

• “The International Centre for Settlement of Investment Disputes (ICSID) is an international arbitration institution established in 1966 for legal dispute resolution and conciliation between international investors and States. ICSID is part of and funded by the World Bank Group, headquartered in Washington, D.C., in the United States.”
• “It is an autonomous, multilateral specialized institution to encourage international flow of investment and mitigate non-commercial risks by a treaty drafted by the International Bank for Reconstruction and Development’s executive directors and signed by member countries.[3][4] As of May 2016, 153 contracting member states agreed to enforce and uphold arbitral awards in accordance with the ICSID Convention.”

“Buried Hill: Arbitrator Disqualified Over Bias Concerns” —

• “On 11 February 2026, in Buried Hill v. Turkmenistan, the two remaining arbitrators, Mr Siqueiros and Mr Goldberg (the ‘Unchallenged Arbitrators’), accepted Buried Hill Serdar Limited’s (the ‘Claimant’) proposal to disqualify Professor Philippe Sands, KC, from the tribunal. Their decision was based on Articles 14(1), 57 and 58 of the Convention on the Settlement of Investment Disputes Between States and Nationals of Other States (the ‘ICSID Convention’) and Rule 23(1) of the 2022 ICSID Rules of Procedure for Arbitration Proceedings (the ‘ICSID Arbitration Rules’).”
• “The Decision addresses a recurring problem in international arbitration: whether the same arbitrator can serve in two separate cases involving different legal claims but many of the same facts, witnesses and documents, as well as the same underlying asset.”
• “The Unchallenged Arbitrators rejected the idea that parallel appointments are automatically disqualifying. What mattered was the unusually close overlap in witnesses, documents, the underlying asset and the order of the hearings, which they found created an evident risk of unconscious influence and an information imbalance within the ICSID tribunal.”
• “Buried Hill’s ICSID claim concerned its investment in the Serdar oil field, now known as the Dostluk field, in the Caspian Sea. It alleged that Turkmenistan breached its obligations under the Energy Charter Treaty (the ‘ECT’) by encouraging Buried Hill’s investment through governmental promises before abandoning those commitments and excluding Buried Hill from any future development of the field.”
  Separately, the Claimant was also pursuing an ICC arbitration against State Concern Turkmennebit under a 2013 Production Sharing Agreement.”
• “The factual overlap was nevertheless substantial: Buried Hill was the claimant in both cases, and both concerned the Serdar field. Turkmennebit was also described in the Decision as an instrumentality of Turkmenistan that Turkmenistan had not denied.”
• “The witness overlap was also extensive. All three factual witnesses who had submitted statements in the ICC Arbitration were also expected to testify in the ICSID case. The authors of two of the three expert reports submitted in the ICC Arbitration were also expected to provide expert evidence in the ICSID Arbitration.”
• “Professor Sands was already serving in the ICC Arbitration case when Turkmenistan appointed him to the ICSID tribunal. The ICC hearing on jurisdiction and the merits was expected to take place first, so he would likely hear and assess the shared witnesses before they appeared before the ICSID tribunal.”
• “The Claimant argued that Professor Sands’ role in both proceedings created a risk of unconscious influence and gave him access to information that the other arbitrators could not assess.”
• “Turkmenistan opposed the Disqualification Proposal. It responded that the cases involved different respondents, legal instruments, applicable laws and causes of action. It also argued that any information gap could be addressed because Buried Hill was represented by the same counsel in both proceedings and the ICC record could be placed before the ICSID tribunal.”
• “Professor Sands did not believe that resignation was necessary. He explained that experienced arbitrators frequently encounter similar facts and legal questions and that he considered each case independently. He further observed that assessing a witness in one case does not predetermine how the same witness will be assessed on another issue.”
• “The Unchallenged Arbitrators accepted the Claimant’s Proposal to disqualify Professor Sands. They held that actual dependence or actual bias did not need to be proved. Under Articles 57 and 14(1) of the ICSID Convention, proof of actual dependence or bias is not required. Actual dependence or bias did not need to be proved; an appearance of dependence or bias was sufficient, provided that the lack of the required qualities was ‘manifest’, meaning ‘evident’ or ‘obvious’. It must be objectively evaluated by a reasonable third party. A challenging party’s concerns are not enough on their own; they must be supported by objective evidence.”
• “An arbitrator serving in parallel proceedings does not by itself establish prejudgment or unconscious bias. It was held that arbitrators may still hear separate cases involving similar facts, legal questions, witnesses or measures without necessarily losing their independence or impartiality.”
• “Here, the decision rested on the combined effect of several circumstances: Professor Sands would hear many of the same witnesses, review related documents concerning the same asset, and take part in confidential ICC deliberations before the evidence was considered in the ICSID arbitration. In those circumstances, a reasonable third party would perceive an obvious risk that impressions formed in the ICC arbitration could influence Professor Sands’s assessment of the ICSID case.”
• “The Unchallenged Arbitrators concluded that Professor Sands’ continued participation would create an imbalance within the ICSID tribunal. They disqualified him and reserved the question of the costs arising from the Disqualification Proposal for a later stage.”

