Bressler Risk Blog

“Tech Co. Fights AT&T Bid To Disqualify Its Ex-BigLaw Attys” —

• “U.S. District Judge Katherine Polk Failla shouldn’t disqualify the trio of attorneys based on ‘prior matters from a decade or more ago involving different patents, different products, and different technology,’ Network Apps LLC told the court Thursday in a lightly redacted filing.”
• “Though AT&T claims the three attorneys — Kevin Cadwell, formerly of Baker Botts, and Akin Gump alumni David Clonts and Michael Reeder — worked on matters that were ‘substantially related’ to the patent in this case, Network Apps said in its motion AT&T’s argument ‘quickly unravels under the proper legal standard.'”
• “‘In the context of patent litigation, when neither the patent nor the accused product overlap with the previous matters, no substantial relationship exists to warrant disqualification,’ Network Apps said.”
• “Working on matters related to SMS messaging and call interception aren’t enough to call the work the attorneys did substantially related to the patent litigation at hand, according to Network Apps. ‘Knowing that its ‘substantial relationship’ arguments fail from the start, AT&T falls back on its position that Cadwell, Clonts, and Reeder each spent many hours working for AT&T in years past,’ it said. ‘But without a ‘substantial relationship,’ this argument fails as well.'”
• “When AT&T asked Judge Failla to consider disqualification, it pointed toward the volume of work done by the attorneys on behalf of the tech giant. All together, the attorneys spent more than a decade working for the company, according to AT&T, with Caldwell alone billing almost 13,000 hours, or ‘the equivalent of working full-time for six and a half years.'”

“Activision Blizzard Employees Form Coalition To Oppose Auditing Law Firm” —

• “Workers from multiple Activision Blizzard offices have joined together in a coalition and are formally protesting CEO Bobby Kotick’s appointed policies and procedures auditing firm. The group, The ABK Workers Alliance, sent a joint letter to Activision Blizzard executives to oppose the company’s hiring of WilmerHale, a law firm known for past anti-union action, to oversee an audit of Activision Blizzard’s workplace policies, practices, and procedures.”
  “The games publisher has been under fire since a lawsuit filed against Activision Blizzard was made public in July. A California state agency alleges a history of abuse and discrimination against Activision Blizzard’s female employees, which Activision Blizzard initially called ‘distorted, and in many cases false, descriptions of Blizzard’s past’ in a statement to Screen Rant. The internal and public backlash against the company’s initial response was later followed by a statement from Kotick, acknowledging that the Activision Blizzard response had been ‘tone deaf.’ Rather than only investigate the allegations internally, WilmerHale was hired as a third-party auditor of Activision Blizzard.”
• “Responding to Activision Blizzard’s choice of WilmerHale, The ABK Workers Alliance sent a joint letter to Kotick and the rest of the publisher’s executive leadership, rejecting the firm for its previous history of ‘discouraging workers’ rights and collective action.'”
  • They wrote: “We reject the selection of WilmerHale for the following reasons:
    • WilmerHale’s pre-existing relationships with Activision Blizzard and its executives create an unacceptable conflict of interest.
    • Activision Blizzard has already been a client of WilmerHale, who you used to dispute the Diverse Candidate Search Policy proposed by the AFL-CIO Reserve Fund and UAW Retiree Medical Benefits Trust [1] earlier in 2021.
    • Frances Townsend is known to have relationships with multiple partners at WilmerHale, including former FBI Director Robert Mueller [2].”

