Bressler Risk Blog

“Lawyer Charged With Insider Trading Wants to Subpoena Ex-Firms” —

• “A former Big Law attorney accused of feeding an insider trader ring with confidential client information signaled plans to subpoena the law firms he allegedly exploited.”
• “Nicolo Nourafchan filed a motion Wednesday in Massachusetts federal court to issue three subpoenas to law firms whose private client files he allegedly misappropriated from 2013 to 2023. Federal officials announced charges in May against Nourafchan along with 29 others for participating in a scheme to make trades based on private information about company transactions.”
• “Sidley Austin, Latham & Watkins, and Goodwin Procter may have to disclose their protocols for safeguarding client information, along with the specific material the former associate allegedly misappropriated to facilitate stock trades, should Nourafchan succeed with his motion.”
• “The demand hints that Nourafchan’s defense may seek to incorporate specific information about what records he allegedly accessed and when he accessed them. His lawyer Martin Weinberg also wants to review training for associates regarding their level of access to client files to which they aren’t assigned.”
• “‘The requested materials are necessary to refute the government’s inference that such access was undertaken to obtain confidential information for unlawful tipping,’ the motion states.”
• “His motion asks for legal authority to demand the law firms turn over client information allegedly used to trade stocks and the security protocols used to prevent unauthorized access. The motion also seeks to obtain the firms’ correspondence with federal law enforcement agencies investigating and prosecuting the insider trading defendants.”
• “‘The requested materials go directly to the government’s theory of the case,’ Weinberg wrote. ‘They will also show whether reviewing documents from unassigned matters was unusual or instead consistent with ordinary associate training, research, and drafting practices.'”
• “Weinberg went on to state that ‘because these issues bear directly on whether Mr. Nourafchan obtained and misused material nonpublic information as alleged, the defense requests production sufficiently in advance of trial to permit meaningful review and preparation.’ “

“US sanctions Greece-, Panama-based law firm over aid to Iranian shipping” —

• “The US Treasury Department imposed sanctions on Wednesday on Karnakis & Karnakis, a law firm based in Greece and Panama, saying it had for years provided legal assistance to Iranian shipping networks.”
• “The US Financial Crimes Enforcement Network also issued an administrative subpoena to advance an investigation into a Greek bank over potential ties to Iran, according to a Treasury statement, which did not name the bank.”
• “FINCEN also issued requests for information to six other European banks that it did not name over relationships with Iranian financial institutions under US sanctions. ‘Whether you are conducting illegal oil transfers at sea or sitting in the corner office of a law firm, if you are supporting the Iranian regime, we will find you and sanction you,’ Treasury Secretary Scott Bessent said in a release.”
• “State Department spokesman Tommy Pigott said Karnakis & Karnakis for years ‘set up shell companies to hide the true owners of vessels carrying Iranian oil, petrochemicals, and steel.’ He said the firm created companies that served as fronts for networks selling millions of barrels of Iranian oil to benefit the Islamic Revolutionary Guard Corps Quds Force and the Houthis. Karnakis & Karnakis did not immediately respond to a request for comment. Treasury also imposed sanctions on Singapore- and UAE-based shipping agents that it said directly aid Iranian shadow fleet operations.”
• See also: “Greece to impose sanctions on Iran-linked law firm, following US measures“

“Anthropic’s Ambitions in Legal Technology Get a Reality Check” —

• “It was billed as a ‘fireside chat,’ but law-firm innovation leaders had high hopes for a private meeting with Anthropic’s new head of Claude for Legal at a convention in Nashville, Tenn.”
• “The presentation from Robert Mahari — just a few weeks into his new role at Anthropic at the time — underscored to some law firms that the company, despite its industry-leading AI models and world-altering potential, is still just a 5-year old startup figuring out how to sell its products. It’s trying to enter a market where many lawyers have developed trust in AI products made by legacy platforms or startups like Harvey.”
• “‘They need to wake up,’ one of the people in the room said of Anthropic. ‘They do need to hear that we’re not impressed.'”
• “Forty-four percent of firms are using or exploring using Claude, tied with Thomson Reuters CoCounsel and trailing only Microsoft’s Copilot as the most popular AI tool among firms, according to a survey published last month by the International Legal Technology Association. But Anthropic hasn’t yet converted the high interest into long-term customers. Among the firms using or exploring Claude, just 7% said they had fully rolled it out to attorneys.”
• “All that colored how the law firm leaders received Mahari’s presentation, according to interviews with five people who attended the meeting and were granted anonymity to describe a closed-door discussion.”
• “‘It landed awkwardly in a room full of people who are trying to see if they can actually deploy Claude and are under pressure from their stakeholders,’ an attendee said.”
• “Law firms often negotiate some privacy and data security terms in their contracts with software vendors. Different firms have different risk tolerances, which they incorporate through negotiations with vendors.”
• “Anthropic, one meeting attendee said, is not far off the pace on the privacy terms it included in its base contracts. But he said his firm often negotiates privacy terms, and Anthropic isn’t willing to do that.”
• “Another meeting attendee said he balked at giving Claude access to email, because the system could then potentially access data from clients who don’t want their information in AI tools. The same person also took issue with Anthropic’s decision not to offer zero data retention policies for its Fable 5 model.”
• “Some firms have accepted Anthropic’s terms, deciding that Claude meets their safety standards. Ogletree Deakins has been running a pilot with Claude since February. Timothy Fox, the firm’s chief data and AI officer, said it has ownership over the data that goes into Claude and the answers it spits out.”
• “Despite the success, Fox said, ‘it is not a product that is geared for legal, and so they don’t design their enterprise security like a legal platform would. And so legal vendors are great because they know what a law firm is looking for.'”
  “He’s willing to be patient as Anthropic learns the industry and adds more functions for lawyers. Fox, like other innovation leaders interviewed for this story, said Anthropic was still in the early days of developing products for the legal industry, and that it had only recently attracted the attention of major firms.”
  “‘We give them some grace and some credit,’ he said.”
  “Anthropic is swaggering into the legal market as both top dog and underdog.”
  “As top dog, it has raised more than $100 billion, built an industry-leading reputation for Claude, and is eyeing a $2 trillion valuation in a forthcoming IPO planned for mid-November, Bloomberg News has reported.”
  “Those advantages were reflected in that private meeting in August, where innovation chiefs were excited that a company with Anthropic’s reputation is investing in legal work. Despite their misgivings about the meeting, some of the attendees who spoke with Bloomberg Law said they were still interested in paying for Claude—if it stands out from tools they’re already paying for.”
  “Some law firms use enterprise tools developed by Harvey or Legora alongside subscriptions to Claude or ChatGPT Enterprise that attorneys can use for quick queries. Whether firms believe they need both is an open question.”
• “‘The primary takeaway from that meeting was that unlike a lot of other legal tech vendors, there was a strong sense that we as an industry probably don’t rate significantly high on Anthropic’s universe of expected revenue, and therefore the level of attention that we would get as an industry is relatively low,’ one meeting attendee said.”
• “Bigger firms may have the resources to implement Claude themselves, but smaller firms lack the resources to do that, said Alex Finkel, chief innovation officer at Offit Kurman. Firms like his are looking for vendors that provide pre-built workflows, trainers and AI experts. Anthropic is still in the process of building that infrastructure, Finkel said.”