“New York City Bar Association adds guidance to ‘safe harbor’ conflict of interest rule for new hires” —

• “After the New York City Bar Association issued ethics guidance last year that created a new workaround for conflicts of interest that arise when attorneys move law firms, its Professional Ethics Committee followed up last week with a clarification of the rule.”
• “The rule allows law firms to avoid having a new hire’s conflicts of interest affect the rest of the firm by preventing the attorney from working, discussing, or profiting from cases involving their former clients and notifying the former client in writing — rather than obtaining a conflict waiver, as previously required.”
• “But the Professional Ethics Committee wanted to clarify some key exceptions to the new rule that will save law firms complications in court.”
• “A keystone rule of professional conduct is that a lawyer ordinarily cannot work on both sides of a legal matter. When a lawyer switches firms, he may bring with him conflicts from his previous firm. If the lateral hire was working for one side of a negotiation, for instance, they cannot change firms, then start working for the other side in the same negotiation. That rule doesn’t just apply to the hire but the entire law firm that he’s joining.”
• “Up until last year, the only way around that conflict was through a waiver that the client would have to agree to, indicating that the firm can represent the other party as long as the lawyer promises not to reveal confidential information. “
• “The new rule provides a shortcut, referred to as a ‘safe harbor,’ in which the new hire alone is blocked from being involved with clients on the other side of a conflict of interest. That means they cannot work on a case, talk about it, have access to the case file, and/or profit from it. “
• “The idea is that waivers are more restrictive and harder to attain than merely screening the new hire. The safe harbor rule applies to conflicts arising from past work, except in scenarios where the attorney had high-level management of decision-making authority.”
• “For instance, a firm cannot use the new screening method and must ask for a formal conflict waiver if the matter involves an active litigation, arbitration, or a formal dispute process that the lawyer worked on before moving, and the lawyer had substantial, day-to-day management or decision-making responsibility over that litigation. If for instance, the lawyer was a lead partner as opposed to a junior associate doing basic document review, the firm would still have to file a waiver.”
• “When safe harbor applies, the law firm must notify the former client that it is screening its new hire within a ‘prompt’ time frame.”
• “One goal of the notification process is to prevent conflicts of interest from arising in court and derailing litigation. ‘Let’s say that the lateral did screen, but the other side says, ‘Well, wait a second, you were in charge of this matter, so under the New York rule, you fall within the exception to the exception. You’re not entitled to the safe harbor.’’ Salzman said. ‘Then, typically in a litigation context, the opponent would complain to the judge and move to disqualify the law firm, and then the judge would have to rule on whether the law firm ought to be disqualified or not.'”
• Opinion: here.

“Do I have a conflict? Case law reveals some practical ways to know” —

• “One of the most anxiety-riddled words for a busy lawyer juggling an existing caseload while onboarding new clients is ‘conflict.’ Raising the specter of competing interests and divided loyalties is a surefire way to capture the attention of any lawyer, because duties to clients are paramount. Yet in a world where lawyers switch firms frequently, building a portfolio rather than settling down in one place for a career, the question of conflict is common. Fortunately, case law interpreting current rules of professional conduct continues to shed light as a practical matter on how to determine whether a conflict exists.”
• “Contact is not automatically conflict In the recent (2026) case of Munger Hortifrut North America v. Dan Drake Enterprises (Munger), a company that was embroiled in ongoing litigation sought to disqualify the law firm of opposing counsel after an associate who had previously taken part in two depositions switched firms to briefly join the law firm representing the opposing party in the case. Regarding investment of time, the associate had logged slightly more than 21 hours on the case, but her new position at the firm of the opposition focused on unrelated areas of law and was in a different office. When the new law firm learned about the potential conflict, they promptly executed measures to prevent any contact or information exchange between the new associate and the litigation team. Further, they ended up terminating her within 10 days.” [Decision: Here.]
• “The Superior Court of Kern County reviewing the facts denied a disqualification motion. It found no evidence the associate had shared confidential information with the attorneys in the new firm or had any substantive communication with the litigation team after joining the firm. The court also cited the immediate steps the firm took to isolate the associate, including erecting an ethical screen, and concluded there was no disclosure of confidential information.”
• “The California Court of Appeal, Fifth Appellate District, incorporating the current California Rules of Professional Conduct, held that after the associate was terminated, disqualification of the entire firm would only be required if attorneys who remained at the firm were in possession of material, confidential information derived from the associate’s prior representation of the opposing party. Because the appellate court agreed with the trial court’s finding that no such information had been disclosed, it affirmed the order denying disqualification.”
• “In addition to rule 1.9, considering the frequency with which modern lawyers switch firms over the years, lawyers and law firm managing partners are also wise to consider rule 1.7 Conflict of Interest: Current Clients, which in paragraph (a), prohibits lawyers from representing clients in circumstances where the representation is ‘directly adverse’ to another of the lawyer’s client in the same or a separate matter. There are exceptions and caveats within rule 1.7 as in the other conflict of interest rules which should be considered generally as well.”
• “Particularly with large law firms spanning different jurisdictions, hiring lawyers from other firms requires diligent screening. This involves active engagement between the lawyers themselves, as well as the managing partners and supervisors at the law firms in question. (See rule 5.1 Responsibilities of Managerial and Supervisory Lawyers and rule 5.2 Responsibilities of a Subordinate Lawyer).”
• “Munger provides useful guidance on the limits of imputed conflicts with lateral hires, as well as the types of settings and circumstances where diligent screening procedures may be effective. A few important takeaways, particularly in a jurisdiction where lateral hires are common: ask questions early and often and have a list of common questions modeled after the relevant ethical rules at the ready, because they will be relevant in every case. In this fashion, lawyers and law firms can greatly increase the chances of providing conflict-free representation that is engaging, effective and ethical.”

David Kluft asks: “If I file an answer on behalf of a party I don’t represent, do I now represent them for conflict purposes?” —

• “A NJ employee field a work-related injury claim against his respondent employer. The defendant tendered the claim to its insurer, who passed on the claim to a law firm. The law firm filed an answer on behalf of the respondent, identifying itself as the respondent’s counsel. Four days later, the firm filed an amended claim stating that it only represented the insurer, which was denying coverage, a position clearly adverse to the respondent.”
• “When the respondent moved to disqualify the firm for the obvious conflict, the firm argued that it was the court’s fault: the docketing system only allows you to respond to such claims with a ‘partially prefilled answer form provided by the electronic system,’ in which you cannot change the name of the respondent. Therefore, the firm stated that its ‘normal practice’ was to file a ‘preliminary answer’ that looks like it comes from the respondent but is really just to let the court know the firm is involved. The firm claims it never represented or even gave any advice to the respondent, so it shouldn’t be regarded as their attorney just because it filed a form purportedly on their behalf.”
• “The trial judge and the appellate division were not impressed by this explanation. The firm could have filed the response manually [presumably using the blank form easily available online]. Additionally, despite the firm’s protests to have no attorney client relationship with the respondent, ‘the firm clearly represented [the respondent], even if it was for just four days, when it undertook its defense by filing an answer.'”
• Opinion: here

