Risk Update

Ethics Updates — Commentary on Change, Survey on Concerns, Invite to Opine

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Lucian Pera published in the South Carolina Law Review: “Ethics, Lawyering, and Regulation in a Time of Great Change: Field Notes from the (R)evolution” —

  • “Observing these changes at close range in representing clients and working on ethics issues as a bar volunteer has led me to understand that we live in the midst of the greatest period of change in the business and practice and regulation of law in more than a century.”
  • “Much more important has been the way technology and the forces of regionalization, nationalization, and globalization have changed the lives and work of clients. Lawyers exist to serve clients, and changes in their lives and businesses drive changes in ours.”
  • “By far, the most important concern for lawyers in this mixed environment is what law applies to their conduct. This includes lawyers located or licensed in jurisdictions with new or different rules. But it also includes clients, whose expectations—and, to the extent consistent with good regulatory policy— consent should be honored. The rules on choice of law in this context can and should be clarified and made as uniform as possible.”
  • “To be clear, the questions implicated by the choice of law conversation include not only nonlawyer ownership and fee-sharing but also more mundane (but important) issues like conflict of interest rules, rules governing fee agreements, and where trust accounts for client and third-party funds must be established.”
  • “While some potential choice of law issues concerning lawyer conduct implicate concerns beyond the interests of one consenting client, the regulatory interests concerning many choice of law issues primarily concern the interests of one client who is in a position to consent. In those situations, the consent of the client should be honored.”
  • “Indeed, even this year, the ABA has taken a significant positive step with the issuance of a new Formal Ethics Opinion that takes a fresh look at the application of the ABA’s widely-adopted Model Rule on choice of law.”
  • “The Opinion also opens the way to greater client autonomy in agreeing to engagement terms by which the attorney-client relationship may be governed by ethics rules of the lawyer’s home jurisdiction, potentially including jurisdictions where regulatory reforms have been adopted that might be at odds with rules in other jurisdictions. These are rational, forward-looking applications of accepted choice of law principles.”

Bloomberg survey: “ANALYSIS: Lawyers Worry Most About the Profession’s Reputation” —

  • “Lawyers have undergone some soul-searching in the wake of election fraud cases and the Jan. 6 raid on the US Capitol. So it stands to reason that they chose ‘maintaining the integrity of the profession’ as the legal ethics category most in need of revision, according to a recent Bloomberg Law survey.”
  • “In Bloomberg Law’s second 2023 State of Practice survey, conducted in June and July, attorneys who said they believe the ABA’s model rule categories need revising overwhelmingly selected ‘maintaining integrity of the profession’ as the leading target for change.”
  • “But although the survey results show a clear direction from lawyers on what changes they’d like to see, another interesting survey statistic shows some ambivalence about whether lawyers really want change at all.”
  • “Of the 447 lawyers who answered a question about whether the ABA’s model rules should be revised in the first place, a plurality (43%) selected ‘not sure/prefer not to answer.’ Only 38% said ‘yes.'”

Jessica Bednarz with Institute for the Advancement of the American Legal System (IAALS), notes:

  • “The ABA Standing Committee on Delivery of Legal Services is seeking your feedback! They’d like you to share your opinions on any (or all) of these topics: AI, ownership of law firms by people who aren’t lawyers, and training and certifying people who aren’t lawyers to advocate for parties in lower courts. It’s a quick and easy survey.”
  • Survey link: https://americanbar.qualtrics.com/jfe/form/SV_8cAoqqbzrTUdNxc


Risk Update

Trump Matters Conflicts News — Georgia Secretary of State Waives, Stormy Attorney Saved

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Georgia’s GOP Secretary of State Brad Raffensperger Waives Attorney Conflicts for Pro-Trump Lawyer: Court Doc” —

  • “Georgia Secretary of State Brad Raffensperger has disavowed any conflicts of interest from his former attorney, who is now representing pro-Trump attorney Kenneth Chesebro in the sprawling election-racketeering case, a new court filing indicates.”
  • “On Thursday, Fulton County District Attorney Fani Willis told a judge that six attorneys representing former President Donald Trump’s associates have possible conflicts of interest that could compromise their client’s rights at trial.”
  • “At least two of those attorneys — Chesebro and Anulewicz — previously represented Raffensperger, the Georgia Republican whom Trump tried to pressure to ‘find 11,780 votes’ in a phone call seeking to overturn Joe Biden’s 2020 electoral victory. Trump appeared to threaten Raffensperger with criminal liability for failing to do his bidding, making Raffensperger a key figure in the former president’s alleged racketeering scheme in Georgia.”
  • “Recruiting Raffensperger as a central witness in her case, DA Willis warned Judge Scott McAfee of the possibility that the Georgia secretary of state may be cross-examined by his former lawyers.”
  • “Grubman’s alleged conflict relates to his former representation of the Georgia secretary of state and wife Tricia Raffensperger, whom Grubman represented during the DA’s special grand jury investigation that preceded the RICO indictment.”
  • “Acknowledging that he did represent the Raffenspergers ‘in their personal capacities,’ Grubman noted that the DA has known that fact ‘for longer than a year.'”
  • “Denying any conflicts of interest, Grubman added that he has ‘signed, written ‘ from the Raffenspergers and Chesebro that he offered to submit privately to the court.”