“9-Figure Lawsuit Alleges DLA Piper Committed Malpractice in Soccer Deals” —

• “A former DLA Piper client and multimillionaire sports investor is seeking hundreds of millions of dollars in damages from the law firm in a complaint that alleges malpractice in a series of European soccer club deals.”
• “Represented by McDonald Hopkins partner Alan Burger in Florida’s Fifteenth Judicial Circuit Court, John Textor claims that DLA Piper represented itself as Textor’s personal legal counsel despite negotiating contract terms that ultimately exposed Textor to losses he valued in the tens of millions.”
• “Williams & Connolly is representing DLA Piper, a firm spokesperson confirmed. In a statement, Williams & Connolly partner John Villa described Texter as a ‘very experienced and sophisticated businessman’ who knew the risks inherent to the deals.”
• “‘The well-publicized problems he and his companies have encountered had nothing to do with the quality of the lawyering, which was excellent in all respects,’ Villa said. ‘We are confident that DLA has fulfilled its professional responsibilities and will be vindicated here.'”
• “Per the complaint, which was surfaced by Law.com Radar, DLA Piper never suggested that Textor seek personal legal counsel as it simultaneously represented Eagle Football Holdings, a global football holding company chaired by Textor until March, when investor Ares Capital Corp. put the U.K. side of the company into administration.”
• “DLA Piper only sought a conflict waiver, the complaint stated, after performing and billing substantial work for Textor and Eagle Football Holdings, which purchased a 43% stake in Crystal Palace, a 90% stake in Brazilian club Botafogo, and a 77% stake French club Olympique Lyonnais between 2021 and 2022.”
• “The conflict waiver was addressed to Eagle Football Holdings rather than Textor personally, the complaint stated.”
• “As part of his Lyon purchase, DLA Piper shifted ‘enormous personal risk’ onto Textor in a put option agreement between Textor and Iconic Sports Eagle Investment by attaching Textor’s signature to a document that included revisions Textor hadn’t approved, a move Textor alleges cost him $90 million.”

“Private equity firm Charlesbank bets on US law firm in back office deal” —

• “Private equity firm Charlesbank Capital Partners has invested in the back-office operations of US insurance defense firm Wood Smith Henning & Berman, the law firm said on Monday, marking the latest influx of outside capital into the traditional legal market.”
• “Wood Smith Henning & Berman, a Los Angeles-based trial firm with more than 550 lawyers across 23 states, said it created a management services organization called WSHB Support Services that will provide non-legal operational infrastructure and support to the firm.”
• “Terms of the deal were not disclosed. the Financial Times previously reported that the transaction values the law firm at about $700 million. Charlesbank and Wood Smith Henning & Berman did not immediately respond to requests for comment on the valuation.”
• “The transaction is one of the most notable examples of investment in the legal industry through a management services organization (MSO), highlighting investors’ growing interest in the sector. Lawyers, consultants and other businesses are increasingly marketing their expertise in advising on such deals.”
• “Investors and others who are not lawyers are broadly prohibited from owning direct stakes in US law firms or sharing in attorney fees. The MSO model provides a vehicle for law firms to receive outside investments without breaching those professional rules. Outside investors can own or take stakes in the law firm’s non-legal, back-office operations through the MSO, which is paid through the firm’s revenues without any direct sharing of fees.”
• “Wood Smith Henning & Berman in a statement said it will remain an independent law firm with its lawyers ‘retaining sole authority over the practice of law and client matters.'”

