Bressler Risk Blog

“Launch House splits with law firm conducting its harassment investigation” —

• “In response to the allegations first surfaced by the news publication Vox, the startup claimed that it would undergo an independent, third-party investigation. But as some former members of Launch House have noted, the company is using the same law firm for both its defamation warnings and its independent investigation.”
• “While it’s not a violation to have the same law firm handle two somewhat connected legal matters — one on behalf of Launch House for defamation and one to look into the allegations raised by victims — it is an optical challenge.”
• “After all, Launch House advertised that the firm was expected to conduct a neutral investigation, but it’s not really ‘third party’ if the same firm is going after employees, members and journalists speaking about the allegations.”
• “Indeed, the appearance of conflict of interest — or the idea that the law firm, Benesch Friedlander Coplan & Aronoff, LLP — could provide a more favorable outcome to Launch House due to its other work with the startup, was enough to rock the boat. After a TechCrunch inquiry about Launch House’s heavy reliance on the outfit, co-founder and CEO Brett Goldstein said that the startup has asked the law firm to end its investigation into the company and is turning to another law firm for its fresh perspective.”
• “Goldstein added that a completely separate team within Benesch Friedlander Coplan & Aronoff has been working on the investigation, and that Launch House ‘trusted their ability to remain impartial with those standard separation practices.'”
• “However, he said in his statement, ‘we do not want there to be even the appearance of any conflict, so a new law firm will be engaged as soon as possible to conduct this crucial work… We must learn exactly what happened, so we can best ensure it never happens again.'”

“NLRB Scraps CVS Ruling, Citing Ex-Member Emanuel’s Conflict” —

• “The National Labor Relations Board has vacated a second case involving William Emanuel, a former board member who violated ethics rules by participating in cases where he owned stock in one of the companies.”
• “A three-member panel Monday scrapped the Feb. 5, 2021 decision, in which the board sided with CVS Health Corp. in a dispute over the scope of a bargaining unit in 33 of its Chicago-area pharmacies.”
• “The two Democrats on the panel, Chair Lauren McFerran and member Gwynne Wilcox, vacated the decision and replaced it with a retroactive order guaranteeing the same outcome. They said it wouldn’t unravel a subsequent contract reached between CVS and the International Brotherhood of Teamsters, but would serve to clean up Emanuel’s conflicts.”
• “The NLRB members cited an earlier decision to vacate an Exxon Mobil ruling, saying it’s the best remedy when a board member is accused of violating ethics law.”
• “In both cases, the NLRB inspector general found that Emanuel—a former shareholder at the management-side firm Littler Mendelson— broke federal ethics law by failing to monitor his investments in companies with cases pending before the board. The IG concluded Emanuel had disqualifying conflicts of interest in five cases.”
• “A Bloomberg Law investigation published in March found that Emanuel repeatedly ignored the advice of ethics officials, creating at least the possibility of self-enrichment in his public role. Emanuel held close to $300,000 at some points in two exchange-traded sector funds that invested substantially in the companies’ shares, according to hundreds of emails and financial documents obtained through records requests and released by the board.”

“Dechert and former partner Neil Gerrard sued over hacking claims” —

• “International law firm Dechert has been named as a defendant in a $100m claim alleging that its former head of white crime, Neil Gerrard, used cyber mercenaries to hack the emails of Farhad Azima, an Iranian-American aviation mogul who lives in Kansas City, RollonFriday reports today (21 October).”
• “Gerrard, a former policeman who was Dechert’s head of white collar crime, was instructed by the UAE sheikhdom Ras al-Khaimah (RAK) to investigate allegations the former head of its Investment Authority was engaged in fraud.”
• “As the scope of Dechert’s investigation under Gerrard expanded, it encompassed Karem Al Sadeq, the Investment Authority’s former legal advisor, who said that as a result of the probe he was wrongfully arrested and incarcerated in a UAE prison. Al Sadeq is suing Dechert, Gerrard and other partners in a separate claim and alleges that he was blindfolded and tied to a chair while Gerrard interrogated him.”
• “You can read the article in full using the link above. A spokesperson for Dechert told RollOnFriday: ‘The claim against the firm is denied and will be defended.'”
• “The link to the claim, which is being brought in The United States District Court for the Southern District of New York, is here.”
• “The High Court has previously ruled that Gerrard committed deliberate acts of wrongdoing in relation to the fees he generated while conducting a probe into corruption at ENRC mining conglomerate. That extremely lengthy judgment is here.”