NYC lawyer Joe Tacopina can represent Trump in hush money case despite past dealings with Stormy Daniels, judge says” —

  • “New York City lawyer Joe Tacopina convinced the judge presiding over Donald Trump’s hush money case that his prior dealings with porn star Stormy Daniels wouldn’t pose a conflict representing the former president, according to a filing reviewed by the Daily News Monday.”‘
  • “Prosecutors flagged Tacopina’s prior communications with Daniels after he joined Trump’s team in the case centering on an illegal payment to the adult film star ahead of the 2016 election. Daniels’ lawyer, Clark Brewster, filed a complaint with a grievance committee after finding out Tacopina was on the case.”
  • “At Trump’s April arraignment, Tacopina told Judge Juan Merchan that Daniels had called his firm in 2018 when she was looking for a lawyer and spoke with one of his associates and a paralegal. At the time, he suggested he would represent her in a television interview.”
  • “‘We refused the case. I did not offer her representation. Didn’t speak to her. Didn’t meet with her,’ Tacopina said at the hearing where Trump told Merchan he understood his right to conflict-free representation.”
  • “After meeting with Tacopina and conferring with an ethics expert, Merchan, in a Sept. 1 letter, said he would accept there is no conflict.”
  • “‘court will revisit this issue with Mr. Trump when he next appears virtually on February 15, 2024,’ Merchan wrote. ‘[The] court accepts your suggestion that you do not participate in the examination of Ms. Daniels if she is called as a witness at trial.'”
Risk Update

Risk News — Conflicts Fight Over Duty of Loyalty in Dual Representation, Opioid Special Master Facing Disqualification, Law Firm Data Breach Notification Delay

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Lawyers for ‘orgasmic meditation’ company founder refute prosecutors’ ethics concerns” —

  • “Attorneys at law firm Steptoe & Johnson on Wednesday defended their work for the indicted founder of the sexuality-focused wellness company OneTaste, as they asked a judge to reject U.S. prosecutors’ concerns about a potential conflict of interest.”
  • “In a filing, defense lawyers for OneTaste founder Nicole Daedone responded to a request from the U.S. Attorney’s Office in Brooklyn for a hearing to explore what the government called the possibility for divided loyalties among defense lawyers.”
  • “Steptoe represents both Daedone and Institute of OM, which the government said is a OneTaste-affiliated entity. Institute of OM is not a defendant. Cherwitz is represented by law firm Alston & Bird.”
  • “Prosecutors said they were concerned about two things: Daedone’s legal strategy — for instance, if she were to plead guilty — could ‘tarnish the OneTaste brand’ and be ‘adverse’ to Institute of OM, prosecutors said.”
  • “In addition, they said OneTaste’s payment of fees to Cherwitz’s lawyers could affect what legal advice they provide to her in any scenario in which she takes a stance adverse to OneTaste.”
  • “Steptoe ‘owes a duty of loyalty’ to the Institute of OM and could be limited in sharing information with Daedone, prosecutors told U.S. District Judge Diane Gujarati.”
  • “In their court filing, Daedone’s attorneys called the government’s concerns ‘speculative’ and ‘implausible.'”
    “‘The dual representations have not, and have no potential of, creating a conflict of interest for Steptoe,’ Steptoe’s Reid Weingarten and Julia Gatto said.”
  • “Cherwitz’s attorneys denied there was any conflict in her fee arrangement, saying ‘companies routinely agree to advance the legal fees of current and former employees.’ They said there was not ‘a single shred of evidence that Ms. Cherwitz engaged in a forced-labor conspiracy.'”

Opioid Special Master Facing Disqualification Motion After Hitting ‘Reply All’ on Email” —

