Bressler Risk Blog

“U.S. Chamber blames judges, arbitrators and lawyers for mass arbitration ‘abuses’” —

• “In more than a decade of litigation to entrench corporations’ power to impose arbitration on consumers and employees, the U.S. Chamber of Commerce has steadfastly championed arbitration as a fair and efficient alternative to class actions.”
• “But when thousands of workers and consumers actually file demands against a company to have their nearly identical claims arbitrated? That’s not fair or efficient. It’s “blackmail,” the Chamber’s Institute for Legal Reform said in an extremely provocative new report.”
• “The 80-page paper, entitled “Mass Arbitration Shakedown: Coercing Unjustified Settlements,” argued that mass arbitration, in which plaintiffs’ lawyers file hundreds or even thousands of nearly identical demands against a defendant, is the ’21st century equivalent of the abusive class actions that characterized the last part of the 20th century.'”
• “The business model, according to the report, has nothing to do with the validity of claimants’ demands. Instead, the Chamber asserted, plaintiffs’ firms rely on the leverage of hefty arbitration fees – which can quickly escalate to tens of millions of dollars when thousands of people file demands — to force corporations into settlements that are ‘wholly unrelated to the claims’ merits.'”
• “The report, written by Mayer Brown lawyers Andrew Pincus, Archis Parasharami, Kevin Ranlett and Carmen Longoria-Green, asserted that plaintiffs’ firms may be skirting an array of ethical rules in their mass arbitration campaigns.”
  “Among other potential pitfalls, the Chamber cited conflicts of interest among clients who diverge on accepting settlement offers; restrictions on client solicitation; and prohibitions on representing out-of-state clients.”

“Choice-of-law questions for state ethics rules examined in new ABA opinion” —

• “Lawyers admitted to multiple jurisdictions may be subject to different ethical requirements in the different states in which they are licensed to practice law, according to a new ABA ethics opinion.”
• “A March 1 ethics opinion from the ABA’s Standing Committee on Ethics and Professional Responsibility provides a comprehensive analysis of which jurisdiction generally controls in these instances.”
• “The governing rule noted in Formal Opinion 504 is ABA Model Rule of Professional Conduct 8.5, which provides in subsection (a) that: ‘A lawyer admitted to practice in this jurisdiction is subject to the disciplinary authority of this jurisdiction, regardless of where the lawyer’s conduct occurs.'”
• “A March 1 press release from the ABA is here.”
• “Thus, for litigation matters, a lawyer is subject to the rules of the jurisdiction of the court before which they are litigating a case. For other matters, the rule generally provides that the rules apply in which the lawyer’s conduct happened unless ‘the predominant effect of the conduct is in a different jurisdiction.’ A difficult part of this rule determines when the predominant effect of the lawyer’s conduct is in a different jurisdiction.”
• “For example, the opinion addressed a scenario in which a lawyer-client relationship is formed in State X, and the fee agreement is signed there. The client resides in State X, and the lawyer will work from their office in State X, but the litigation will happen in State Y, another state where the lawyer is licensed.”
• “According to the opinion, while a lawyer is generally subject to the ethics rules of the jurisdiction when appearing before a tribunal, Comment 4 to Model Rule 8.5 explains that “conduct in anticipation of a proceeding not yet pending before a tribunal” is covered by Model Rule 8.5(b)(2), not Model Rule 8.5(b)(1).”
• “In other words, drafting a fee agreement is conduct not yet pending before a tribunal, rather than litigation before a tribunal. This means that Model Rule 8.5(b)(2) would govern, and the question becomes where is the predominant effect of the lawyer’s conduct. The opinion noted that the lawyer and the client would reasonably regard that as State X, rather than State Y.”
• “The opinion provides similar detailed analysis of the other four scenarios.”

