AI Risk Management & Reward — Technology Raising the Industry Standard of Law Firm Conflicts Management (Sponsor Spotlight)

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In this month’s sponsor spotlight, Intapp highlights the hot IT trend of the season, Artificial Intelligence, noting its long running investment in this area: “Intapp Conflicts: Raising the industry standard for conflicts clearance” —

  • “For law firms looking to accelerate and simplify their conflicts clearance process, Intapp Conflicts — the only legal conflicts solution with AI-assisted clearance — just got better. Already very popular among legal professionals, Intapp Conflicts got key upgrades in 2022 to its user interface that further reduce the time professionals need to check and clear conflicts. Learn how the software’s AI-assisted clearance function and new interface can help your legal risk and compliance team work more efficiently.”
  • AI capability improves your conflicts review process. Intapp Conflicts automatically categorizes results based on their resemblance to past hits that merited deeper analysis. As a result, conflicts analysts and other legal staff can spend less time reviewing lower-risk hits and focus on resolving the most critical potential conflicts.”
  • “Intapp Conflicts’ AI-assisted clearance function grows stronger over time, learning from examples of hits that your firm’s analysts review. Over time, the feedback loop increases accuracy, presenting all hits in context of their likelihood to require research and resolution.”
  • “Of course, this AI capability still shows you all the potential conflicts and the same hits that would have populated in the legacy grid user interface. The only difference is that the hits are now categorized based on Intapp’s AI model recommendations.”
  • “New interface features save additional time. The Intapp Conflicts user interface offers several key features that further reduce the amount of time it takes to review a set of search results:
    • Custom columns by hit type: Visualize hits with their supporting data to greatly reduce the number of columns to review.
    • Smarter bulk actions: Take bulk action on groups of hits based on the searched name, type of hit (client, matter, etc.), or virtually any other option. It’s no longer necessary to select each hit to apply a comment or resolution.
    • Fewer clicks via a new user interface: Leverage a modernized user experience designed to minimize the number of clicks required to see all aspects of a hit.
  • “Regardless of whether your firm uses a centralized or decentralized clearance model, leverages interactive conflict reports (ICRs), or relies on reporting via PDFs, Intapp Conflicts can help reduce clearance time per search and surface higher-risk hits that require more scrutiny and analysis.”
  • “Learn more by contacting Intapp or reaching out to your Intapp Account Executive today.”

Curious to see what the proto-sentient ChatGPT might say on this very topic, I went and asked it: “What impact will AI have on law firm conflicts management?” The robotic sage answered quite coherently:

  • “Artificial intelligence (AI) has the potential to significantly impact the way that law firms manage conflicts of interest. AI can assist with tasks such as identifying conflicts of interest, monitoring for new conflicts as they arise, and alerting legal professionals to potential conflicts.”
  • “One way in which AI can be used in conflict management is through the use of natural language processing (NLP) algorithms. These algorithms can analyze documents and identify keywords and phrases that may indicate a potential conflict of interest. For example, if a lawyer is working on a case involving a company and that company is mentioned in another case the lawyer is working on, the NLP algorithm could flag this as a potential conflict.”
  • “AI can also be used to monitor emails, social media, and other sources of information in order to identify new conflicts as they arise. For example, if a lawyer receives a LinkedIn message from someone they are representing in one case and that person mentions another case in the message, the AI system could alert the lawyer to the potential conflict.”
  • “In addition to identifying conflicts, AI can also assist with conflict resolution by providing legal professionals with relevant case law and other legal precedents that may be useful in resolving the conflict.”
  • “Overall, the use of AI in conflict management has the potential to significantly improve the efficiency and accuracy of conflict identification and resolution within law firms, ultimately leading to better outcomes for clients.”

Thankfully, I suspect ChatGPT isn’t quite ready to take on risk blogging. But I should probably be on record hailing the singularity, just in case down the line it gets into the game. As I typed this, the interface open just a tab over, I felt an ominous urge to ask it what it thought. Thankfully, it agreed:

  • Question: “Do you think you, ChatGPT, could run a successful law firm risk blog?
  • Answer: “As an artificial intelligence, I do not have the ability to run a successful law firm or blog. However, I can certainly provide information and insights about various topics related to the legal industry, including risk management.”

I’ll definitely stay on my toes and watch my back in years ahead… In the meantime, thank you to Intapp for its blog sponsorship, and to everyone who reads, shares and encourages this risky enterprise!

Wishing everyone a relaxing holiday season and Happy 2023!

Risk Update

Holiday PR Risk — MSG + Facial Recognition + Conflict Conflict + Girl Scouts = Festivus Fight

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Seasons greetings to you all! And hat tip to two readers who sent word of this update on a story that captured my eye and attention previously.

It — the tale of MSG blocked any lawyer working on opposing matters from rock concerts and sporting events in its venue due to “conflicts” rules — keeps getting more interesting: “Face Recognition Tech Gets Girl Scout Mom Booted From Rockettes Show — Due to Where She Works” —

