Risk Update

(DQ Week) Disqualifications, Disputed (Cell Phones, Opioids, and State Senators)

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Sunday’s interesting update notwithstanding, we’re running a new risk blog experiment (it’s pretty low risk) — welcome to Theme of Week: Disqualifications. Today’s DQ stories focus on running disputes, and there are several to share.

First up, a fascinating example with no facts to evaluate, making many all the more curious: “Huawei says will fight U.S. prosecutors’ motion to disqualify its lawyer” —

  • “Huawei Technologies said it will ‘vigorously oppose’ a motion filed by U.S. prosecutors on Thursday to disqualify its lead defense lawyer from a case accusing the Chinese company of bank fraud and sanctions violations.”
  • “According to a filing in the U.S. District Court in Brooklyn, New York, the U.S. government sought to remove James Cole from the case. Cole was the No.2 official at the Justice Department between 2011 and 2015, a period when the United States was obtaining information on how Huawei might have been doing business in Iran in violation of U.S. sanctions.”
  • “The filing did not make public why it is seeking to remove Cole from the case. In a letter to the court, prosecutors said they had filed a sealed, classified motion to disqualify Cole and expected to file a public version by May 10.”
  • “Cole, the former U.S. deputy attorney general, is now a partner at law firm Sidley Austin in Washington. He declined to comment.”

Next, a disputed duked out: “BakerHostetler Can’t Overturn Opioid MDL Disqualification” —

  • “BakerHostetler will remain disqualified from representing Endo Pharmaceuticals in two bellwether cases in the multidistrict opioid litigation, an Ohio federal judge ruled Monday, saying the drugmaker waited too long to cry foul.”
  • “The ruling from U.S. District Judge Dan Aaron Polster rejected Endo’s newly raised objection to his consultation with the U.S. Department of Justice about confidential information that BakerHostetler partner Carole Rendon viewed while serving on a DOJ task force related to the opioid crisis.”
  • “In addition to criticizing the DOJ consultation, Endo accused Judge Polster of improperly basing BakerHostetler’s disqualification on his own experience as a federal prosecutor. The drugmaker pointed to Judge Polster’s recollection of mistrust decades ago between local and federal law enforcement and his stated concern that Rendon’s side-switching could revive that mistrust.”
  • “But Judge Polster on Monday deemed that faultfinding tardy as well, saying he had “made it clear” at February’s hearing that he would rely on his own experience when deciding whether to boot BakerHostetler.”
  • “‘If Endo had any problem with the court drawing on its own experience, the time to object was at the hearing or, at the latest, immediately thereafter,’ the judge wrote. ‘At no point during the hearing, or at any time in the intervening 41 days between the hearing and the [disqualification], did Endo … object in any way,’ Judge Polster wrote, concluding that ‘Endo has therefore waived any objection it might have had.'”

Finally, a withdrawal before a ruling: “Sen. Steve Santarsiero resigns from law firm after ethics dig” —

  • “[Pennsylvania] State Sen. Steve Santarsiero has resigned as partner with law firm Curtin & Heefner after an attorney representing the Rockhill Quarry accused him of a conflict of interest. Santarsiero says the charge is unfounded and was meant to intimidate him.”
  • “State Sen. Steve Santarsiero resigned as a partner in the law firm of Curtin & Heefner earlier this month, writing in a letter he did so to ‘avoid so much as the appearance’ of a conflict of interest over a dispute regarding the controversial Rockhill Quarry in East Rockhill.”
  • “Santarsiero’s letter was in response to Robert Gundlach Jr., an attorney at Fox Rothschild LLP representing the quarry. Gundlach raised the prospect of a conflict of interest in a pair of his own letters, noting Curtin & Heefner also provides legal representation to area residents opposed to the quarry.”
  • “In his letter, Gundlach charged Santarsiero ‘may have engaged in conduct that constitutes a ‘conflict of interest’’ under the state Ethics Act. He cited a section of the law that says a lawmaker cannot use information gained through the privilege of offices to monetarily benefit himself, a family member, or an associated business.”
  • “In a phone interview, Santarsiero forcefully denied any ethical issue. He said he had not been an equity partner at Curtin & Heefner, and instead was compensated on an hourly basis and for work brought into the firm, none of which he said involved the quarry. Since his senate term officially began last Dec. 1, Santarsiero said, he had had no ‘substantive’ conversations with or provided any information to attorneys at the firm regarding the quarry.”
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Risk Update

Lateral Moves, Client Data, Conflicts & Ethical Obligations

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An interesting story relating to lateral movement of staff and movement of client data (or metadata): “In dispute over client list with former employee, Webb Law Firm of Pittsburgh loses motion for judgment” —

