Bressler Risk Blog

“Law Firm Has Potential Conflict of Interest in Doyle Investigation” —

• “If you described an investigation where the person works with the investigator and makes decisions about future engagements with the investigator, most people would call it a conflict of interest.”
• “But that’s exactly what’s happening at Santa Clara City Hall. The same law firm that worked with Santa Clara City Attorney Brian Doyle for two years litigating a 2018 pension dispute, Liebert Cassidy Whitmore and its attorney Morin Jacob, is also investigating Doyle’s professional conduct. It’s no secret that Liebert Cassidy Whitmore is conducting the investigation: The City refers information requests about it to Jacob.”
• “Liebert Cassidy Whitmore specializes in labor law for local governments. In 2019 a former Humboldt County Counsel sued the firm and other county officials, alleging he was pushed out when he brought to light inflated billings by the firm, according to the Spotlight story.”
• “The law firm’s 2014 agreement with the City states that Liebert Cassidy Whitmore ‘shall make a good faith effort to identify and shall apprise City of those possible conflicts of interest which could affect Firm’s duties to City or to the City Attorney under the California Rules of Professional Responsibility.'”
• “‘There’s nothing legally improper, but it certainly doesn’t look good,’ said well-known trial attorney James McManis of McManis Faulkner. “You now have someone with a relationship [with Doyle] investigating him. ‘Santa Clara would have been better served,’ McManis continued, ‘if they had hired an attorney with no connection to the City and who didn’t know any of the people involved,” McManis said. Hiring a firm with years of experience working with Doyle to investigate him “is not a very smart thing.'”

“Curtiss-Wright Wants DLA Piper DQ’d In $30M Supply Fight” —

• “Curtiss-Wright Electro-Mechanical Corp. said in a disqualification motion on Thursday that it was represented in 2013 by a Swedish attorney, now working for DLA Piper, in a substantially similar dispute with Westinghouse Electric Co. LLC over the supply of reactor coolant pumps for nuclear power plants in China. That dispute is ongoing and subject to arbitration in Sweden, Curtiss-Wright said.”
• “Because the Swedish DLA Piper attorney, Karl-Oskar Dalin, received confidential information about Curtiss-Wright’s defenses against Westinghouse’s claims in the China supply dispute, DLA Piper has a conflict of interest in representing Westinghouse in the Georgia case, Curtiss-Wright said.”
• “‘Mr. Dalin represented C-W with regard to substantially similar liquidated damage terms in the China purchase order as are in issue in the above-styled litigation,’ Curtiss-Wright said in a brief supporting its motion for disqualification. ‘C-W does not consent to DLA Piper’s representation of Westinghouse in this action or in a related arbitration proceeding in Sweden … with or without some form of screening efforts with respect to Mr. Dalin and C-W’s communications with him regarding such matters.'”
• “Curtiss-Wright said in its disqualification motion that related circumstances exist between the Vogtle and Summer purchase orders and the China one being arbitrated in Sweden, with respect to the timing of supply of the reactor coolant pumps.”
• “It said Dalin was retained by Curtiss-Wright in October 2013, when he was at Swedish law firm G. Gronberg Advokatbyra, to represent it in the dispute with Westinghouse over the supply of reactor coolant pumps for the Chinese power plants. Dalin received confidential information from Curtiss-Wright about the strengths and weaknesses of its defenses in that case, it said. Dalin joined DLA Piper in 2016 and is a partner in its Stockholm office, according to the law firm’s website.”
• “Curtiss-Wright said Georgia’s professional conduct rules prohibit a lawyer who has formerly represented a client in a matter from representing another person in the same or a substantially related matter, in which that person’s interests are materially adverse to the interests of the former client. This rule can be worked around if the former client gives informed written consent, which Curtiss-Wright, as the former client of Dalin, does not, it said.”
• “Curtiss-Wright argued that DLA Piper can’t avoid disqualification through ‘screening’ under Georgia’s professional conduct rules, which allow attorneys who are former judges or former government attorneys to be screened to avoid disqualifying their new law firms or organizations by imputed conflicts. ‘The [rules] do not, however, allow other types of attorneys to avoid imputed conflicts by screening,’ Curtiss-Wright said.”