  • “The special master in the opioid multidistrict litigation is under pressure to disqualify himself after he hit ‘reply all’ on an email that was meant for himself but, instead, went to lawyers in dozens of cases.”
  • “David Cohen, who has served as special master since 2018, intended to forward an Aug. 28 email with notes to himself on the bellwether trial process in the opioid cases against pharmacy benefit managers. But, according to an affidavit, he accidentally replied to all the lawyers in the cases.”
  • “Now, lawyers at Alston & Bird and Quinn Emanuel Urquhart & Sullivan, representing two pharmacy benefit managers, have moved to disqualify Cohen on the basis of the email, which ‘would lead any reasonable observer to question his impartiality.’
    Cohen, a prominent special master in mass torts, immediately emailed lawyers to apologize, asking them to disregard his earlier email, which was ‘meant to be to my own files.’ But on Sept. 1, lawyers for the pharmacy benefit managers requested in an email that he disqualify himself.”
  • “In a Sept. 7 email responding to them, Cohen said he found no reason to recuse himself. ‘To this day,’ he wrote in an attached affidavit, ‘I have never had any disqualifying personal bias or prejudice concerning any party, nor any disqualifying personal knowledge of disputed evidentiary facts concerning any proceeding, in any case where I served as special master.'”
  • “Cohen sent his email two days before an Aug. 30 hearing. In his email, he wrote: ‘PBMs’ goal is to complicate and delay (including a request to do nothing and set a status 4 weeks hence). I say Ps add claims against PBMs as mail-order pharmacies. Two reasons: (1) Ps are the master of their own complaint, and (2) claims against PBMs as mail-order pharmacies will show how much PBMs knew (and they knew a lot). And then let PBMs respond as they wish. If that complicates the case, so be it. We are used to that.'”
  • “The disqualification motion cites that portion of the email, and Cohen’s decision to allow each side to pick four bellwether cases, not two, because ‘it is too easy for Ds to buy off 2 Ps, avoiding any global resolution.'”
  • “‘Special Master Cohen’s email shows that he has prejudged merits issues before any evidence has come in and before OptumRx or Express Scripts have had any opportunity to brief and be heard on the question of their purported knowledge,’ the motion says. ‘That alone requires disqualification.'”
  • “At the Aug. 30 hearing, U.S. District Judge Dan Polster, who is overseeing the opioid multidistrict litigation in the Northern District of Ohio, was quick to shut down any possibility that he would disqualify Cohen.”
  • “‘Well, that isn’t going to happen,’ he told Boone, according to a transcript. ‘You know, he sent something that – it showed – may have shown his thought at the moment, doesn’t in any way, shape, or form indicate that he’s biased or prejudged anything. All right? No one has a clue what the evidence is. All right? I don’t.'”

Law Firm Accused of Waiting More Than a Year to Inform Affected Parties About Data Breach” —

  • “Los Angeles-based law firm Hill, Farrer & Burrill was slapped with a data breach class action over allegations it detected a data breach in March 2022 but waited over a year to inform affected individuals their personal information had been leaked.”
    “Booker alleges that the data breach was a result of Hill Farrer’s inadequately protected computer network, and that it was completely preventable.”
  • “According to the complaint, Hill Farrer determined that cybercriminals gained unauthorized access to its systems between March 14 and March 18, 2022. The hackers are alleged to have accessed and stole sensitive personal information, including names, dates of birth, Social Security numbers, and medical treatment information of Booker and other victims.”
  • “Booker claims she was notified of the breach on Sept. 5, 2023, over a year after it was discovered that an unauthorized user had gained access to the firm’s electronic systems. The letter informed her that her name, date of birth, Social Security number, and medical treatment information was stored in a system that had been accessed by hackers.”
  • “According to the complaint, the Los Angeles firm’s lack of urgency to inform victims that their information had been leaked allowed cyber criminals ‘free reign to surveil and defraud their unsuspecting victims.'”


Risk Update

Local Conflicts News — Los Angeles Appeal Axed, School Board Waiver Waived Off

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Plaintiff in DWP Overbilling Suit Loses Follow-Up Battle” —

  • “The Ninth U.S. Circuit Court of Appeals has affirmed a summary judgment in favor of the City of Los Angeles in a suit for damages brought by a man alleging that the city’s cover-up of the fact that then-New York lawyer Paul O. Paradis, representing him as named plaintiff in a class action over the Department of Water & Power’s massive overbilling of customers in 2013, was also working at the time for the city.”
  • “Affirmance came in a memorandum opinion by a three-judge panel, filed Tuesday, saying that any cover-up did not preclude an action against Paradis because once plaintiff Antwon Jones learned of the perfidy, there was still time to sue before the relevant statute of limitations expired.”
  • “Paradis—now disbarred and awaiting sentencing on a federal bribery count in connection with the DWP debacle—in 2015 represented the city, along with Beverly Hills practitioner Paul Kiesel, in pressing claims against the consulting firm of PricewaterhouseCoopers, maintaining that it was responsible for the faulty billing system that resulted in exorbitant amounts being exacted from rate-payers. It was liable, the city contended, for any refunds that the city might be compelled to make.”
  • “Jones sued the city and others on Dec. 21, 2020, claiming that because the city had covered-up Paradis’s conflict of interest, an action by him against Paradis became time-barred.”
  • “‘[B]ecause the four-year limitation period did not expire before the one-year limitation period had run, Jones had until June 2020 to sue Paradis. Because Jones decided not to sue Paradis and instead waited until December 2020 to file this action against the City, the City was not responsible for Jones losing his ability to sue Paradis within the limitation period.’ The case is Jones v. City of Los Angeles, 22-55612.”

Bill Freivogel notes:

  • Hamed v. Diaz, No. 514433/2019 (N.Y. Sup. Ct. Kings County Sept. 6, 2023).
  • “In this medical malpractice case, involving a State of N.Y. facility, the Attorney General’s Office (‘OAG’is defending a doctor. In another case, involving the same events, Plaintiff is suing the State of New York. OAG is defending that case, as well. Plaintiff moved to disqualify OAG in this case, claiming both representations are in conflict.”
  • “In this opinion the court denied the motion, holding that the doctor’s and State’s interests are aligned. A complication is that the doctor is suing the State for wrongful termination. The OAG is not in that case, however. Plus, the grounds for termination did not involve the alleged malpractice in this case.”

