Bressler Risk Blog

David Kluft asks: “Can my client instruct me not to share information within my firm?” —

• “A WY civil litigant with counsel decided to file a pro se motion for sanctions against her own lawyers. The litigant claimed she shared information with an associate at the firm, and that the associate breached confidentiality by sharing the information with others at the firm.”
• “The court cited to Comment 5 to the WY Rule 1.6: ‘Lawyers in a firm may, in the course of the firm’s practice, disclose to each other information relating to a client of the firm, unless the client has instructed that particular information be confined to specified lawyers’ (ABA and many states have the same comment).”
• “Because there was no evidence the client had instructed the associate not to share the information (and for other reasons), the motion was denied.”
• Decision: here.

Yale Law Journal on: “Private Equity’s Law Firm Workaround: MSOs, Rule 5.4, and the Governance Gap” —

• “Private equity is moving aggressively into the legal sector, and the profession’s oversight infrastructure is wholly unprepared for this generational shift. To work around prohibitions against nonlawyer ownership, investors are repurposing the management-services organization (MSO): a split-entity model in which attorneys retain the regulated practice, but investors acquire the firm’s operating platform.”
• “This Essay provides the first systematic account of private-equity investment in law firms and the governance gap in which it is occurring—a vacuum unrecognized by the American Bar Association, state bars, or courts. The playbook is seasoned; the risks are not hypothetical. After pioneering the model with healthcare, private equity fundamentally reshaped accounting through hundreds of transactions in just a few years, with regulators scrambling only after the fact. Law is next.”
• “The MSO model rests on the fragile assumption that ‘business operations’ and ‘legal practice’ can be clearly and durably separated. Healthcare and accounting experience proves otherwise, with similar split structures consistently exhibiting formality erosion and investor ‘control creep’ through financial and operational pressure. Governance tensions run deep: the structurally conflicted MSO board must build value while policing its own influence over the interlinked law firm.”
• “The problem is not the MSO model per se, but the transactions proliferating in darkness without guardrails. This Essay proposes a three-part governance framework: (1) structural safeguards limiting MSOs to genuine support functions; (2) independent directors and a board ethics committee; and (3) ongoing compliance monitoring. The ultimate costs of the governance gap will fall on the public, not on investors. The window to act is closing fast.”

“Tennessee Supreme Court Rejects PE Law Firm Ownership” —

• “After considering potential updates to its rules on attorney licensing, the Supreme Court of Tennessee has announced that it will not be changing its regulations barring nonlawyers from ‘engag[ing] in the ‘practice of law’ or the ‘law business’ in Tennessee.’ “
• “The court received almost 400 comments in response to its request, according to the order. Those weighing in included lawyers, law firms, law schools and organizations including the Tennessee Board of Law Examiners, the Tennessee Access to Justice Commission, the Tennessee Bar Association, the Tennessee Attorney General, the Federal Trade Commission, the U.S. Attorney’s Office for the Middle District of Tennessee and the Council of the ABA Section of Legal Education and Admissions to the Bar, among others.”
• “‘From our perspective, the Tennessee order is a positive development,’ Attorneys’ Liability Assurance Society (ALAS) Senior Vice President of Loss Prevention Nesheba Kittling told Law.com in a phone call on Tuesday. ALAS was one of the organizations that submitted public comment to Tennessee’s high court.”
• “Kittling said that her organization is against private equity involvement in law firm ownership because ‘there are some lawyer liability risks associated with nonlawyer ownership of law firms,’ including ‘a downstream impact on lawyer independence, client service and adherence to the rules of professional conduct.'”
• “‘As lawyers, we have a unique relationship with our clients where client interests are supposed to supersede anything else, including profits,’ Kittling said. ‘The concern is that [by] introducing nonlawyer ownership, [including private equity], there may be an erosion of that, and there may be pressure to put profits over client interest and client service. For example, that could go to staffing, right? Is there pressure to decrease the amount of lawyers who are on a matter? And then does that decrease mean it impacts the client representation, which ultimately could lead to a malpractice claim?'”

Lawyer/Law Firm Impersonation Risk in the Age of TikTok: “TikTok Lawyers Face Their AI Clones” —

• “Documented found swarms of fake immigration attorney TikTok accounts and bots targeting immigrants in an analysis of tens of millions of posts.”

