Bressler Risk Blog

“Epstein accuser suing JPMorgan seeks to disqualify bank’s law firm” —

• “A Jeffrey Epstein accuser suing JPMorgan Chase & Co (JPM.N) for allegedly aiding the late financier’s sex trafficking of girls and women asked a judge to disqualify the bank’s law firm on Thursday, arguing it has a conflict of interest.”
• “Lawyers for the woman, who claims she was a victim of Epstein and is not named in court papers, said the judge should bar law firm Wilmer Cutler Pickering Hale and Dorr from representing JPMorgan because it previously represented an anti-sex trafficking organization that supported a different Epstein accuser.”
• “The accuser’s attorneys argued that WilmerHale had learned confidential information about the case of Courtney Wild, an alleged victim of Epstein who is also a potential member of the class suing JPMorgan, according to a court filing.”
• “WilmerHale represented the anti-trafficking organization ECPAT-USA in a legal brief urging the U.S. Supreme Court to accept Wild’s appeal to invalidate a 2007 non-prosecution deal between Epstein and U.S. prosecutors. The court ultimately did not take the case.”
• “A lead WilmerHale lawyer on JPMorgan’s defense team, Felicia Ellsworth, signed the Supreme Court brief. Wild’s attorneys also consulted with WilmerHale attorneys on legal strategy, Thursday’s filing said.”
• “‘WilmerHale is obviously undertaking a representation in which JPMorgan’s interests are materially adverse to ECPAT’s (as well as Ms. Wild’s),’ the filing said.”

“West Haven’s attorney suspended after awarding work to his own law firm” —

• “West Haven’s corporation counsel has over the past three years funneled city work to his own private law firm, enabling him and his wife to represent the city in foreclosure cases and to bill up to $225 per hour for their services.”
• “As West Haven’s top attorney, Lee Tiernan has the power to hire outside counsel to assist the city in legal matters. But public documents show he used that authority to assign work to his wife, Amanda Tiernan, through a private law practice that bears his name.”
• “The arrangement is now drawing scrutiny. Moments after this story initially published Tuesday afternoon, West Haven Mayor Nancy Rossi suspended Tiernan, for purportedly not filling out an ethics report properly.”
• “‘A top official engaging in conflicts of interest for personal gain is exactly the type of bad, inherent culture the MARB has been harping on,’ said Rep. Dorinda Borer, D-West Haven, referring to the state Municipal Accountability Review Board that has been overseeing the city’s finances for years. ‘But clearly their calls for change are not resonating. The only way this is going to change is a clean sweep.'”
• “State court records indicate Tiernan appointed his wife to represent West Haven in at least 10 different court cases between 2020 and 2022 in which the city sought to foreclose on various properties for back taxes.”

Continued bubbles surfacing on this one, starting with: “Coke’s Quest to Disqualify Paul Hastings Faces Big Hurdles” —