Not accustomed to finding conflicts news in the gossip rags, we noted: “Bryan Kohberger Lawyer’s Secret Conflict-Of-Interest Hearing Revealed! See Why She Was Allowed To Take The Case!” —

• “For those who don’t know, the man accused of brutally murdering four University of Idaho students in that shocking November massacre was assigned a public defender named Anne Taylor. The assignment almost immediately caused a swell of controversy — as it came to light the lawyer had also represented three different parents of the murder victims!”
• “She had to hand that case over to someone else in order to represent Kohberger — after all, it would be something of a conflict of interest to represent an accused murderer AND a parent of the victim at the same time.”
• “But, uh, why wasn’t it a conflict of interest already? Why didn’t they get another public defender?? One big reason is that Taylor is one of only 13 public defenders in the entire state approved to handle capital cases — ones where prosecutors may seek the death penalty. Hence why she would have been chosen. But what about the conflict? All we knew before was that she had a behind-closed-doors meeting with the judge in the case, Megan E. Marshall.”
• “NewsNation‘s Brian Entin got hold of the court transcripts, and it turns out it wasn’t just Taylor and Judge Marshall. This was a full hearing with both attorneys AND Kohberger in attendance, held back on January 27. It began with the court stating that conflicts of interest were handled on a case-by-case basis, and it was usually up to the attorney and client if they felt comfortable proceeding.”
• “Taylor explained her argument as to why this was not a conflict. She explained that as head of the Kootenai County Public Defender’s Office, her name was on every document at the office — but that didn’t necessarily mean she had personally represented the client.”
• “However, she said, that was a formality, and she ‘had no contact or relationship with Ms. Kernodle, and has not met with her or provided any legal advice.’ She further noted ‘most of what the media is reporting’ on the cases was ‘untrue.'”
• “As for the legality, Taylor also pointed out she discussed the matter with the prosecutor’s office and the Idaho State Bar, and everyone had determined that it was all fine. Ultimately the judge checked with prosecutor Ashley Jennings and with the defendant. Both said it was fine with them; Kohberger explicitly agreed he wished to continue with Taylor as his attorney.”

“Judge: Miske Can Keep A Key Defense Attorney” —

• “Accused racketeering boss Michael J. Miske will retain at least one of his original criminal defense attorneys after a federal judge decisively rejected an attempt by federal prosecutors to disqualify Miske’s two lead counsels, Thomas Otake and Lynn Panagakos, due to alleged legal conflicts of interest.”
• “In a court order filed in Honolulu’s U.S. District Court Tuesday morning, Judge Derrick K. Watson ruled the government had failed to back up its generalized and ‘speculative’ allegations about supposed conflicts, and failed to provide evidence of any actual conflict. “
• “The judge’s order concerning Panagakos repeatedly characterized the government’s allegations about conflicts as speculative at best, and ruled the government ‘has not come close’ to establishing the existence of a disqualifying conflict of interest.”
• “Otake filed a motion to step away from the case on Jan. 13, after being informed two prior clients are expected to be called as government witnesses in the trial of Miske and six remaining co-defendants.”
• “The dispute over whether legal entanglements created conflicts for Panagakos and Otake began in mid-January, when prosecutors filed a motion asking the court to disqualify Panagakos and Otake, arguing ‘each have multiple, significant conflicts requiring their disqualification.'”
• “In their 40-page motion, prosecutors point to two sources of conflict. First, according to prosecutors, both attorneys ‘are percipient and material witnesses to the genesis, receipt, filing, and use of two fraudulent character letters submitted to this Court in support of Mike’s motion for pretrial release, and in the case of Ms. Panagakos, she directly dealt with Miske and his subordinates in the filing of these letters.'”
• “Prosecutors cited an additional conflict on the part of Panagakos, pointing to a string of WhatsApp texts from February 2018, in which Miske told an associate he had been at the ‘doctor’s office,’ a code word referring to his attorney’s office, where he was shown documents indicating another insider, Lance Bermudez, appeared to have ‘flipped’ and could no longer be trusted. Miske warned his associate not to take calls from anyone ‘inside’ because Miske could ‘guarantee’ they were recorded, and included a photo of an office door showing the office number, which is the address of Panagakos’ office.”
• “Further, Panagakos said the allegedly fraudulent reference letters did not require disqualification since neither she nor Otake can be considered a ‘likely’ or a ‘necessary’ witness at trial ‘because the court can take judicial notice of the filing of the letters and the email supplies the chain of custody for admissibility.'”
• “Although Panagakos raised a number of additional issues, Watson found it unnecessary to go beyond the basics. ‘First, other than speculative possible conflicts that may arise in the future, the government has presented no actual conflict that presently exists between Miske and his counsel with respect to the alleged ‘fraudulent’ character letters,’ Watson wrote in his order.”
• “With regard to prosecutors’ allegations about Miske’s meeting with his ‘doctors,’ Watson said he ‘is not convinced that Panagakos is one of the ‘doctors’ referenced.’ Even if she were, Watson wrote in his order, Miske’s subsequent text messages do not create a conflict between Panagakos and Miske, or anyone else, ‘let alone one that should result in Panagakos being disqualified, even if the government is correct in representing that the communication depicts a piece of how Mike allegedly controlled his associates.'”