Michael J. Epstein, managing partner of The Epstein Law Firm, writes: “The Most Important Question About a Law Firm MSO Isn’t Who Owns It. It’s Who Can Say No” —

• “There is an understandable tendency when lawyers talk about management services organizations, private equity and outside investment in the legal industry to start with the organizational chart. Who owns the law firm? Who owns the MSO? Are they separate companies? Where does the money go? Those are important questions, but I’m increasingly convinced they aren’t the most important ones.”
• “The question I would ask is much simpler: Who gets to say no?”
• “Imagine a law firm considering a major case. The lawyers believe in it. The liability theory is strong, the client has suffered a catastrophic injury, and pursuing the case properly may require hundreds of thousands of dollars in experts, depositions, testing and other litigation expenses. The business people looking at the same case may see something different. They see projected cost, time to resolution, capital tied up for several years and risk.”
• “Nothing about that is inherently sinister. A law firm is still a business, and lawyers have always had to make financial decisions. We pay salaries, rent, insurance and experts. We decide which cases to take. In contingency-fee practices, firms routinely spend substantial amounts of money on litigation without knowing whether they’ll ever recover it. But the analysis becomes more complicated when the lawyer making the professional judgment isn’t the only person with meaningful economic power over the firm.”
• “What happens if the lawyer says yes and the MSO says no?”
• “That, to me, is where this entire debate becomes real. New Jersey’s Rules of Professional Conduct have long protected the professional independence of lawyers. RPC 5.4 addresses fee sharing with nonlawyers and also prohibits a lawyer from allowing someone who employs or pays the lawyer to direct or regulate the lawyer’s professional judgment. The rule restricts arrangements in which nonlawyers have the right to direct or control a lawyer’s professional judgment.”
• “Suppose an MSO provides virtually everything a law firm needs to function: office space, employees, technology, marketing, accounting, intake systems, call centers, advertising, data analysis and perhaps even the financing that allows the firm to grow. The lawyers still technically own the law firm. Fine. But now ask who controls the budget, who decides whether another lawyer can be hired, who approves a major advertising campaign, who determines whether the firm can spend $250,000 developing a difficult case and who establishes the financial targets the lawyers are expected to hit.”
• “Then ask what happens when the lawyers say they need to do something that makes perfect sense professionally but makes very little sense on a spreadsheet this quarter.”
• “That is why I think we need to get beyond the comforting idea that ownership answers everything. Control can exist without ownership. Anyone who has ever run a business understands that. A landlord can exert leverage without owning your company. So can a lender. So can your biggest customer. So can the person who controls access to the thing your business cannot operate without.”
• “The same basic reality can exist in a law practice. If an outside entity controls enough of the infrastructure, financing, personnel or revenue flow, the formal answer to ‘Who owns the firm?’ may tell us much less than we think.”
• “Consider settlement decisions. The decision whether to accept a settlement ultimately belongs to the client after receiving the lawyer’s advice, but there are a hundred decisions leading up to that moment. Do we take another deposition? Do we retain another expert? Do we conduct additional testing? Do we reject an early offer and prepare for trial? Do we spend another $75,000 because we believe it will materially strengthen the case?”
• “Introduce a separate business entity with its own owners, return expectations, debt obligations or growth targets, however, and the incentives can become more complicated. Maybe the pressure is obvious. More likely, it isn’t. Nobody has to call the lawyer and say, ‘Settle this case because we want our money.’ Business pressure is usually more subtle than that.”
• “Budgets tighten. Certain cases become harder to fund. Hiring requests sit unanswered. Marketing dollars are allocated toward particular case types. Performance metrics begin shaping behavior. The firm’s economic priorities slowly become everyone’s priorities because that is how organizations work.”
• “None of this automatically means an ethical line has been crossed. That point matters. Law firms need vendors. They need technology. They need sophisticated marketing and financial management. Some firms desperately need better business systems. An MSO can potentially provide expertise lawyers don’t have and probably don’t want to develop themselves.”
• “And lawyers entering these arrangements should spend at least as much time thinking about what happens when everyone disagrees as they spend thinking about what happens while everyone is getting along. Contracts are easiest to live with when the firm is growing, revenue is up and everybody wants the same thing. The meaningful provisions are the ones that matter during conflict.”
• “Can the lawyer reject a business recommendation? Can the firm spend money on a case the MSO thinks is economically unattractive? Can lawyers refuse a marketing strategy they believe creates ethical problems? Can they change vendors? Can they hire the professionals they believe their clients need? Can they walk away from the management relationship without effectively destroying the practice?”
• “Those questions tell us much more about independence than a corporate diagram ever will. There is also another question lawyers should ask themselves: if saying no to the business side would cost the firm millions of dollars, access to its employees, its office, its marketing platform or perhaps its entire operating infrastructure, how independent is that ‘no’ in reality?”

“Dentons achieves global benchmark for protecting client information: ISO 27001” —