“‘Is she even allowed to be doing this?’: Inside a federal judge’s side gig running a PR firm” —

• “A Trump-appointed federal appeals judge spent months running a Washington public affairs firm after being appointed to the bench last year, an arrangement that contributed to an exodus among the firm’s staff and clients and only ended when the firm went out of business at the end of June.”
• “Jennifer Mascott, a former conservative law professor who sits on the 3rd Circuit Court of Appeals, was deeply involved in daily operations at the firm, Adfero, for at least six months after she was confirmed as a judge in October 2025, according to 14 former employees and clients granted anonymity to discuss internal details of the firm’s final months.”
• “Nine of the former employees said Mascott, who inherited her ownership stake in the firm from her late husband in 2023, worked at least once a week out of Adfero’s office in Washington and oversaw the firm’s staffing, business development efforts and client relations in between her full-time judicial duties in Wilmington and Philadelphia.”
• “The firm was historically a nonpartisan business that did public relations and marketing work for companies and trade associations such as PhRMA and the National Retail Federation. In the final months of the business, Mascott brought on consultants with strong MAGA credentials, according to eight of the former employees and clients. Her leadership of the firm involved operational and strategic decisions: She required her signoff on marketing materials and suggested staff pitch the firm’s services to health insurers after the loss of crucial clients like PhRMA.”
• “The details of Mascott’s involvement with the firm, which have not been previously reported, come amid a yearslong push by members of Congress and others in the legal community for stricter ethical requirements for judges. While judges are barred from engaging in business activities that could call their impartiality into question, they may maintain ownership of family businesses as long as they are not using the prestige of their judgeship to further the business or taking significant time away from their judicial duties.”
• “Mascott said she adhered to legal and ethical requirements and ensured she was fully transparent with relevant authorities during her stewardship of Adfero. But her former employees and some of the firm’s clients said the arrangement made them uncomfortable. And ultimately, the resulting loss of staff and clients led to the demise of the company after two decades in operation.”
• “Judicial ethics experts said Mascott’s operation of the firm falls in a gray area, given its nature as a family business. The U.S. court system’s code of conduct for judges generally allows continued participation in ‘a closely held family business,’ but warns such participation ‘may be prohibited if it takes too much time or involves misuse of judicial prestige or if the business is likely to come before the court on which the judge serves.'”
• “‘If she is logging time there and it has the potential to interfere with her judicial duties, that is a no-go,’ said Charles Geyh, a law professor at the Indiana University Mauer School of Law who studies judicial ethics.”
• “The nature of Adfero’s work — the firm’s website boasts examples of its marketing campaigns designed to ‘influence elected officials’ — makes Mascott’s situation unique, said retired federal judge Nancy Gertner, an appointee of President Bill Clinton who has called for Supreme Court justices to adopt the same code of ethics that binds lower court judges like Mascott.”
• “‘It’s not like she’s making widgets,’ she said. ‘A company that she controls is sending out a message that she could never send out directly.'”
• “Mascott told staffers who questioned the arrangement that her management posed no problem as long as she recused herself from matters involving the firm, its clients or potential clients, according to three of the former employees. The explanation did little to assuage their concerns.”
• “‘On one hand, maybe the owner of the company should be involved, but on the other hand she’s a judge,’ said one former employee. ‘People asked me ‘Is this legal?’ I don’t know. ‘Is this ethical?’ Certainly not.'”
• “One former client pointed to Mascott’s unusual arrangement as one reason they sought services elsewhere.”
• “In February 2025, an Adfero account executive published an op-ed in PR Week on the importance of diversity, equity and inclusion in public relations. Adfero promoted the op-ed on its social media accounts until Mascott had the posts removed, according to four former employees. Mascott sent the staffer flowers congratulating her on the op-ed, but afterwards started requiring her approval on the firm’s marketing materials.”
• “Two former clients told POLITICO they decided to end their work with Adfero because nearly their entire account teams had left the firm. On multiple occasions, firm clients saw their entire account teams resign but were not told until the last minute due to a directive from Mascott that firm departures not be announced until just before a staffer’s final day, four former employees and one client said.”