Kaneland school board votes against approving waiver with law firm involved in Crown development project” —

  • “The Kaneland [Illinois] School District board voted unanimously against approving a waiver of conflict of interest with the law firm Ottosen DiNolfo Hasenbalg & Castaldo, Ltd. regarding Crown Community Development’s request for a TIF district for a proposed development at the Interstate 88 and Route 47 interchange.”
  • “It is believed that the village of Sugar Grove will be utilizing the law firm for the development of a new tax increment financing district (TIF) for The Grove, a 760-acre master-planned community at the I-88 and Route 47 interchange. Since such representation presents a conflict of interest between Ottosen DiNolfo Hasenbalg & Castaldo, Ltd., the village of Sugar Grove and the Kaneland School District, all board members voted against the waiver of conflict of interest.”
  • “‘My biggest concern is it’s a major conflict of interest,’ board member Aaron McCauley said. ‘I’d rather have somebody that’s going to focus on Kaneland, on our school district and they’re going to work with us. If we have to spend an extra couple of bucks, that’s fine. I love my wife [who is a lawyer], I’m taking her advice and going with that.'”
Risk Update

Conflicts Landscape — PwC Opts Out of Consulting Work to Clear Conflicts, In-house Lawyer Ethics & Conflicts Considerations, UK Director Conflicts Navigation

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PwC to curtail consulting work for US audit clients to reduce conflict risk” —

  • “PwC is planning to give up tens of millions of dollars of consulting work for its US audit clients to reduce the risk of conflicts of interest, challenging its rival Big Four firms to follow suit.”
  • “The accounting firm has begun to tell clients it will stop offering them some advisory services, even though they are permitted under US rules, as part of a wider revamp of its audit work.”
  • “The move comes amid a worldwide debate over how to ensure accounting firms remain independent of the companies they audit, after scandals such as the collapse of Carillion in the UK. It follows an abortive attempt by PwC’s Big Four rival EY to spin off its consulting arm. The UK accounting regulator has already pushed the biggest accounting firms to make their audit operations in the country more independent of their consulting arms.”
  • “PwC’s US leaders have agreed a package of reforms that also include the introduction of clawback provisions in their executive pay and the promise of new disclosures about how the firm manages conflicts of interest.”
  • “The moves are designed to head off concern among clients, whose directors and shareholders are increasingly scrutinizing potential conflicts, and to improve the reputation of a profession that has found it harder to attract young people.”
  • “The US drastically curtailed the consulting work accounting firms can do for audit clients in the Sarbanes-Oxley Act, passed in 2002 after the Enron scandal. However, the rules still allow for more non-audit services than allowed in other parts of the world, particularly Europe.”
  • “Non-audit work accounts for a smaller proportion of the fees PwC gets from its US audit clients than it does at Deloitte and EY, according to public disclosures collated by Ideagen Audit Analytics.”
  • “The Big Four sold $1.5bn of tax and miscellaneous consulting services to their US-listed audit clients last year, on top of $13.5bn of audit and audit-related fees, the figures show. The proportion has been trending down for most of the past two decades.”
  • “The move by PwC US is limited to miscellaneous consulting and would not affect tax work, it said. It could affect its consulting revenues outside the country, if its local member firms work for overseas subsidiaries of US audit clients. The work would be phased out by 2025, PwC said.”
  • “Details were due to be announced in May but the launch was pushed back while the firm dealt with a scandal in Australia in which partners were revealed to have misused confidential information about the government’s tax plans, according to people familiar with the situation.”
  • “PwC US will also next year introduce new audit procedures to improve the detection of fraud and to broaden the range of factors staff must consider when ruling on whether a client is at risk of bankruptcy.”
  • “Other measures include expanding the audit report that is published with its US clients’ annual report, which will from 2025 be modeled on the UK, where additional disclosures are required about contentious issues an audit has raised.”

Ethical Considerations for In-House Lawyers” —

  • “Although the Rules of Professional Conduct have many provisions targeted to lawyers who are in private practice, in-house lawyers, who are dedicated solely to representing their corporate client’s—and employer’s—interests, are still subject to those rules.”
  • “Notably, the nature of the in-house counsel role can pose some unique ethical considerations for attorneys whose clients also serve as their employers.”
    “Among other things, in-house counsel may wear different hats in the course of their work, acting as both legal adviser and business adviser at times, which can lead to complicated ethics questions.”
  • “There may be circumstances, however, in which an in-house lawyer is providing legal support to individual employees of the company. For example, Rule 1.13 allows lawyers to represent an organization and ‘any of its directors, officers, employees, members, shareholders or other constituents, subject to the provisions of Rule 1.7.'”
  • “This may come up in a situation in which an in-house lawyer provides guidance to an employee who is about to be deposed in a case involving the organization. The in-house lawyer is permitted to provide advice to the employee, but the lawyer should be wary of any situations that could create a conflict, such as when the individual employee’s interests and the corporate client’s interests are adverse.”
  • “In accordance with Rule 1.13(f), in-house counsel will often advise the employee that they represent the company, not the employee as an individual, and that the lawyer is permitted to tell the company anything the employee divulges. Sometimes, for this reason, companies will elect to use outside counsel to conduct sensitive internal investigations, which, among other things, can help avoid any misunderstandings about an in-house lawyer’s role (and any potential awkwardness around the Upjohn warning that an employee’s conversations with in-house counsel are not private from their employer).”
  • “As noted above, there may be circumstances in which an in-house lawyer can represent an individual employee in an event like a deposition. However, if the employee is adverse to the company, the conflicts-of-interest rules advise that in-house counsel cannot represent both parties.”

