Risk Update

Risk Update — Conflicts and Litigation Funding, R. Kelly Lawyer Conflicts Allegations

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It’s Official: New Jersey Federal Courts Will Require Disclosure of Litigation Funding Arrangements” —

  • “The new rule says lawyers who get financial assistance from nonparties for legal fees and expenses must disclose the funder’s name and address, whether the funder’s approval is needed for litigation or settlement decisions, and what terms and conditions apply to such approvals.”
  • “Some critics have questioned the need for a rule mandating disclosure of litigation funding arrangements. But litigation funding is also facing criticism from the U.S Chamber of Commerce, which argues that such funding leads to meritless litigation, and will make settling suits more difficult.”
  • “Steven Richman, chair of the subcommittee that formulated the rule, said, ‘I’m pleased with the result. Our rule strikes the balance that was needed between those who were concerned that it would open up the floodgates of disclosure, and those who felt we needed to provide certain basic information.'”
  • “And Kerri Chewning, president of the Association of the Federal Bar of New Jersey, said the proposal hadn’t generated much feedback or interest among that group’s members. Chewning, of Archer in Haddonfield, who is also a member of the lawyers advisory committee, said she understood the purpose of the rule to help trial judges avoid a conflict of interest when parties in their court is using a litigation funder. A judge might own stock in a bank or other company that is affiliated with a litigation funder but trades under another name, and the rule change would make it easier to spot such conflicts, Chewning said.”

Conflicts involving an R. Kelly lawyer arise ahead of his trial” —

  • “As R. Kelly shuffles his legal team two months ahead of trial, a federal judge is weighing potential conflicts involving one of his remaining attorney’s past interactions with potential witnesses who may be involved in the trial.”
  • “Kelly is awaiting US District Judge Ann Donnelly’s decision on a request from two of Kelly’s long-time Chicago-based attorneys, Steve Greenberg and Michael Leonard, to withdraw from the case. Kelly’s remaining attorneys, Thomas Farinella and Nicole Blank Becker, said in court last week that the singer had terminated Greenberg and Leonard. Donnelly in court asked to hear about concerns about alleged conflicts Becker may have before approving Greenberg and Leonard’s request to leave the case.”
  • “An attorney who represented the women at one time said in a declaration filed by Greenberg and Leonard that was read in court Thursday, that Becker gave ‘legal advice’ to the women, one of whom began cooperating with prosecutors in early 2020 after severing ties with Kelly. Becker denied in court that she gave the women legal advice.”
  • “Prosecutors in the hearing raised another allegation of a potential conflict by Kelly’s legal team: that an attorney helped facilitate payments to one of the women who Kelly lived with before his arrest and who may testify in his defense at trial.”
  • “Federal prosecutor Maria Cruz Melendez, of the US Attorney’s Office for the Eastern District of New York, voiced concerns over the alleged payments, saying a jury may be misled into thinking that the payments incentivized the woman to testify for the defense. Becker denied ever facilitating payments to the woman on Kelly’s behalf.”
  • “Donnelly said she would not discuss another alleged conflict involving Becker that was raised by prosecutors in a sealed letter to the court. Sources confirmed to CNN the matter deals with an allegation that Becker was connected to an effort to pay to silence a victim who is cooperating with the government. CNN has reached out to Becker for comment on the claim.”
Risk Update

Bulk Risk Management — Costco Conflicts Contest Checked by Ethical Screen

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L.A. Firm Beats Costco’s Bid to Disqualify It Based on Conflict” —