“The Metaverse for the Risk-Averse: Legal Ethics in the Virtual World, Part I” —

• “As lawyers rush to claim a stake in the Metaverse [sic], it’s vital to consider how the Rules of Professional Conduct will apply. Is it a virtual Wild West, with little or no jurisprudence to guide its players? Or is it the next iteration of the internet where competing avatars understand the legal and ethical norms of a thriving commercial wonderland?”
• “Whether practicing in the real world or the Metaverse, acting in the best interest of the client requires that lawyers avoid a conflict of interest.”
• “In a time of increasing globalization, firms have expanded on an international level. To achieve this growth and this global reach, several of the world’s largest law firms have organized themselves under the verein structure.”
• “Within the Metaverse, the concept of establishing a verein structure may appear to be a foreign one as there are no national boundaries in the Metaverse. Whether such a structure will apply to the Metaverse turns on whether such global initiatives in the modern era of globalization will continue to center on the contours of borders as we know it.”
• “While the Metaverse as envisioned will be an interconnected system that transcends national borders, a verein structure could be adapted to such an environment by either allowing a law firm to offer legal services in multiple virtual environments within the Metaverse or by recreating the real-world environment of well-defined countries and allowing those law firms to offer their services in those recreated real-world environments.”
• “Whether and how avatars will ‘travel’ in the Metaverse is still to be determined. Nonetheless, if verein firms are established in the Metaverse, they will need to address conflicts and determine who are deemed current or former clients. This poses an additional concern given that it is unknown whether a user could have multiple avatars, thereby posing as a different client or whether a user is limited to one avatar that is an extension of their ‘personhood.'”

“How Google’s former CEO Eric Schmidt helped write A.I. laws in Washington without publicly disclosing investments in A.I. startups”

“IF YOU WERE NOTIFIED IN APRIL 2021 BY THE LAW FIRM BRICKER & ECKLER THAT YOUR PERSONAL, MEDICAL, OR FINANCIAL INFORMATION WAS POTENTIALLY ACCESSED IN A RANSOMWARE ATTACK, YOU MAY BE ELIGIBLE FOR COMPENSATION.” —

• “On January 31, 2021, Bricker learned that it was the target of a ransomware attack. Upon learning of the incident, Bricker immediately took measures to contain the incident and launched an investigation, with the assistance of third-party cybersecurity forensic experts. Bricker also notified federal law enforcement.”
• “Findings from the investigation indicate that the party obtained some data from certain Bricker systems during this period, including personal and medical data that Bricker had in its possession for purposes of providing legal advice to TriHealth, Inc. and Adena Health System (the ‘Health Systems’).”
• “You are a member of the Settlement Class if your personal, medical, or financial information was potentially exposed in the Incident.”
• “Under the Settlement, Bricker will pay $1,950,000.00 into a non-reversionary Settlement Fund that will be used to provide the following benefits…”
• “You must submit a claim in order to receive reimbursement for unreimbursed Out-of-Pocket Losses and/or loss of time paid at $20 per hour. You may claim Out-of-Pocket and Extraordinary Out-of- Pocket Losses, Undocumented Time, and Documented Time under the Settlement.”

“Wife of Retired MLB Player Sues BakerHostetler, Patent Attorney Over Fiduciary Breach” —

• “Fulton County plaintiffs Brittany Fletcher Beckham and Lutzy Inc. claim BakerHostetler counsel’s ‘mishandling’ of patent applications resulted in a conflict of interest that blocked the plaintiff from activating her app. Now the wife of retired Major Legal Baseball infielder Gordon Beckham is seeking uncapped punitive damages through a jury trial, per a complaint filed with the Fulton State Court.”
• “According to the plaintiff complaint, Brittany Beckham retained BakerHostetler to file patent applications for her ‘Smart Closet’ following an introductory phone call with attorneys Jeffrey Rosedale and Greg Grissett in January 2015.”
• “But Grissett’s representation of a home and textile client named Welspun Indian Limited would soon create an issue for Beckham, prompting her to sue. In the two months after Grissett filed Brittany Beckham’s provisional patent application, he also filed patent and nonprovisional applications for Welspun that contained language identical to the plaintiff’s application, the complaint alleged.”
• “‘In our research, most of the patent ethics cases we have seen involved different lawyers in different offices writing competing applications,’ said plaintiff attorney Randy Edwards of Cochran & Edwards in Smyrna. ‘Here, we have the same lawyer, cutting and pasting from one patent application into the other within a few weeks of filing the first, while the first application is unpublished and confidential.'”
• “The complaint alleged that if Brittany Beckham practiced her invention, ‘she may have problems with the Welspun ‘589 Patent.’ ‘The other patent blocks our client from practicing the invention that she hired Baker to protect,’ Edwards said.”