“High-Powered Attorney Disqualified From PNM Merger Case” —

• “An attorney representing an international energy company involved in a utility merger in New Mexico has been disqualified because of an alleged conflict of interest stemming from ongoing contracts with the state attorney general’s office.”
  “A hearing examiner with the state Public Regulation Commission issued the order Friday, saying Marcus Rael Jr. can no longer represent Iberdrola in connection with the utility case.”
• “Watchdog groups had filed complaints in July with the state auditor, the state Ethics Commission and the disciplinary board of the New Mexico Supreme Court that highlighted Attorney General Hector Balderas’ relationship with the law firm where Rael works. They alleged that Rael used his influence to convince Balderas to sign off on the merger and that Balderas awarded numerous contracts to Rael and approved improper invoices.”
• “Balderas and Rael both graduated from the University of New Mexico law school in 2001 and briefly worked together before Balderas ran for public office.”
• “Matt Baca, a spokesman for the attorney general’s office, suggested the claims about a conflict were a ‘sideshow’ and the case needs to proceed on the actual merits.”
• “New Energy Economy Executive Director Mariel Nanasi is among those who have raised concerns about the merger and Rael’s relationship with the attorney general’s office. Public records obtained by her group and a review by Searchlight New Mexico showed that since taking office in 2015, Balderas has hired Rael or others at his firm to help represent the state in at least 19 cases, which is at least triple the number of cases farmed out to any other private law firm.”

“Top lawmaker poking around election commission chair’s law firm exit” —

• “Lt. Gov. Randy McNally is asking questions about Davidson County Election Commission Chair Jim DeLanis’ recent departure from law firm Baker Donelson Bearman Caldwell & Berkowitz.”
• “DeLanis said recently that he was fired after decades at the firm because of ‘threats and pressure’ from two firm clients related to his actions as chair of the election commission. There, he has in recent months been trying to force an anti-tax ballot referendum to a countywide vote, despite repeated decisions by judges agreeing that the proposal is unconstitutional and was improperly submitted. The firm countered that the lawyer had retired.”
• “Jamie Hollin, an attorney representing the Nashville Business Coalition, speculated that conflict of interest was the cause of DeLanis’ departure. ‘This is a classic conflict of interest. If another one or more of the firm’s clients had a conflict with the things DeLanis was doing, then it would be very appropriate for the client to notify the firm and how the actions of the firm’s employee was materially adverse to the interests of its employee. When that happened, and with notice of the conflict, the firm did what was responsible: get him to stop acting adverse to the firm’s client or termination, if failing to resign.'”
• “DeLanis said the law firm claimed his alleged dismissal was because of a business conflict, not a legal or ethical conflict… DeLanis declined to name the two firm clients who he claimed pressured the firm to oust him, saying that Baker Donelson officials told him that would be revealing privileged communication.”

RECORDING (ILTA): “The Modern Ethical Minefield – Leveraging Technology to Manage Conflicts at the International Law Firm” —

The continued growth of law firms, and the increasing transience of their attorneys, have created many new risks for firms to account for regarding conflicts of interest management. Increasingly, large international firms have transitioned to a centralized approach for conflicts clearance, utilizing non fee-earning professionals for this function.

Despite this, challenges remain – particularly stemming from increasingly restrictive conflicts language within Outside Counsel Guidelines as well as recent US case law.

In this podcast session, the speaker focuses on discussing the unique conflicts challenges faced by US firms with international presence and various approaches to these challenges; how technology and centralization are the key to meeting these challenges; and whether changes to the conflicts rules are needed in order to “modernize” and account for the breadth of today’s international law firm and technological advances.

• Moderator: Tracey Pardo – IS Process Improvement Analyst, Cooley LLP
• ​Speaker: Mark Agin – Senior Manager of Global New Business Intake and Information Management, Shearman & Sterling LLP

“C.A. Bars Private Judge Ouderkirk From Presiding in Case” —

• “Retired Los Angeles Superior Court Judge John Ouderkirk must be disqualified from presiding under court appointment in post-judgment proceedings in a case because, even though the ex-wife, Angelina Jolie, knew of a history of the attorneys for her former spouse, Brad Pitt, representing clients in cases before the private judge, Ouderkirk failed to divulge two new matters in which that lawyer is involved, the Court of Appeal held Friday.”
• “Declaring that ‘history is different from current events,’ Presiding Justice Dennis M. Perluss of Div. Seven said Jolie’s knowledge that Pitt’s lawyer or others in his firm had cases before Ouderkirk in the past, or at the time of the judge’s pro tem appointment in 2017 or two reappointments, did not obviate the jurist’s ethical duty to disclose the two new matters, as well as the extension of his appointment in a third matter.”
• “In light of that breach, he declared, ‘the person on the street might reasonably entertain a doubt as to Judge Ouderkirk’s ability, consciously or subconsciously, to remain impartial in the upcoming, hotly contested custody dispute,’ requiring issuance of a writ of mandate compelling the jurist’s recusal.”
• “While Perluss’s opinion underscores the obligation of court-appointed temporary judges to disclose new relationships with a lawyer for one of the parties, which is apt to jar private judges into increased diligence in reporting new matters, the concurring opinion by Justice John L. Segal is bound to draw attention on the part of the Judicial Council and legislators. Segal urged an end to the system under which the court appoints temporary judges who are paid by the parties.”