• “Legal experts say they can understand why Coca-Cola would be unhappy with Paul Hastings’ representation of a company suing the beverage giant for $100 million, but they call the company’s efforts to disqualify the law firm an uphill battle.”
• “Atlanta-based Coke asserts in its April 12 motion that Los Angeles-based Paul ‘abandoned its ethical obligations’ when it took on the case, even though Coke was a long-standing client.”
• “But Paul Hastings characterizes the motion as baseless, given that Coke in April 2021 signed an engagement letter with the law firm on a human rights matter, giving it wide latitude to work with any client it wishes, so long as the subject is ‘not substantially related to a matter in which we have represented you.'”
• “Attorneys not involved in the dispute say courts normally uphold such advance waivers, unless the party granting the waiver lacks the sophistication to understand its consequences.”
• “‘It is in my view quite unfair for one of the largest, oldest, most successful and most sophisticated corporate entities in the world to induce a law firm’s reliance by agreeing to a waiver and a short time later say, ‘No, not so much, we really didn’t have enough information to inform our consent,’’ said Michael McCabe Jr., managing partner of McCabe & Ali in Washington, D.C.”
• “‘Give me a break. If Coke can’t be held to an advance waiver, why would anyone honor an advance waiver?'[McCabe added]”
• “After reviewing the language in Paul Hastings’ advance waiver with Coke for Law.com, University of Minnesota law professor Richard Painter said: ‘Is it a clear waiver? It appears to be.'”
• “For its part, Coke argues that the advance waiver was ‘buried in a boilerplate attachment’ to the engagement letter and was so general as to be unenforceable. It noted that the waiver did not even include an expiration date.”
• “Coke said courts have found that such ‘open-ended advance waivers, like the one at issue here, do not provide ‘informed’ consent because they do not provide the signer with adequate information to evaluate the conflict… Paul Hastings knew that Coca-Cola did not intend for every potential future conflict to be waived in perpetuity.'”
• “Furthermore, Coke says its guidelines for outside counsel explicitly state that the company does not grant advance conflict waivers. It says those guidelines require full prior disclosure and written approval of potential conflicts.”
• “But Paul Hastings counters that such guidelines are subordinate to the letter of engagement containing the waver, which was signed by Derek Gilliam, who at the time was a Coke senior counsel and now is chief of staff for the Office of General Counsel.”
• “One case similar to Coke’s involved Texas-based Galderma Laboratories, which in 2012 filed a motion to disqualify one of its outside law firms, Vinson & Elkins. The law firm had been representing the company on employment matters but also represented a company that Galderma sued over an intellectual property dispute.”
• “Galderma had asked V&E to withdraw, but it refused, citing a conflicts waiver that was part of the engagement letter Galderma had signed. Texas federal Judge Ed Kinkeade rejected the disqualification request, calling the waiver language unambiguous. ‘Galderma is a sophisticated client who has experience engaging multiple large law firms and has twice signed similar waiver provisions with at least one other law firm it has hired,’ the ruling said.”

For those curious to read the specific language of the engagement letter, see page 37 of Coke’s: “Motion to Disqualify“. Here’s a snapshot of that:

And for other interesting perspective, see this from Rob Chesnut (former GC at Airbnb, former Justice Department prosecutor): “Paul Hastings Burns Coca-Cola, Reputation in Conflict Fight” —

• “No matter how the dispute shakes out, advance conflict-of-interest waivers are bad business. According to some courts, they’re also unenforceable.”
• “The Paul Hastings-Coke saga isn’t terribly surprising. It highlights an inherent conflict between law firms and their clients. Firms want to cast their nets as widely as possible to bring in work. Clients, of course, want lawyers that are loyal to them above all.”
• “Law firms, which have grown exponentially over the last three decades, face continued pressure to bring in new clients. Lawyers have jumped from one firm to the next more frequently over the same time, raising complicated questions about potential conflicts.”
• “During my time leading legal departments at companies like Airbnb and eBay, my relationships with outside counsel boiled down to a few questions: Do we approach legal problems the same way? Is the lawyer smart, well-versed in the relevant area of the law, practical, solutions-oriented, highly responsive and invested in the success of my company?”
• “If the answer to those questions is “yes,” we were likely to have long relationship. Even if the lawyer’s firm ticks up billing rates over the years. A total of seven outside lawyers—four men and three women—met this criteria for me. I trusted them completely to deliver what I wanted. If they moved law firms, I moved law firms. If I changed jobs, I retained them to advise my new company.”
• “By the same token, my outside counsel wouldn’t want to do anything to hurt my company. They would never, for example, send me an annual letter with an advance conflict-of-interest waiver buried in small print.”
• “Instead, I’d expect us to have a mature conversation about the issue up front. It usually would go something like this:
  • Outside counsel: Hey Rob, if we ever get approached for representation in a situation that might present a conflict of interest with your company, I’ll call you and we’ll discuss it. I know that you’ll be fair, and if there’s not a real conflict, you’ll waive it so that you can support my firm’s success. If the conflict is real, there won’t be much of a conversation…I’ll ensure that our firm turns down the work.
  • Me: Done.“

“My advice to firms is to rip these waivers out of your terms of service, now. Don’t show up on the other side of a lawsuit, suing my company, without so much as an advance phone call and a discussion.”
“Paul Hastings might manage to get a court to enforce the waiver in this case. But, by allegedly failing to have the conversation with Coke—and later threatening to walk away from the company if it doesn’t agree to waive the conflict—the firm hurt its own brand.”