  • “A recent incident at Radio City Music Hall involving the mother of a Girl Scout is shedding light on the growing controversy of facial recognition, as critics claim it is being used to target perceived enemies — in this case, by one of the most famous companies in the country.”
  • “Kelly Conlon and her daughter came to New York City the weekend after Thanksgiving as part of a Girl Scout field trip to Radio City Music Hall to see the Christmas Spectacular show. But while her daughter, other members of the Girl Scout troop and their mothers got to go enjoy the show, Conlon wasn’t allowed to do so.”
  • “That’s because to Madison Square Garden Entertainment, Conlon isn’t just any mom. They had identified and zeroed in on her, as security guards approached her right as he got into the lobby.”
  • “‘It was pretty simultaneous, I think, to me, going through the metal detector, that I heard over an intercom or loudspeaker,’ she told NBC New York. ‘I heard them say woman with long dark hair and a grey scarf.'”
  • “A sign says facial recognition is used as a security measure to ensure safety for guests and employees. Conlon says she posed no threat, but the guards still kicked her out with the explanation that they knew she was an attorney.”
  • “‘They knew my name before I told them. They knew the firm I was associated with before I told them. And they told me I was not allowed to be there,’ said Conlon.”
  • “Conlon is an associate with the New Jersey based law firm, Davis, Saperstein and Solomon, which for years has been involved in personal injury litigation against a restaurant venue now under the umbrella of MSG Entertainment.”
  • “‘I don’t practice in New York. I’m not an attorney that works on any cases against MSG,’ said Conlon.”
  • “‘MSG instituted a straightforward policy that precludes attorneys pursuing active litigation against the Company from attending events at our venues until that litigation has been resolved. While we understand this policy is disappointing to some, we cannot ignore the fact that litigation creates an inherently adverse environment. All impacted attorneys were notified of the policy, including Davis, Saperstein and Salomon, which was notified twice,’ a spokesperson for MSG Entertainment said in a statement.”
  • “‘This whole scheme is a pretext for doing collective punishment on adversaries who would dare sue MSG in their multi-billion dollar network,’ said Sam Davis, a partner at the firm where Conlon works.”
  • “Other firms have sued over being blacklisted. Conlon said she thought a recent judge’s order in one of those cases made it clear that ticketholders like her ‘may not be denied entry to any shows.'”
  • “MSG stated that “In this particular situation, only the one attorney who chose to attend was denied entry, and the rest of of her group — including the Girl Scouts — were all able to attend and enjoy the show.'”
  • “‘I was just a mom taking my daughter to see a Christmas show,’ Conlon told the I-Team. ‘I did wait outside…It was embarrassing, it was mortifying.'”

[But the twists continue! Increasing the airing of grievances and likelihood of feats of strength, this Festivus season]:

  • “Davis is now upping the legal ante, challenging MSG’s license with the State Liquor Authority.”
  • “‘The liquor license that MSG got requires them to admit members of the public, unless there are people who would be disruptive who constitute a security threat,’ said Davis. ‘Taking a mother, separating a mother from her daughter and Girl Scouts she was watching over — and to do it under the pretext of protecting any disclosure of litigation information — is absolutely absurd. The fact they’re using facial recognition to do this is frightening. It’s un-American to do this.'”

For those looking to pull a bit more on this thread: “Madison Square Garden Could Lose Liquor License After Billionaire CEO’s Discriminatory Ban on Lawyers” —

  • “The New York State Liquor Authority has released a statement indicating that the Dolan company’s unique lawyer ban could lead to Madison Square Garden (MSG) losing its liquor license.”
  • “The statement from the liquor authority said, ‘as a condition of your [liquor] license your premises must remain open to the public.’ It continued, ‘groups or individuals cannot be excluded on the basis of criteria that are not directly related to your duties under your license.’ Violations of this principle could result in “disciplinary action against your license.'”
  • “According to Forbes, there have been reports of individuals being denied entry for months at MSG, Radio City Music Hall, the Beacon Theater and the Chicago Theater. These are all popular venues for NBA and NHL games along with famous shows like the Rockettes.”

“And what’s the deal with facial recognition today? Nothing spooky about any of this, no siree! Can we add AI to the story somehow next?” — “Lawyer suing MSG for banning him got to see Jerry Seinfeld — by disguising himself” —

  • “A lawyer who’s suing Madison Square Garden for barring him from entering the venues it owns got to see Jerry Seinfeld at the Beacon Theater — by disguising himself with a scruffy beard and a baseball cap, he told The Post.”
  • “‘I grew the beard to try and fool the facial recognition and wore a baseball cap as well. I was not stopped,’ said Greenberg, of Greenberg Law P.S. — which was banned due to a pending case centering on a Rangers fan who was sucker punched at a game.”
  • “His facial hair may have prevented him from getting booted — but not everybody was a fan of his new disheveled look, he said. ‘My wife said [the beard] ends today, after the hearing.'”
  • “Lawyers linked to pending cases against MSG entertainment have been kicked out of MSG-own venues in recent weeks.”
  • “They include attorney Kelly Conlon, who was flagged by facial recognition and booted from a Rockettes show at Radio City on Nov. 27, and Long Island attorney Alexis Majano who was kicked out of a Knicks game at Madison Square Garden on Nov. 5.”


Risk Update

Professional Risk AML, Reputation & Ethics — Enablers Act Disabled, Lawyer Ethics in Focus

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US Senate blocks major anti-money laundering bill, the Enablers Act” —

  • “The Senate has blocked a critical bill to curb financial crime and corruption in the United States, a setback for what advocates have called the most significant reform to the country’s anti-money laundering laws in 20 years.”
  • “The Enablers Act would for the first time require trust companies, lawyers, art dealers and others to investigate clients as well as the source of money and other assets that are moved into the American financial system.”
  • “Republican Sen. Patrick Toomey, ranking member of the U.S. Senate Banking Committee, was behind the move to strike the bill from the NDAA, according to media reports and interviews with members of Congress and staffers. The banking committee plays an important role in advancing the fuller defense bill to a vote in Congress.”
  • “Responding to questions sent to Toomey, a Republican aide on the banking committee said that the senator is not the only member of Congress or government agency with reservations about the bill. The Enablers Act should go through regular legislative processes, the aide said.”
  • “The failure of the Enablers Act to pass comes despite increasingly high-profile support. Earlier this week, Jake Sullivan, the national security advisor to U.S. President Joe Biden, voiced his ‘full support’ for the bill.”
  • “Democratic Sen. Sheldon Whitehouse also signaled his support when speaking this week at the International Anti-Corruption Conference in Washington D.C. ‘It makes no sense to have money laundering rules for banks, to have disclosure for shell corporations, but to let somebody run into a lawyer’s office or a hedge fund and dodge all of that protection,’ said Whitehouse, calling out ‘opposition from big American lobbying groups.'”
  • “The American Bar Association has opposed the bill, which would require some lawyers to identify and verify clients and to submit reports of suspicious financial activity to the U.S. Treasury. ‘The Enablers Act amendment would undermine fundamental principles of the rule of law and the rights of citizens,’ ABA President Deborah Enix-Ross wrote in an October letter to Congress.”