“Airport Attys Beat Colonial’s DQ Bid In Pipeline Easement Row” —

• “U.S. Magistrate Judge Alistair E. Newbern rejected Colonial’s attempt to get Waller Lansden Dortch & Davis LLP attorneys disqualified from representing MNAA in two related cases involving a pipeline that runs through airport property. Colonial argued attorneys from the firm shouldn’t be allowed to represent MNAA because Colonial received advice from two former Waller Lansden attorneys about the pipeline’s 1976 easement nearly 20 years ago.”
• “But the court said the claims at issue in the current dispute are rooted in events that took place well after the two attorneys departed Waller Lansden and there is no reason to believe the firm is in possession of any confidential information that would unfairly advance MNAA’s position in the litigation.”
• “‘Because a substantial relationship between the former and current matters is required for a formerly associated lawyer’s conflict to be imputed to current counsel, the court need go no further in its analysis,’ Judge Newbern said.

“[United Kingdom] Supreme Court upholds six-year non-compete clause signed by law firm” —

• “A non-compete undertaking given by one law firm to another ahead of them working together was reasonable and not a restraint of trade, the [UK] Supreme Court ruled today.”
• “Chesterfield firm Your Lawyers (YL) approached London practice Harcus Sinclair in 2016 for help with the group it was building to sue Volkswagen over the diesel emissions scandal. As a first step, Harcus was required to sign a non-disclosure agreement (NDA), which included a ‘non-compete’ clause, which provided that Harcus undertook “not to accept instructions for or to act on behalf of any other group of claimants in the contemplated group action” without the express permission of YL.”
• “The key question of law, the Supreme Court said, was whether Mr Johnson was right, when considering whether the non-compete clause was protecting YL’s legitimate interests, to take into account the parties’ non-contractual intentions or what they contemplated would occur after entering into the NDA.”
• “The Supreme Court went on to uphold Mr Johnson’s decision that the non-compete clause was reasonably necessary to protect YL’s legitimate interests: ‘Once it is seen that Your Lawyers had legitimate interests in protecting its own proposed group claim from Harcus Sinclair setting up a rival group claim, it was logical and necessary for the non-compete undertaking to last for a six-year period that would roughly equate to the limitation period for claims in the emissions litigation.'”
• “The court said it was of ‘general relevance in considering reasonableness between the parties that the parties here were two law firms of equal bargaining power. If anything (as the Court of Appeal recognised), Harcus Sinclair may be regarded as being the ‘stronger’ party, because it was more experienced in these matters, than Your Lawyers.'”
• “The court also saw ‘some force’ in YL’s broader submission that, even if a party was just protecting confidential information, a non-compete undertaking may be needed. ‘This is because it is often difficult to prove what is and what is not confidential information and, in particular, whether that information has been misused. A non-compete undertaking may be a useful means of ensuring that confidential information is protected without needing to prove, through protracted litigation, that the information has been misused.'”
• “Once YL had established that the clause was reasonable as between the parties, the burden shifted to Harcus Sinclair to prove that it was nonetheless contrary to the public interest. But the Supreme Court again agreed with Mr Johnson’s decision that it was not. The deputy judge had found no public policy against a solicitor undertaking not to continue to act for a client.”

See also: full text of the ruling.