Claire Brown, Partner, Commercial Litigation at JMW Solicitors explains: “How do we regulate conflicts of interests arising out of directorships in competing businesses?” —

  • “In law, there is no limit upon the number of companies that any one individual may be a director of. However, where an individual has multiple directorships, particularly where one of those company directorships competes with another, there are several considerations to be mindful of. The consequences for a director who disregards these considerations can be severe.”
  • “A company’s Articles of Association will often dictate how directors’ conflicts of interests should be managed. Where the Articles of Association are followed in a situation of conflict, no infringement will be deemed to arise under the Companies Act 2006.”
  • “Under the Companies Act 2006, it is possible for the directors to authorise a conflict, in the case of a private company, where nothing within the company’s constitution invalidates such authorisation and, in the case of a public company, where its constitution provides for such authorisation and any prescribed process for obtaining such authorisation is followed. In either case, the authorisation will only be effective if any constitutional voting or quorum requirements are met without counting the director in question (or any other interested director).”
  • “In resolving whether or not to approve a conflict of interest, whether in relation to a director’s involvement in a competing business or otherwise, the directors must act in accordance with their general duties and, in particular, their duty to promote the success of the company. Where an industry specialist is brought on board to assist with the growth of a company, for example, the existing board may reasonably determine that any potential risk associated with the conflict is outweighed by the expertise that the incoming director can bring (particularly if conditions are attached to such approval). However, more generally, it will likely be difficult to lawfully sanction such competing interests.”
  • “In the inevitable event that the director’s competing directorship gives rise to a breach of the statutory duties above, or any contractual obligations owed to the company, and the breach causes harm to the company in question, the company will be able to bring a claim against the director in respect of such breach.”
  • “Where the competing director controls the board of directors in the original company and does not support action being taken against them by the company, it is possible for a shareholder to seek to bring a claim against the director ‘derivatively’ on the company’s behalf.”







Risk Update

Last Call! — BRB Law Firm Risk Staffing Compensation Survey

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Getting close to closing the window on this one. But I wanted to make sure anyone who wants to participate (or is on the fence and wants to connect directly on questions or an extension) has the opportunity. So the window remains open for another ~week, until Wednesday, September 27.

My survey summary report reveals that we now have 110+ participants, sharing data on 350+ positions! Interestingly, we’ve well exceeded 2022 levels in terms of individual contributors (last year we had 80+), but have not quite surpassed data point the mark set last year. My hope is we’ll cross that threshold shortly, we’re very close.

So if you’re an individual contribution looking to understand how your comp compares to your peers, or you’re a risk manager looking to keep your team (and potential new hires) on par with changing market standards, you don’t want to miss out.

And, in case you missed my earlier update, we’re also capturing data on “risk director” level positions as well this year.


  • Participation open to law firm risk professionals only
  • All responses will be treated confidentially
  • Manager/Director participants sharing data on their/their team’s roles and compensation will receive a report summarizing key findings and analysis
    • (The report may be shared internally within your firm, but not redistributed externally. So if you want the results, your best path is to participate!)
  • Individual contributor participants sharing personal compensation data will be receive a personal benchmark compensation summary relevant to their specific role and firm demographics.

The survey will be open for at least another week, but the end is nigh, so access it here: 2023 Risk Staffing Compensation Survey.

Feel free to share the link with law firm peers and colleagues — directly via email, via social media, or however you like.

And if anyone has questions, please do reach out to me directly. In particular, if having an “anonymous” path to participation would get you over the line, let’s talk.(Email readers can do that by just replying to this note — it’ll reach me. Others can use the contact form as well.)

Thanks for reading. More risk news and updates tomorrow. Thanks!

Risk Update

Conflicts News — Maui Lawyer/Legislator Picks a Path, Phone Case Conflict Call Challenged

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Keith-Agaran to retire from Senate as law firm pursues fire lawsuits” —