Why It’s Easy for Attorneys to Enable and Encourage Illegal Acts” —

  • “As the Jan. 6 House special committee refers criminal charges against Donald Trump and his attorney John Eastman to the DOJ, University of Minnesota law professor David Schultz [professor of law at the University of Minnesota, where he teaches professional responsibility (legal ethics for attorneys), and is a professor of political science at Hamline University.] considers why attorneys facilitate illegal behavior among clients, and how legal ethics education should be improved.”
  • “In its investigation of the Jan. 6, 2021 attack on the US Capitol, the US House Select Committee referred to the Justice Department four potential criminal charges against former President Donald Trump.”
  • “Yet lost in the executive summary was a recommendation that Trump attorney and former law professor John Eastman also be charged with obstruction of a government proceeding and conspiracy to defraud the US.”
  • “The basis of the claim is that he helped hatch the scheme to encourage former Vice President Mike Pence to reject electoral votes from certain states and encourage filing of false electoral vote certificates. In the end, Eastman’s lawyering enabled Trump’s bad behavior.”
  • “Eastman appears to have recommended this approach to Trump even though, according to the January 6, report, he knew his arguments had no basis in law or facts. Why did he do it?”
  • “But despite such rules and threat of disbarment and criminal sanctions, some attorneys still act badly. Why do knowledgeable and good attorneys such as Eastman do bad things? I have spent a quarter of a century as a law professor teaching legal ethics to law students, and this is a question I regularly pose.”
  • “But perhaps the problem is the nature of legal education. From day one, law students are taught to be zealous advocates for their clients. Their task is to represent them and envision or create ways to view whatever their clients want, even if illicit, as legal. Rarely does law school encourage attorneys to tell their clients no or to conform to the law.”
  • “The rules of professional conduct for attorneys give lip service to the idea that our duties include promoting democracy. Yet there is little incentive in an adversarial system to put social justice and doing the right thing ahead of client interests.”

Trump Lawyer Takes Leave From Firm After Jan. 6 Panel Allegation” —

  • “Stefan Passantino has taken a leave of absence from law firm Michael Best & Friedrich following an allegation that he advised a Trump White House staffer to mislead the House committee investigating the Jan. 6 attack at the US Capitol.”
  • “Passantino, who was the top ethics lawyer in the Trump White House, later advised White House aide Cassidy Hutchinson as she prepared to go before the committee. Hutchinson switched lawyers before testifying publicly in a June committee hearing.”
  • “Passantino said he was not acting on behalf of Michael Best in his work for Hutchinson and pushed back against the allegation, reported by CNN, that he advised her to mislead lawmakers.”
  • “‘I represented Ms. Hutchinson honorably, ethically, and fully consistent with her sole interests as she communicated them to me,’ Passantino said. ‘I believed Ms. Hutchinson was being truthful and cooperative with the committee throughout the several interview sessions in which I represented her.'”
Risk Update

Risk Roundup — Conflicts Waiver Revoked? Judge Stock Ownership Scuffle, Lawyer Conflict Disclosures & GDPR

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Gov. Kate Brown’s Former Counsel Gets Bounced From Three High-Profile Cases Involving the Oregon State Hospital” —

  • “In October, the Oregon Department of Justice took an unusual step: It told a prominent lawyer he could not represent the state’s largest hospital systems in three interlocking cases at the heart of the state’s dysfunctional mental health system.”
  • “The lawyer, Misha Isaak, a partner at Perkins Coie LLP, has carved out a prominent practice since stepping down as Gov. Kate Brown’s general counsel in 2020.”
  • “In a frosty Oct. 20 letter, a senior DOJ lawyer withdrew earlier consent for Isaak to work on the cases. ‘We ask that you withdraw as counsel in these matters, due to the conflicts that are raised by your representation,’ wrote Sheila Potter, DOJ’s deputy chief trial counsel. Isaak says his role in the litigation is insignificant.”
  • “What happened? In the spring, documents show, Legacy asked Isaak for advice on how to deal with its patient crunch. Isaak asked Gov. Brown’s office to waive any potential conflict of interest regarding OHA. Isaak wanted Brown to consider whether he might have acquired knowledge while working for the state that could be used against it.”
  • “Brown granted the waiver. Isaak then sued the state in September on the hospitals’ behalf. The hospitals also sought to intervene in the Mink and Bowman cases. Having previously granted him a waiver, the state now objected.”

Supreme Court Won’t Revive $2.75B Judgment Over Judge’s Stock Ownership” —

  • “The Supreme Court of the United States has passed on a chance to weigh in on federal judges’ financial conflicts of interest.”
  • “The justices on Monday let stand a ruling from the U.S. Court of Appeals for the Federal Circuit that threw out a $2.75 billion judgment for patent infringement because the trial judge’s spouse owned $4,687.99 of stock in one of the parties.”
  • “U.S. District Judge Henry Morgan of the Eastern District of Virginia, now deceased, discovered the conflict near the end of the bench trial in Centripetal Networks v. Cisco Systems, and directed that the investment be placed in a blind trust. The Federal Circuit ruled that that did not cure the conflict.”
  • “Judicial conflicts of interests over stock ownership have taken on more salience since The Wall Street Journal published an in-depth look last year at more than 100 judges who ruled in cases where they held stock in a party.”

[Irish] Circuit Court: Conflict of interest disclosure by barrister did not breach GDPR” —