“Know Your Client: 3 Issues Facing In-house Counsel in 2023” —

• “A 2022 survey by the Legal Value Network (LVN) highlighted a critical disconnect between law firms and the clients they serve: A strong majority (79%) of law firms said they made “strong efforts” to understand the challenges that law departments face, yet fewer than half of their clients agreed.”
• “According to the LVN survey, 43% of clients said they have terminated a law firm or legal service provider for failing to follow their guidelines.”
• “Cyber insurance is harder. When we say ‘harder,’ that’s exactly what we mean: harder to get, harder (more expensive) to pay for and harder to use. Many carriers are exiting the cyber insurance market; actual losses far exceeded early estimates, and the threat landscape keeps changing. The remaining carriers have substantially upgraded their underwriting process: if, two years ago, underwriting was a two-page questionnaire, it’s now a 15-page mini-audit plus external security scanning. Rates have also dramatically increased.”
• “Everyone gets a regulation! Even just a few years ago, meaningful cybersecurity regulations only touched a few sectors of the U.S. economy… Because these privacy laws have far wider reach across industry sectors, their increasingly meaningful cybersecurity requirements likewise catch more companies… A few years ago, the majority of your clients likely had no cybersecurity regulatory requirement; not long from now, it will be a rare outlier client that doesn’t.”
• “Over the past two years, the legal industry has come under increasing pressure to move the needle on diversity, equity, inclusion and belonging (DEIB). Outside counsel, specifically large and mid-size law firms, will be held accountable. The Institute for Inclusion in the Legal Profession’s recent 2022 report on diverse outside counsel portends a serious push among corporate departments to take decisive action.”

“Marketing Team Exits Cooley for Fried Frank, Highlighting Competitive Landscape for Business Pros” —

• “In a rare group move of law firm professionals, a marketing team at Cooley left for Fried, Frank, Harris, Shriver & Jacobson in the last month, following a chief marketing officer who made the move in the last year.”
• “In all, the lateral group includes six marketing and communications professionals who transferred between the two law firms. One law firm marketing expert said law firms in general could start seeing more business professional group moves such as this one, describing the team departure as a ‘harbinger of things to come’ in the industry.”
• “[a source] said that there ‘is an added efficiency when teams join together—they can really hit the ground running as it removes some of the initial hurdles of learning new personalities and work styles.'”
• “Robyn Addis, the chief marketing and business development officer at Legal Internet Solutions and a veteran of the law firm community, said that, depending on the team and the level of personnel, such a move could be as significant as a team of attorneys changing firms. ‘In my opinion, it has the potential to be as impactful as a group of lawyers moving,’ she said. ‘You are taking a strategic group, one that was working on the marketing strategy of a competitor. Really taking the brain trust of a department and moving it.'”
• “Attorneys have long enjoyed the leverage of being able to pick up their practice group and move it to a competitor if they feel the practice would benefit from a different platform, or managing partner, or client base. The same cannot be said for business professionals at law firms. Although mobile, most of the moves are done individually, with perhaps a high-level leader bringing on a captain or two in the months after they make a move. Addis said that in her years in the legal profession, she has not seen many group moves by law firm business professionals, but this could be a new modus operandi for hiring groups of law firm staff.”

“Nixon Peabody Atty Faces DQ Bid In Nazi-Plundered Art Suit” —

• “The heirs of a Jewish art collector claim a Nixon Peabody lawyer representing the Museum of Fine Arts, Houston, should be disqualified because he is filling the roles of both witness and advocate.”
• “Heirs of Max Emden, who allegedly was forced to sell paintings to an art buyer for Adolf Hitler in 1938, asked a federal judge in the Southern District of Texas to kick Thaddeus Stauber of Nixon Peabody LLP off the case, in a motion filed on Thursday. They claim that Stauber is acting as both attorney and witness and that if allowed to argue before a jury, it could muddy jurors’ understanding of what is fact and what is opinion.”
• “At a hearing in March before U.S. District Judge Keith P. Ellison to address a motion to dismiss the heirs’ original complaint, Stauber argued for the defense and reportedly referred to his role in investigating the history of the ownership of ‘The Marketplace at Pirna.’ Stauber traveled to Berlin and Munich with museum representatives, including Peter Marzio, who is now deceased, and wrote letters that the heirs claim are central to the defense’s case.”
• “The heirs argue that procedural rules support Stauber’s disqualification. The heirs say that they will be prejudiced by juror confusion if Stauber is allowed to act in ‘dual roles.’ They also note that as a defense lawyer Stauber will be allowed to remain in the courtroom throughout the trial while other witnesses are excluded so that their testimony is not influenced by the proceedings.”