  • “Costco Wholesale Corp. can’t disqualify the plaintiff’s firm litigating a California woman’s slip-and-fall suit merely because one of its law clerks worked for the discount retailer’s counsel, according to a state appellate court ruling.
  • “Federico Stea worked at Yukevich Cavanaugh as a law clerk while in school, and while waiting for results from the California Bar exam. During that time, he was assigned to the team of litigators handling the defense of Costco in several different cases, the company said. Yukevich left Stea and later accepted a law clerk job at the Los Angeles-based Vaziri Law Group.”
  • “Stea asserted that his work at Yukevich didn’t include confidential attorney-client information and that he only performed menial tasks on Costco files. Costco failed to explain how that explanation was insufficient, Justice Judith Ashmann-Gerst wrote in the unpublished opinion.”
  • “Vaziri’s screen was implemented before Stea started work—he was explicitly told he would not be working on any Costco-related cases—and included the creation of separate email distribution lists to prevent Stea from receiving Costco-related emails. There also were locked file cabinets he didn’t have access to, Ashmann-Gerst said.”

Costco Can’t Disqualify Shopper’s Attys In Injury Case” —

  • “A California appeals court has refused to disqualify attorneys representing a woman suing Costco for slip-and-fall injuries, saying a staffer working for the plaintiff’s counsel, who previously worked on similar Costco cases for defense counsel, was properly prevented from working on Costco cases.”
  • “Costco had argued that because Federico Stea, a nonattorney staff member employed by Devora’s counsel, Vaziri Law Group, had previously worked for defense counsel Yukevich Cavanaugh on at least 20 Costco slip-and-fall cases, Stea possessed confidential attorney-client information that may have been disclosed in the current case.”
  • “On appeal, Costco argued that plaintiff’s counsel should be disqualified because Vaziri Law Group did not implement proper ethical screening procedures before Stea was hired. The panel on Wednesday disagreed, however, saying Vaziri Law Group and Stea’s supervising attorney, David Shay, took reasonable and timely measures to implement screening. The firm told Stea before he was hired that he would not be allowed to work on any Costco cases, and the panel said ‘there would have been no rational reason to implement any other screening procedures until Stea had accepted employment,’ according to the opinion.”
  • “‘These declarations, and the reasonable inferences arising from them, supported the trial court’s findings and implied findings that VLG implemented various screening procedures both before and as soon as Stea began working for VLG, and that those procedures were in fact effective in ensuring that Stea never worked on Costco matters or communicated anything he may have learned at the Yukevich firm to VLG,’ the panel said in an unpublished opinion.”
Risk Update

Conflicts Decisions and Updates of Note — Focus on Freivogel Findings

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Bill Freivogel has clearly been busy with a brimming June reading list. Here are some key updates from him, shared with a hat tip and appreciation for his ongoing efforts:

