Risk Update

More on Judicial Conflicts — Recent ABA Ethics Opinion & The Facebook “Friend” Factor (and Another Judge in the News)

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A timely update from Karen Rubin, considering yesterday’s story about the judge disqualified for online “likes.” Today’s question is about the ‘friend click’ before the like: “ABA opinion on judges and recusal based on personal relationships leaves some open questions” —

  • “Can we be Facebook friends? That’s one question left open by the ABA earlier this month in Formal Opinion 488, on the subject of judges’ personal relationships with lawyers as grounds for disqualification. While spotlighting judicial ethics duties in maintaining impartiality, the opinion fails to provide some needed guidance on social media relationships.”
  • “In Opinion 488, the ABA Ethics Committee advises on situations that fall outside the bounds of Rule 2.11(A)(2); that is, where judges may have “social or close personal relationships with the lawyers or parties” but not as a spouse, domestic partner or other family member. The Committee identifies three categories of such relationships between judges and lawyers: acquaintanceships; friendships; and close personal relationships.”
  • “‘Friendship’ implies a greater degree of affinity, according to the opinion. Friends may be casual (periodically meeting for a meal, staying in touch through calls or correspondence) or closer (routinely spending time together, vacationing together, sharing a mentor-protegee relationship developed while colleagues). Not all friendships require disqualification, but there may be situations ‘in which the judge’s friendship with a lawyer or party is so tight’ that there might be reasonable questions about the judge’s impartiality. It’s a matter of degree, the Committee advised.”
  • “Opinions in Ohio and New York, for instance, suggest that a social media friendship with a lawyer is not a per se basis for judicial disqualification. Opinions in some other jurisdictions are more restrictive, and bar judges from being Facebook friends with lawyers who are currently appearing before them (California) or even may appear before them (Massachusetts). Late last year, the Florida Supreme Court ruled in a divided opinion that there is no basis to single out social media “friendships” between judges and lawyers for a per se rule of judicial disqualification.”
  • “But earlier this year, a Wisconsin court of appeals rejected a per se rule while still holding in a child custody case that accepting a Facebook “friend” request from a party with a motion pending creates an appearance of impropriety and warrants judicial disqualification.”

The full article has links to various decisions and commentaries, and is worth a detailed read for those curious.

Atty Slams Bid To Remove Judge From BP Oil Spill MDL” —

  • “A Louisiana federal court should deny a Florida attorney’s motion for a judge to recuse himself from sprawling multidistrict litigation over the 2010 Deepwater Horizon oil spill as the alleged conflicts are minimal at best, irrelevant to present matters and have since been mitigated, a Louisiana lawyer has argued.”
  • “U.S. District Judge Carl J. Barbier should not bow out from the litigation involving BP and the 2010 spill because he previously owned debt instruments for Halliburton and Transocean, as the judge divested himself of the assets back in June 2010, owning the assets didn’t amount to a conflict under legal precedent, and attorney Brian J. Donovan fails to establish that they have led to conflicts, according to Tuesday’s memorandum by Stephen Herman.”
  • “‘Donovan [does not] point to any ‘extrajudicial’ sources to support his claims of alleged ‘deep-seated favoritism or antagonism’ that would supposedly make it impossible for the court to be fair and impartial in the Donovan cases,’ the brief reads. ‘There is absolutely no basis for recusal simply because, over the past nine years, the court has issued a handful of orders with which Donovan apparently disagrees.'”
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Risk Update

Judicial Conflicts Allegations — Unreasonable Disqualification Motion Earns Sanctions, Opioid Fight Continues, Judge’s Facebook ‘Likes’ Earn DQ Downvote

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NY Judge Knocks Hedge Fund For Flimsy DQ Bid”

  • “A New York federal judge on Friday agreed to sanction hedge fund Weston Capital Advisors Inc. for an “objectively unreasonable” bid to get him to step away from overseeing a long-running fight over millions owed to an Indonesian bank. Calling the disqualification motion “another chapter” in the company’s history of defiance, U.S. District Judge Paul A. Crotty refused to recuse himself and granted a fee-and-costs sanction to Bank Mutiara.”
  • “Weston Capital has also tried to “walk back” its argument that the court was biased due to the judge’s connection to the firm’s former law firm — Judge Crotty’s brother Robert is a litigation partner at Kelley Drye & Warren LLP — thus further undercutting its argument it had suffered from related bias from the bench. “Kelley Drye ceased representing Weston in this action over four years ago and the court disclosed its relationship with Kelley Drye over five years ago. Weston raised no objections,” Judge Crotty said. ‘Accordingly, since no objective person would reasonably question the court’s impartiality under these circumstances … there is no basis for disqualification.'”