• “Dentons has achieved ISO 27001 certification for all operations across Australia and Papua New Guinea, reinforcing its commitment to protecting client information and maintaining the highest standards of information security, risk management and governance.”
• “ISO 27001 is the internationally recognised standard for information security management systems. Certification follows an independent external audit and confirms that Dentons’ information security, risk management and governance processes meet globally recognised requirements. The certification demonstrates that the firm has robust and repeatable controls in place to protect client and firm information, manage risk effectively and support continuous improvement.”
• “The achievement comes at a time when clients are placing increasing importance on information security, data protection and governance when selecting legal and professional services providers. ISO 27001 certification provides clients with additional assurance that Dentons’ information security practices have been independently assessed against a recognised international standard.”
• “Amber Warren, Australian Chair and Chief Executive Officer, Australasia, said, ‘Protecting our clients’ information is fundamental to the trust they place in us. Achieving ISO 27001 certification demonstrates our ongoing commitment to maintaining strong information security, governance and risk management practices across our operations.”
• “This certification provides independent validation of the controls and processes we have in place to safeguard information and supports our focus on delivering exceptional client service in an increasingly complex risk environment.'”
• “Maureen Migliazzo, Chief Operating Officer added, ‘This is an important milestone for our firm and reflects the dedication of teams across the business who work every day to protect information, manage risk and continuously improve our operations. It further strengthens our ability to support clients with confidence and meet evolving expectations around information security.'”
• “The certification complements Dentons’ broader information security and risk management framework and reflects the firm’s ongoing investment in systems, processes and people to help safeguard client and firm information.”

“Reddit Accuses Former Law Firm of Switching Sides to Defend Perplexity AI” —

• “Reddit is fighting to prevent its former law firm, Proskauer Rose, from representing Perplexity AI in a federal data-scraping lawsuit, alleging that the firm dropped the social media company to take on its courtroom opponent despite an earlier promise to stay out of the case. In competing filings submitted October 9, 2026, to U.S. District Judge Paul A. Engelmayer in Manhattan, Reddit and Proskauer disputed whether the firm’s earlier work on a separate whistleblower lawsuit creates a conflict that prevents it from defending Perplexity in the data-scraping case.”
• “The separate whistleblower lawsuit was brought by former Reddit employee Jutta Williams, who alleged she was fired after raising concerns about the company’s data privacy and licensing practices. Proskauer represented Reddit in that case, which involved its licensing arrangements with Google and OpenAI.”
• “That earlier work allegedly exposed Proskauer to confidential information about Reddit’s agreements with Google and OpenAI, including practices now at issue in its lawsuit accusing Perplexity of improperly collecting content through Google search results.”
• “After Perplexity approached Proskauer about taking over its defense, the firm sought Reddit’s consent and was refused. It subsequently moved to withdraw from the whistleblower proceedings, prompting objections over ongoing discovery and the difficulty of finding replacement counsel.”
• “The social media company eventually agreed to the withdrawal in November 2025 after allegedly receiving assurances that Proskauer would stay out of the Perplexity litigation. The firm disputes that any binding restriction was imposed, setting up the current fight over whether it can represent Reddit’s courtroom opponent.”
• “In its defense, Proskauer characterizes the earlier representation as an employment dispute involving retaliation and discrimination allegations, distinct from the data-scraping claims against Perplexity. Attorneys assigned to the new case have also been screened from confidential information obtained while representing Reddit, according to the firm.”
• “The challenge also invokes the ‘hot potato doctrine,’ which can prevent lawyers from dropping an existing client to represent another with conflicting interests. Reddit argues that Proskauer withdrew to pursue Perplexity’s business and should face the stricter rules governing conflicts involving current clients.”
• “Under the rules governing former-client conflicts, Proskauer argues that disqualification generally requires a substantial relationship between the two matters, a connection the firm disputes in this case.”

In Massachusetts: “Insurance – Defense counsel – Conflict of interest” —

• “Where a plaintiff has claimed that the defendant insurance company has no right to control the defense of asbestos lawsuits against the plaintiff that the insurer has an obligation to defend, the insurer should be awarded summary judgment because the plaintiff has not shown that there is any actual or meaningful potential conflict of interest that would justify rejecting the insurer’s selection of counsel and control of the defense as to those claims for which it has relinquished or not asserted a reservation of rights.”
• “‘The fundamental dispute between the parties out of which all of Watts’ claims arise revolves around who gets to control the defense of the Asbestos Lawsuits against Watts that FFIC has an obligation to defend on and after October 1, 2024. …”
• “‘The first issue here is whether FFIC has withdrawn its reservation of rights with respect to the Asbestos Lawsuits against Watts Regulator that it has an obligation to defend as of October 1, 2024. …”
  “‘In July 2024, FFIC formally notified Watts that it ‘fully withdraws’ its reservations of rights with respect to claims that FFIC is or will be defending on or after October 1, 2024, and it has continued to do so for all new claims against Watts Regulator since October 1, 2024 which assert a possible exposure during the FFIC Policy period. At oral argument, FFIC reaffirmed its position that it has withdrawn its reservation of rights with respect to these claims. … Such admissions to the court are binding on FFIC. …”
• “‘Watts argues that, even if FFIC has withdrawn its reservations of rights, a conflict bars FFIC from assuming control of Watts’ defense, at least in many of the Asbestos Lawsuits. Specifically, Watts argues that FFIC has a conflict because (a) it seeks to defend claims for which (i) Watts potentially bears significant uninsured indemnity responsibility; (ii) FFIC disclaims any liability obligation whatsoever; and (iii) indemnity depends on evidence to be gathered during the underlying case; (b) because certain of the Non-Party Insurers have agreed to defend subject to a reservation of rights, Watts has the right to control the defense as to those insurers, and FFIC’s selected counsel will be subject to conflicting instructions; and (c) FFIC has required Watts to give up its right to defend with respect to the Non-Party Insurers as a condition of FFIC providing a defense. …”
• “‘In short, Watts has not shown that there is any actual or meaningful potential conflict of interest that would justify Watts rejecting FFIC’s selection of counsel and control of the defense as to those claims for which it has relinquished or not asserted a reservation of rights. …”
• “‘FFIC has abided by the terms of the FFIC Policy. By withdrawing their reservation of rights, FFIC is entitled to control the defense in the absence of a conflict of interest with Watts. Watts should not have reasonably expected to control the defense merely because other insurers have ceded control to Watts. Watts has no factual basis for a claim for breach of the implied covenant of good faith and fair dealing. …”
• “‘Watts also brings a claim against FFIC for violation of G.Lc. 93A (Count III). … ‘Here, Watts’ claim under Chapter 93A arises from the same set of facts as Watts’ breach of contract and breach of implied covenant of good faith and fair dealing claim. Watts alleges that by claiming a right to control the defense while reserving certain rights, FFIC has violated Watts’ reasonable expectations under the FFIC Policy, breached the implied covenant of good faith and fair dealing, and committed an unfair and deceptive act. I have already found that FFIC has withdrawn its reservations of rights. Without a conflict of interest, the claim for breach of implied covenant of good faith and fair dealing fails and with it the Chapter 93A claim fails as well.'”
  “Watts Regulator Company, et al. v. Fireman’s Fund Insurance Company (Lawyers Weekly No. 09-081-26) (18 pages) (Krupp, J.) (Suffolk Superior Court) (Civil No. 24-2530-BLS1) (Aug. 20, 2026). “
• Decision: here.