See also: “Senator Weighs Ethics Complaint Over Judge’s Alleged Conflicts“

“Training AI Tools on Client Data? Talk to Clients First” —

• “Big Law firms are sitting on a mountain of data from past client engagements, and the AI tools they’re developing require real world data to be accurate and useful. The perfect match? Not so fast, clients say.”
• “‘My first initial reaction would be I would not want my organization’s data used in a learning situation, because I don’t know what’s going to happen when they do that,’ said Av Maharaj, VP of Canadian legal and corporate affairs and global legal procurement at Kraft Heinz Company.”
• “Maharaj is one of several in-house counsel who expressed varying reservations about the prospect of their company’s data being used to train or inform AI tools at law firms.”
• “In addition to concerns about sensitive data leaking and falling into the wrong hands, in-house counsel, consultants and even law firm AI leaders raised another issue: precedent.”
• “‘If I go to a law firm and say, ‘Hey can you tell me what the market rate for a management fee and carried interest for this kind of fund is?’ I’d say 100% that the law firm is going to look at all the data they have on hand, whether it’s their client or not,’ said SmartEsq CEO Esther Chiang. While not a novel use of law firms’ internal databases, accessing precedent in the AI era amounts to ‘doing what I described on steroids forever,’ Chiang said.”
• “That capability has shifted the conversation about how law firms use precedent altogether, Crowell & Moring chief innovation and value officer Alma Asay said.”
• “‘Because of generative AI, clients have become more hesitant about how and where law firms use precedent to inform work moving forward because of the concern that precedent is used in ways that weren’t expected, and at a scale that is different than one lawyer looking at how they wrote a provision in the past,’ Asay said. ‘If they’re using that to inform how they write a similar provision for another client, that’s a different use case.'”
• “The idea that a bespoke, savvy and expensive solution crafted for one client might be rapidly repurposed for a competitor raises ethical questions about how data owned by clients ought to be used, said Clio lawyer in residence Joshua Lenon.”
• “‘That data belongs to the client,’ Lenon said. ‘When we look at training AI, are we training AI for the benefit of the client or the benefit of the law firm? If it’s for the benefit of the law firm and future unaffiliated clients, that is a bit of an ethical gray area at best.'”
• “Also top of mind for clients is the confidentiality of sensitive data they turn over to law firms.”
• “‘The confidentiality point becomes very, very important. What if my information gets out into the open? What does that look like? And what are the implications for my solicitor-client privilege?’ Maharaj said. ‘There are lots of questions being opened up. We’re getting there slowly on these answers, but I think there are a lot of questions.'”
• “In turn, law firms have agreements with enterprise software providers that prohibit the latter party from training their models on client data, and law firm AI leaders said questions about those agreements are increasingly surfacing in outside counsel guidelines.”
• “And law firms can help by adding specific AI clauses in their own engagement letters, Polsinelli COO Regan Lemke said. ‘Whether we or clients are bringing it up, we’re making sure we’re talking to them about what we’re doing with their data.'”
• “Clients are also asking firms to exclude or redact particularly sensitive data from AI tools altogether, regardless of confidentiality provisions.”
• “Despite varying reservations, clients are coming around to the idea of their data being used to help law firms improve their AI tools and, in turn, client service.”
• “‘The biggest thing I find interesting is the journey in outside counsel guidelines,’ said Katten Muchin Rosenman chief innovation officer Andrew Sprogis. ‘They went from ‘Don’t do anything’ to ‘We need you to do it and we need you to do it safely,’ even in the past six months.'”
• “Ultimately, Big Law AI leaders emphasized the importance of ongoing communication between law firms, clients and vendors as all three parties mature in the AI era.”

“ABA Issues New Rule on Government Lawyer Misconduct” —

• “Government lawyers have a duty to report unlawful conduct by fellow government employees. The duty applies when the misconduct could substantially harm the government agency they represent, according to a new ethics opinion from the American Bar Association (ABA). The guidance explains how attorneys should respond to wrongdoing within public agencies.
• “Although the opinion is not legally binding, it carries significant influence. Many states rely on the ABA’s Model Rules of Professional Conduct when interpreting attorney ethics obligations. Consequently, the guidance could shape how government attorneys, agencies, and state disciplinary authorities handle misconduct investigations.”
• “The ABA’s Standing Committee on Ethics and Professional Responsibility released Formal Opinion 524. The opinion explains how Rule 1.13 of the ABA Model Rules applies to lawyers representing government organizations instead of private clients.”
• “The committee concluded that government lawyers cannot ignore unlawful conduct by government officials or employees. The duty applies when the misconduct is likely to cause substantial injury to the agency. Instead, attorneys must take appropriate action to protect the government organization they represent.”
• “Furthermore, the opinion explains that a government lawyer’s client is the government organization itself. It is not an individual officer, employee, or elected official. As a result, attorneys must place the organization’s interests first when misconduct occurs.”
• “According to the ABA, reporting obligations arise when a government lawyer knows an officer or employee violated the law. The duty also applies when someone breaches a legal obligation while acting in an official role.”
• “The committee stated that unlawful conduct may expose an agency to financial losses or legal liability. It may also damage public confidence. Therefore, attorneys should help prevent or reduce those harms whenever possible.”
• “Additionally, the opinion recognizes that government agencies serve the public interest. Consequently, misconduct by public officials may have broader consequences than similar violations in private organizations.”
• Opinion; here.

“Texas law firm agrees $15mn settlement over judicial scandal” —

• “One of the most prominent Texas law firms has agreed to pay a $15mn settlement to resolve a lawsuit brought by US federal authorities over a judicial scandal that gripped the US bankruptcy system.”
• “Jackson Walker LLP had been accused by the Office of the US Trustee of failing to disclose a romantic relationship between one of its former partners, Elizabeth Freeman, and Judge David Jones. Freeman had served as a judicial clerk to Jones before being hired by Jackson Walker. The firm appeared in more than 30 Chapter 11 cases between 2018 and 2023 where Freeman represented clients in front of Jones.”
• “Jones, whose influence among bankruptcy advisers had turned Houston into the US’s insolvency capital, quickly resigned from the bench in October 2023 after admitting to the relationship when confronted by questions from the media. In late 2022, Freeman had left Jackson Walker to start her own practice, which would work with her former employer.”
• “The US bankruptcy code allows debtors to have bankruptcy estates pay their professional fees but requires that advisers be independent and disclose to the court any possible conflicts of interest they may have in cases.”
• “Jackson Walker had typically served as a local counsel to debtors represented by national lawyers from Kirkland & Ellis, who routinely filed major cases in the Southern District of Texas where Jones would become the chief bankruptcy judge.”
• “The US Trustee, which represents the public’s interest in Chapter 11 cases, said Jackson Walker knew or should have known about the Freeman-Jones relationship. The agency had been seeking to claw back more than $30mn in fees Jackson Walker had been paid in 33 different cases where Freeman had participated, including the high-profile restructurings of JC Penney and Neiman Marcus.”
• “The Texas bankruptcy court earlier this summer had separately approved settlements that Jackson Walker had struck with several individual bankruptcy estates to pay back nearly $5mn in fees that had been disbursed in those cases.”
• “A federal district judge in 2024 dismissed a racketeering lawsuit filed by a bankruptcy claimant against Jones, Freeman, Jackson Walker and Kirkland & Ellis, but criticised the group for not previously disclosing the conflict of interest stemming from the relationship.”
• “The US Trustee settlement requires the approval of the Texas bankruptcy court, and Jackson Walker said in the settlement filing on Monday it had also made changes to its ‘conflict screening and disclosure practices’ and intended to hire a third-party consultant to review its compliance.”