Opioid plaintiffs fight bid to disqualify U.S. judge before trial” —

  • “Lawyers for cities and counties suing drug companies over the opioid epidemic on Monday objected to a bid by pharmaceutical distributors and pharmacies to disqualify the federal judge overseeing the cases, saying it had no basis and came too late.”
  • “The companies had argued in Saturday’s motion that Polster, who has long pushed for a settlement that could ‘do something meaningful to abate this crisis,’ had made a series of public statements since 2018 that could cause a reasonable person to question his impartiality.”
  • “In Monday’s brief, lawyers for the plaintiffs said the defendants had waived their ability to seek Polster’s recusal, noting they were relying on statements he made more than a year ago to belatedly seek his disqualification. ‘If these Defendants really thought recusal was necessary, they were required to raise the issue sooner – much sooner,’ the plaintiffs’ lawyers wrote.”

Facebook ‘Like’ of Campaign Post Gets Judge Disqualified” —

  • “A Kentucky judge was disqualified from a case involving the state’s governor and his re-election challenger over his ‘like’ of a Facebook post seen as a political endorsement.J udge Phillip Shepherd was removed from a case between Republican Gov. Matt Bevin and his Democratic opponent, state Attorney General Andy Beshear, for ‘liking’ a post discussing Beshear’s campaign.”
  • “The Sept. 27 ruling from Kentucky Supreme Court Chief Justice John Minton Jr. found Shepherd should have disqualified himself because his impartiality ‘might reasonably be questioned.'”
  • “‘The body of law addressing judges’ use of social media is still developing nationally. But recent opinions emphasize that ‘[t]he code of judicial conduct’s restrictions on judges’ off-bench activities apply equally on social media as in other contexts,’ Minton said in his order.”
    “Shepherd had defended his impartiality by pointing out his bipartisan social-media habits: he also ‘liked’ posts supportive of Bevin’s campaign and other Democratic and Republican candidates. But Minton said two “likes” don’t make a right. “In fact,” he wrote, ‘those ‘likes’ constitute additional violations of Rule 4.1(A)(3),’ the rule against judges publicly endorsing a candidate for any public office.”
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Risk Update

Risk Roundup — Hot-Potato-Dropping Conflicts, Ethical Screen Struggles

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Nice analysis from two lawyers from the Professional Liability Practice Group of Pullman & Comley: “The Dangers of Resolving Client Conflicts by ‘Dropping the Hot Potato’” —