“Paul Hastings Slams Coke Bid to Boot Firm From SuperCooler Suit” —

• “Coca-Cola Inc. is seeking a ‘tactical advantage’ by asking a federal judge to have Paul Hastings removed from a lawsuit against the beverage giant, the Big Law firm said in a case highlighting its fallout with a one-time client.”
• “Paul Hastings lawyers should not be barred from representing a company suing Coke for more than $100 million, the law firm said Wedenesday in a filing in federal court in Orlando, Florida. Coke, which Paul Hastings represents in a human rights matter, has accused the firm of trying to ‘fire’ it as a client by working for SuperCooler Technologies Inc. in an unrelated lawsuit against the soda-maker.”
• “The dispute tests the limits of ‘advance conflict waivers,’ in which firms ask clients to agree ahead of time to allow their lawyers to represent others in situations that could otherwise pose an ethical problem.”
• “Paul Hastings called Coke’s attempt to remove the firm from the SuperCooler case a ‘technique of harassment’ designed to help the company fight off the lawsuit. Coke agreed Paul Hastings could represent other clients in future litigation against the company when it signed an engagement letter in 2021 that included a ‘waiver of prospective conflicts,’ according to the firm.”
• “SuperCooler alleges Coke misused its trade secrets and broke promises to use its technology that rapidly chills beverages, according to court filings.”
• “A group of lawyers from Cahill Gordon & Reindel representing SuperCooler jumped to Paul Hastings over the last two months, bringing the case with them. Coke said at least one of those lawyers, Bradley Bondi, did not alert the company he was joining Paul Hastings to work on the lawsuit even after Coke raised concerns about the firm taking a case against it.”
• “The conflict waiver Coke signed was ‘fully informed’ and signed by a ‘sophisticated consumer of legal services,’ the firm said.”

“Advance Conflict Waivers: Use Them or Lose Them?” —

• “Many lawyers use advance or future conflicts waivers to streamline the conflict waiver process for future matters involving current clients, including those who may subsequently become former clients. An effective advance conflict waiver will permit lawyers to take on matters adverse to a client without the need for a subse- quent waiver from that client.”
• “This article offers two suggestions for the possible use of advance waivers. First, advance waivers may permit lawyers to seek more streamlined consents to conflicts that come up repeatedly with the same client or clients.”
• “Second, recent case law suggests that con- flicts waivers may be an effective tool for maintaining representation of one client when adversity arises during a joint representation. Courts appear to be more likely to enforce advance waivers in the context of jointly represented clients because the lawyer is at least arguably able to be more specific as to both 1) the clients whose interests may become adverse in the future, and 2) the types of matters covered by the waiver.”
• “Although not the focus of this article, two other points bear noting. First, a lawyer seeking a conflict waiver, whether for a current conflict or a future one, would be well-advised to discuss the waiver with the client before signing. Such discussions are especially important in the context of an advance waiver. Second, all waivers should, at a minimum, discuss loyalty/zealousness and confidentiality/privilege, as noted in greater detail below.”

“As Holland & Knight Grows, Another Partner Leaves Because of Conflicts” —

• “With two recent major mergers in the books, Holland & Knight is losing another partner to a dispute resolution firm in South Florida, the latest in a string of conflict-related departures.”
• “Rodolfo ‘Rudy’ Sorondo Jr., a longtime partner and former state court judge, is leaving the Am Law 100 firm after more than 20 years. He’ll join newly launched alternative dispute resolution firm Private Resolutions, founded by another local ex-judge, Alan Fine, after he left the bench earlier this year.”
• “Sorondo is referring to being conflicted out of certain arbitration cases at Holland & Knight because of the firm’s size.”
• “‘The conflict database [at Holland & Knight] is enormous. And consequently, there are many arbitrations and special master assignments that I simply cannot take,’ he said. ‘In those instances, you are an adjudicative officer and people don’t feel comfortable if there is a conflict.'”
• “And although mediations typically avoid conflict issues because a mediator has less power than an arbitrator, Sorondo said the conflicts also bled into mediation at times.”