“Cannabis Practice Creates Ethical Traps, Conflicts for Lawyers“ —

• “Ethical and legal snags abound for lawyers representing cannabis industry clients in the growing number of states where weed is legal, requiring extra due diligence to ensure compliance, attorneys familiar with the rapidly evolving business tell Bloomberg Law.”
• “For instance, the California Evidence Code covering attorney-client privilege requires lawyers to advise clients of state and federal law conflicts, and should be incorporated in engagement letters to balance ethical obligations.”
• “Michelle Mabugat, counsel at Greenberg Glusker LLP in Los Angeles, said she also likes to counsel of the inherent conflict of representing clients with competing economic interests in the small industry. ‘The cannabis law practice is just particularly and especially ripe for conflicts in client’ engagement, she said. ‘It’s finite. There’s only so many players in this industry and they’re all trying to do business with each other. You have to be extra vigilant on with your ethical obligations in this space.'”
• “Rachel Gillette, who leads Holland & Hart in Denver’s cannabis practice, said she sees ‘over and over lawyers in newly legalized states dipping their toes into what they would call ‘cannabis law.’ Really cannabis is an industry, and just because you practice criminal defense, DUI defense, or personal injury law, that does not mean you should now hang your shingle as a ‘cannabis lawyer.””
• “Knowing who the client is crucial. Bricken said attorneys ‘need to develop a very good red flag radar where a lot of bad actors still make their way to your office in order to try to take advantage of licensing for other nefarious activities.'”
• “Careful client selection is essential ‘because there are still operators in the industry that are not operating quite legally. If you want to protect your firm and practice, you want to work with good actors,’ said Ryan Lowther, founder of Farella Braun + Martel LLP’s cannabis Industry practice group in San Francisco.”

“Lawyers beware: NY and GA issue conflicting ethics decisions on representing cannabis clients” —

• “Ethics authorities in New York and Georgia recently issued opposing opinions on whether lawyers can represent clients in navigating what Justice Clarence Thomas last month called the ‘half-in, half-out regime’ related to both recreational and medical marijuana, ‘a contradictory and unstable state of affairs’ that ‘conceals traps for the unwary.'”
• “On July 8, 2021, following New York’s enactment of legislation legalizing recreational cannabis for adults, the New York State Bar Association gave attorneys the green light to counsel clients in the recreational marijuana industry… The NYSBA found that the federal enforcement policy created a ‘highly unusual and unique circumstance’ and that the prohibition in Rule 1.2 was not intended to ‘preclude lawyers from counseling or assisting conduct that is legal under state law or to provide assistance that is necessary to implement state law and to effectuate current federal policy.'”
• “The NYSBA’s opinion comes on the heels of the Supreme Court of Georgia taking the exact opposite position in its June 21, 2021 order denying a motion to amend Rule 1.2(d) of the Georgia Rules of Professional Conduct.”
• “In denying the motion, the Supreme Court of Georgia relied on the federal illegality of cannabis and held that passage of state laws permitting and regulating conduct that is still a federal crime does not change the long-standing prohibition against ‘counseling and assisting clients in the commission of criminal acts.'”
• “If you are considering counseling a cannabis client, you should be familiar with the relevant jurisdiction’s position on cannabis and Rule 1.2. Unsurprisingly, many commentators note that lawyers are simply ignoring ethics opinions that prohibit advising cannabis clients and some expect that will be the case in Georgia as well. That seems risky. While it is unclear whether lawyers have yet faced disciplinary consequences for violating state ethics rules related to cannabis clients or will in the future, this is a continually developing area that requires caution.”

“SDNY Takes Over ‘Lottery Lawyer’ Case Due To EDNY Conflict” —

• “Federal prosecutors from the Southern District of New York are taking over the case accusing the “Lottery Lawyer” of defrauding clients out of millions of dollars from the Eastern District of New York in light of a conflict due to the marriage of the acting EDNY U.S. attorney and a lawyer for the former Rivkin Radler partner.”
• “The recently appointed acting EDNY U.S. attorney, Jacquelyn Kasulis, is married to Telemachus “Tim” Kasulis of Morvillo Abramowitz Grand Iason & Anello PC, a lawyer for attorney Jason Kurland, who stands accused of offering investment opportunities to his lottery winner clients without disclosing kickbacks he received in exchange for the referrals.”
• “Prior to her appointment to acting U.S. attorney, Jacquelyn Kasulis served as chief assistant U.S. attorney and chief of EDNY’s criminal division. She had been recused from the case due to her husband’s representation of Kurland. Elbert will continue as a prosecutor on the case, she said, but supervision of the matter will be handled by the higher-ups at SDNY.”
• “Kurland advised some of the biggest jackpot winners in recent history on how to stay anonymous, handle the media, and collect and invest their winnings. He would stand beside his clients or stand in for them at news conferences… According to prosecutors, Kurland’s three clients invested $107 million with entities involved in the scheme, and more than $80 million of that was stolen or lost between 2018 and 2020… Kurland faces six counts of wire fraud, eight counts of honest services fraud, and a count each of money laundering and conspiracy.”