  • “A 2018 decision by the United States District Court for the District of Massachusetts highlights a risk faced by law firms tempted by the prospect of business from a new client whose interests are, or may be, adverse to those of an existing firm client. Altova GMBH v. Syncro Soft SRL, 320 F.Supp. F.3d 314 (D. Mass. 2018).”
  • “Faced with the opportunity to represent its existing client (Altova) in a new patent dispute against another client (Syncro), the firm was faced with an obvious conflict of interest. It attempted to solve its dilemma as follows: within a few weeks of being contacted by Altova for representation in the patent dispute, the firm wrote to Syncro terminating its relationship with Syncro. The firm described the reason for the termination as “potential conflicts in relation to other clients’ work that [the firm] would like to undertake and that those other clients would like [the firm] to undertake.” 320 F.Supp. 3d at 318. In its letter the Sunstein firm did not identify Altova as one of the “other clients” at issue, let alone ask for Syncro’s consent for the firm to represent Altova in the anticipated patent litigation against Syncro.”
  • “The court slapped down the notion that such a gambit necessarily will convert the dropped client into a “former” client for purposes of conflicts analysis. When a client falls into the category of a “former” client, the law firm’s conflict of interest obligations are governed by the more lenient standards of Rule 1.9 of the Rules of Professional Conduct, rather than the more stringent conflict of interest requirements applicable to a “current” client under Rule 1.7. But given that the Sunstein firm dropped Syncro within mere weeks of being asked to represent Altova against Syncro, the court readily found that Syncro plainly was a “current client” at the time Altova first approached the firm about suing Syncro.”
  • “While a law firm might be entitled to drop one client in favor of another unrelated client when the two clients become embroiled in a dispute that was “unpredictable,” the Sunstein firm had been performing ongoing work for Altova, including having previously sent Syncro a cease and desist letter relating to an alleged copyright infringement involving the same property at issue in the patent dispute. The court found in light of these facts, the 2017 patent “altercation was foreseeable.” Id. at 321.”
  • “As a general rule, courts will not countenance a law firm’s attempt to avoid disqualification in a dispute between two current clients by the firm terminating its representation of the client it deems, for whatever reason, less desirable. The authors of Rule 1.7 command that “a lawyer must not accept a second client if the directly adverse conflict is known in advance and [therefore] must withdraw if the conflict is discovered after the concurrent representation has” begun. Hazard, Hodes & Jarvis, The Law of Lawyering §12.03 (4th ed. 2019).”

Boeing Seeks DQ After Assistant Switches Sides In ADA Suit” —

  • “Boeing has asked an Oregon federal court to disqualify a law firm handling a disability discrimination suit against the company, saying that it had hired a legal assistant who previously worked on the case while employed by Boeing’s attorneys at Ogletree Deakins Nash Smoak & Stewart PC.”
  • “The Boeing Co. told the court on Friday that it had tried to ensure that The Law Offices of Daniel Snyder properly screened legal assistant Sarah Churchill off from the suit, but Snyder had resisted putting a screen in place and violated the screen just three weeks after agreeing to it.”
  • “…Churchill worked on the case while employed as an assistant for Ogletree attorney James M. Barrett, who is still one of the attorneys of record for Boeing. During that time, Churchill sent or received almost 300 emails related to the case, including emails that contained legal advice on the company’s affirmative defenses, objections to depositions and other discovery, discussions of work product, and other issues, according to the motion. She left the firm in February, the motion said.”
  • “The motion portrays Snyder as being resistant to formally agreeing to the screen, but he did agree to the requested screening procedures in June, according to the motion. Just three weeks later, however, he copied Churchill on an email about the case, the motion said.”

 

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Risk Update

Attorney-Client Privilege ⁠Edition — Mergers, In-House Counsel, Sanctions & Information Security

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This caught my eye, thinking about the applicability to firm-to-firm mergers: “How To Protect Atty-Client Communications After A Merger” —

  • “When negotiating deals for clients, lawyers should heed an often-overlooked 2013 ruling on the issue of who will own privileges over attorney-client communications because a failure to do so can result in legal trouble down the line, experts say.”
    “But one area that some lawyers miss was addressed in a 2013 Delaware Court of Chancery ruling — the question of which party will own privileges over attorney-client communications once the deal is done, especially if the target is transferring its computer systems and email servers as part of the agreement.”
  • “In the fall of 2012, private equity firm Great Hill Partners sued e-commerce company Plimus Inc., which it had brought the previous year. According to the lawsuit, Plimus fraudulently induced Great Hill into the transaction, allegations the PE shop made based in part on correspondence between Plimus and its attorneys that had been archived on company computers and passed on to Great Hill in the deal.” [Was curious and discovered it looks like GHP lost last year.]
  • “Plimus argued the communications were still protected post-sale under attorney-client privilege, but Chancellor Leo Strine ultimately found that under Delaware law, that privilege itself — along with the information it covered — traded hands in the deal. Chancellor Strine also noted in the ruling that the sellers could have protected themselves by negotiating provisions that excluded attorney-client communication from the assets handed over.”
  • “Kendall said he often tries to include language that allows a client to erase communications or take certain emails off a server before providing the buyer with those assets. This is important because sometimes one side will push back on how much freedom the other side should have to go in and get rid of emails or other communications. The more detailed the original protection provision is, the better chance of getting a strong clause into the final merger agreement, he said.”