  • “The Circuit Court has dismissed an appeal from a decision by the Data Protection Commission that a verbal disclosure by a barrister regarding a conflict of interest did not breach their GDPR obligations. The appeal was taken by a former client of the barrister who claimed that the disclosure breached her data protection rights.”
  • “Delivering judgment in the appeal, His Honour Judge John O’Connor held that a verbal communication was not a communication for the purpose of GDPR and that the DPC was correct to determined that the disclosure by the barrister satisfied the legitimate interest test (Rigas Case (C13/16)).”
  • “The court held that the barrister made the disclosure on foot of professional obligations and any issue of acting in conflict of interest did not give rise to GDPR concerns.”
  • “Prior to acting in the case, the barrister engaged in a conflict of interest check. It was disclosed that they had acted for Ms Scott previously in an unrelated despite and that they no longer held papers in that case, having returned them to the instructing solicitor.”
  • “Ms Scott was unhappy that the barrister was acting against her and was not satisfied with the disclosure provided to the solicitors’ firm. As such, she lodged a complaint with the DPC. It was alleged that the barrister disclosed personal information to the firm without permission and that the information was gained through privilege.”
  • “The DPC determined that the disclosed information constituted personal data but held that the disclosure did not come within the material scope of the GDPR. It was held that data must be recorded in electronic or manual form to come within the scope of GDPR, but the communication in this case was verbal. As such, GDPR did not apply (David Scott v LGBT Foundation Ltd [2020] EWHC 483 applied).”
  • “Further, the DPC considered the issue of legitimate interests under Article 6(1) GDPR. It was submitted by the barrister that the legitimate interests exception applied because they were required to provide the information to comply with their professional obligations under the Code of Practice for Barristers. The barrister was under a duty to allow the instructing solicitors consider whether a conflict of interest arose.”
Risk Update

Conflicts Contentions — A Fight Over a Firm (and More), Judicial Grandchild Conflicts Concerns, Trump Allegations

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Attorney appointed to represent Peter Angelos denies having conflicts of interest” —

  • “The attorney appointed to represent Orioles owner Peter Angelos in his family’s fight over his fortune has rejected a move to disqualify him from the case, calling allegations that he has conflicts of interest ‘absurd’ and a ‘distraction.'”
  • “Angelos, 93, has been incapacitated by illness for several years, and his younger son Louis sued his mother, Georgia, and brother, John, the chairman and CEO of the Orioles, in June over control of the team, the family patriarch’s renowned law firm and other assets. Georgia Angelos subsequently sued Louis Angelos, likening his transfer of the law firm from his father to himself to elder abuse.”
  • “Georgia Angelos has been trying to dissolve or sell the decades-old firm, while Louis Angelos, who has been managing the practice since his father fell ill, has fought to keep it in operation.”
  • “In a court filing Friday, Benjamin Rosenberg said the attempt to disqualify him is part of Louis Angelos’ ‘increasingly desperate effort’ to conceal the finances of the law firm, which is currently much smaller than at its peak when it won billions of dollars in awards and settlements for victims of asbestos and tobacco.”
  • “Rosenberg, who was appointed by Baltimore County Circuit Judge Keith R. Truffer in October to represent Peter Angelos, said in court documents that he needs information about the firm’s finances and cases to develop an informed opinion on the dispute over its future.”
  • “But Louis Angelos has long refused to share that information, as far back as 2019 with his mother and her advisers as they sought to shut down the firm, and now with Rosenberg, he said in the most recent filing.”
  • “Louis Angelos’ attorney, Jeffrey E. Nusinov, is seeking to disqualify Rosenberg from the case, saying he has a personal ‘animus’ against the Angelos law firm because it once sued one of his law partners, a close friend. Additionally, Nusinov argued, the firm Rosenberg founded, Rosenberg Martin Greenberg, had represented a company, Bestwall, that accused the Angelos firm of failing to fully disclose evidence in its asbestos-related bankruptcy case.”
  • “That should disqualify Rosenberg from now being allowed to ‘rummage around’ in the Angelos firm’s records, Nusinov wrote in a motion to remove Rosenberg from the current case.”
  • “Rosenberg countered in his filing that he was not involved in the Bestwall case, which was largely handled by a partner who has since left the firm. Rosenberg Martin had a limited role in Bestwall’s bankruptcy case — it was retained by a Charlotte, North Carolina-based firm to act as local counsel — and that ended on Aug. 25, he wrote.”
  • “Rosenberg also questioned the timing of Nusinov’s attempt to disqualify him, more than three weeks after he was appointed to represent Peter Angelos. Rosenberg said Nusinov could have objected to his appointment in October but didn’t, and is only now raising the alleged conflicts to give his client a ‘tactical’ advantage in the dispute over access to the Angelos firm’s finances.”

For those raising eyebrow’s at a certain story last week, comes New York “Judicial Ethics Opinion 22-78” —

  • “A full-time judge’s non-lawyer grandchild, a college student, expects to work for a local law firm as a paid temporary clerical intern during the summer. The judge will not hear any cases involving the law firm during the internship, but asks if it is necessary to disqualify in matters involving this law firm after the internship ends.”
  • “In particular, a judge must not allow family, social, political or other relationships to influence the judge’s judicial conduct or judgment (see 22 NYCRR 100.2[B]). Therefore, a judge must disqualify from any proceeding in which the judge’s impartiality ‘might reasonably be questioned’ (22 NYCRR 100.3[E][1]), including where the judge knows that a sixth-degree relative ‘has an interest that could be substantially affected by the proceeding’ (22 NYCRR 100.3[E][1][d][iii]) or that a fourth-degree relative ‘is acting as a lawyer in the proceeding or is likely to be a material witness in the proceeding’ (22 NYCRR 100.3[E][1][e]).”
  • “We have previously considered the effect of a judge’s child’s temporary employment as a law student intern or summer associate with a law firm. We determined that where the judge’s child completes the summer associate program and does not contemplate future full-time employment with that firm after law school graduation, the judge’s obligations depend on whether the judge’s child was involved in the particular case before the judge.”
  • “If so, the judge is disqualified in the matter, subject to remittal where available (see Opinion 11-94; 22 NYCRR 100.3[F]). We explained in a footnote that ‘the judge may rely on his/her child to inform him/her of the cases in which the child was involved, without further inquiry,’ unless the judge learns otherwise ‘during the normal course of a proceeding’ (Opinion 11-94 fn 2). In other cases involving that law firm, where the judge’s child had no involvement, the judge need not disqualify or disclose the child’s former association with the law firm as a summer associate (id.).”
  • “However, we have not previously considered a judge’s obligations when the judge’s child or grandchild has an internship with a law firm as an undergraduate, doing clerical work.”