“U.S. Watchdog Wants Kirkland Out of 3M Earplug Unit Bankruptcy” —

• “The Justice Department’s bankruptcy watchdog wants Kirkland & Ellis LLP removed as counsel to 3M Co.’s bankrupt earplug manufacturing unit, saying the law firm has a conflict because it also defends the parent company in mass earplug lawsuits.”
• “Kirkland & Ellis doesn’t possess ‘undivided loyalty’ to its client, 3M subsidiary Aearo Technologies LLC, according to court papers filed by the Office of the U.S. Trustee on Thursday objecting to the firm’s retention. The U.S. Trustee said that Kirkland can’t be loyal to Aearo because its bankruptcy process is being financed by 3M, which the firm also represents in roughly 230,000 personal injury lawsuits pending against the company in federal court in Pensacola, Fla.”
• “3M placed Aearo under chapter 11 protection in July in the U.S. Bankruptcy Court in Indianapolis, hoping to move the earplug lawsuits against the subsidiary and its solvent parent out of the tort system. Aearo’s chief restructuring officer said in court papers in August that Kirkland is well qualified and uniquely able to represent Aearo in chapter 11 because of its familiarity with the company’s business and potential legal issues that might arise in bankruptcy.”
• “The bankruptcy depends on 3M’s commitment to provide unlimited funding toward resolving the earplug litigation in return for a full release from liability. As counsel to Aearo, Kirkland has a fiduciary duty to maximize 3M’s contribution—and by implication to maximize 3M’s share of their combined tort liability, the U.S. Trustee said Thursday.”
• “‘Yet this presents a conflict with Kirkland’s duty, in its capacity as litigation counsel to 3M, to minimize those same liabilities as to 3M,’ government lawyers wrote.”

“Roche Firm Booted From Tether Action After Crypto Leaks Post” —

• “A New York judge on Thursday removed Roche Freedman from representing plaintiffs in a class action that accuses the crypto exchange Bitfinex and Tether, the issuer of the USDT stablecoin, of market manipulation.”
• “The decision is a blow for Roche Freedman after videos posted on a website called Crypto Leaks showed founding partner Kyle Roche boasting about the law firm’s relationship with the crypto startup Ava Labs.”
• “Allowing the firm to continue serving as counsel ‘with the metaphorical baggage they now carry is not in the best interests of the class,’ Failla said.”
• “During an Oct. 3 hearing, Failla called Roche’s comments ‘uniquely stupid’ and pressed co-founder Devin ‘Velvel’ Freedman on the firm’s conduct while litigating the 2019 lawsuit.”
• “Roche has denied his firm has used litigation to target Ava Labs competitors. Ava Labs CEO Emin Gün Sirer has also said that the videos posted on Crypto Leaks showed Roche making false statements about their relationship.”
• “Following the disclosure of the recordings in August, Roche’s firm kicked him off its class action practice and barred him from participating in ongoing class matters. Freedman argued that it took such steps to protect against the appearance of impropriety.”
• “Still, Bitfinex and Tether moved to terminate Roche Freedman from the case, claiming the comments raised concerns about the firm’s motivations. Roche Freedman’s co-counsel, meanwhile, argued that booting the firm would eliminate a distraction.”
• “Roche Freedman faces disqualification motions in at least four other cases, according to federal court filings.”
• “A different New York judge has scheduled a Friday hearing in an action the firm brought on behalf of investors against the Tron Foundation, the company behind the TRON blockchain protocol.”
• “Launched in 2019 by expats of the prominent litigation shop Boies Schiller, Roche Freedman has become one of the most active firms in the cryptocurrency class action space.”

More on this: “Crypto Leaks Risks Roche Freedman Losing More Class Action Work.”

“Recruiter Wants DLA Piper Sanctioned In Trade Secret Case” —

• “A legal recruiting firm that recently won a $3.6 million judgment against an ex-employee for trade secrets theft wants DLA Piper and Tauler Smith LLP sanctioned for their role in what it calls an ‘exceptional’ case of ‘unreasonable and vexatious’ litigation. “
• “Those efforts included avoiding discovery obligations, raising frivolous arguments to disqualify MWK’s attorney, adding unconnected parties to the case, and bringing time-barred and inadequately pled counterclaims that were ‘designed to embarrass and harass the plaintiffs,’ said MWK, which is now known as Counsel Holdings Inc., according to the filing.”
• “DLA Piper pushed back against the allegations in the sanctions motion on Tuesday. ‘DLA Piper vigorously denies the assertion that its representation of Mr. Jowers was in any way improper or would warrant the imposition of sanctions,’ said Fields Alexander of Beck Redden LLP, counsel for DLA Piper, in a statement. ‘As this matter involves ongoing litigation, DLA Piper declines to respond further at this time.'”