“Cadwalader Partner Steps Down to Represent Trump in Manhattan DA’s Criminal Case” —

• “Todd Blanche, a partner at Cadwalader, Wickersham & Taft, has resigned from the law firm to join the defense team representing former U.S. President Donald Trump in a criminal case brought by the Manhattan District Attorney’s office. According to reports by Politico and Law.com, Blanche will eventually lead Trump’s representation. A spokesperson for Cadwalader confirmed Blanche’s departure but declined to comment further.”
• “In an email obtained by Politico, Blanche stated that he resigned from Cadwalader because he had been asked to represent Trump in the recently charged Manhattan District Attorney’s case. He further explained that after careful thought and consideration, he believed it was the best opportunity for him and an opportunity he should not pass up. Blanche’s LinkedIn profile indicates that he was a partner at Cadwalader from September 2017 to April 2023 and is now listed as the founding partner of Blanche Law.”
• “Blanche will join a defense team that includes lawyers Joe Tacopina and Susan Necheles. In a statement to Law.com, an anonymous source described Blanche’s departure from Cadwalader as a ‘happy uncoupling.'”

“Pitfalls for Corporate Counsel in Business Divorce Disputes” —

• “No corporate lawyer wants to get drawn into a nasty litigation between an entity’s owners. But the reality is that corporate and general counsel often find themselves unwittingly ensnared in business divorce cases. Sometimes a corporate transaction is the genesis of litigation, and corporate counsel’s role or advice may be exceedingly important.”
• “Other times, corporate counsel may have served in a joint, dual, or uncertain capacity, providing advice to the entity and its owners simultaneously. This can create particular problems when formerly aligned interests diverge.”
• “In this week’s business divorce, we’ll consider three doctrinal pitfalls for corporate and general counsel in business divorce litigation: the fiduciary exception to the attorney client privilege, the joint representation exception to the attorney-client privilege, and a virtual per se rule of disqualification for litigation counsel who previously served as corporate counsel for a closely-held entity whose owners become adverse.”
• “A final rule of law that crops up repeatedly in business divorce cases: ‘One who has served as attorney for a corporation may not represent an individual shareholder in a case in which his interests are adverse to other shareholders’ (Matter of Greenberg, 206 AD2d 963 [4th Dept 1994]).”
• “Under this principle of law, an attorney may not serve as corporate or general counsel for an entity, or its owners jointly, then morph roles to become litigation counsel for one owner adverse to the other.”
• “The bottom line of all of these concepts is that corporate and general counsel should be exceedingly careful when taking on taking on new representation to spell out in their engagement letters exactly who are the clients, who are not the clients, and the precise scope of the representation.”
• “Recently, my firm and I successfully relied upon the Deerin line of case law for disqualification of opposing counsel in a pair of cases involving a 50% / 50% father-son shareholder dispute in the Suffolk County Commercial Division.”
• “According to our client (the father), opposing counsel previously served as both trust and estate counsel for the father and as corporate counsel for the entity and its shareholders, including drafting the shareholders’ agreement on behalf of both shareholders. Opposing counsel then switched roles, becoming litigation counsel for the son suing the father for attempted rescission and damages relating to a stock purchase agreement both sides allege the other breached. You can read the resulting disqualification decisions here and here.”

“Purdue Pharma Law Firm Builds ‘Ethical Wall’ to Shield Ex-Judge” —

• “Skadden, after hiring the judge who approved a $6 billion opioid settlement for its client Purdue Pharma LP, will bar him from matters involving the OxyContin maker and block him from company fees.”
• “There’s an ‘ethical wall’ between Purdue and retired Judge Robert Drain, Skadden, Arps, Slate, Meagher & Flom said in a filing last week at the Southern District of New York Bankruptcy Court. Skadden made the filing a day after it said Drain will join its corporate restructuring group in New York as of counsel.”
• “Drain in March 2022, three months before he retired, approved an opioid settlement conditioned on Purdue Pharma prevailing in an ongoing appeal of its bankruptcy plan. The plan was controversial because it gave broad protections to Purdue owners—members of the Sackler family—from future opioid suits.”
• “Under the New York rules of professional conduct, Drain is barred from working on any matter that he heard as a jurist. The rule also notes that judges cannot negotiate for employment at a firm arguing before him, indicating that talks between Drain and Skadden would have had to commence following his retirement.”
• “While Drain’s move to a firm involved in the Purdue case violates no ethics rules, it shows how narrow the ethics restrictions are, said Kathleen Clark, a professor at Washington University School of Law in St. Louis.”
• “‘It’s not a great look, even though the rules allow it,’ Clark said. ‘Of all the law firms, Drain goes and works for one of the firms in one of the most controversial recent cases he’s been involved in.'”
• “Drain’s example is unique from other judges that have joined law firms because Skadden came under scrutiny itself during the case, Lipson said. Skadden and two other law firms in 2021 agreed to give up $1 million in legal fees to resolve claims from the US Trustee that they failed to properly disclose an information-sharing agreement between Purdue, the Sacklers, and their respective lawyers.”
• “Skadden said in a statement that the firm ‘complied with all applicable rules that enable retired judges to work at law firms.'”