  • “Cantu Servs., Inc. v. Worley, No. CIV-12-129-R (W.D. Okla. June 7, 2021). Discovery dispute. In this opinion the court found that parties being represented jointly by one lawyer enjoy a common interest privilege even after the parties interests diverge. The fact that the lawyer should have recognized the conflict, but kept going, does not remove the privilege. The court then found that the discovering party had made a prima facie showing of crime/fraud requiring that the court do an in camera inspection of the disputed material. The court’s lengthy analyses of both common interest and crime/fraud appear to be good research tools.”
  • “Prentice v. OfficeMax N.A., Inc., No. 13-71 (D.V.I. June 10, 2021). In this employment-related case the Rohn firm represents Plaintiffs, and the Ogletree firm represents Defendant. While with the Ogletree firm Lawyer worked on this case. He then joined the Rohn firm. The magistrate judge disqualified the Rohn firm. In this opinion the district judge affirmed, finding that the magistrate judge’s findings were not clearly erroneous. The Rohn firm delayed giving notice to the Ogletree firm for a month. Virgin Island courts follow the ABA Model Rules. Thus, the notice was not “promptly given” under Rule 1.10(a)(2)(ii). The court found other deficiencies in the Rohn firm’s screen, as well.”
  • “Cicchiello & Cicchiello, LLP v. Sarris, No. HHD-CV-21-6137918-S (Conn. Super. Ct. Hartford Dist. May 19, 2021). Lawrence Connelli represents Plaintiff. The Dzialo law firm is a defendant. The defendants moved to disqualify Connelli, claiming that he represents the Dzialo firm. In this opinion the court denied the motion, finding that the Dzialo firm had hired Connelli as a testifying expert, and not as the Dzialo firm’s lawyer. The court relied primarily on Commonwealth Ins. Co. v. Stone Container Corp., 178 F. Supp. 2d 938 (N.D. Ill. 2001), which essentially held that a testifying lawyer expert does not have a client.”
  • “Kimberly-Clark Corp. v. Extrusion Group, LLC, 2021 WL 2291078 (N.D. Ga. June 3, 2021). Suit by Kimberly claiming Extrusion’s infringement of Kimberly’s “‘104 patent.” There is a lot going on in this opinion. We will limit our discussion primarily to the court’s order regarding exclusion of a patent opinion. Law Firm representing Kimberly (but not in this case) had obtained a conflicts waiver from Kimberly allowing Law Firm to provide patent opinions to other clients relating to Kimberly patents. The waiver did prevent Law Firm from providing “assistance in, litigation or other disputes that are adverse to” Kimberly. One of Law Firm’s lawyers, in November 2019, provided Extrusion a non-infringement opinion relating to the ‘104 patent. This was after Kimberly filed this case and after Kimberly told Extrusion it was claiming infringement of the ‘104 patent. Thus, the court found that the opinion violated Kimberly’s waiver and ordered exclusion of the opinion and testimony relating to it.”
  • “Initial Interview (posted June 9, 2021) Tex. Op. 691 (6/2021). Does a lawyer have a duty of confidentiality to prospective clients who do not become clients? Texas does not have a version of Model Rule 1.18; they’re looking at it. In this opinion the Committee has cobbled together several Texas rules to reach the conclusion that the lawyer does have such a duty. So, if Lawyer meets with W years ago to discuss a possible divorce, Lawyer probably cannot now represent H with respect to a possible divorce from W. Lawyer’s partner could not represent H either. Consents could cure some of these conflicts. We will leave it to our Texas brethren to parse the opinion and sort through how the current, oddly numbered, Texas rules relate to all this.”
Risk Update

Private Equity, Public Conflict — KPMG Faces Fine

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KPMG faces record fine over ‘conflict of interest’ on Silentnight sale” —

  • “KPMG UK faces record fines of over £ 15 million after advising bed maker Silent Night to sell its business, despite a “conflict of interest” with the buyout fund where the accountant bought it.”
  • “The significance of the findings against KPMG and its partner, David Costley-Wood, who advised Silentnight to sell, ‘sits at the top,’ although the referee can do, Richard Coleman QC of the FRC told the hearing. The referee’s decision was not published, but a draft of its key findings was read aloud by Coleman.”
  • “According to Coleman, Costly Wood and KPMG weren’t considering whether their objectivity was threatened or if the interests of HIG and Silent Night could be in conflict. It turns out that the motivating factor for cheating is the ‘desire to maintain HIGH’ as a potential client.”
  • “The referee also fraudulently made Costley-Wood provide false or substantially incomplete statements to Silentnight, pension trustees, pension protection funds, and pension regulators regarding the causes of Silentnight’s financial difficulties. By supporting the pension, we found that it showed a lack of objectivity. Said.”
  • “KPMG was paid around £ 1.6m for its Silent Night Engagement initiative, but hearings said it has received more than £ 8.5m from companies invested by HIG and the fund since 2010. HIG continues to be interested in Silentnight, which reported a pre-tax loss of £ 888,000 from £ 133.9m in sales for the year to February 2020.”
  • “KPMG resisted the FRC’s request to conduct a review of the causes of Silent Night’s illegal activity and order the company to carry out a corrective review of current procedures… In a statement, KPMG UK said: ‘The referee’s draft findings relate to restructuring work carried out over a decade ago. At the right time, we will consider these findings and options for possible appeal.'”