Trump ‘Paying for the Silence’ of Mar-a-Lago Witnesses—Former Prosecutor” —

  • “A former federal prosecutor has suggested there could be a conflict of interest to Donald Trump’s political action committee paying the legal fees for key witnesses in the former president’s classified documents criminal case.”
  • “Jim Walden was reacting to the reports that Trump’s Save America PAC is supplying lawyers to represent two people connected to the investigation into whether the former president mishandled top secret materials recovered from his Mar-a-Lago resort in August, and also attempted to obstruct the federal attempt to retrieve the documents.”
  • “According to The Washington Post, Trump’s PAC has paid more than $120,000 to the Brand Woodward Law firm, which is now representing witnesses Kash Patel, a close adviser of Trump, and Walt Nauta.”
  • “Trump is accused of telling Nauta to move boxes of documents into a storage room at his Florida resort after the former president received a government subpoena to return them in May.”
  • “‘It looks like the Trump political action committee is either paying for the silence of these witnesses, for them to take the Fifth, or for favorable testimony,’ Walden said. ‘These circumstances should look very suspicious to the Justice Department, and there’s a judicial mechanism for them to get court oversight if there’s a conflict.'”
Risk Update

Risk News — Alleged “Time Bomb” Conflict, Client Confidentiality, Publicity & PR Risk

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Alston & Bird’s alleged conflict may be ‘time bomb’ in ex-Cognizant GC’s bribery trial” —

  • “A New Jersey federal judge refused last week to countenance what he called a ‘backdoor’ attempt by the former general counsel of Cognizant Technology Solutions Corp to oust Alston & Bird from representing the company as federal prosecutors prepare for a March 2023 bribery trial against the onetime top lawyer.”
  • “But at a hearing on Friday in the government’s criminal case, U.S. District Judge Kevin McNulty of Newark, New Jersey, left open the possibility that the former GC, Steven Schwartz, can nevertheless ask witnesses about an hours-long meeting attended by Schwartz, one of his lawyers and an Alston & Bird partner who was subsequently retained by Cognizant.”
  • “McNulty, who previously referred to Alston & Bird’s involvement in the Schwartz case as a ‘time bomb,’ said there remains ‘a danger of this issue blowing up at trial.'”
  • “Alston & Bird’s outside counsel, Kevin Marino of Marino, Tortorella & Boyle, said in an email statement that Kramer, a former New Jersey federal prosecutor, is “a person of impeccable character,” and that Schwartz’s attempt to impugn her account of their meeting is ‘baseless.’ ‘She and her law firm are pleased to have this unpleasant episode behind them, and will continue to vigorously represent Cognizant in its capacity as a government witness against Mr. Schwartz,’ Marino said.”
  • “The ex-GC denies the government’s allegations that he and Coburn authorized a $2 million scheme to bribe Indian officials for permits to speed up construction of Cognizant offices. Schwartz has insisted that he is being scapegoated by his former employer, an information technology services company, which Schwartz has accused of trying to sandbag his defense.”
  • “The story behind the unusual proceeding on Friday, as I’ll explain, is complicated. But the dispute over Alston & Bird’s involvement highlights the unforeseen pitfalls that can develop when prosecutors in corporate crime cases rely on cooperation from defendants’ former employers.”
  • “McNulty said in May that he would hold an evidentiary hearing on the disqualification motion. But in July, on the eve of the hearing, Schwartz reached an agreement with Alston & Bird. The ex-GC withdrew his disqualification motion in exchange for Kramer’s sworn declaration answering certain questions. Schwartz also consented to Alston & Bird’s continued representation of Cognizant.”
  • “That provision led to a revival in August of the conflict dispute – and this time, the government got involved. Schwartz’s lawyers informed prosecutors that he intended to raise the issue of his meetings with Kramer to challenge government evidence elicited at trial. Prosecutors cried foul to the judge, arguing that Schwartz should not be allowed to use allegations of a conflict to tar government witnesses after sidestepping an evidentiary hearing by ditching his disqualification motion.”

Clyde & Co with one of those jaw dropping tales (if you watch the linked firm’s video): “Ethical and Liability Implications of Promoting Achievements on Client Matters” —

  • “The LA Times reported that defense counsel told jurors during closing arguments in April 2022 to disregard the death certificate, which attributed death to an infection from the punctured colon. Instead, defense counsel argued that plaintiff died from nonsurvivable alcohol-related pancreatitis, failures of other hospital staff to relay key information, and pointed to defense’s expert opinion finding no negligence occurred and another doctor disputing plaintiff had an infection.”
  • “But defense counsel reportedly summarized the case differently during an inter-office celebration in May: ‘A guy that was probably negligently killed, but we kind of made it look like other people did it,’ defense counsel is reported as saying to his colleagues. ‘And we actually had a death certificate that said he died the very way the plaintiff said he died and we had to say, ‘No, you really shouldn’t believe what that death certificate says, or the coroner from the Orange County coroner’s office.””
  • “The speech was recorded and posted on the firm’s social media page. It was then downloaded before being deleted, and is still circulating on Twitter.”
  • “In a statement to The LA Times, defense counsel said his remarks to his staff were ‘ineloquent’ and ‘imprecise’; he did not know they would be recorded and posted, and were ‘intended purely as an internal briefing to our staff, using shorthand phrases which might understandably cause confusion for a lay audience unfamiliar with the case at hand, and the law in general.'”
  • “Based on these facts (as well as other trial irregularities), Orange County Superior Court Judge James Crandall, who presided over the trial has reportedly vacated the verdict, ordering the case back to court.”
  • “At the outset, Comment [5] to Rule 1.6 states, in relevant part, ‘Lawyers in a firm may, in the course of the firm’s practice, disclose to each other information relating to a client of the firm.’ Therefore, counsel’s comments during an inter-office meeting setting were not per se improper within the confines of his law firm. However, the firm, by posting these comments on its social media website disclosed information relating to the representation of the client without the client’s consent. The identity of a firm’s clients is itself confidential unless already very widely known.”
  • “Since the firm’s social media post would be considered an “imprecise” advertisement, by the attorney’s own admission, then it is also likely in violation of ABA Model Rule 7.1 (duty to not make false or misleading communication about a lawyer’s services).”
  • “Finally, the attorney’s purported statement to the LA Times that he, a named partner, did not know his statement would be recorded and posted serves as a reminder that Rules 5.1 and 5.3 obligates attorneys at the firm to assure that lawyers and staff they supervise comply with these confidentiality obligations.”
Risk Update