  • “A judge in the Allegheny County Court of Common Pleas last year ruled against a law firm that was sued by one of its former employees for breach of contract and tortious interference.”
  • “Alexander worked at the firm for five years but was terminated in April 2016. Two months later, he emailed Michael Somerhalder, the firm administrator, requesting a list of application numbers, client names, applicant names, assignee names and inventor names for all patent applications that Alexander worked on while he was with the firm, the suit says. Alexander says he wanted the information for another job he was applying for at Reed Smith. The list of clients was a stipulation if Alexander wanted to work at Reed Smith, he claims. Reed Smith did not return a message seeking comment.”
  • “The Webb firm denied Alexander access to those records and the plaintiff was unable to procure the job at Reed Smith, the lawsuit says. ‘There is no language in the offer letter discussing any duty on the part of Webb to comply with the Pennsylvania rules or the USPTO rules, let along supply plaintiff with the client list he requested,’ Webb firm lawyers said in court documents.”
  • “The Webb firm also contacted the Pennsylvania Bar Association Ethics Counsel to inquire if it had an obligation under the Pennsylvania Rules of Professional Conduct to provide the list requested by plaintiff. Webb was told it did not have such an obligation, it says.”
  • “Alexander said in filings that professional conduct rules impose an ethical obligation upon Webb to produce the requested listing of client names and impose an ethical obligation plaintiff to avoid conflicts of interest based on the requested information.”
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Risk Update

Risk Roundup: Technology Competency Rules, Email Elimination, California Fingerprints & Hollywood Conflicts

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Michigan Supreme Court proposes changes to attorney rules in light of new technology” —

  • “The Michigan Supreme Court on Monday proposed adding technological competency to the list of required skills under the state’s rules of professional conduct for attorneys.”
  • “Attorneys would be required to engage in continuing education within the realms of developing technology. Attorneys would also be held to a higher standard in regard to confidentiality when transmitting information electronically. It would be required for attorneys to take reasonable measures to prevent the unwarranted dissemination of client information.”
  • See the text of the proposed new rules: here.

Not a law firm (yet)… but are we witnessing the birth of a trend? “$10 trillion custodian Northern Trust is exploring shutting off external email for thousands of its employees as it tries to thwart cyber threats” —

  • “Northern Trust, which oversees roughly $10 trillion, is looking at restricting the ability of some employees to send email outside the company as it beefs up its cybersecurity, according to a top executive at the company who requested anonymity because the policy hasn’t yet been formalized.”
  • “The Chicago-based firm is exploring limiting external email to only employees who work with clients and other groups outside the company to avoid potential privacy breaches.”
  • “Right now, the firm’s email system cautions employees not to send any information externally, with warnings that pop up about sending such a message. These warnings are typically disregarded, the executive said, so the firm is thinking about taking more drastic measures.”

Re-Fingerprinting Of California Lawyers Turns Up Thousands Of Criminal Records” —

  • “The State Bar of California has received more than 6,000 criminal history reports to review as a result of the ongoing re-fingerprinting of lawyers in the state.”
  • “Slightly more than 2,200 of the records involve attorney convictions for which the bar had no previous record, according to data from early March. Almost all of those crimes were misdemeanors, and less than one percent were felonies.”
  • “The 20 previously unreported felonies have already been sent to the bar’s Office of Chief Trial Counsel for review and possible disciplinary action.”
  • “Re-fingerprinting is underway because the California bar was required by a 1989 law to ensure the retention of submitted fingerprints so it could receive notifications of attorney arrests and convictions, but the agency did not seek to comply with the statute until recent years.”

It can be fascinating to observe how other professions and industries navigate their own conflicts landscape, and how those rules evolve (or are created) over time. For those similarly fascinated (and similarly interested in what show runner David Simon has to say): “Why Hollywood Writers Are Firing the Agents They Love” —

  • “Now the Writers Guild of America is fighting back. The union represents about 13,000 screenwriters—some 8,500 of whom have agents—and it provides them with health and pension benefits and advocates for writers’ interests with studios and producers. Last week, the guild sued the four biggest talent agencies—WME, Creative Artists Agency, ICM Partners, and United Talent Agency—on the grounds that their packaging practices violate California and federal laws by pitting the financial interests of the agencies against those of their clients. The union also instructed its members to fire their agents after failed negotiations on a new industry code of conduct to replace the compact that governs how agents represent writers.”
  • “David Simon, the creator of The Wire and Homicide: Life on the Street, recently wrote an impassioned blog post, reprinted on Deadline, about the inherent conflict that packaging presents: ‘The problem is that the agency incentive to package shows and provide larger payments to themselves has obliterated any serious thought about aggressively negotiating on behalf of any writer, or actor, or director, large or small. Why bother to fight for 10 percent of a few dollars more for this story editor or that co-executive producer when to NOT do so means less freight on the operating budgets of the projects that you yourself hope to profit from? Why serve your clients as representatives with a fiduciary responsibility and get the last possible dollar for them, when you stand to profit by splitting the proceeds of a production not with labor, but with management—the studios who are cutting you in on the back end? Why put your client’s interest in direct opposition to your own?'”
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