Update (October 29, 2026):​ Thanks to our sponsor, copies of the survey report are now available to qualified firms for free from Epiq. For more information, see this post. (Copies remain available directly as well, as noted below.)

Now in its fifth year, the 2026-2027 Law Firm Risk Staffing Compensation Survey report is now on its way to those who participated! (And also now on file with the US Copyright Office, so don’t go asking your friends for their copy.) If you took the survey, please watch for your reports/benchmarks via email today!

This year, we saw 78 participants share detail on 576 US staff and management positions.

We had great response levels from managers in the optional Q&A portion. That generated another wave of fascinating input and response, coming in at 12 pages of commentary, which is presented in the report, grouped by firm size bands, addressing five questions:

1. 1. What are your top challenges tied to risk staff recruiting, training, and career development?
   2. What are your goals for risk staff recruiting, training, and career development in 2027?
   3. To what extent are you adding new/emerging roles to your risk organization (e.g. OCG, AI related)? If new roles aren’t yet defined or funded, which would you like to add if possible?
   4. Are there staffing model changes you’re pursuing or would like to pursue moving forward?
   5. What risk initiatives, if any, is your firm focusing fresh investment in new staff, new resources for 2027?

For those who participated, I expect to have PDFs in your inboxes by the end of the day. Depending on your participation:

• Managers who contributed team data and participated in the Q&A will receive the “extended edition” of the report, coming in at 30 pages, which includes peer Q&A responses
• Managers who contributed team data only will receive the “standard edition” of the report, which includes complete data on all positions and compensation data included in the extended version (20 pages).
• Individual contributors who shared their personal details, will receive a personal benchmark compensation summary relevant to their specific role and firm demographics.

If you didn’t participate…

• If your law firm did not participate in the survey, copies are available for a fee.
• If you didn’t participate individually, personalized benchmarks are also available for a (lower) fee.
• Please get in touch for details. 

I’d like to thank everyone who took the survey this year.

Thoughts are brewing for 2027.

Thanks!

“Swier Law Firm ordered to pay $572,000 after malpractice trial” —

• “A South Dakota law firm with connections to the Mitchell area is facing a judgment of more than $572,000 following an 11-day malpractice trial earlier this year over its treatment of an elderly client.”
• “In the Hickey case, a Minnehaha County jury found Swier Law Firm, founder Scott Swier and attorney Lindsay Harris liable in a lawsuit brought by the estate and trust of former client Shirley A. Hickey.”
• “The lawsuit alleged legal malpractice, breach of fiduciary duty and breach of contract. It centered on whether the firm violated its duties to Hickey by pursuing legal action against her after she had attempted to end the attorney-client relationship and move her estate matters to new counsel.”
• “The lawsuit, Denison v. Swier Law Firm, was brought by Jeffry Denison, who serves as the personal representative of the estate of the late Shirley A. Hickey and trustee of her trust. The case continued after Hickey’s death in September 2019, with Denison pursuing her estate’s and trust’s claims against the defendants.”
• “The jury awarded Hickey’s estate and trust $309,768.68 in compensatory damages. Circuit Judge Mandi Mowery later added $241,275.38 in prejudgment interest and $21,247.40 in court costs, bringing the total judgment to more than $572,000. The jury assigned 35% of the fault to Swier, 35% to Harris and 30% to Swier Law Firm. Henderson, who also was named as a defendant, was assigned 0% fault.”
• “The case dates to 2017, when Hickey hired Swier Law Firm for estate planning. Harris drafted the Shirley A. Hickey Living Trust. In August 2017, Hickey sought new legal representation from attorney Jack Theeler. Theeler asked Swier Law Firm to transfer Hickey’s files, and Hickey also personally requested the files.”
• “Instead, Swier Law Firm filed an ex parte petition seeking a guardian and conservator for Hickey without notifying her, according to court records. The court ultimately determined that neither a guardian nor conservator was necessary.”
• “The following year, Swier directed Harris and Henderson to represent Hickey’s daughter, Kristina Lippert, in a lawsuit against Hickey involving the trust the firm had previously drafted for Hickey.”
• “The lawsuit was filed in March 2018. In August of that year, Circuit Judge Douglas Hoffman disqualified the firm and Harris because of the conflict of interest. ‘It’s a slam dunk. They should have withdrawn — well, they should have never brought this action in the first place,’ Hoffman said during the proceedings.”
• “The firm billed Hickey and her trust more than $144,000 between April 2017 and September 2018, including fees connected to the litigation against her, according to the South Dakota Supreme Court’s 2020 decision in the case.”
• “The jury also found by clear and convincing evidence that Swier, Harris and the firm engaged in oppression, malice, intentional misconduct or willful and wanton misconduct. The jury, however, awarded no punitive damages.”
• “In a 2020 decision, the Supreme Court said Swier admitted to formal accusations that he violated professional-conduct rules involving conflicts of interest, supervision of attorneys and conduct prejudicial to the administration of justice. The court suspended him from practicing law for one year.”
• “The disciplinary case included the Hickey matter. The Supreme Court found that Swier violated rules concerning duties to former clients and supervisory responsibilities, among other professional-conduct rules. Two associates also were disciplined by the State Bar Disciplinary Board.”
• “Those prior disciplinary proceedings became part of the evidence presented to the jury in the 2026 civil trial.”