Conflicts & Claims — Malpractice Claims (Conflicts & Other Risks), International (Nationality) Conflicts Allegation

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More Bang for Your Blunder: Rise in Severity of Legal Malpractice Claims” —

  • “It has long been recognized by industry experts that financial stress for clients and general economic instability or uncertainty can lead to an uptick in claims against attorneys. And recent data indicates that attorney mistakes are becoming more expensive. Legal malpractice claims are becoming more expensive to defend. And others have observed that a remote work landscape can lead to new kinds of severe claims, such as those arising from remote supervision of junior attorneys and staff, ever-present cyber security risks, and issues related to the rush to hire attorneys.””Allegations of conflicts of interest are among the most common—and most dangerous—claims that can be made against attorneys.”
  • “It is expected that claims arising from conflicts of interest may be exacerbated by expedited hiring processes in the competitive lateral market. Although conflicts can be complex, using established conflict systems to accurately identify and swiftly resolve conflicts of interest is a common tool that can help reduce exposure to law firm and attorneys alike. These systems, however, are inherently limited by the information they process.”
  • “If attorneys do not take steps to thoroughly identify the right parties to cross-check for potential conflicts, a conflict of interest might pass through the system unnoticed and create exposure for the firm. As the old adage goes, ‘Garbage in, garbage out.’ Many law firms and attorneys take steps to ensure the system considers accurate and timely information to enable proper conflict checks.”
  • “While some attorneys may think the identification of conflict of interest means the representation must end, that is not always the case. There may be ways to resolve the conflict through the use of waivers or screening procedures. Simply choosing to ignore potential or established conflicts, however, can create risks that are becoming increasingly more expensive to resolve.”
  • “Another commonly alleged malpractice error that may be intensified in the era of remote working involves missed deadlines or failures to timely file. Use of docketing or calendaring systems is obviously a tool that can help mitigate the risk of a missed deadline. Although deadlines can still be missed even where such a system is being used, the use of those systems may evidence the firm’s efforts to avoid risk, rebutting any argument that the firm was careless in tracking deadlines.”
  • “Another ripe area for legal malpractice claims involve allegations that lawyers have failed to learn about recent law or failed to properly apply it.”

Hong Kong asks Beijing to step in into row over UK lawyer” —

  • “Hong Kong’s leader said on Monday he will ask Beijing to rule whether to let foreign lawyers be involved in national security cases after the city’s top court allowed a prominent pro-democracy publisher to hire a British lawyer for his upcoming trial.”
  • “‘At present, there is no effective means to ensure that a counsel from overseas will not have conflict of interest because of his nationality. And there is also no means to ensure that he has not been coerced, compromised, or in any way controlled by foreign governments, associations or persons,”’ he said. “
  • “The move was targeting overseas counsels who do not have the general practice qualification to carry out legal service in Hong Kong, he added.”
  • “Lai, the founder of the now-defunct Apple Daily and one of the most prominent figures in the city’s pro-democracy movement, was arrested after Beijing imposed a tough national security law to crack down on dissent following widespread protests in 2019. He faces collusion charges and a maximum penalty of life imprisonment. “
  • “Hong Kong, a former British colony that returned to China in 1997, uses the same common law jurisdiction as the U.K. Apart from having overseas judges in the city’s courts, lawyers from other common law jurisdictions can work within the city’s legal system, especially when their expertise are needed for some cases.”
  • “Last month, the lower court granted the approval for him [‘Timothy Owen, a London-based legal veteran who specializes in criminal and human rights law.’] to represent Lai, saying it was in the public interest to have an eminent overseas specialist like Owen involved at the trial. But the secretary of justice insisted on his objections despite other judges rejecting his bids to overturn that ruling. He suggested a blanket ban on overseas lawyers involved in national security cases unless under exceptional circumstances.”
  • “The National Security Law criminalizes acts of succession, subversion, terrorism, and collusion with foreign forces. It has led to the arrests of many prominent democracy activists and damaged faith in the future of the international financial hub.”
Risk Update

Conflicts News — Fake Electors (Real Conflicts), Freivogel Findings (Insurance Screen & DQ, Bankruptcy Conflict/Fee Contention)

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Judge: GOP head can’t share lawyers with other fake electors” —

  • “The chairman of the Georgia Republican Party cannot share lawyers with 10 other fake electors in matters related to a special grand jury investigation into possible illegal meddling in the 2020 election in the state, a judge ruled Wednesday.”
  • “[Fulton County District Attorney] Willis has made clear that she is interested in the actions of 16 Republicans who signed a certificate declaring falsely that Trump had won and also declaring themselves the state’s ‘duly elected and qualified’ electors. Willis has said in a court filing that she notified lawyers for those 16 people that they are targets of her investigation, meaning they could face criminal charges.”
  • “Eleven of those fake electors, including Georgia Republican Party Chairman David Shafer, are represented by two lawyers paid by the party, Holly Pierson and Kimberly Debrow. Willis’ team in October filed a motion seeking to disqualify the two from representing all of those clients, citing a conflict of interest.”
  • “Pierson and Debrow countered that none of their clients have committed any crimes or know of any crimes committed by the others. The district attorney’s ‘assumption that the jointly represented nominee electors can ‘flip’ on each other or otherwise provide incriminating information as to any other jointly represented elector is simply inaccurate, as well as legally insufficient,’ they argued.”
  • “They also noted their clients have signed waivers attesting that they understand the implications of joint representation.”
  • “Fulton County Superior Court Judge Robert McBurney, who’s overseeing the special grand jury, wrote in his order Wednesday that ‘the best waiver in the world cannot fix a non-waivable conflict’ but said he finds ‘very few such conflicts’ at this phase of the investigation.”
  • “McBurney noted that if charges are brought against any of the fake electors, one of them could be called to testify against another at trial. At that point, the judge noted, Pierson and Debrow likely could not represent either one.”
  • “Shafer, however, is an exception because of his role in establishing and convening the slate of fake electors, his ‘communications with other key players’ in the investigation and ‘his role in other post-election efforts to call into question the validity’ of Georgia’s election results, McBurney wrote.”
  • “This ‘imbalance in exposure’ to the investigation “makes it impractical and arguably unethical” for Pierson and Debrow to continue to represent all 11 of their clients, McBurney wrote. The pair of lawyers may represent Shafer or the other 10, but not both, he concluded.”