“Muddy Waters Moves to Disqualify Quinn Emanuel Over Prior Representation” —

• “Muddy Waters Capital asked a federal judge in Austin on July 19 to disqualify the law firm Quinn Emanuel from representing Techtronic Industries in a lawsuit against the short seller, saying the firm previously represented Muddy Waters in a related government investigation and holds confidential information that could be used against it.”
• “Quinn Emanuel previously represented Muddy Waters, founder Carson Block and affiliated entities when they became subjects of Justice Department and SEC investigations into activist short sellers in October 2021. The SEC closed its inquiry in July 2024 without taking enforcement action. During the representation, the firm received extensive confidential information about Muddy Waters’ business, strategies and relationships with third-party researchers, according to the motion. Muddy Waters says the firm assured it there were no conflicts and promised to keep its information confidential.”
• “The motion describes Quinn Emanuel’s conduct as part of a broader pattern of ethical lapses and argues that allowing the firm to continue representing Techtronic would undermine public confidence in the legal profession. It cites several recent cases in which courts disqualified the firm over similar conflicts, including matters involving CoStar Group, X Corp. v. Bright Data and Gil-White v. Alterna Capital Partners.”
• “Quinn Emanuel’s representation of Muddy Waters involved strategy discussions, review of confidential documents, and advice on legal and media responses during the DOJ and SEC investigation.”
• “Engagement letters and communications indicate that Quinn Emanuel agreed not to use Muddy Waters’ confidential information in any future adverse representations.”
• “While still representing Muddy Waters, Quinn Emanuel published articles on how to sue short sellers, referencing Muddy Waters and its founder.”
• “After the investigation concluded, Quinn Emanuel unilaterally ended its representation of Muddy Waters and began representing TTI in a lawsuit against Muddy Waters, alleging conspiracy to libel TTI.”
• “Muddy Waters alleges that Quinn Emanuel is now using, or could use, confidential information obtained during its prior representation to the detriment of its former client.”
• “When contacted for a comment on Tuesday, a Quinn Emanuel spokesman wrote in an emailed statement: ‘We believe the motion is meritless and intend to oppose it.'”
• “Muddy Waters delayed filing the motion until TTI requested broad discovery, including depositions of Quinn Emanuel’s former clients, which made the conflict unavoidable, according to the motion.”
• “Carson Block, CEO of Muddy Waters, submitted a declaration supporting the motion to disqualify Quinn Emanuel from representing Techtronic Industries. Block asserts that Quinn Emanuel’s actions violate ethical duties of loyalty and confidentiality, as the new representation is substantially related to the prior engagement and involves the same confidential subject matter. The declaration expresses shock and disappointment at Quinn Emanuel’s conduct and emphasizes the expectation of undivided loyalty from legal counsel.”
• “‘Muddy Waters has spent years holding companies to account—unsurprisingly the legal profession needs some of that same scrutiny,’ Block wrote in an emailed statement. ‘At least eight recent conflict-related disqualifications and resignations isn’t bad luck; it’s a pattern, and law firms shouldn’t get a pass on it.'”

“Heritage Valley accuses whistleblowers’ lawyer of conflict of interest” —

• “Heritage Valley Health System is accusing attorneys representing plaintiffs in a whistleblower lawsuit of a conflict of interest and trying to jettison them from the case.”
• “The whistleblowers have alleged in a federal lawsuit that system officials ignored repeated complaints about a nurse they claim caused the death of at least two patients because he was high.”
• “On Monday, lawyers for the health system filed a motion seeking to disqualify the law firm representing the whistleblowers — a current and former nurse at the facility.”
• “One of the plaintiffs’ attorneys, Charles Kelly, with the law firm Saul Ewing, served on Heritage Valley’s board of directors for three years —
• from 2021 to 2024. Some of the alleged misconduct occurred during that period.”
  “The lawsuit claimed that Kelly, as a board member, learned inside information about Heritage Valley’s operations, strategy, compliance, risk management and executive compensation.”
• “The filing called it ‘massive overlaps on multiple issues,’ which show an ‘egregious’ conflict.”
• “Joseph Valenti, an attorney from Saul Ewing, said in a statement Wednesday that questions about the alleged conflict will be addressed in his firm’s response, which is due July 31.”
• “[The filing] also asserted that Kelly, one of the lead attorneys in the whistleblower lawsuit — as well as his firm — ought to be disqualified. ‘(T)he evidence shows that Attorney Kelly was privy to the very (Heritage Valley Health System) subject matter that forms the backbone of the lawsuit he now seeks to prosecute against his former client… Indeed, individual defendants in this matter participated in meetings with Attorney Kelly and other board members on the very subject matter he now seeks to litigate against them.'”
• “According to the filing, Kelly served on several committees while he was on the board, including quality management/medical affairs, risk and corporate compliance and executive compensation.”
• “‘In those roles, he received confidential and privileged information concerning (Heritage Valley Health System) and its operations, practices, policies, procedures and its strategic future,’ the filing said.”
• “Part of that future, the court document continued, was the multi-year effort by Heritage Valley to find another health system with which to merge.”
• “‘As a partner at Saul Ewing, he was in the business of suing insurance companies like Highmark,’ the brief said. ‘Attorney Kelly opposed the AHN affiliation and tried to persuade other members of the board to oppose it as well.”
• “‘He did not prevail. When it became clear that a majority of the board was prepared to move forward in negotiations with AHN, Attorney Kelly abruptly left the (Heritage Valley Health System) board meeting and resigned from the board via an email sent later that night.'”
• “Six months later, the document continued, Kelly resurfaced as opposing counsel in the whistleblower case.”
• “At the time, though, the filing said, Heritage Valley officials did not know about the lawsuit, as it was proceeding under seal while the U.S. Attorney’s Office in Pittsburgh decided whether to intervene, which it declined to do in June.”
• “The brief cited several examples of what the health system sees as Kelly’s conflict of interest. He had access to Heritage Valley’s quarterly patient safety report, which included information on events included in the whistleblower lawsuit; he was familiar with the desire of Heritage Valley officials to get a substantial retention or severance package in the merger; and he was kept abreast of the health system’s billing practices.”
• “If the whistleblower claims are true, the filing said, then Kelly is suing Heritage Valley for violations ‘that happened under his watch and, given his committee assignments, by his own failures while serving on the board.'”
• “If there is a conflict of interest for Kelly, it continued, the conflict extends to his firm, as well. The brief notes that Kelly was a partner at Saul Ewing during his time on the board and that he used firm resources —including assistance from staff and firm emails — in his board work.”
• “Finally, the brief also asserts that Kelly acted as an attorney for the board, making it impossible for him to continue in the whistleblower suit against the health system.”
• “His legal advice was so pervasive, the filing said, that other board members ‘understood him to be their counsel.'”
• “‘(Heritage Valley’s) CEO, board officers and other employees repeatedly sought Attorney Kelly’s legal review of agreements, conflict waivers, litigation matters and payor disputes,’ the brief said. ‘They plainly sought Attorney Kelly’s legal advice.'”