DQ-related allegations made in the filing:

• “Along the way, to raise costs and vexation, DLA Piper raised frivolous arguments to obtain a disqualification of Robert Kinney (“Kinney”) from serving as pretrial counsel to Plaintiff. When that failed, DLA Piper sought to block Kinney from seeing documents by over-designating thousands of them (even public websites) as AEO, adding a separate defamation case in Hong Kong that was factually and legally intertwined with the issues before the Court (but could not be handled by Plaintiff’s US legal team), and pursuing discovery against current and former employees of Plaintiff with no intention of or basis for ever using that discovery at trial.”
• “DLA Piper sought to disqualify Kinney solely to raise costs.”
• “[DLA Piper Lawer] Jowers’s statement to the Court admitted the reason for this effort. Jowers said that losing in the DQ effort was the ‘key watershed moment of this litigation…because Kinney would not have continued his litigation…if he lost his leverage of paying no attorneys fees.'”
• “Because Jowers has admitted the purpose of the disqualification effort was to increase costs for his adversaries, the repetitive motions to disqualify further demonstrate bad faith and multiplication of the proceeding.”

“Buchanan Ingersoll Has No Conflict of Interest in Employment Dispute, Pa. Appeals Court Finds” —

• “Pittsburgh-headquartered firm Buchanan Ingersoll & Rooney can continue to represent a vending machine business client in an employment contract dispute with the business’ former president, a Pennsylvania Superior Court panel decided on Friday, despite contentions by the defendant that the firm has a conflict of interest.”
• “The Sept. 30 appellate decision comes 10 months after a trial court denied a motion by defendant Alan Simons, the former president of RDS Vending, to disqualify Buchanan from representing his former RDS business partner John Brown in a dispute over Simons’ employment contract from 2019.”
• “[In the appeal] Simons argued that Buchanan’s representation of RDS leadership, including himself, in the formation of two businesses operated by RDS in the mid-2010s should conflict the firm out of representing Brown and RDS in their suit against Simons.”
• “However, as the judges noted in their decision last week, all invoices for Buchanan’s legal work for the companies’ formations were directed to RDS and not Simons, and the firm has claimed in court filings that it has not performed legal work for RDS regarding the LLCs since 2016.”
• “There was no express agreement indicating that Simons retained the firm when it provided legal services for the formation of one of RDS’s companies, Rite-Vend, the judges found. And while there was an express agreement for the formation of the other RDS company, Regal Vending, the judges reasoned that it was RDS, not the appellant, that retained Buchanan.”

Bill Freivogel notes:

• CALAMCO v. J.R. Simplot Co., 2022 WL 7443383 (E.D. Cal. Oct. 13, 2022).
  • “Plaintiff is suing Defendant for a judgment declaring the parties’ obligations under a fertilizer ‘handling and storage agreement.’ Law Firm represents Defendant. Plaintiff moved to disqualify Law Firm because Law Firm is privy to information turned over by Plaintiff to Plaintiff’s own ‘Class B’ directors, and to Defendant’s subsidiary.”
  • “The complication here is that the Class B directors were appointed by a subsidiary of Defendant. That power to appoint derived from Defendant’s subsidiary’s ownership of ‘many’ of Plaintiff’s outstanding shares.”
  • “Over Plaintiff’s objection, a state court ordered that Plaintiff furnish certain information to the Class B directors and the Defendant’s subsidiary. Plaintiff began doing so. Law Firm, representing the Defendant, the subsidiary, and the Class B directors, necessarily became privy to the information. In this opinion the court denied the motion to disqualify because the information was disclosed to the subsidiary without any ‘protections against later use.'”
• Marchant Realty Partners v. Milborne, 2022 ONSC (CanLII) (Ont. Super. Ct. Sept. 7, 2022).
  • “Plaintiff is suing Defendants to collect unpaid loans. Defendant, Charles Hunter Milborne (‘Hunter’), moved to disqualify Plaintiff’s law firm (‘Law Firm’). Hunter is a shareholder of Niagra Global, a Law Firm current client. Hunter also has familial relationships with the other Defendants as well as some supervisory responsibilities.”
  • “Thus, in this opinion the court found that Hunter is a ‘near client’ of Law Firm, and that Law Firm should be disqualified. The court went on to look at Law Firm’s earlier representation of Hunter himself. After a fact-specific analysis, the court determined that Hunter would have shared enough information with Law Firm to make those matters and this one ‘sufficiently related’ to further justify disqualification. Law Firm had erected a screen about six months after taking on this case. The lateness was due to a glitch in Law Firm’s conflicts checking. The court said the screen was not sufficient.”
• ZW Acquisition LLC v. Volkov, No. 500199/2022 (N.Y. Sup. Ct. Kings Cty. Sept. 29, 2022).
  • “Defendant moved to disqualify law firm (‘Law Firm’) for Plaintiff, claiming Law Firm had represented Defendant in the transaction underlying this case. In this opinion the court denied the motion. The decision turned on whether Defendant was Law Firm’s client at the time of the transaction. While Law Firm’s retainer agreement for the transaction could have been clearer, there was no place for Defendant to sign individually (just as representative of the company subject to the transaction), and Defendant never sought personal advice from Law Firm regarding the transaction.”