“Law firm Crowell faces disqualification bid in AI lawsuit” —

• “A fight over attorney loyalties has erupted in a lawsuit over the use of photographs to train AI technology, threatening law firm Crowell & Moring’s continued role in the case.”
• “Online art gallery DeviantArt asked a federal judge in Los Angeles on Wednesday to disqualify Crowell & Moring from representing automotive photography company Evox in the lawsuit, saying the firm previously advised defendant DeviantArt and its parent company on AI and other matters.”
• “DeviantArt said in a court filing, that Crowell advised its parent company Wix.com and its subsidiaries from 2022 through 2026 on AI litigation, AI regulation and copyright issues. The company said the firm also advised DeviantArt on its DreamUp AI image-generation service.”
• “‘Crowell’s conflict  is substantive, not merely technical,’ DeviantArt told the court. It said the firm’s prior work allowed it to acquire ‘material confidential information’ about the company.”
• Filing: here.

“Ex-Paul Weiss Client Can’t Pause Malpractice Suit Against Firm” —

• “Fairstead Capital Management’s malpractice suit against Paul Weiss for allegedly failing to disclose a conflict will continue rather than holding for an underlying appeal. Fairstead is represented simultaneously by Kasowitz and Skadden in different layers of the dispute.”
• “A former Paul, Weiss, Rifkind, Wharton & Garrison client who accused the law firm of failing to disclose a conflict in its representation cannot pause its malpractice lawsuit against its ex-counsel, a New York judge has ruled.”
• “Fairstead Capital Management’s motion to pause its case against Paul Weiss was denied by the Manhattan Supreme Court this month, despite its argument that a pending Delaware appeal for an underlying dispute could determine the scope of its New York legal malpractice case.”
• “The dispute between real estate investment firm Fairstead and Paul Weiss spans several court dockets in the two states. So far, more than half a dozen firms have entered the litigation across New York and Delaware, including Kasowitz LLP; Paul Weiss; Simpson Thacher & Bartlett; Skadden, Arps, Meagher, Slate & Flom; Quinn, Emanuel, Urquhart & Sullivan; Morris, Nichols, Arsht & Tunnel; and Ross Aronstam & Moritz.”
• “Fairstead originally retained Paul Weiss to advise it on removing two executives, William Blodgett and John Tatum, who allegedly sought to either take over Fairstead or alternatively create a new competitor.”
• “According to Fairstead’s legal malpractice complaint, Paul Weiss allegedly failed to disclose its ties to the influential Tisch/Sussman family, which both Blodgett and Tatum are linked to, and also allegedly gave the company poor advice, which led to a ruling against Fairstead in a Delaware suit over Tatum’s removal.”
• “That Delaware ruling is the one currently on appeal. As a result of the pending appeal, Fairstead sought to delay its New York case against Paul Weiss. Manhattan Supreme Court Justice Joel M. Cohen denied that stay on Friday and kept the parties to their already-agreed-upon briefing schedule for Paul Weiss’ pending motion to dismiss.”
• “Under that schedule, Fairstead must file any opposition to Paul Weiss’ dismissal motion by Friday, October 23. Paul Weiss then has until November 13 to reply.”

“Judge Finds No Conflict of Interest for Defense Attorney in 2016 Homicide Case” —

• “DC Superior Court Judge Todd Edelman allowed a defense attorney to remain on a murder case ahead of trial on Oct. 20.”
• “Wilbert Whitaker, 77, is charged with first-degree murder while armed and possession of a firearm during a crime of violence for his alleged involvement in the fatal shooting of Leo Hackett, 30, on April 30, 2016 at the 800 block of 21st Street, NE. Hackett died from a gunshot wound to his chest.”
• “Whitaker’s attorney, Nathaniel Mensah, began the hearing by explaining a potential conflict of interest that would necessitate his removal from the case if real. The conflict stemmed from Mensah previously working for a firm that represented the defense’s key witness, Whitaker’s wife. Mensah explained that while he currently does not currently know any information that could bias his relationship to the witness, he could not guarantee he won’t remember this information during the trial.”
• “After looking at caselaw, in specific Freeman v. United States, Judge Edelman ruled that there was no current conflict of interest, and Mensah should stay on as Whitaker’s lawyer. “
• “Judge Edelman said that if Mensah in the future did remember some information about the witness that would create a conflict of interest, he can withdraw from the case then.”

“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.”