“Skadden’s Intel Work Conflicts With Trump Deal, Lawmakers Say” —

• “Top Democratic lawmakers on Tuesday sought information from Skadden Arps Slate Meagher & Flom on the law firm’s agreement with President Donald Trump for free legal services.”
• “The firm’s work advising Intel Corp. on the US government’s 10% stake in the company ‘presents a host of conflicts given Skadden’s agreement with the Trump administration,’ Sens. Richard Blumenthal (D-Conn.) and Adam Schiff (D-Calif.), and Rep. Jamie Raskin (D-Md.) wrote in a letter.”
• “Intel shareholders in a Delaware Chancery Court complaint in March alleged such a conflict, the lawmakers said in their letter to firm Executive Partner Jeremy London. ‘It is hard to understand how Skadden’s provision of free legal services to the Trump administration and the allegations made in the complaint do not cause Skadden’s attorneys to be in violation’ of professional conduct rules, they said.”
• “The letter emphasizes the investigatory threat Democrats pose to Skadden and eight other Big Law firms that collectively pledged $940 million in free legal services to the Trump administration last year in return for avoiding punitive executive orders. Democratic wins of either the House or Senate in the fall mid-term elections would supply committees they run with subpoena power to press investigations.”
• “So far the firm ‘has provided no responsive information or records in response to our requests,’ the lawmakers wrote, noting they have twice previously asked Skadden for information. The law firm didn’t immediately respond to a request for comment.”

“When Hiring Rainmakers Demands ‘Surgical’ Precision” —

• “Not every lateral partner, even with a book of business, can add value to a Big Law firm’s practice. Some rainmaking laterals could be business accretive and add value, while others could afflict a firm’s culture or other partners’ business after a lateral move.”
• “‘We have to be surgical with our hires at this point to not cannibalize the business,’ noted Frank Lopez, chair of Paul Hastings, which has a leading finance practice within Big Law, when speaking of a lateral hire earlier this month.”
• “He’s far from alone. Other firm leaders also spoke on considerations of adding lateral partners to already well-built-out and mature practices, such as the potential for conflict and business conflicts, impact on culture, and the impact on other partners’ business.”
• “One Am Law 50 leader, speaking on condition of anonymity to speak freely, said that at their firm, knowing the reaction of the existing partnership is key to the hiring process. ‘No matter who you hire, you have to care about how your people are going to feel about them,’ the firm leader said. ‘You can’t talk about how culture matters and then bring people without taking that into consideration. That fit can be more important than the business case for bringing them on.'”
• “A lateral hire could impact an existing practice in a number of ways, including conflicts, taking business credit away from a current partner, or just adjusting the culture within a firm. If a firm has a highly ranked practice, with brand names staffing it as well as a strong market reputation, firms don’t want to cannibalize their own practice.”
• “‘Law firms don’t want to risk hiring into a practice and then losing someone,’ said Jon Truster, partner at recruiting firm Macrae. ‘And that is where firms need to be more surgical.'”
• “Law firms should ultimately be hiring people who can effectively leverage off the platform, noted Matthew Bersani, founding partner of Cliff Group recruiting firm. ‘That goes to the whole question about strategic hires,’ he said.”
• “Still, firms can also seek out laterals who have the same clients but different types of matters, such as trying to obtain litigation work from a client that has only given their transactional matters to a firm. Smart lateral hiring should be less about the book of business and more about the relationships laterals can bring and how those fit into the existing platform, he said.”
• “Business conflicts or actual client conflicts from a lateral can also damage a practice. Law firms always do conflict checks with laterals, but sometimes a potential conflict is missed, or the move is not as ‘accretive’ as the firm thought it would be, due to a conflict, Bersani said.”
• “For instance, a restructuring partner who is averse to big banks in debtor representations could lose out on business to banking and finance partners, who have strong relationships with these bank clients. ‘You’re forcing partners to pass up on other business,’ Bersani said.”
• “These lateral hiring conflict and business clash issues are a frequent problem for law firms, Bersani said, but it’s a matter of degree — some lateral partners may reduce or overlap with other partners’ business, but not significantly.”
• “‘It’s very hard to assess the magnitude of those issues from the outside,’ Bersani added. It’s important for the law firm bringing laterals in to do a deep dive on these potential issues before bringing them on board, he said.”
• “Lateral move conflicts and clashes with other partners’ business ‘probably happen more than firms would like them to,’ Bersani said. ‘In the current rapid-fire hiring market, sometimes these issues have been overlooked or under-appreciated in terms of the impact they can make.'”
• “And these issues are popping up more, as firms hire more laterals and more quickly. ‘One of the risks of bringing in laterals fast is you might be under-appreciating the potential conflicts issues,’ Bersani said.”
• “Rainmaker hiring is the one that firms put on the full court press, as one of these hires can have an outsized effect on the future of the firm. ‘Rainmakers are always on the table.'”