“EY’s US partners flouted conflict of interest rules, regulator says” —

• “One in three of EY’s US audit partners has flouted its policies for preventing conflicts of interest, the industry regulator said on Monday, and the firm had failed to address the issue more than a year after it was discovered.”
• “Among lower-level managers the rate of non-compliance with its financial disclosure rules was even higher, at almost half, according to a Public Company Accounting Oversight Board report.”
• “The revelations come on the heels of other ethics scandals at the Big Four firm, including the discovery of widespread cheating on professional exams, which led to a $100mn settlement earlier this year.”
• “EY, which audits about 15 per cent of US public companies, requires staff to adhere to numerous compliance rules designed to ensure the independence of their work. Its own spot checks in 2018 found that 33 per cent of partners and 46 per cent of managers certified they had made the proper financial disclosures without actually doing so.”
• “The issue was reported to the PCAOB as part of its annual inspection by the regulator. It was kept out of the inspectors’ public report, however, to give EY time to address the issue. The PCAOB only makes such deficiencies public if they are not fixed within a year.”

“Clark Partington Facing DQ Bid In Fla. Whistleblower Case” —

• “A former client of Clark Partington Hart Larry Bond & Stackhouse PA has asked a federal judge to disqualify the firm from representing a commercial pilot in a whistleblower case against him over his alleged illegal monopoly control of a northwest Florida airport.”
• “Clark Partington currently represents commercial pilot Robert Smith in a False Claims Act suit accusing businessman Jay Odom of using a strawman scheme to take full control of the Destin Executive Airport in violation of laws prohibiting monopolies at airports that receive state and federal funds.”
• “But Odom argued in a brief Wednesday that Clark Partington’s work on his behalf in 2011 in the negotiation of a loan and the creation of entities to hold assets at issue in Smith’s suit meant the firm should be barred from handling the case.”
• “‘Given the law firm’s prior role as counsel in facilitating one of the schemes cited in the amended complaint as evidence of the fraud alleged as to the Destin airport, disqualification is proper,’ Odom said.”
• “The request to disqualify Clark Patington in the federal False Claim Acts suit notes that a judge in a related state court case in the First Judicial Circuit Court of Okaloosa County granted a motion to disqualify on Sept. 23 based on the same arguments about the firm’s prior representation of Odom and his companies.”
• “In reaching that decision, Circuit Judge John T. Brown found that Odom and Clark Partington had an attorney-client relationship and that the law firm’s prior work for Odom was ‘substantially related’ to Smith’s claims of wrongdoing in the current case.”
• “‘The court finds plaintiff’s counsel violated the duty of loyalty to a former client … given the evidence that Clark Partington law firm previously provided legal representation … in a transaction related to the purchase of a Hammock Bay loan, and the scope of that same representation and transaction are now an issue in this case,’ Judge Brown’s order said.”

“In Order to Fairly Represent Whistleblowers, Defense Firms Must Take Conflicts Seriously” —

• “It is now public knowledge that large corporate defense firms are representing whistleblowers under the Dodd-Frank Act.”
• “The exact number of corporate defense firms cannot be known, given the confidentiality surrounding SEC investigations. WNN uncovered that out of 64 different law firms that had represented whistleblowers who obtained awards under the SEC Whistleblower Program through 2021, 6 were primarily corporate defense firms.”
• “No matter the specific number of firms, this marks a major shift in the legal field. The “iron curtain” that historically separated law firms that represent corporate criminals from those that represent whistleblowers has fallen. Whether or not this is a good or bad thing, the shift unquestionably comes with serious ethical, policy and legal implications, and is not without risk for whistleblowers.”
• “Clearly, there are inherent potential conflicts when a firm which primarily defends corporations accused of fraud takes on a whistleblower who is alleging fraud as a client. Although such representations may be permitted under the attorney’s rules of ethics, local Bar rules, and SEC policy they can still pose a number of issues.”
• “Corporate fraud cases can progress in unexpected ways and begin to involve new entities as they progress. Thus significant conflicts of interest may exist that are not evident at the commencement of a case.”
• “Furthermore, the SEC whistleblower law is still relatively new and precedent-setting issues consistently arise. It could be a major conflict of interest if a firm that primarily represents corporations is involved in a precedential case that could expand whistleblower rights and hurt corporations.”
• “In order to best navigate these obvious conflicts, traditional defense firms should institute a number of procedures and guardrails to minimize risks to whistleblower clients. These procedures and rules should include:
  • Defense firms who represent whistleblowers should identify this on their websites.
  • Defense firms should fully disclose to any potential whistleblower clients how the firm’s primary practice will influence their handling of a whistleblower case.
  • Defense firms should have a plan of how to handle whistleblower cases where whistleblowers engaged in tactics, such as removing documents, which would be unpalatable for their corporate clients.
  • Defense firms need to be prepared for the possibility that their case involves expanding the means by which an employee can gather information about potential wrongdoing by an employer.
  • Before taking on a whistleblower case, defense firms need to fully explore the potential for conflicts of interests in “related actions.” Under the SEC Whistleblower Program, whistleblowers can qualify for awards based on enforcement actions taken by other federal agencies. Firms need to fully explore how potential “related actions” could expand the potential for conflicts among relevant witnesses, parties, and issues.
  • Defense firms should establish protocols to refer whistleblowers to law firms and attorneys who primarily represent whistleblowers. Thus in instances where conflicts exist for defense firms a whistleblower still has access to quality representation.”