KPMG faces call for record fine from British accounting watchdog” —

  • “Britain’s accounting watchdog called for KPMG’s UK arm to be fined more than 15 million pounds ($21 million) on Monday over a ‘conflict of interest’ when it advised on the sale of bed maker Silentnight.”
  • “‘The tribunal’s findings that the respondents lost their objectivity and dishonestly advanced, or associated themselves with, misleading statements are particularly serious and unusual,’ the Financial Reporting Council’s (FRC) executive counsel said at the hearing.”
  • “‘If the respondents had properly addressed and dealt with threats to their objectivity, including the conflict of interest, they would not have been able to advise and assist both HIG and Silentnight,’ the FRC said.”
  • “KPMG said the tribunal’s findings related to restructuring work performed over a decade ago and the fine being sought was ‘overly punitive’ and ‘disportionate.'”

KPMG Faces $21 Million Fine for H.I.G. Capital Conflict” —

  • “The U.K.’s audit regulator said the conflict with H.I.G. Capital LLC was “obvious” in documents prepared for a sanctions hearing Monday. The Financial Reporting Council said that KPMG “lost their objectivity and dishonestly advanced, or associated themselves with, misleading statements,” with misrepresentations repeated on eight separate occasions.”
  • “The tribunal’s executive counsel also recommended that David Costly-Wood, an ex-KPMG partner who worked on the sale, face a personal fine of at least 500,000 pounds and be stripped of his membership of the Institute of Chartered Accountants in England and Wales for 15 years.”
Risk Update

Conflicts & OCGs — FIFA DQ Fight, OCG D&I Trends

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Robbins Geller Wants To Fight FIFA Suit DQ At 2nd Circ.” —

  • “The law firm urged U.S. District Judge Louis L. Stanton on Tuesday to extend the case’s current stay by two months so it can seek so-called mandamus review of his May 19 decision to boot it from representing Grupo Televisa SAB investors, who say their shares tumbled following revelations that the Mexican media company bribed international soccer officials to secure broadcasting rights to the FIFA World Cup.”
  • “Judge Stanton removed Robbins Geller from the lead counsel spot it had held since 2018 as punishment for hiding that former class representative Colleges of Applied Arts & Technology Pension Plan, which claimed to have lost $968,000 when the stock dropped, also earned $11 million from shares it held in a Canadian investment fund that had shorted Grupo Televisa.”
  • “But the firm said Tuesday that the Second Circuit should weigh in on whether it was required under the Private Securities Litigation Reform Act, or PSLRA, to disclose the short position. It said that without an appeal, the precedent set by Judge Stanton’s order could muddy securities litigation with limitless claims involving third-party traders.”
  • “‘No identified PSLRA plan of allocation has required the disclosure or accounting of trades other than a claimant’s own transactions in the subject security,’ Robbins Geller wrote. ‘The injection of third-party trading into PSLRA actions would make it impracticable to administer them, as overlapping claims would be virtually impossible to identify, and disputes over who has legal right to them would spawn endless litigation.'”
  • “‘Not only is the challenge to this court’s disqualification order not ‘clear and indisputable,’ that order is manifestly correct,’ Grupo Televisa wrote. ‘What is clear and indisputable is that Robbins Geller was not entitled to falsely represent and conceal the existence of CAAT’s massive short position from the court and defendants alike at every turn during the first eighteen months of this action.'”