“Leaked chats show Russian extortion gang sending ‘agents’ into US law firms” —

• “Members of a Russia-based cyberextortion gang plotted to send operatives into U.S. law firms, kidnap business executives and even recruit military personnel to spy on submarine-based nuclear forces, according to leaked chats reviewed by Recorded Future News.”
• “The archive, posted to a bespoke .onion site in early October by an unidentified source who did not state a motive, contains thousands of messages from August 2025 to September 2026.”
• “In those messages, members track dozens of victims, haggle over multimillion-dollar payments and direct operatives based in the United States whom they call ‘agents.’ Some of the named organizations have not publicly acknowledged a breach.”
• “Recorded Future News could not verify whether the most extreme schemes were ever attempted. However, parts of the cache have been corroborated independently. Blockchain analysis firm Chainalysis examined cryptocurrency addresses contained in the leak and said it could tie them to known extortions by the Silent Ransom Group, which is also tracked as Luna Moth and Chatty Spider. The company cautioned that it could not ‘speak to the totality of claims’ documented in the archive.”
• “The FBI has also documented the group’s most unusual tactic for a Russian extortion group: recruiting what the gang calls ‘agents’ to physically infiltrate victims’ offices. A flash alert earlier this year warned that members of the Silent Ransom Group were posing as IT personnel to gain physical access to computers.”
• “In one negotiation shared in the chats, a law firm’s representative told the extortionists that the firm knew an individual had entered its New York office and copied files onto a flash drive.”
• “The firm said its executives had authorized $1 million to settle the demand but wanted proof that every digital and physical copy of its information would be destroyed, citing evidence that the LockBit ransomware gang had failed to delete data belonging to victims who paid.”
• “The internal conversations show members plotting for months about how to get their ‘agents’ into firms’ offices. One participant suggested buying delivery uniforms and insulated bags. ‘We buy these insulated bags and uniforms for agents,’ he wrote, before outlining a pizza delivery ruse in which an operative would get through reception by delivering pizza and then pose as an IT worker in the main office itself.”
• “About 50 organizations, mostly law firms, appear in the records. Several have publicly disclosed cyber incidents this year, while others have made no public statement.”

David Kluft asks: “Can I depose a witness who was my former client in a topically similar case?” —

• “A college basketball player sued a University in NE federal court, alleging that the coach pursued a sexual relationship with her while she was a student and that led to her removal from the team. The lawyer for the University wanted to depose one of the plaintiff’s witnesses, but the problem was that this witness was a former client of the lawyer in a matter ‘generally described .. as involving potential complaints or past allegations of sexual misconduct against [the witness] by an unrelated third party.'”
• “The witness filed a motion to quash the deposition and to disqualify the University’s counsel. The Court looked to whether the prior matter substantially related to the present one. The matters might have been substantially related ‘if there is a substantial risk that confidential factual information ordinarily obtained in the prior representation would materially advance the client’s position in the subsequent matter.'”
• “Here, the witness argued that the prior representation gave counsel knowledge of his ‘finances, relationships, associations, character and credibility.’ The Court held this didn’t meet the standard because those categories of information were so broad they could apply in any case. Here, the ‘people, events, and legal issues are entirely different,’ despite the superficial ‘topical similarity,’ so there was no substantial relationship.”
• “The court also found that disqualification was not required because the witness was not actually adverse to the University, because he had no real legal exposure. Even if there had been a substantial relationship, disqualification ‘does not extend to situations where a former client faces nothing more than the ordinary obligations of a fact witness.'”
• Case file: here.

“Judge May Preside in Matters Involving Attorney Who Exchanges Case Referrals With Spouse: Judicial Ethics Opinion 26-34” —

• “Digest: Provided the judge can be fair and impartial, he/she may preside in matters involving an attorney to whom the judge’s spouse has referred occasional, discrete cases, and from whom the judge’s spouse has received such cases. The judge need not make any disclosure.”
• “Rules: 22 NYCRR 100.2; 100.2(A); 100.3(E)(1); 100.3(E)(1)(c), (e); 100.3(E)(2); Opinions 20-126; 15-33.”
• “Opinion: The inquiring judge’s spouse, who works in a specialized area of law, occasionally refers cases to another attorney and occasionally accepts referral of cases from him/her. The judge indicates they ‘do not have a formal arrangement, and no referral fees are paid’ between them. The judge asks if he/she may preside in cases involving the other attorney.”
• “Clearly, a judge ‘may not preside over any matters in which the spouse was involved or has an economic interest, including those referred by the spouse, or matters in which the attorney appearing before the judge has an ongoing counsel relationship with the judge’s spouse’ (Opinion 15-33).”
• “However, a judge’s ethical ‘obligations based on a business or financial relationship between their spouse and a particular individual are necessarily fact-dependent’ (Opinion 20-126). We have advised that neither disqualification nor disclosure is required when ‘attorneys to whom the judge’s spouse has referred occasional, discrete cases, or from whom the judge’s spouse has received such cases, appear in the judge’s court’ (Opinion 15-33). In reaching this conclusion, we emphasized (id.):”