“Gibson Dunn withdrawal from Qatar hacking case ‘doesn’t smell good,’ judge says” —

• “A U.S. judge said on Tuesday she would weigh accusations that one of Gibson Dunn’s lawyers had a conflict of interest in the defense of a man accused in a civil lawsuit of hacking emails on behalf of Qatar, noting that the firm’s withdrawal from the case ‘doesn’t smell good.'”
• “The firm, which denies any conflict of interest, withdrew on Aug. 1 from the defense of former CIA officer Kevin Chalker and his company Global Risk Advisors (GRA) in a 2019 lawsuit brought in Manhattan federal court by Elliott Broidy, a onetime fundraiser for former President Donald Trump.”
• “Broidy, an outspoken critic of Qatar’s government, said in the lawsuit that the Middle Eastern country’s government hired GRA to hack his emails, some of which were leaked to the media. Qatar has denied any involvement in the hacks.”
• “‘It doesn’t smell good from your firm’s point of view and you’re not really giving explanation for why after two years of back and forth … your firm all of a sudden decides to step aside,’ [Judge] Vyskocil said in court.’
• “Brian Ascher, a partner at Gibson Dunn, said at the hearing the firm withdrew because its client decided to bring in new counsel, not because of an alleged conflict. The law firm Hughes Hubbard & Reed took over the defense for Chalker and GRA.”
• “Vyskocil said she would delay a ruling on Broidy’s request to subpoena Gibson Dunn and depose Ahmad until she considers a motion to dismiss filed by Chalker and GRA.”
• “Broidy wants the discovery to learn ‘all confidential government information that Ms. Ahmad conveyed’ to Gibson Dunn, court papers show.”
• “Broidy in October 2020 pleaded guilty to a charge that he illegally lobbied Trump to drop an investigation into a Malaysian embezzlement scandal. Trump pardoned Broidy before leaving office in 2021.”

“Law Firms Are Getting Pushed Into ‘Red’ or ‘Blue’ Corners” —

• “Sidley Austin was sent a threatening letter by the GOP Texas Freedom Caucus over its employee policy to cover abortion costs after the U.S. Supreme Court overturned Roe v. Wade. Kirkland & Ellis decided not to take Second Amendment cases any longer, losing a prominent partner in the process.”
• “As political discourse becomes more heated and as society raises expectations about large organizations taking stands on social and political issues, law firms face a dilemma around who they represent and what, if any, actions they take related to large social issues.”
• “The increasing polarization of today’s environment is making it more difficult to stay neutral on a variety of these issues. But any wrong move could affect the firm’s market perception, client roster, as well as their recruiting and retention of talent, experts say.”
• “‘Today, with the increased likelihood of political blowback and client retaliation, there is the chance that your partners will be disturbed by the representation,’ Cadwalader, Wickersham & Taft’s Nick Gravante recently told Law.com. He agreed that ‘we may be headed in that direction’ of firms compelled to choose sides. ‘It is as divided and politically charged as it has ever been.'”
• “It isn’t likely that Jones Day will be picking up work from Planned Parenthood or the Biden family any time soon. Just like it is unlikely that Paul, Weiss, Rifkind, Wharton & Garrison will be representing the National Rifle Association in the near future.”
• “Firms have always had “leanings” toward what they will and won’t do, but for the most part, those leanings were slight and, mostly, didn’t interfere with the business. But things have changed, some legal industry observers said.”
• “Borgal Shunk said how firms choose to handle taking political and social positions will likely dictate whether they can recruit new attorneys and retain their existing ones. ‘That is where I see the greatest risk to law firms: How do they keep talent happy and have a healthy dialogue without conflict undermining people and their perspectives,’ she said.”
• “Borgal Shunk referenced the litigation around tobacco and oil spills and how firms that represented them had a ‘stigma’ associated with them for incoming talent. But client-related stigmas are ‘more prevalent today’ as the issues at hand, such as guns and abortion, have a ‘strong emotional tie’ for many, she said.”
• “Besides market perception and attorney recruitment, a larger, existential issue also lingers when law firms refuse to represent controversial or political clients. ‘I believe there are benefits to having what I would call hard-edged clients repped by mainstream firms,’ Dimitrief said. ‘They bring mainstream sensitivity to issues and prevent extreme positions from being taken.'”
• “He noted the legal circus that has surrounded Trump as an example of how things can go sideways if more reputable and mainstream firms forgo working with clients such as Trump.”
• “Several legal industry observers said Big Law will likely not devolve into ‘red’ and ‘blue’factions, with one side forsaking all business from the other. But they did agree that politics and social causes are now more a part of the calculus for firms than they used to be, and firms would be good to keep their eyes open.”