Corporate Legal Departments Seek Increasingly Rigorous D&I Goals, Expectations for Outside Counsel” —

  • “While diversity and inclusion has increasingly topped the priority lists of corporations over the last several years, corporate legal departments are calling upon their outside counsel to keep up.”
  • “‘There’s got to be accountability on both sides,’ said Ed Blakemore, assistant general counsel at Rockwell Automation. ‘So corporate counsel have to hold themselves accountable to actually review their bills and know who’s doing their work. That’s a non-negotiable. And then outside counsel have to actually staff your matters with diverse folks.'”
  • “Markel Insurance, for example, in surveying the law firms representing 80% of their legal spend, broadened the scope to include questions about socioeconomic status, asking whether individuals are the first generation in their family to graduate from college or the first generation in their family to be an American citizen. The team is also considering including age, on both ends of the spectrum.”
  • “‘We’re trying to define diversity as broadly as we can, because we hire lawyers all over the country and all over the world. And I don’t think we can have the same expectations of a firm in Detroit as we would of a firm in Boise, so we’re trying to be very broad about it,’ said Shannon Stevens, Markel’s legal audit claims manager.”
  • “While D&I data collection and analysis can become about as complex and expensive as you’d like it to be, it doesn’t necessarily have to be.”
  • “‘For the corporations that may just be getting started on this journey, you can actually just call your representative outside counsel … and ask them to send you a report broken down, maybe over the last two years by gender, race, maybe looking at some other factors,’ Blakemore said. ‘Most firms, unless they’re grossly incompetent, can get you that report in less than two weeks, and then you’ll have your data that at least gives you a baseline.'”
  • “When it comes to enforcing D&I expectations with outside counsel, the jury’s still out on the “correct” approach. Some corporations penalize their firms for not meeting their D&I goals, while others reward firms with bonuses or more work when they do.”
  • “Regardless of whether the department chooses to use the carrot or the stick approach to hold their outside counsel accountable, the panelists all noted the importance of setting quantifiable goals and expectations for the firms they work with and clearly communicating these goals with their outside counsel.”
Risk Update

Rogue Partner Risk — Client Selection, Surprise Presidential PR Pain

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Emails Show Biglaw Lawyer Was In Deep With Donald Trump Election Case When Firm Claimed To Have No Idea” —

  • “Cleta Mitchell used to be a partner at Foley & Lardner. She and the firm swiftly parted ways after the Washington Post and Atlanta Journal-Constitution secured audio of the former Biglaw attorney participating in a call where Donald Trump seemed to tick all the elements of Georgia’s election fraud statute without discouragement or chiding from the licensed attorneys in the room (including someone only known as Alex that Above the Law ultimately identified as now-former Fox Rothschild attorney Alex Kaufman).”
  • “The next day, Foley & Lardner announced that she was out, which marked a laudably quick resolution in an industry not known for quick turnarounds. The firm’s statement noted that it had decided not to touch the various ‘Big Lie’ litigations with a 10-foot pole back in November and had no knowledge that Mitchell was running around doing the highest-of-stakes lawyering without their knowledge.”
  • “This morning, Carrie Levine from the Center for Public Integrity tweeted this now-released December email. This places Mitchell deep in the case at least by the end of December and, language like ‘we didn’t include… in our lawsuit’ certainly suggests that Mitchell saw herself as involved as early as December 4.”
  • “From the moment this broke, the firm was adamant that it had not been retained in this matter and that Mitchell participated as a private person. Unfortunately, it’s not that easy to flip the firm affiliation switch from an ethical or potential liability perspective — a fact that likely played a big role in her departure.”
  • “It would, however, explain why the firm was unable to police the matter. If she’s not submitting the matter for a conflict check and just showing up without clearing it through the proper channels, they really couldn’t know what’s going on.”
  • “At that point, it’s all about trust. Can you really trust your partners not to jeopardize the platform with their own selfish behavior? Whether it’s an attempt to eke out another few bucks in billables by taking on a surprise local counsel gig or actively hiding a matter from the firm by playing it off as private participation doesn’t really matter — it’s about making sure everyone you work with is truly pulling the same direction.”
  • “That’s why quickly addressing this sort of behavior is important, but at some point firms need to have a reckoning about the risk of putting faith in people they don’t unreservedly trust as colleagues. Because if the last few months have taught us anything, it’s that folks who run in these circles aren’t afraid to take reckless actions. And that’s not good for any firm.”
Risk Update