New Insights On Privilege, Ethics Duties For In-House Attys” —

  • “In Fischman v. Mitsubishi Chemical Holdings America Inc., Judge Jesse M. Furman of the U.S. District Court for the Southern District of New York ruled on July 11, that Jennifer Fischman, former acting general counsel and chief compliance officer of Mitsubishi Chemical Holdings, did not rely on privileged and/or confidential client information in asserting claims of sex discrimination and retaliation against her former employer. Judge Furman also found that, even if Fischman had relied on privileged and/or confidential information, dismissal of her complaint at the prediscovery stage of litigation would not be the proper remedy.”
  • “Although it is commonly assumed that in-house legal advisers are prohibited from using any information whatsoever about their employers in pursuing discrimination claims against them, this opinion dispels that notion.”
    “Specifically, Mitsubishi claimed that Fischman had violated the attorney-client privilege and/or breached her ethical obligation not to disclose client confidences by disclosing in her complaint: the company’s annual revenue; the fact that she managed “a number of high exposure lawsuits” during her tenure; the fact of the company’s relationship to its subsidiaries; her job duties and accomplishments; her male colleagues’ compensation; Mitsubishi employees’ comments about sexism at the company; the performance of internal investigations at the company; and unethical conduct by her own colleagues.”
  • “In denying the motion, Judge Furman expressly held that none of the information identified by Mitsubishi was protected by the attorney-client privilege or by Fischman’s ethical obligation to protect client confidences. The court explained that the only circumstances in which a client may invoke the attorney-client privilege are to protect ‘a communication between client and counsel’ that was (1) ‘intended to be and was in fact kept confidential’ and (2) ‘made for the purpose of obtaining or providing legal advice.'”
  • “Since most of the information identified by Mitsubishi ‘involve[s] narratives of events, rather than communications,’ it is not subject to the attorney-client privilege. Specifically, the court indicated that allegations about matters such as the company’s revenue, Fischman’s job duties and accomplishments, the performance of internal investigations, and unethical conduct by her colleagues, did not involve communications. As to the information that derived from communications, Judge Furman held that it is not privileged because it ‘recount[s] informal conversations between employees about sexism in the company,’ not comments made for the purpose of obtaining or providing legal advice.”

Bilzin Sumberg Sanctioned For Claims Against Opponents” —

  • “A Florida state judge has sanctioned Bilzin Sumberg Baena Price & Axelrod PA and partner Jose M. Ferrer, finding they improperly handled attorney-client privileged communications that formed the basis for a bad-faith motion to strike their opponent’s defenses ahead of a damages trial in a dispute between former business partners.”
  • “In a scathing 51-page order issued Sept. 16, Miami-Dade Circuit Judge Beatrice Butchko found that it should have been obvious to Ferrer that the secretly made recordings he received from a member of defendant Vicken Bedoyan’s legal team in Bolivia were privileged materials and that the attorney acted in bad faith by making scandalous and baseless allegations that Bedoyan’s counsel participated in a scheme to bring trumped-up criminal child pornography charges in Bolivia against his client, gold dealer Harout Samra, to gain an advantage in their litigation in Miami.”
  • “Based on the evidence presented, the judge said she rejected Ferrer’s claim that he did not believe the materials he received from Inchausti were privileged and added that at minimum, the highly suspicious circumstances surrounding them ‘should have alerted Mr. Ferrer not to use them.’ She faulted Ferrer for not bringing the recordings to the defense’s or the court’s attention and said his fashioning of Samra’s motion to strike as an emergency motion was in bad faith because they had possession of the materials for weeks beforehand.”