“Sidley Partner Rebuts Conflict Claim in Genesis Healthcare Case” —

• “Sidley Austin LLP partner Thomas R. Califano said he isn’t conflicted as counsel in the bankruptcy of Genesis Healthcare Inc., in a bid to fend off arguments for disqualification leveled by investor Joel Landau.”
• “Califano represented Landau’s investment vehicle ReGen Healthcare LLC in a limited capacity in late 2020. But that doesn’t taint his or his firm’s disinterestedness in lawsuits filed against Landau, the Sidley attorney said in a declaration filed with the US Bankruptcy Court for the Southern District of Texas.”
• “Landau, who has been accused of exerting control over Genesis to loot valuable assets from the nursing home operator before it filed for Chapter 11, last week urged the bankruptcy court to bar Califano and Sidley from the proceedings. Califano failed to fully disclose his connections to Landau and the confidential information he gleaned about the investor’s business interests, according to the disqualification bid.”
• “In his July 24 declaration, Califano said he briefly provided advice to ReGen when he was a lawyer at DLA Piper LLP about the risks of becoming a new investor in Genesis if the company filed for bankruptcy. The ‘limited engagement’ for ReGen, not Landau, didn’t cover ‘the underlying substantive terms or conditions of that investment,’ the attorney said.”
• “‘Neither ReGen nor Mr. Landau has ever been a client of Sidley, either before or after I moved to Sidley in April 2021,’ Califano said. ‘This representation from five years ago, while at a prior firm, will have no impact on Sidley’s representation.'”
• “A hearing on the motion before Judge Stacey G. C. Jernigan is set for Aug. 11.”
• “Landau and his corporate affiliates have been named as defendants in litigation filed by Genesis following the investor’s failed bid to buy the company out of bankruptcy. The investor, who has garnered attention from some US Senate and House Democrats over his private equity firm’s role in the Genesis bankruptcy, has argued that his investments saved the company from a liquidity crisis in early 2021.”

“Judge Blasts Firm Trying to Kick Him Off Phila. Zantac Litigation” —

• “A Pennsylvania judge says that a large Chicago-based plaintiffs firm has ‘effectively ground’ the city’s Zantac mass tort to a halt through a handful of recusal motions and related appeals.”
• “In a filing to the state Superior Court on Tuesday, Philadelphia Judge Joshua Roberts asked the intermediate appeals court to affirm his decision from April denying Keller Postman’s latest effort to recuse him from the consolidated litigation, where nearly 600 cases are pending.”
• “The firm had sought to recuse Roberts because his wife is a partner at Blank Rome, which represents Apotex Corp., a defendant in the broader mass tort. It’s the second time the firm has sought to kick Roberts from the litigation after it filed a recusal motion over his wife’s ties to her then-firm, Reed Smith, which represented Zantac manufacturer GlaxoSmithKline in litigation over the drug in other states.”
• “In the 14-page filing, Roberts cited testimony from Blank Rome’s counsel saying that his wife’s compensation is not directly impacted by Apotex, noted that Keller Postman filed its recusal motion in a case where Apotex is not a defendant, and said the firm is ‘attempting to create a perception of impropriety which otherwise does not exist[.]'”
• “‘From the beginning, following my initial disclosure in December 2023 as supplemented in May 2024, and up through the disclosure that Blank Rome represented Apotex, I have maintained that I can be fair and impartial,’ Roberts said. ‘That has never changed, but that has not stopped Keller Postman from seeking to create a conflict—where none exists—through its filings and statements.'”
• “In a footnote, Roberts suggested that the firm’s repeated efforts to recuse him may have crossed the line into violations of the conduct rules.”
• “‘The court notes that plaintiffs’ counsel has duties to their own clients which may be implicated by this ongoing and seemingly never-ending campaign,’ Roberts said before noting rules against pursuing frivolous actions and requiring lawyers to expedite litigation. ‘It is unclear whether the individual clients have been made aware of the delay in these proceedings, and whether they approve of this approach. Resolution of these issues, if any, is outside of the scope of this opinion.'”
• “Keller Postman represents Roberto Jimenez and other plaintiffs in the Zantac mass tort where plaintiffs alleged that the over-the-counter heartburn medication causes various forms of cancer. The firm filed its latest recusal motion in December, noting that Roberts’ wife began working at Blank Rome in February 2025.”
• “In denying the recusal motion earlier the spring, Roberts noted that only one case involves Apotex—Hilbert v. Boehringer Ingelheim—and that case was filed by Anapol Weiss, which has not sought his recusal. Roberts further explained that Blank Rome entered the Hilbert case in 2021 and that his wife did not join the firm until February 2025, which Roberts said he disclosed that same month.”
• “Roberts also said that his wife has been ‘walled off from having anything to do with Apotex,’ that her ‘compensation has no direct relationship to the amount of fees or income that Blank Rome earns from Apotex,’ and that her compensation from the firm ‘is not tied to Blank Rome’s representation of Apotex.'”
• “Robert reiterated those points in his filing that was entered on the mass tort docket Wednesday, and further noted that the firm not only appealed his recusal effort, but also served subpoenas on his wife, as well as Blank Rome and Reed Smith. The subpoenas were later withdrawn.”