Law.com pulls together several surveys and points of view to remind us: “Outside Counsel Guidelines Are Straining Law Firm-Client Relationships” —

• “OCGs are becoming increasingly prevalent. They’re also becoming increasingly varied and complex, leading many law firms to either waste time trying to reconcile them all or to just ignore them altogether. Needless to say, neither of those scenarios is ideal for a healthy law firm-client relationship.”
• “Only 32% of responding firms said they were confident that more than 50% of their lawyers actually knew the OCGs for their matters… But remaining ignorant to clients’ OCGs creates the potential for firms to leave money on the table—or at least leave the proverbial check in the mail.”
• “‘Law firms may find themselves in a difficult situation if they do not comply with a client’s guidelines because they failed to read them,’ Dentons partners Klevens and Clair wrote. ‘Such a defense may not be particularly strong in a subsequent dispute or may otherwise create friction with a client that could be avoided.'”
• “Klevens and Clair pointed out that while law firms’ engagement letters are often drawn specifically to define the client relationship and, at times, to shape a law firm’s potential exposure to the client, OCGs may not provide those same protections.”
• “‘For example, the definition of who the ‘client’ is in a set of outside counsel guidelines could be expansive, including not only the direct corporate client but also related entities,’ Klevens and Clair wrote. ‘Such a scenario could create complications for a law firm’s exposure or in future conflicts analysis. Indeed, the law firm could be found to owe duties to an entity that the law firm did not expect—but might have been able to consider or negotiate if the risk had been identified.'”
• “But to the extent that OCGs are creating more nonbillable headaches for outside counsel, clients can help by streamlining their communications to highlight what’s most important to them.”
• “Argopoint partner Jason Winmill told Law.com’s Guzman that OCGs are often unfocused and stuffed with minutiae. ‘Counsel guidelines are both too strict and not strict enough,” Winmill said. “And I’d say counsel guidelines often are lengthy and focus a lot on minutiae that doesn’t ultimately add up to much more than a hill of beans.'”
• “The problem is compounded when lawyers have to work for more than a dozen clients, in many cases.”

Lawrence A. Kasten, General Counsel at Lewis Roca reminds: “Beware Of Midstream Conflicts” —

• “The judge glances at you as he announces his ruling granting your opponent’s motion to disqualify your law firm. You think back to the day, one year earlier, when the case came in the door. It was a cold Tuesday morning. The phone rang at 7:30 a.m. You remember it well, because you hadn’t even had a chance to take your first sip of coffee.”
• “Even without caffeine, you remembered to caution Ms. Jones not to reveal any confidential information and to provide you with the names of all parties who foreseeably might be involved in the case. After running the names through your firm’s conflicts database, you received the all-clear. You diligently filed a record of the conflicts check and the steps you took. For the past year, you have worked hard on the case, putting it in good position for a satisfactory result for Widgets.”
• “So how did you end up getting disqualified? Ten months into the litigation, a representative of your co-defendant, the manufacturer of the allegedly defective product, testified at a deposition that a component was made by Sprockets, Inc., a small company in a remote part of the state. Plaintiff amended the complaint to add Sprockets as a defendant, and, without doing a new conflicts check, you filed a cross-claim. As it turned out, unknown to you, one of your firm colleagues has been giving Sprockets advice about its employment contracts.”
• “Even though the matters are entirely unrelated, Sprockets sought to disqualify you and your firm, on the ground that you had an imputed concurrent client conflict of interest under ER 1.7 and ER 1.10. The judge agreed.”
• “Too often, attorneys view conflicts clearance solely as a new-matter intake issue. Once conflicts clear, lawyers may forget to analyze subsequent developments that may create midstream conflicts of interest.”

Read the full article for commentary on incorporating supplemental conflicts checks, new party shifts, non-party awareness, and parties “changing character.”

“OptimisCorp Seeks Suit Halt Amid Bid To DQ Plaintiffs, Bayard” —

• “OptimisCorp wants to pause a derivative suit in Delaware Chancery Court involving claims against the company’s CEO and other officers, pending decision on its bid to have plaintiffs and their counsel, Bayard PA, disqualified because of ‘conflicts’ it says ‘threaten’ to prejudice the case.”
• “In a letter brief to Vice Chancellor Morgan T. Zurn on Monday, OptimisCorp attorney Theodore A. Kittila of Halloran Farkas & Kittila LLP argued that a suit filed by William Atkins, Gregory Smith, and John Waite, former company officers, should be put on hold pending a decision about whether they and their counsel will be disqualified. ‘Over the last two years, Waite, Atkins, and Smith played keep-away with a multi-million company asset while simultaneously levying on company accounts,’ the letter asserted.”
• “In its disqualification motion, OptimisCorp argued that since the three are also represented by Bayard in the other suit related to their handling of the arbitration award, conflicts could arise… Among potential conflicts, OptimisCorp argued, is that ‘discovery will commence against Atkins, Smith, and Waite in the related action, and such discovery will directly implicate Bayard’s advice concerning the handling of the prior derivative award.'”
• “Also, allowing the derivative suit to proceed before a decision is made on disqualification ‘would result in a waste of judicial and party resources if disqualification is ultimately ordered as a remedy,’ the motion argued.”