“Third Degree” Conflicts Conundrum — Mandatory DQ versus Subjective Analysis

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Fluor Says Bombing Case Could Be ‘Undone’ Without Judge Switch” —

  • “Fluor Corp. asked a federal judge to reconsider her decision not to transfer an Afghanistan bombing lawsuit to another judge in the same district because of a conflict of interest, asserting that it will preserve the matter for appeal if the transfer doesn’t happen.”
  • “The plaintiff in this case, Winston Hencely, sued in February 2019 alleging Fluor didn’t do enough to stop a suicide bombing attack in 2016. Other related cases filed with the court this year—now 13—were also assigned to Judge Bruce H. Hendricks.”
  • “Hendricks transferred those cases to Judge Joseph Dawson III, on May 3 because of a presumed conflict, but kept the Hencely case.”
  • “Hendricks denied Fluor’s motion to transfer the Hencely case in a May 12 text order, stating there was no conflict of interest from an attorney and niece-by-marriage who was working on the transferred cases. Hendricks said there was no close relationship with the attorney, and that transferring the case after two years would be highly inefficient.”
  • “Fluor’s reconsideration motion here said Hendricks didn’t fully consider a conduct rule requiring mandatory disqualification if a person within the third degree of relationship with the judge is known by the judge to have an interest that could be substantially affected by the outcome of the proceeding.”
  • “Hendricks improperly relied on a subjective analysis of the per se conflict instead of confronting the mandatory nature of the rule, Fluor said.”

Judicial Ethics Opinion 21-39 [March 26, 2021]” —

  • “This responds to your inquiry (21-39) asking about your ethical obligations if your law clerk’s second degree relative obtains employment with a local law firm as an attorney.”
  • “The Committee has previously advised that a judge is not required to disqualify him/herself when an attorney who is a relative of the judge’s law clerk within the fourth degree of relationship appears in the judge’s court. Instead, the judge must disclose the relationship and advise that the law clerk will be insulated from the attorney and their law firm’s cases. After disclosure, if a party objects to the judge’s continued participation, the judge has the sole discretion to exercise recusal.”
  • “If the attorney/relative is in private practice, the judge’s disclosure obligation extends to the attorneys’ partners and associates. However, if the attorney/relative appears on behalf of a public law office, the judge’s obligation is limited to only those cases where the attorney actually appears or has had some involvement, such as a supervisory role, in the case.”
Risk Update

Role of Law Firm GC — Post-Covid Perspectives, Governance, Regulation, Conflicts Management & More

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Law Firm General Counsel Have Never Been So Important. Here’s Why.” —

  • “As the legal industry undergoes seismic change and grapples with the pressures caused by COVID-19 and ever active regulators, the law firm general counsel has arguably never been so important.”
  • “Slaughter and May general counsel Julia Adams also points out that while scrutiny of the industry by regulators, clients and the public has always loomed large, the fast changing landscape currently means the importance of the role cannot be underestimated.”
  • “‘It is more than simply ensuring compliance,’ she explains. ‘The role of the City lawyer is evolving fast. GCs need not only to keep abreast of changes that are coming but to understand the impact of these on the organisation so that risks can be mitigated.'”
  • “Despite Adams’ clear intention to keep regulation high on the agenda, she says it’s crucial to ensure that governance ‘does not stifle individuality, innovation and the right of partners to question decisions.'”
  • “‘For obvious reasons, unlike ‘normal’ internal clients, practising lawyers will be tempted to self-diagnose, and often want to understand the law behind internal policies,’ Adams explains.”
  • “Richard Follis, Shoosmiths’ inaugural GC who took on the role in May 2021, agrees. He says there is a ‘balance to be struck between mitigating risk at law firms without creating a lot of red tape.’ ‘To guard against risk you have to know where it is and prepare for it – the GC is essentially the lightning rod through which all of our knowledge about and defences against risk can be channelled.'”
  • “Another challenge, Clifford Chance’s Perrin says, is establishing common standards in an increasingly international world. He explains that the ‘huge proliferation of regulation that is applied in different ways across different countries,’ has made the task extremely complicated.”
  • “His key achievement was getting a new global conflict management system accepted within the firm, after realising the former way to manage conflict was ‘totally inadequate.’ The new centralised process was ‘radical’ and a ‘huge success,’ he says – with little push back from partners.”
  • “‘The process quite quickly came to be highly regarded by partners, and it’s very rare for the conflict analysis and decision to be seriously challenged internally; perhaps about five times in 20 years. That’s extraordinary and I’m proud of that.'”
  • “Legal technology is being embraced by the industry, but making sure individuals understand exactly what they have access to and how they use it ethically is a crucial consideration for Adams, she says.”
Risk Update