“‘They Kind of Lost Their Way’: Cooley Must Pay $25M for Legal Malpractice” —

• “A New Jersey judge has entered a $25.4 million judgment against Cooley in a legal malpractice suit over a failed pharmaceutical deal.”
• “The order, issued Monday by Douglas H. Hurd, presiding civil judge in Mercer County Superior Court, includes $3 million in attorney fees, $1.1 million in expenses and $5.6 million in prejudgment interest on a $15 million malpractice verdict that was returned in the case in October 2025.”
• “The judgment represents a victory for John Gregg, who filed the suit in 2017, alleging that Cooley failed to disclose a conflict of interest while negotiating financing for his startup drug company, Symbiomix Therapeutics. He alleged he lost control of the company after faulty advice from Cooley about a multimillion dollar investment in the company by two venture capital firms.”
• “Gregg alleged Cooley had a relationship with one of the companies at the time the firm was advising him.”
• “The Cooley statement said, ‘We strongly disagree with the verdict and will be pursuing an appeal. The evidence presented throughout this matter demonstrated that our attorneys acted with professionalism, diligence and integrity. We stand firmly behind their conduct and look forward to a fair and thorough review by the appellate court.'”
• “Gregg, a drug industry veteran, established Symbiomix in 2008. He saw an opportunity to obtain U.S. government approval for Secnidazole, a drug available in Europe for treatment of vaginal infections.”
• “After looking over the two venture capital firms’ proposal to invest tens of millions of dollars in his endeavor, Cooley attorneys exchanged emails with each other stating that the terms were ‘terribly abusive’ and that he was ‘getting absolutely hosed.’ But they did not share those observations with Gregg, the suit alleged.”
• “Some Cooley attorneys allegedly had client relationships with at least one of the venture capital firms but other attorneys at the firm who were advising Gregg allegedly said they were unaware of this.”
• “Speaking of Cooley, Freeman claimed, ‘This is kind of their bread and butter, trying to help startup guys like John Gregg. But you know, they kind of lost their way. I think they really forgot whose interests they were they were trying to protect.'”

“One law firm represents over half of Stanislaus County’s cities. Are people concerned?” —

• “One law firm charges millions of dollars to represent over half the cities in Stanislaus County. Some residents and former clients have raised questions about potential overcharging, erroneous billing or potential conflict of interest.”
• “The Sacramento-based law firm White Brenner represents at least 30 to 55 cities and special districts throughout California at any given time, including Newman, Oakdale, Patterson, Ceres and Riverbank. The majority of cities within Stanislaus County have been represented by White Brenner either currently or in the past.”
• “In 2015, White Brenner touted on its website a $1 million lawsuit it won for Patterson. But in a subsequent lawsuit it lost in 2026, it billed the city approximately $2 million.”
• “Kandace Weyhrauch, a community organizer and volunteer in Patterson, claimed that White Brenner has led the city astray. She’s concerned because the law firm benefits monetarily when it is in litigation.”
• “‘They’re making millions of dollars off of us,’ she said, adding she felt the city has been overcharged.”
• “As of April, Patterson was $1.6 million over its budget for legal services.”
• “Carlos Roque, mayor pro tem of Patterson, said he tried for two months to get on the City Council agenda a discussion about exploring other options for legal services. He was blocked by White Brenner’s City Attorney Nubia Goldstein for a potential Brown Act violation in March 2026, but it was eventually agendized in May.”
• “On May 19, the Patterson City Council approved issuing a request for proposal for a feasibility study on replacing the law firm with in-house counsel.”
• “Goldstein said that no one from the firm assisted with, worked on, or otherwise provided input or review of the feasibility agenda item. During the May 19 meeting, she stepped off the dais during staff’s presentation to avoid potential conflict of interest.”
• “At the June 2 City Council meeting, former Patterson mayor Pat Maisetti called for a Stanislaus County Civil Grand Jury inquiry into the law firm.”
• “‘Personally, I don’t think [a feasibility study] is enough,’ Maisetti said at the meeting. ‘What I think you need to do is have somebody come in from the Stanislaus County Grand Jury and do a full assessment of exactly what’s been going on with the city and how much money is being spent.'”
• “Beougher also wrote a letter to the editor in the Ceres Courier in November 2025, calling out White Brenner for alleged conflicts of interest for providing legal advice to a city and then representing that same city in the resulting litigation.”
• “Douglas L. White, the co-founder of White Brenner, is listed as deputy city attorney for Oakdale, Patterson, Ceres and Riverbank within Stanislaus County. Originally from Modesto, White has his primary residence in Sacramento. His family lives in Spain, so he splits time between the two places.”
• “White denied that the firm has been overcharging cities. He explained that counting developer‑funded cost‑recovery work as if it were taxpayer‑funded city spending inflates the numbers. Those cost‑recovery charges — the firm’s highest rate tier — are passed through the city but paid by developers or bond proceeds rather than the city’s general fund.”

David Kluft asks: “What are a law clerk’s duties when using AI?” —

• “The Iowa Supreme Court has adopted a new Chapter of the Iowa Court Rules entitled ‘Judicial Use of Artificial Intelligence Tools.’ It outlines the duties of judges and their staffs when using AI.”
• “The judge’s duties, as you would expect, include (1) not handing over decision-making responsibility to AI; (2) verification of accuracy and (3) oversight of staff use. “
• “The clerk’s duties include (1) getting permission before using it; (2) letting the judge know AI is being used, and (3) telling the judge whether all factual and legal sources have been independently verified.”
• Rules: here.

“AI-Run Company Gamble Tests the Limits of Delaware Corporate Law” —

• “Delaware’s plan to create a new type of standalone legal entity, the artificial intelligence company, is raising fundamental questions about AI capabilities, business governance, human accountability, and the political economy of America’s corporate capital.”
• “The legislative proposal is short on the specifics that make up a fully formed regulatory apparatus. But its architects have laid out the AIC’s core features, including funding minimums, the ability to own assets, litigation rights, and limited liability for their owners.”
• “A 30-month ‘sandbox’ phase — starting as soon as next year — is designed to let a small number of AICs learn to follow the law while legal institutions simultaneously figure out how to tame the unruly technology reshaping global markets. The public experiment may determine if the AIC gambit represents a novel solution or a hasty misstep.”
• “There’s no consensus about how close autonomous commerce is to a reality, with forecasts ranging from next month to never. That wider uncertainty masks discrete questions about AI’s operational capacities, the psychopathic tendencies of rogue models, and the legal system’s prospects for bringing them to heel.”
• “Other unknowns include how much recognition the entities would receive beyond Delaware — a question likely to be litigated — and how AICs would be governed within the state, where they’d be subject to oversight and potential dissolution by Delaware’s Chancery Court.”