  • “Central Maui’s longtime state Sen. Gil Keith-Agaran announced he will retire Oct. 31, saying he didn’t want questions over conflicts of interest to be a “distraction” as his law firm prepares to represent clients in lawsuits over the Lahaina fire.”
  • “Keith-Agaran’s position as a lawmaker and an attorney could have put him in a questionable spot if his law firm had represented residents or businesses suing the state over the fires. Keith-Agaran’s firm, Takitani, Agaran, Jorgensen and Wildman, is among three firms that filed a lawsuit on Aug. 17 alleging that the Lahaina fire started when Hawaiian Electric’s power lines came in contact with brush. The three firms hosted a presentation and sign-up on Sunday for residents and business owners impacted by the fire.”
  • “Keith-Agaran, who faced questions from local media about the potential conflict of interest before announcing his retirement Wednesday, said he spoke to the staff of the state Ethics Commission ‘to get a feel on whether or not there was going to be issues.’ He said based on conversations with the commission staff, he felt he would have had to choose between his family and community and protecting the state.”
  • “‘Right now it’s theoretical. But I think they were sort of suggesting that even the appearance of a conflict is enough to raise a violation or create a violation. To me that’s a distraction from the real pain and the real issues that people are going through,’ Keith-Agaran said Wednesday afternoon.”
  • “When asked if he stepped down to avoid a potential conflict of interest, Keith-Agaran said, ‘Yeah … Given what we’re all going through right now, that’s just not something that’s worthwhile in the larger scheme of things for my family and for my law partners.'”
  • “Colin Moore, director of the University of Hawai’i Public Policy Center, said he wasn’t “terribly surprised” by Keith-Agaran’s decision. ‘I think it’s a pretty clear calculation here where you’re a plaintiffs attorney. This is potentially the case of a lifetime,’ Moore said Wednesday afternoon. ‘There’s just going to be millions and millions of dollars at stake. I’m sure that he doesn’t feel that he can represent his clients and be in the Legislature without questions of the ethical implications of that and just being dogged by reporters. I can’t say I’m terribly surprised.'”

Otter Says No Conflict For Atty In Phone Case Patent Dispute” —

  • “Otter Products says a rival’s effort to disqualify Merchant & Gould as its counsel in a patent dispute doesn’t hold up, arguing in Colorado federal court that there’s no real conflict because the law firm represented a different company from the patent holder and plaintiff when it helped write an application for the same patents in the suit.”
  • “…Otter Product LLC said its attorney, James W. Beard of Merchant & Gould PC, had represented Otter in patent suits for more than a decade before the lawsuit filed in June by Jefferson Street Holdings LLC, which does business as Cradl Ltd.”
  • “Cradl alleged in a motion filed in July to disqualify Merchant & Gould from representing Otter in the case that the law firm worked on the application for the patents for Elizabeth Inc., predecessor in interest to Cradl, with all the patents sharing the same specification that Merchant & Gould attorneys drafted. Cradl said both Elizabeth Inc. and Cradl are owned by Dining.”
  • “But the distinction between the companies is key, Otter said in its brief opposing the motion. ‘Fundamentally, Jefferson Street is not and was not a client of Merchant, and therefore there is no protectible ‘attorney-client relationship’ between plaintiff and merchant,’ Otter said in the brief.”
  • “Otter argued that the assignment of a patent doesn’t also transfer an attorney-client relationship related to that patent. Otter also argued that the patents had been transferred through a series of entities before ending up with Jefferson Street Holdings, with two of them not being tied to Elizabeth Inc. and not appearing to sell phone cases. Otter also argued that Elizabeth Inc. still exists as its own entity and isn’t the parent company of Jefferson Street Holdings.”
  • “Beyond that, Otter said the engagement letter that Elizabeth Inc. signed stated that ‘representation of the company in this matter will not give rise to any conflict of interest in the event other clients of the firm are adverse to any of the company’s affiliates.'”
  • “And just because attorneys who worked on prosecuting the patents for Elizabeth Inc. work at the same firm as Beard doesn’t automatically mean there’s a conflict, Otter said, arguing that ‘the record informs no substantial risk that confidential information obtained by’ Merchant attorneys while prosecuting the patents for Elizabeth Inc. would be useful in the Cradl case.”
Risk Update

Litigation Financing Developments — Lawsuit Funders Ordered Unmasked

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3M Lawsuit Investors Ordered to Be Unmasked Amid $6 Billion Deal” —

  • “A federal judge wants to know how much of a $6 billion settlement for military veterans injured by faulty 3M Co. earplugs is set to go to outside investors backing the lawsuits.”
  • “Rodgers expressed concern about outside funders’ role in the deal. ‘For at least the past decade, settlements of this size and nature have often attracted the attention of third-party litigation funding entities intending to prey on litigants,” she wrote. Rodgers said she wants to ensure that the claimants are not being “exploited by predatory lending practices, such as interest rates well above market rates, which can interfere with their ability to objectively evaluate the fairness of their settlement options.'”
  • “The settlement will resolve roughly 260,000 lawsuits alleging defective 3M combat earplugs caused hearing damage to troops. The company agreed to contribute $5 billion in cash and $1 billion in common stock through 2029, under the terms of the deal.”
  • “The plaintiffs lawyers are required to disclose all funding agreements made with any claimant before or after the settlement, within 30 days, according to the order. The lawyers and the claimants are also barred from entering new outside funding deals without court approval.”
  • “The funding declarations, which Rodgers said will be filed under seal, will include lender names, loan amounts, and interest rates, among other information. Lawyers will be required to produce financing agreements and be prepared to discuss them, Rodgers said.”
  • “Disclosure is a contentious topic in the $13.5 billion litigation finance industry, where investment firms pool money into litigation in exchange for a portion of the award. A federal judge in Ohio made a similar move in 2018 in massive opioid litigation, requiring in camera disclosure of litigation finance agreements.”
  • “Funders in mass torts cases typically loan money to law firms against their entire docket of cases. The 3M order does not specify whether such “portfolio deals” are required to be disclosed.”