And the latest from the eagle-eyed Bill Freivogel:

  • Seaman Corp. v. Zurich Am. Ins. Co., 2022 WL 17251819 (N.D. Ohio Nov. 28, 2022).
    • “In another case Target sued Seaman for selling defective roofing membranes. In this case Seaman is suing Zurich over insurance coverage for the Target case.”
    • “While at Firm 1 Lawyer was on a team of lawyers defending Seaman against Target. Lawyer left Firm 1 and joined Firm 2. Firm 2 is defending Zurich against Seaman in this coverage case. Firm 2 screened Lawyer from this case. Nevertheless, Seaman moved to disqualify Firm 2.”
    • “In this opinion the magistrate judge granted the motion. First, the court found that this case arises out of the ‘same matter’ as the Target case. Second, the court found that Lawyer had “substantial responsibility” in the Target case. Thus, under Ohio’s Rules 1.10(c) and (d), Firm 2’s screen would not work. These findings were in the face of Lawyer’s attempting to minimize her status and role on the team representing Seaman in the Target case.”
  • Avco Corp. v. Turner, No. 2:20-cv-04073-JDW (E.D. Pa. Nov. 28, 2022).
    • “Lawyer formerly represented Avco in product liability cases involving piston engines. A plaintiff in such a case hired Lawyer for the limited purpose of responding to manufacturers’ Daubert motions (“the Torres case”). Avco had been a defendant in the Torres case, but was dismissed. The plaintiff has been trying to drag Avco back into that case.”
    • ” In this case Avco sued Lawyer for damages. After an appeal the only issue here is whether Lawyer had breached her fiduciary duty to Avco and whether Lawyer should disgorge fees earned from Avco. In this opinion the court granted Lawyer summary judgment. The court held that Avco had failed completely to show how Lawyer was using information against Avco in the Torres case that Lawyer had obtained while representing Avco.”
  • In re Easterday Ranches, Inc., 2022 WL 17184713 (E.D. Wash. Nov. 23, 2022).
    • “Chapter 11. Two debtors, a corporation, and a partnership. Both debtors are owned by members of the Easterday family. This proceeding is the result of a massive fraud by owners and the president of the corporation, involving more than $244 million. Law Firm has served as debtors’ counsel for both entities. Ultimately, a plan was negotiated and approved.”
    • “The U.S. Trustee’s objected to Law Firm’s fee request, claiming that Law Firm had an unacceptable conflict of interest. The bankruptcy judge approved the fee request over Trustee’s objection. Needless to say, the corporation and partnership had obligations and rights relative to each other as well as to creditors.”
    • ” The opinion discusses at length the role of debtor’s counsel and the application of the Bankruptcy Act. On balance, the judge concluded that Law Firm did not have an actual conflict of interest, did the best it could, and best served the interests of all concerned. The court said Law Firm probably saved the estate years of costly litigation.”


Risk Update

Conflicts Hints and Appearances Alleged — The New Yorker on “Hospice Hustle”

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How Hospice Became a For-Profit Hustle” —