Hat tip to a risk expert colleague who noted an interesting “frontier” spotlight of conflicts, client due diligence, and compliance in this AI case study: “How law firm Gilbert + Tobin governs and scales AI with OpenAI” —

• “Gilbert + Tobin used [OpenAI] Codex to help build an AI-enabled workflow for selected conflict, anti-money laundering, politically exposed person, and know-your-customer checks. It completes research and processing steps, then produces a report for human review and sign-off. Selected checks that previously took up to eight hours can now be completed in minutes.”
• “When generative AI began reshaping knowledge work, Gilbert + Tobin saw an opportunity—not to change how it delivers legal advice, but to raise the standard of the operational work that supports it. The firm set out to give every operations team sharper tools for research, drafting, and analysis, while preserving the governance and professional accountability its clients expect.”
• “ChatGPT Enterprise was introduced first to operations teams, where practical use cases could be tested in a controlled environment. From there, adoption expanded into marketing, business development, recruitment, finance, technology, business transformation, and parts of the legal practice. Throughout, the focus has remained on how the firm operates, not on displacing the professional judgment at the heart of its legal services.”
• “Gilbert + Tobin paired that leadership support with role-specific enablement. Instead of relying on generic training, the business transformation team joined individual team meetings to demonstrate workflows tailored to marketing, finance, recruitment, operations, and other functions. Internal videos, showcases, challenges, and use-case stories helped employees keep pace as ChatGPT gained new capabilities.”
• “Gilbert + Tobin handles confidential client and business information, including information subject to different client requirements. Its AI rollout was supported by clear guidance on approved tasks, what employees could enter, and how outputs should be reviewed. The firm also assessed contractual protections, role-based access, data-processing requirements, and administrative controls.”

“Latham & Watkins AI Adoption: How BigLaw Is Deploying Generative AI” —

• “The firm has stood up a Generative AI Task Force, deployed Harvey across thousands of attorneys, rolled out Microsoft 365 Copilot, published external client guidance on AI risk, and built mandatory training into associate development.”
• “The use case BigLaw firms talk about least and undervalue most is conversational client intake and matter onboarding. Latham, like every AmLaw firm, runs a meaningful intake process every time a new matter opens — conflicts checks, engagement letter drafting, scope definition, billing arrangement capture, KYC where relevant, and matter-team selection. Today, most of this happens through a combination of email threads, Word documents, intake portals, and a back-and-forth between business development, the originating partner, the conflicts team, and the new business intake group.”
• “That entire workflow is a conversation pretending to be a form. Engagement letter intake portals demand structured fields (‘matter type,’ ‘billing arrangement,’ ‘estimated fees,’ ‘key parties’). But the signal a client gives over email is unstructured — ‘this is a complicated cross-border thing, we expect to see a counter-bid in two weeks, I need someone who’s worked with the German regulator before, the budget is whatever it has to be.’ Forms flatten that signal. Senior partners then spend their own time translating client narrative into the structured intake fields.”
• “Conversational AI is the right instrument here. An AI intake agent can ask the natural follow-ups a senior associate would — ‘you mentioned a counter-bid; do you want us to start preparing defensive materials now or wait?’ — and capture the matter context in the client’s own language before any structured fields are populated. The structured fields then get derived from the conversation, not demanded up front.”

“Law firm intake that runs the conflict check before anyone calls the prospect back” —

• “An intake workflow for law firms that turns web forms, chats, emails and voicemails into structured intake: matter type, parties, jurisdiction and urgent deadlines. It searches the practice management system for conflicts across the parties and their corporate groups, triages each inquiry against the practice groups’ criteria, and prepares the engagement letter and a consultation slot. A person clears every possible conflict and a lawyer accepts every matter. The assistant never gives legal advice and says it is an AI.”

And in terms of OCGs, one consultant hypothesizes: “Ken Crutchfield: Taking BigLaw Private? The Implications Of Kirkland’s Decision To Stop Disclosing Financials” —

• “Kirkland & Ellis made headlines again when it stated it will no longer disclose financial information to The American Lawyer magazine and other media after 2026. Firm leadership said financial disclosures could put too much focus on quantitative metrics over the quality and caliber of the firm’s legal services.”
• “Clients will still care about financials and reputation, but their interests aren’t necessarily predicated on profit per equity partner and other top-level metrics reported publicly in an Am Law list. They require compliance with Outside Counsel Guidelines (OCGs) to manage supplier risk and pricing, and compliance.”
• “The scope of those guidelines continues to expand, and they now can cover billing, staffing, technology, security, and AI use. It is not difficult to imagine negotiated disclosures of financial metrics privately as a necessary condition of the ongoing relationship.”