3M judge issues extraordinary order to shut down ‘predatory’ litigation funding” —

  • “She appears to be the first MDL judge to place significant logistical obstacles in the way of post-settlement agreements between plaintiffs and lenders offering them advances on their settlement money, according to several litigation funding experts I consulted. Like many other federal courts, Rodgers also called for the disclosure of pre-settlement litigation funding deals, citing her authority under the Federal Rules of Civil Procedure.”
  • “‘It’s a significant leap,’ said Jack Kelly, managing director of the American Legal Finance Association, a trade group for funding companies that offer non-recourse advances to plaintiffs. Charles Agee of Westfleet Advisors, which issues an annual report on the litigation finance market, said Rodgers’ order is ‘unique,’ adding, ‘I worry about the ambiguity surrounding the standards by which the court would approve any such new transactions or, worse, potentially invalidate or void any historical agreements.'”
  • “Rodgers, who did not say what prompted her order, certainly has reason for concern about lenders who contend that double-digit interest rates are justified by the risk that a proposed settlement will take years to win approval or won’t be approved at all. (Plaintiffs who take advances against their anticipated settlement payouts — often because they need quick cash to pay bills or medical expenses — don’t have to pay anything back if they don’t recover any money.)”
  • “Rodgers cited a December 2022 study from the U.S. Government Accountability Office, which noted that post-settlement funding deals can create conflicts between plaintiffs and their lawyers and can gum up settlement approval when plaintiffs seek extra money to pay back litigation funders.”
  • “But Rodgers’ order, however well-intended, raises two important and related questions: Will the restrictions actually deter funders? And does the judge have the power to block plaintiffs from entering into private contracts with litigation funders?”
  • “Rodgers does have power over plaintiffs lawyers in the MDL. And barring them from facilitating funding deals, which typically include a letter in which plaintiffs’ lawyers promise to pay funders from the clients’ proceeds, could chill agreements.”
  • “But Peter Buckley of Fox Rothschild, who represents a litigation funder from the NFL case, said funders can structure agreements to work around that part of Rodgers’ order. In fact, Buckley said, Rodgers’ order could turn out to be a boon for good-faith funders, as long as the judge gives fair consideration to proposed deals. His reasoning: Advance court approval of funders’ repayment process will reduce the risk of plaintiffs trying to evade contractual obligations after they receive settlement money.”

For that 2022 report, see: United States Government Accountability Office: “THIRD-PARTY LITIGATION FINANCING: Market Characteristics, Data, and Trends.

Risk Update

“Ex” Risk Edition — Lawyer “Prenup” Proves Practical, Ex-client Client File Fight Finished

Posted on

A Lawyer Prenup Passes Ethical Muster” —

  • “The Maryland Appellate Court has upheld the post-departure provisions of an employment agreement between a law firm and an attorney:
    • “This case principally involves a dispute between a law firm and an attorney who was formerly employed by the firm. At the outset of her employment, the attorney and the firm entered into an agreement about how they would divide a contingent fee if she left the firm, was engaged by a client of the firm, and earned the fee after leaving the firm.”
    • “The attorney contends that the agreement violates the Maryland Attorneys’ Rules of Professional Conduct and, thus, is unenforceable. On that premise, she withheld over $700,000.00 in fees that were due to the firm under the agreement. For the reasons stated below, we shall hold that the agreement is not unenforceable on its face or as applied in the circumstances of this particular case. Consequently, we shall largely affirm the judgment of the Circuit Court for Prince George’s County, which upheld the agreement and ordered the attorney to pay the fees that she had withheld in violation of it. We shall, however, vacate the judgment insofar as the circuit court failed to award pre-judgment interest to the firm. We shall remand the case with instructions to amend the judgment to include the undisputed amount of $81,212.10 in pre-judgment interest.”
    • “The Prenuptial Agreement is not an employment agreement; it is a departure agreement. It governs the division of fees between Ashcraft and an attorney if the attorney leaves the firm, is retained by any of the firm’s former clients, and settles the clients’ cases after leaving the firm.”
    • “In the absence of an agreement like the Prenuptial Agreement, the parties’ share of a contingent fee would be governed by principles of quantum meruit, under which the firm would have to show the extent to which it contributed to the client’s success.”
    • “The Prenuptial Agreement uses a sliding-scale formula to apportion the division of fees. The formula considers two factors: (1) the amount of time between when the client retained the firm and when the attorney departed, and (2) the amount of time between when the attorney departed and when a fee was generated.”
    • “Ms. Bennett signed the Prenuptial Agreement, but about six months later she formed the opinion that the agreement was unethical and that it violated the Maryland Attorneys’ Rules of Professional Conduct. She expressed her opinion to Ashcraft’s managing partner.”
    • “We conclude that the Prenuptial Agreement is not unenforceable on its face—i.e., that it is not facially invalid. We are persuaded by the 1989 MSBA ethics opinion, which approved an agreement with a sliding-scale formula, much like Ashcraft’s—one in which the division of fees is “based upon a combination of the length of time that the case was in the law firm prior to the attorney’s termination and the period of time in which the fee is realized after the attorney has left the firm.” MSBA Ethics Comm., Formal Op. 1989-29.”
    • “We are persuaded as well by the Michigan Court of Appeals’ decision in McCroskey, which upheld an agreement under which the attorney received ‘a ratable proportion of a given fee on the basis of the stage of the litigation at the time of departure.’ McCroskey, Feldman, Cochrane & Brock, P.C. v. Waters, 494 N.W.2d at 828-29.”
    • “It is undisputed that for three years thereafter Ms. Bennett adhered to that agreement and paid the percentage of the fee dictated by the Prenuptial Agreement. It is also undisputed that Ms. Bennett ceased making payments in October of 2018, when she commenced this action (by filing a complaint that made no mention of the Barker cases). Finally, it is undisputed that, between October of 2018 and the entry of judgment, Ms. Bennett failed to remit $706,164.83 in fees, not including pre-judgment interest. It would seem, therefore, that Ashcraft has indisputably established all of the elements of its breach of contract claim.”