“Clarence Thomas didn’t recuse himself from a 2004 appeal tied to Harlan Crow’s family business, per Bloomberg” —

• “Justice Clarence Thomas didn’t recuse himself from a 2004 appeals case, even though the company being sued was part of the real estate empire run by Harlan Crow, the GOP mega-donor who has showered Thomas with lavish trips starting in 1997 and more recently bought Thomas’ childhood home, according to Bloomberg.”
• “Thomas previously told Bloomberg that it was OK for him to accept gifts from Harlan Crow because the GOP mega-donor did not have ‘business before the court.'”
• “But the 2004 appeal ties the Crow family name to a case that did come before the Supreme Court: In January 2005, the court denied the appeal petition, a $25 million copyright claim brought by an architecture firm against Trammell Crow Residential Co., a development company that’s part of the real estate empire built by Crow’s father. The Supreme Court’s decision ultimately benefitted Trammell Crow Residential.”
• “Thomas is facing heavy scrutiny following a series of ProPublica reports earlier this month that said he sold his childhood home to Crow and didn’t disclose the sale, and that he’s been accepting pricey vacations from Crow — without disclosing them — for over 20 years.”
• “It’s not known whether Thomas would have made the connection between Trammell Crow Residential and Harlan Crow, who, at the time, had already begun to give Thomas gifts and trips, according to a 2004 Los Angeles Times report.”
• “But Thomas should have been ‘hypervigilant to the prospect of a Crow interest showing up on the Court’s docket,’ given their friendship, Stephen Gillers, a judicial ethics expert at New York University School of Law, told Bloomberg.”

“Head of a Major Law Firm Bought Real Estate From Gorsuch” —

• “Legal experts said that the justice’s disclosure of the sale, which came right after the justice’s appointment, did not violate the law but underscored the need for ethics reforms.”
• “One month after Neil M. Gorsuch was appointed to the Supreme Court in April 2017, he and two partners finally sold a vacation property they had been trying to offload for nearly two years. But when he reported the sale the next year, he left blank a field asking the identity of the buyer.”
• “County real estate records in Colorado show that Brian L. Duffy, the chief executive of Greenberg Traurig, a sprawling law firm that frequently has business before the court, and his wife, Kari Duffy, bought the property.”
• “The buyer’s identity — and Justice Gorsuch’s decision not to disclose it — was reported earlier on Tuesday by Politico. The revelation comes as scrutiny on Supreme Court ethics and financial entanglements has intensified, prompting Democratic lawmakers to call for tightening the rules for justices.”
• “Justice Gorsuch did not break the law by omitting the buyer’s identity, said Stephen Gillers, a New York University professor and specialist in legal ethics. Under a 1978 statute governing financial disclosures, federal judges are not required to disclose who bought property from them.”
• “Gabe Roth, the executive director of Fix the Court, a nonpartisan group that presses for greater transparency and accountability by the justices, agreed that the omission did not violate the law. But he argued that Congress should pass legislation expanding what justices must disclose, including losses from any sales, the nature of partnerships that hold real estate and who buyers are.”
• “Mr. Duffy, who lives in Colorado, did not respond to an email from The New York Times. But he told Politico that he bought the property because he is a fly fisherman and that he has never argued before Justice Gorsuch or met him socially. He also said he did not know that the jurist had a stake in the property when he made his first offer.”