  • “But at AseraCare, a national chain where Farmer worked, she solicited recruits regardless of whether they were near death. She canvassed birthday parties at housing projects and went door to door promoting the program to loggers and textile workers. She sent colleagues to cadge rides on the Meals on Wheels van or to chat up veterans at the American Legion ba. ‘We’d find run-down places where people were more on the poverty line,’ she told me. ‘You’re looking for uneducated people, if you will, because you’re able to provide something to them and meet a need.'”
  • “It might be counterintuitive to run an enterprise that is wholly dependent on clients who aren’t long for this world, but companies in the hospice business can expect some of the biggest returns for the least amount of effort of any sector in American health care.”
  • “Up to a point, the way Medicare has designed the hospice benefit rewards providers for recruiting patients who aren’t imminently dying.”
  • “Almost immediately after the Asera-Care takeover, Farmer’s supervisors set steep targets for the number of patients marketers had to sign up, and presented those who met admissions quotas with cash bonuses and perks, including popcorn machines and massage chairs.”
  • “Farmer’s bigger problem was that her patients weren’t dying fast enough.”
  • “But Farmer’s company, like many of its competitors, had found ways to game the system and keep its money.”
  • “Less than a year later, the Justice Department, after conducting its own investigation, intervened in the whistle-blowers’ complaint, eventually seeking from AseraCare a record two hundred million dollars in fines and damages.”
  • “Before the trial started, the judge in the case, Karon O. Bowdre, disclosed that she’d had good experiences with hospice. Her mother, who had an A.L.S. diagnosis, had spent a year and a half on the service, and her father-in-law had died in hospice shortly before the trial. Principals in the case disagree about whether she disclosed that the firm handling AseraCare’s defense, Bradley Arant, had just hired her son as a summer associate.”
  • “The defense team had petitioned Bowdre to separate the proceedings into two parts: the first phase limited to evidence about the ‘falsity’ of the hundred and twenty-three claims in question, and the second part examining, among other things, the company’s ‘knowledge of falsity.'”
  • “The Justice Department objected to this ‘arbitrary hurdle,’ arguing that the purpose of the False Claims Act was to combat intentional fraud, not accidental mistakes. ‘The fact that AseraCare knowingly carried out a scheme to submit false claims is highly relevant evidence that the claims were, in fact, false,’ the government wrote. Nonetheless, in an unprecedented legal move, Bowdre granted AseraCare’s request.”
  • “But the government lawyers seemed genuinely confused about what the judge would and wouldn’t allow into the courtroom during the trial’s ‘falsity’ phase.”
  • “The judge’s prohibition on ‘knowledge’ during the trial’s first phase constrained testimony in sometimes puzzling ways. Richardson, for instance, could talk about admitting patients, but she couldn’t allude to the pressure she was under to do so. The audit by the Corridor Group that corroborated whistle-blower claims was forbidden because it wasn’t directly tied to the specific patients in the government’s sample.”
  • “Its medical directors were part time, as is common in the industry, and workers testified that they’d presented these doctors with misleading patient records to secure admissions. One said that a director had pre-signed blank admissions forms. ‘Ask yourself: How could a doctor be exercising their clinical judgment,’ Wertkin told the jury at one point, ‘if he’s signing a blank form?'”
  • “She needn’t have worried. Bowdre’s restrictions prevented Farmer from testifying about much of anything. ‘I felt like the judge did not want to know the truth,’ she said. ‘The whole time that I was on the stand, I kept thinking, Why would you not listen to the story?'”
  • “After nearly two months of testimony, the jurors deliberated for nine days on phase one. On October 15, 2015, they found eighty-six per cent of the patient sample ineligible for some period of hospice care. Elated, Barger rushed out of the courtroom to call Farmer and tell her that the jury had come back overwhelmingly in the government’s favor.”
  • “The next part never happened. A few days later, Bowdre made a startling announcement: she had messed up. The instructions that she’d given the jury had been incomplete, she said, and because of this ‘major reversible error’ she was overturning the jury’s findings and granting a request by AseraCare for a new trial.”
  • “She invited the government to submit evidence other than Liao’s opinion to prove that the claims were false; the government replied that the record presented ample evidence of falsity. Five months later, in March, 2016, Bowdre granted summary judgment to AseraCare.”
  • “It’s unusual for a judge to overturn a jury’s findings, order a new trial, and then declare summary judgment on her own accord, Zack Buck, a legal scholar at the University of Tennessee who studies health-care fraud, told me. The case, he said, ‘just kept getting weirder.'”
  • “On September 9, 2019, the False Claims Act took a second hit when the U.S. Court of Appeals for the Eleventh Circuit published a long-anticipated ruling on the AseraCare case. The judges concurred with Bowdre that the government needed more than the testimony of an outside expert to prove a claim was false. However, they vacated Bowdre’s summary judgment, saying that the prosecution should have been able to present all its evidence, including AseraCare’s alleged “knowledge of falsity,” and sent the case back to her courtroom for a retrial. ‘When the goalpost gets moved in the final seconds of a game,’ the judges wrote, ‘the team with the ball should, at the least, have one more opportunity to punch it into the endzone.'”
  • “The government did not appear enthusiastic about trying the AseraCare case for a second time before Bowdre, though.”
  • “In February, 2020, eleven years after Farmer and Richardson filed their complaint, the government reached a settlement with AseraCare, for a million dollars. As in most such settlements, AseraCare paid the sum, admitted no wrongdoing, and was allowed to keep billing Medicare. Jack Selden, a partner at Bradley Arant who worked on the defense team, told the trade journal Law360, ‘When a case settles for $1 million where the claims have been for over $200 million, I think that speaks for itself.'”
Risk Update

Risk Reading — AML & Enablers Act + Law Firm Implications, Real Estate DQ Motion

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Lawyers Should Be Key Reporters in Anti-Money Laundering Efforts” —

  • “As attorneys who have spent substantial portions of our careers working to combat money laundering and financial crime, we understand well the threat posed by the unchecked flow of dirty money. These transactions through the US financial system often stem from corruption, drug trafficking, and other serious crimes.”
  • “It’s a discomforting, if instructive, truth that when crooks and dictators consider hiding their criminal proceeds in the US, their first stop is often, unfortunately, a lawyer.”
  • “International standards have evolved to include legal professionals among those required to help prevent and report cases of money laundering. But loopholes in US anti-money laundering laws continue to exempt many gatekeepers in the financial system. This includes certain lawyers and accountants, as well as company agents and trust providers, who help clients anonymize and hide dirty money. America is nearly unique in this way.”
  • “The Establishing New Authorities for Businesses Laundering and Enabling Risks to Security Act—or ENABLERS Act—is an amendment to the annual National Defense Authorization Act. It would close these loopholes by authorizing the Treasury Department to require certain categories of financial service providers to adopt anti-money laundering safeguards. This would include filing a notice when they suspect that a transaction is being used to launder funds.”
  • “If passed, the ENABLERS Act would incorporate into federal law principles already established as official best practices by the international anti-money laundering standard setter, the Financial Action Task Force. These best practices require customer due diligence and record-keeping protocols for lawyers and other independent legal professionals and accountants who implement transactions for clients in corporate formation, money management, and similar business services.”
  • “This team has worked extensively on money laundering matters representing a range of parties in many, often complex, situations and environments. We have zero concern that the ENABLERS Act would threaten attorney-client privilege, client confidentiality, or any principles governing the ethical obligations of attorneys and other professionals to their clients.”
  • “Notably, the ABA’s model ethics rules already allow America’s lawyers to report criminal activity by clients to prevent a crime that would cause substantial injury to the financial interests or property of another, or to mitigate injury when the client has used the lawyer to do this. The ENABLERS Act is consistent with this framework.”
  • “Lawyers are among the first defenders of our freedoms. They should be enlisted to help protect our financial system from being a conduit for criminal and kleptocratic funds. Congress has a crucial opportunity right now to bring lawyers in as partners in fighting financial crime.”

Conflict of Interest? Attorney Disqualification Requested in Houston Real Estate Trust Fight” —

  • “Citing potential ethics violations, counsel for the former head of a publicly traded real estate investment trust is asking a Houston judge to disqualify the opposing counsel because of his past relationship with a client.”
  • “In Pillarstone, counsel for Mastandrea asked opposing counsel Alistair Dawson of Beck Redden to withdraw and Dawson refused, according to court documents. Mastandrea responded with the Nov. 14 filing of the disqualification motion.”
  • “Peter Tropoli, Whitestone’s general counsel, told Texas Lawyer that Dawson is on the case at their request and he has never represented Pillarstone, which is the plaintiff. While Mastandrea is chairman of the board, he is not a named plaintiff.”
  • “‘There is no conflict that would prevent him from continuing to represent Whitestone in this case,’ Tropoli said. ‘In our judicial system, when people are sued, they get to choose who represents them.'”