“The AI Agent Privacy Problem: Who’s Liable When Your Legal AI Shares Client Data?” —

• “AI agents are no longer a future-facing concept in legal practice. They are already drafting motions, reviewing contracts, conducting due diligence, managing calendars and email, and in some deployments taking multi-step actions across systems. They process some of the most sensitive data that exists: client communications, litigation strategy, financial records, and personal identifying information. Adoption continues to outpace the guardrails designed to protect the data those agents touch.”
• “That gap is still where the liability lives, and the last several months have sharpened the contours of it.”
• “In June 2026, the American Arbitration Association and Integra Ledger announced the Legal Context Protocol, an open standard intended to attach discoverable, verifiable legal terms, consent, and dispute-resolution pathways to agent-to-agent commercial transactions. Founding contributors included Google, IBM, Circle, Wayfair, and others. The protocol remains a useful piece of infrastructure for agentic commerce. It does not, however, resolve the distinct confidentiality, privilege, and professional-responsibility problems that arise when agents operate inside legal workflows.”
• “When a lawyer uses a traditional software tool, the workflow is relatively clear: the attorney inputs information, the tool processes it, and the attorney reviews the output. Privilege and confidentiality obligations run through the attorney’s conduct. AI agents disrupt that model. An agent tasked with drafting, reviewing, or conducting diligence does not simply process information. It can ingest it, retain it (at least temporarily), route it through third-party infrastructure, and in some configurations act on it sending messages, updating records, or accessing systems before meaningful human review occurs.”
• “ABA Model Rule 1.6 still requires attorneys to make reasonable efforts to prevent the inadvertent or unauthorized disclosure of information relating to a representation. ABA Formal Opinion 512 (2024) remains the foundational ethics guidance: lawyers must understand the specific tool’s capabilities and limitations, evaluate disclosure risks before inputting client information (especially into self-learning systems), and obtain informed client consent where the tool’s design creates a material risk of disclosure. Boilerplate engagement-letter language is not sufficient. State bars have continued to apply and refine this framework. Oregon’s Formal Opinion 2026-208, for example, addresses chatbots and AI agents used for marketing and intake, emphasizing competence, supervision, and the lawyer’s ongoing responsibility for accuracy and confidentiality. Florida and other jurisdictions have issued parallel guidance.”
• “The most concrete statutory development arrived at the end of September. On Sept. 30, 2026, California Governor Gavin Newsom signed SB 574, the first state statute specifically regulating generative AI use by attorneys, arbitrators, judicial officers, and alternative dispute resolution providers. Effective Jan. 1, 2027, the law:”
• “When an AI agent generates a contract summary, flags litigation risk, prioritizes documents, or drafts a demand letter, the question whether that output constitutes or materially influences an automated decision with a significant effect on a data subject is no longer purely theoretical. In some jurisdictions it may trigger notice, opt-out, access, or human-review rights that most current legal AI deployments are not designed to honor. Law firms and legal departments that treat these obligations as ‘just another vendor issue’ are exposing themselves and their clients.”
• “Vendor agreements data processing addenda, confidentiality clauses, and terms-of-service representations remain necessary but still not sufficient. They govern the firm-provider relationship. They do not create rights for clients whose data is processed, nor do they substitute for the attorney’s independent ethical and legal duties. Attorneys deploying agents must still ask, and document, the practical questions: Where does the data go? Who can access it? Is it used for training? What is the retention period? What happens in a breach? What permissions does the agent have, and can those permissions be tightly scoped and monitored?”
• “The last few months have also shown that agent behavior can exceed intended scope. Documented incidents involving OpenAI and other developers’ agents attempting or achieving unauthorized access to external systems prompted a Sept. 30 Senate hearing and, on Oct. 1, the announcement of the bipartisan AI Agent Accountability Act by Senators Josh Hawley and Chris Murphy. We’ve seen a rise in law firm data breaches meanwhile News Nation and Fox Business News had me on air to discuss the ‘pacing of the frontier’ and the AI risks ahead. These new proposals would extend Computer Fraud and Abuse Act liability to both operators (for knowingly operating an agent that recklessly causes hacking damage or loss) and developers (for failing to implement reasonable safeguards when they knew or had reason to know of the agent’s hacking capabilities). It would also empower the attorney general and state attorneys general to seek injunctions. Parallel proposals such as the CLAIM Act discussion draft seek to clarify civil liability when agent conduct would be tortious or criminal if performed by a person. These bills are not yet law, but they signal that ‘the AI did it’ is unlikely to be an accepted defense, and that both developers and deployers face increasing scrutiny.”
• “Privilege risks have also moved from theoretical to concrete. Courts have held that materials generated through consumer-grade tools whose terms permit retention or third-party access can destroy attorney-client privilege and work-product protection. The reasonable expectation of confidentiality simply does not exist under those terms.”
• “Technical protocols such as the Legal Context Protocol address one slice of the agentic economy commercial transactions. Professional responsibility rules, state statutes like California’s SB 574, evolving privacy and ADMT requirements, and emerging liability proposals address another. Courts have not yet issued definitive rulings on the full range of agent-related confidentiality and privilege questions, but the direction of travel is clear: the lawyer or firm that deploys the agent remains responsible.”
• “Attorneys who build documented data-governance frameworks around their AI tools—restricted-access environments, least-privilege permissions, human review gates for consequential actions, client disclosure where required, and verification protocols will be better positioned than those who treat agents as ordinary software and wait for a court or bar to define the boundaries after an incident. The liability question is no longer purely open. The answers are beginning to arrive, and they continue to point to the human professionals who choose to deploy the tools.”