“New York says presumption for sharing confidential information in joint representations does not apply retroactively” —

• “Joint representations can present a host of ethical issues for lawyers to navigate including what to do with the clients’ file upon termination of the representation. The NYSBA’s Committee on Professional Ethics recently issued Opinion 1249 which explains that in a joint representation, the presumption is that the lawyer will share confidential information received from one client with the other co-client(s).”
• “That presumption, however, does not extend to confidential information the lawyer received from a client prior to the start of the joint representation. In general, when the joint representation terminates, the clients are entitled to receive copies of the confidential information exchanged with the lawyer during the joint representation but are not entitled to confidential information shared by one client prior to inception of the joint representation.”
• “The inquiry in the Opinion came from a lawyer whose longtime client requested the lawyer then also represent his Wife in their joint estate planning matters. The lawyer agreed and had them sign a joint engagement letter that included language explaining that, because the representation was a joint representation, no communication that either co-client had with the lawyer could be kept confidential from the other co-client.”
• “…Accordingly, the Wife’s communications and documents in the file was to be turned over to the Husband. But as to the Husband, the file produced to the Wife should only include communications and documents from the period after the joint representation commenced. There is no presumption of sharing regarding communications made or documents provided by the Husband prior to the joint representation.”
• “As the inquiry in Opinion 1249 illustrates, circumstances amongst joint clients can change and there may be confusion about what to do with the file upon termination. It is crucial to include in your joint engagement letter which types of communications will be disclosed to each co-client, including how conflicts could arise, and what would happen in the event of a dispute between the co-clients. Your client needs to know what they are signing up for before they agree to a joint engagement—and so do you. Before agreeing to take on any type of joint representation, you must familiarize yourself with how your jurisdiction views confidentiality in the joint representation context.”

“Dechert Ex-Partner Leak, Hack Allegations Threaten Firm Damage” —

• “Dechert will soon start to find out how much damage the law firm faces from an onslaught of accusations against former UK partner Neil Gerrard, including that he leaked information about a client to authorities and aided a hacking operation.”
• “A British court March 6 will begin a trial to decide how much Dechert owes a former client that operated mines in Kazakhstan. A judge has found Gerrard breached his duty by giving information about the client, a subsidiary of Luxembourg-based Eurasian Resources Group, to UK fraud investigators.”]
• “Dechert separately faces two more UK trials next year, and two US lawsuits, stemming from Gerrard-led representation for one of the United Arab Emirates. The firm is accused of aiding a hacking operation that targeted perceived enemies of the emirate, Ras Al Khaimah.”
• “The spate of allegations has ensnared other lawyers at the firm, two of whom have exited in recent months, while raising questions about how many dollars in damages and reputational costs Dechert will rack up before litigation tied to Gerrard is finished.”
• “‘Law firms have brands just like anybody else,’ said James Jones, a senior fellow at Georgetown University Law Center and former Arnold & Porter managing partner. ‘It can certainly take a toll.'”
• “Dechert has denied allegations of impropriety and is aggressively defending itself in the UK trials and against the US lawsuits. Dechert has also distanced itself from Gerrard, a one-time star lawyer the firm recruited in 2011 who retired nine years later. Counsel for the firm last year stopped representing Gerrard as an individual in the lawsuits.”
• “Eurasian had hired Gerrard to aid an internal probe after an anonymous whistleblower alleged corruption in its Kazakhstan operation. The company later alleged Gerrard ended up working against Eurasian by leaking information to UK investigators and the media in an effort to expand the probe—all in a bid to increase his fees.”
• “The UK opened a criminal investigation of the mining conglomerate’s activities in Kazakhastan and Africa in 2013, and that probe is ongoing, according to court documents.”
• “But a London judge last year found Gerrard acted in ‘reckless breach of duty’ by giving up information on his client to the UK investigators. The judge also concluded that Gerrard instigated leaks to the news media and gave wrong advice to his client about potential criminal liability.”
• “A US aviation executive, Farhad Azima, who said he had been working with Massaad to publicize human rights abuses in the UAE, claimed that as part of Gerrard’s work his emails were stolen and posted online.”
• “Separately, he filed suit in the US, saying a hacking enterprise involving several parties, as well as a cover up that he claims Gerrard led and Dechert aided, violated the RICO Act.”
• “Jay Solomon, a former Wall Street Journal foreign affairs reporter, filed a similar lawsuit, alleging the leak of his correspondence with Azima cost him his job.”