Client Risk — Engagement Letters, DQ Deferred

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A Privilege Lesson from Elizabeth Holmes: Have a Look at Your Engagement Letter. At the Very Least, Have One.” —

  • “The Theranos founder last week lost out on her bid to keep a batch of emails between her and the company’s former lawyers at Boies Schiller Flexner out of her upcoming criminal trial. One thing that weighed against her: The lack of any sort of engagement letter between the firm and the company.”
  • “A federal magistrate judge in San Jose, California, last week opened the door to the possibility that a trove of emails between lawyers at Boies Schiller Flexner and officials at Theranos could be submitted as evidence in the upcoming criminal trial of the defunct blood-testing company’s founder Elizabeth Holmes. While exactly what is contained in those emails will have to wait to be seen, one nugget from the decision over whether the communications were privileged jumped out: Boies Schiller didn’t have an engagement letter with Theranos or Holmes.”
  • “That lack of documentation is especially surprising considering Boies Schiller’s wide-ranging relationship with Theranos, which covered everything from advising on the company’s patent portfolio to consulting on interactions with the press to dealing with inquiries from government agencies to handling litigation matters over the course of a half-decade.”

Legal Recruiter Can’t DQ Old Co.’s Atty In Trade Theft Suit” —

  • “A federal magistrate judge has denied a legal recruiter’s bid to disqualify his former company’s counsel in a trade secrets suit, ruling that while the attorney may have to now be a witness at the trial, disqualifying him from pretrial proceedings would be premature.”
  • “Evan P. Jowers is accused of trade secret theft and breach of contract by his former company, MWK Recruiting Inc. He had attempted to disqualify Robert Kinney, head of MWK subsidiary Kinney Recruiting LP, from working on the case because he will likely be a necessary witness at trial.”
  • “U.S. Magistrate Judge Andrew Austin said Thursday the court should wait until pending summary judgment motions are decided before determining if disqualifying Kinney is necessary. ‘It is possible — indeed, likely — that the resolution of those motions will narrow the issues for trial, which will directly impact how ‘necessary’ Kinney’s trial testimony might be,’ making disqualification at this stage premature, Judge Austin said in the ruling.”
  • “MWK sued Jowers in 2018. Jowers, who started at MWK in 2006, allegedly used information he obtained through MWK to start placing candidates through his own recruiting firm before leaving MWK in 2016, violating a noncompete agreement he signed when he started work.”
  • “Thursday’s order marks the latest turn after the close of bitter discovery, marathon depositions and what Judge Austin has described as a ‘downward spiral … into absurdity.'”
  • “In December, Judge Austin nearly sanctioned Jowers’ California-based counsel, Robert Tauler of Tauler Smith LLP, for using ‘scorched earth discovery tactics.’ In April 2020, Judge Austin told Kirkland & Ellis LLP, which is not a party in the case, that it should be ashamed for its ‘petty, technical, overly argumentative’ response to a request for information in the case.”
Risk Update