“U.S. Supreme Court spurns McKinsey & Co appeal in bankruptcy conflicts case” —

• “The U.S. Supreme Court on Tuesday declined to hear McKinsey & Co’s bid to escape a lawsuit by retired turnaround specialist Jay Alix accusing the management consulting firm of concealing potential conflicts when seeking permission from bankruptcy courts to perform lucrative work on corporate restructurings.”
• “The justices turned away McKinsey’s request that they overturn a lower court’s decision that the lawsuit by Alix, who has accused the firm of running a ‘criminal enterprise’ by hiding its ties to lenders and its clients’ competitors.”
• “Alix’s lawsuit accused McKinsey and several current or former employees of violating the Racketeer Influenced and Corrupt Organizations Act (RICO), a U.S. law used to target illegal conspiracies that originally was designed to target organized crime.”
• “U.S. District Judge Jesse Furman in Manhattan in 2019 dismissed the lawsuit, saying Alix did not assert a ‘proximate’ link between McKinsey’s alleged wrongdoing and harm to AlixPartners. Alix reported owning a 35% equity stake in AlixPartners.”
• ‘The New York-based 2nd U.S. Circuit Court of Appeals in January revived the case, saying Furman gave ‘insufficient consideration’ to whether McKinsey undermined the integrity of federal judicial proceedings.”
• “‘If McKinsey’s conduct has corrupted the process of engaging bankruptcy advisors, as Alix plausibly alleges, then the unsuccessful participants in that process are directly harmed,’ 2nd Circuit Judge Barrington Parker wrote.”

“Conflict-of-interest law limits ex-Tory minister at new job” —

• “Former Progressive Conservative cabinet minister Scott Fielding has parlayed his government experience into a job with one of Canada’s largest private consulting firms, raising inevitable questions about the potential for perceived conflicts of interest.”
• “After quitting Premier Heather Stefanson’s government in June, the former Kirkfield Park MLA and Winnipeg city councillor has landed at KPMG as a deal adviser.”
• “Fielding will provide strategic advice to clients in Western Canada and at the national level, with a focus on ‘economic development, infrastructure, finance, fiscal performance, organizational transformation and strategy,’ a KPMG ad in the Saturday Winnipeg Free Press business section stated.”
• “The former natural resources and northern development minister who was responsible for liquor and lotteries — and was shuffled out of finance in January — is subject to the Legislative Assembly and Executive Council Conflict of Interest Act. It includes rules for former ministers and what they can’t do for a year after leaving office, with fines ranging from $1,000 to $10,000 for those who break them.”
• “‘Depending on what the minister did and what the new employment involved is, it may limit the activities the former minister can engage in,’ said conflict of interest commissioner Jeffrey Schnoor, who could comment generally on the legislation pertaining to former ministers but not specifically on Fielding’s new job.”
• “An expert on Manitoba politics said Fielding’s move to the consulting firm is no surprise, and neither will be questions about potential or perceived conflicts.”
• “At the same time, there are organizations such as Democracy Watch calling for tougher conflict rules for elected officials before and after they leave office — prohibiting them from talking to a prospective, future employer while they’re still in public office, Thomas said, ‘So people in their twilight years in public office — say, when Fielding was finance minister, wasn’t holding conversations perhaps as part of a sidebar to ongoing use of KPMG,’ he said.”
• “There is one lifetime ban in the conflict-of-interest legislation. A section prohibits all MLAs and ministers from using ‘insider information’ for personal gain or for the gain of another person, Schnoor said. It prohibits the use of information that is not available to the public they acquire in the performance of their official powers, duties and functions to benefit themselves or someone else.”