Kathryn Westmore, a senior research fellow at the Centre for Financial Crime and Security at RUSI (the Royal United Services Institute) writes: “Carrot or stick? The future for AML supervision of the legal sector” —

• “The events of the last year have resulted an unprecedented focus on the role of the legal sector in enhancing the UK’s reputation as a haven for dirty money.”
• “The sector has long been felt to have a problem with meeting its anti-money laundering (AML) regulatory obligations and there has always been an uneasy tension between AML and other core tenets like professional privilege and the right to legal representation.”
• “This system of supervising lawyers, and indeed other professions like accountants, is, however, in need of a “radical overhaul,” according to an influential group of backbench MPs. The campaign group Spotlight on Corruption has claimed that the UK’s legal sector “escapes effective supervision for money laundering”.”
• “The government has committed to a consultation later in 2023 on the future AML supervisory framework and recognised that “there is more to do”, proposing a number of options for reform in the way that the professions are supervised for AML purposes.”
• “The Economic Crime and Corporate Transparency Bill, currently working its way through the legislative process, has started to move the dial on AML supervision on the legal sector, introducing new fining powers for the Solicitors Regulation Authority (SRA) and Scottish Solicitors’ Discipline Tribunal and a new regulatory objective around preventing economic crime.”
• “Where firms consistently fail to understand and comply with their basic requirements, then yes, that’s exactly the type of behaviours that the SRA and the other supervisors should be cracking down on.”
• “And there are many, many more firms that simply get things wrong through ignorance, lack of resources or, frankly, a blasé attitude to compliance, than there are firms that are deliberately and willingly facilitating money laundering.”
• “The PBSs, by their own admission, generally favour a supervisory approach of engaging with the sector informally rather than more formal routes. There is a place for formal supervisory activity, and it can be used effectively both to punish breaches of the regulations and act as a deterrent to others in the industry.”
• “But as we look forward to the government’s consultation on AML supervision, what it should really be asking is not necessarily how we can increase the number of fines in the sector but what are the effective interventions that will really drive up the level of compliance in the sector.”
• “What tools, information and resources might the sector need to be able to fulfil their obligations that they don’t have at the moment?”

“Russian mercenary boss passed money laundering checks by using a bill in his mother’s name, report says” —

• “The head of the Wagner mercenary group, implicated in war crimes in Ukraine, was able to pass UK money laundering laws by using a gas bill in his 81-year-old mother’s name, according to the Financial Times.”
• “Yevgeny Prigozhin presented the document in response to a 2021 request by a London law firm for his identity documents, before accepting him as a client, the FT reported, citing leaked emails.”
• “The request was made before Russia’s invasion of Ukraine. But at the time Prigozhin was under UK, EU and US sanctions for funding mercenaries connected to human rights abuses elsewhere in the world, as well as attempts to interfere with the 2018 US elections.”
• “Prigozhin’s Russian lawyers sent Discreet Law a copy of his passport and a gas bill in his mother’s name, which had an address in the Russian city of St Petersburg, the FT reported.”
• “His lawyers wrote that ‘the bill is issued in the name of the claimant’s mother (Violetta Prigozhina) who actually lives at the client’s residential address and pays the bills.'”
• “A lawyer at Discreet Law replied by saying: ‘We are satisfied with the [anti-money laundering] documents,’ according to the FT. The firm was given permission to represent him in 2021 by the UK Treasury, the FT reported.”
• “Prigozhin had hired the firm to sue Eliot Higgins, founder of investigative news outlet Bellingcat, for libel after Bellingcat reported on the group’s activities and Prigozhin’s connections to the Kremlin.”
• “The case was later struck out, and Discreet Law applied to stop representing Prigozhin in March 2022.”

See also: “UK government ‘let lawyers bypass sanctions’ to help Putin ally sue journalist.”