And a general reminder of the importance of information security, with a focus on the technical details: “Law Firms Need to Prioritize Privilege to Protect Client Information” —

  • “When it comes to securing confidential data, law firms are often not held to the same standards as other service providers…
    When an organization invites outside counsel into its network or provides access to confidential information, it introduces third-party risk. Most organizations don’t do enough to secure third-party vendor access and outsourced legal counsel is often overlooked by InfoSec teams, which significantly increases the security risk.”
  • A large law firm with more than 4,000 attorneys who service some of the largest organizations around the world fell victim to the NotPetya attack a few years ago, disrupting services and costing them millions. Better endpoint protection is needed as ransomware continues to be a threat to law firms both large and small. When it comes to access rights, Law firms need to be treated the same as any other remote third-party vendor.”
  • “One of the most common strategies used by malicious insiders and external attackers is to attempt to gain privileged access in order to execute a successful attack. Privileged accounts are everywhere – in every networked device, database, application and server on-premises and in cloud and hybrid environments. Nearly all advanced attacks involve the compromise of privileged credentials. These credentials provide anyone who gains possession of them the ability to control an organization’s resources, disable security systems and grease the tracks for providing fast access to vast amounts of client information and other sensitive data. In the wrong hands, access to this data can cause significant business disruption.”
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Risk Update

Bressler on the Bressler Risk Blog (Six-Month Blog Anniversary Update)

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Just wanted to take a moment to celebrate the half-birthday of the blog. (We do half birthdays in my household, per the defined RPC — Rules of Parental Conduct — shrewdly negotiated by my little ones.)

Over the past six months, we’ve seen strong and consistent growth in readership. Thank you to everyone who receives, reads and passes along these emails. I enjoy graphs that go up and to the right, as they say.

Similarly, thank you to the many who have written in with encouragement, sent in news clips and cases (always appreciated!) and those who write in when there’s a short break in the feed. >smile<

What’s next, Dan?

The current course seems like a productive one. Things seem to be working. But since you asked…

  • I’d like to encourage all looking to support the BRB to send a note to friends, colleagues and peers you think might be interested in joining our readership ranks and encourage them to subscribe for email updates. It’s more fun with more playing.  (The marketing literature says to remind folks to emphasize “free” in these calls to action… But I’m not one for always following those rules, hence being a risk blogger.)
  • I’m also on the hunt for interesting risk visionaries and thinkers to interview. The earlier piece with Bill Freivogel we did was a hit. And there’s another one in the works (should be out later this month). If you know someone with something original, compelling or important to share on the risk front. I’m ears.
  • Without teasing too much, I have another experimental risk project in the works. Hope that sees the light of blog in the weeks ahead as well.

(Long term, I confess to ambitions to seeing if there’s a path to securing some third party sponsors, interested in our elite risk audience. But, this was always intended as a bit of an artistic labor of love, not my day job. So there’s low risk of the lights going out anytime in the near future.)

Thanks for reading!

(Back to normal programming tomorrow. #brb)

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Risk Update

Presidential Conflicts? “Off Books” Lawyers?

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(As some have remarked, sometimes you just can’t make these things up.)

Here’s an update that caught my eye: “Trump reportedly worked with 2 ‘off the books’ lawyers to pressure Ukraine for damaging information about Joe Biden, in addition to Giuliani” —

  • “‘Fox News Sunday’ host Chris Wallace said Sunday morning that top US officials confirmed President Donald Trump was working with more than one personal lawyer “off the books” to pressure Ukranian officials for damaging information on former Vice President Joe Biden.”
  • “Trump initially attempted to hire the two lawyers to represent him in the Russia probe investigation, but decided not to after it was revealed that the two attorneys had a conflict of interest in the case. Toensing had previously represented witnesses who had already communicated with special counsel Robert Mueller’s team.”
    • [Conflict detail] “Toensing also represents Mark Corallo, the former spokesman for Trump’s legal team. Corallo is said to have told special counsel Robert Mueller that Hope Hicks, the White House communications director, may have hinted at concealing evidence from the Russia investigation during a conference call with Corallo and Trump aboard Air Force One last year.”
  • “According to the US official who Wallace used as his anonymous source, only Trump knows the full details concerning diGenova and Toensing’s involvement in the Ukraine efforts, because the president worked with the two ‘off the books,’ choosing not to involve people within his White House administration itself.”
  • “Giuliani has denied working with any other lawyers in Ukraine dealings multiple times in Fox News appearances – a narrative that the network itself contradicts with these latest developments.”

(Would love the see a copy of any engagement letter… or outside counsel guidelines…)

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