For more of the story here, see ABC’s piece: “‘Lottery Lawyer’ allegedly swindled jackpot winners in $107M scheme”

“Conflict of interest fears in Warragamba Dam probe” —

• “An investigation into allegations that traditional owners were offered bribes in exchange for their support for raising the Warragamba Dam wall was handled by a law firm with links to WaterNSW, raising major concerns of a conflict of interest.”
• “Traditional owner Kazan Brown told the hearing Registered Aboriginal Parties were offered inducements, including access to culturally significant sites and employment offers, in exchange for supporting the project.”
• “The allegations sparked an “independent” internal investigation, with WaterNSW engaging Melbourne-based law firm Sparke Helmore Lawyers to provide legal advice. The report found ‘no bribe or inducement was offered to her for her support of the project.'”
• “Sparke Helmore, however, previously employed WaterNSW corporate lawyer regulatory & compliance Daniella Zuvela, raising concerns about the investigation, which was supposed to be undertaken at arms-length from the government agency.”
• “One of the leading critics of the Warragamba Dam raising, Colong Foundation general manager Harry Burkitt, said the revelation raised concerns of a conflict of interest in the investigation, which ‘marred the findings’ of the ‘supposedly independent process.'”
• “A spokesman for WaterNSW said: ‘WaterNSW selected the legal firm to undertake the investigation from among the law firms registered on the NSW Government Legal Services Panel. The ­selection process was consistent with the panel’s rules.'”

“Wiley Rein admits ethics lapse but resists discovery bid in BDO case” —

• “McDermott Will & Emery has asked a Washington, D.C., judge to let it scrutinize rival law firm Wiley Rein’s business practices after it admitted to breaching ethics rules by simultaneously representing opposing sides in an employment lawsuit earlier this year.”
• “The discovery bid stems from a D.C. Superior Court lawsuit that McDermott client BDO USA LLP brought last May against a former BDO partner, Eric Jia-Sobota, for allegedly scheming to steal the accounting giant’s clients and employees.”
• “Lawyers from Wiley Rein, working with Ari Wilkenfeld of Washington’s Wilkenfeld, Herendeen & Atkinson, are representing Jia-Sobota and his new company EverGlade Consulting. But in March 2021, an insurance carrier for BDO separately reached out to Wiley Rein to serve as coverage counsel for a counterclaim filed by Jia-Sobota, who has denied taking any steps contrary to his obligations to BDO.”
• “A conflicts team at Wiley Rein ran a check for any matters adverse to BDO, but the review ‘inadvertently’ did not include EverGlade and Jia-Sobota, the firm stated in court filings. Wiley Rein represented a BDO insurance carrier and the defendants for a month, billing about 11 hours, until BDO first became aware of the conflict and alerted Wiley Rein. The firm apologized to BDO and stopped representing the insurance carrier in April.”
• “Wiley Rein said no lawyer for EverGlade ever saw BDO-related documents during the month the firm represented the opposing sides.”
  “The dispute has teed up a potential disqualification bid by McDermott, and claims from Wiley Rein that its adversary is trying to exploit the ethics error to gain an advantage in the ongoing employment case.”
• “McDermott is seeking documents from Wiley Rein including internal and external communication, conflict-check files and draft billing records. Judge Heidi Pasichow last week set a status hearing for October. The judge hasn’t yet ruled on whether to allow discovery.”
• “‘Wiley must account for its engagement with precision and transparency, which can only be accomplished through the confirmatory discovery BDO seeks,’ McDermott lawyers told the court on June 28. The materials are needed to show ‘whether Wiley can ethically continue as counsel in this litigation,’ the firm said.”
• “Wilkenfeld, a veteran labor and employment litigator, called McDermott’s bid for discovery a ‘continuation of what is, in my view, scorched-earth litigation tactics.'”