Risk Glitches & Surprises — Waivers Waving, Walls Working, Client Selection Vetting Surprises

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Glenmark Says Glitch Calls For Supplement To DQ Testimony” —

  • “In a letter to Senior U.S. District Judge R. Barclay Surrick, Glenmark Pharmaceuticals Inc. said there was a glitch that corrupted a portion of the recording of the May 5 hearing in Pennsylvania federal court, including during the testimony of the company’s general counsel who waived any purported conflict of interest created by Morgan Lewis’ work on behalf of co-defendant Teva Pharmaceuticals in separate civil litigation.”
  • “As a result of the failed recording, Glenmark said, there’s no transcript of its waiver.”
  • “At the hearing last month, Rizkalla testified that he had considered and was comfortable with potential conflicts created by Morgan Lewis’ work on behalf of Teva, but Judge Surrick said he wanted to hear from Teva about its understanding of the firm’s dual representation.”
  • “Federal prosecutors sought the hearing in March as they pointed out that Morgan Lewis, which is representing Glenmark in the criminal case, was also representing Teva in multidistrict civil litigation over alleged price-fixing by generic-drug makers, and that the firm had also worked on behalf of Teva as part of the investigation leading up to its indictment in August.”
  • “Morgan Lewis has pointed to a so-called ‘ethical wall’ it set up in January 2017 after it started representing both companies in connection with alleged price-fixing the previous year.”

More Law Firms Are Vetting Cases for Political Risks. But There’s No Foolproof Solution” —

  • “Amid political polarization throughout the United States, an increasing number of law firms are seeking to vet their lawyers’ engagements for potential political fallout in addition to client conflicts. As Barnes & Thornburg recently discovered, the reputational risks are high if not done properly, while firms face competing business pressure to act quickly for clients.”
  • “The firm announced June 4 that it had parted ways with labor and employment partner Alec Beck after the attorney put his name on a new federal lawsuit on behalf of prominent President Donald Trump supporter and conspiracy theorist Mike Lindell without prior authorization. The incident attracted a firestorm of attention and criticism toward Barnes & Thornburg on social media.”
  • “Barnes said it ‘has clear procedures for evaluating and authorizing proposed new client matters before they can proceed, including local counsel engagements. As we shared last week, this recent matter was engaged without receiving firm authorization pursuant to internal firm approval procedures.'”
  • “Several law firm public relations professionals said that they are seeing a growing number of firms implementing procedures to assess clients and engagements for reputational risk. For now, though, the process is bound to be imprecise, particularly because speed matters in new matters.”
  • “‘It’s a delicate balance to tell entrepreneurial partners who are trying to get new business to slow up,’ said former Morgan, Lewis & Bockius managing partner Tom Sharbaugh.”
  • “And introducing politics into the question adds a level of complexity that goes beyond working through the firm’s existing roster of clients for conflicts. Should firms be flagging every new potential matter in an email for each member of the partnership, prompting questions over confidentiality and privilege? Or feeding each one to a small committee that could quickly be overwhelmed by a huge administrative burden?”
  • “‘Neither one is perfect,’ said a former Am Law 200 media relations professional who sought anonymity based on his current employer’s policies. ‘But I do think this is necessary work. Even if there’s no great solution, the reality is that firms are going to be getting black eyes left and right if they’re not doing this appropriately.'”
  • “The incident places Barnes in the ranks of others such as Fox Rothschild and Foley & Lardner that were forced to take action against attorneys who aligned themselves with efforts to cast doubt on the integrity of the 2020 presidential election.”
  • “‘Firms don’t want to restrict the freedom of their people to believe whatever they want to believe,’ said former Orrick, Herrington & Sutcliffe chairman and CEO Ralph Baxter. ‘But now, there are business consequences of taking positions on issues that are themselves political, so it’s going to be harder for firms to navigate that.'”