Ex-Cadwalader Clients Lose Bid for Legal File in Criminal Case” —

  • “Cadwalader, Wickersham & Taft LLP doesn’t have to turn over files related its representation of two former clients now facing criminal fraud charges who it says owe it at least $760,000 in legal fees.”
  • “Even assuming an urgent, particularized need for the file, the defendants haven’t demonstrated any prejudice or their inability to either pay the outstanding fees or post security, the US District Court for the Eastern District of New York said.”
  • “The defendants also have alternative means of obtaining the file, so denying the motion isn’t the equivalent of denying them access to the information they seek, Magistrate Judge James M. Wicks said.”
  • “Cadwalader represented the twins in multiple relevant preindictment matters from August 2021 through November 2022, when a disagreement over billing and nonpayment ended the relationship.”
  • “The firm asserted a retaining lien on the client file for the outstanding fees owed. The Kaplans, in turn, sued the firm in state court for legal malpractice and breach of fiduciary duty. That matter remains pending, but no application for a provisional remedy for return of the file had been made there, Wicks said.”
  • “The materials the Kaplans want include documents related to Cadwalader’s communications with the SEC, the US Attorney’s Office, and IHT Wealth Management LLC, where the Kaplans used to work.”
  • “The Cadwalader file isn’t ‘wholly unavailable’ and there are reasonable steps that the Kaplans could take to obtain it, he said.”
jobs (listed)

BRB Risk Jobs Board — Client Contracts Attorney (King & Spalding)

Posted on

Here’s another example of growth in the OCG/Terms specialist space. Today’s update is a sponsored job listing from King & Spalding. The firm is looking for a: “Client Contracts Attorney” —

  • King & Spalding, a leading global law firm, seeks a Client Contracts Attorney to review all outside counsel guidelines and other client-drafted engagement terms, non-disclosure agreements (NDAs), Business Associate Agreements, responses to Requests For Proposals (RFP’s), pitches, and other non-standard engagement agreements.
  • The Client Contracts Attorney will advise on the firm’s ability to comply with such agreements and will make revisions and draft exceptions documents as needed.
  • The Client Contracts Attorney will also negotiate terms directly with clients when instructed.
  • This position will work closely with the Client Contracts Attorney Manager, Associate Director of Conflicts & New Business Intake, Director of Conflicts & New Business Intake, and a team of other Client Contracts Attorneys.
  • This position offers remote work as an option, subject to location approval by the firm. Occasional travel to the Atlanta office may be required.

Target qualifications include:

  • Candidates must have a Juris Doctorate (J.D.) and an active law license in the jurisdiction in which they are located.
  • Candidates should have at least three years of contract review and negotiations experience, preferably with a large law firm or in-house.
  • Successful candidates must have the ability to develop a broad subject matter expertise regarding outside counsel guidelines provisions and the firm’s policies regarding such provisions.
  • A proven record of working in a fast-paced environment, having to manage multiple assignments with tight turnaround times, and success in contract negotiations are necessary skills for this role.
  • Candidates must be organized and able to coordinate input from others regarding certain provisions. Exceptional critical thinking, problem solving, and conflict resolution skills are also a must.
  • Knowledge of the Rules of Professional Conduct and experience with the U.S. and international privacy and data protections laws are both a plus.

Compensation and benefits:

  • The firm offers a generous total compensation package with bonuses and raises awarded in recognition of individual merit-based performance. Eligible employees may participate in King & Spalding’s comprehensive benefit program including health and wellness plan, life and disability insurance, flexible spending accounts and a health savings account, a 401(k) plan, discount programs, sick leave, vacation, and parental leave.
  • We are proud of our remarkably cohesive culture, which encompasses more than 2000 lawyers and business professionals in 23 offices worldwide. We seek to attract and develop the very best talent to work with us.

For additional detail:

You can read more and apply by visiting their job posting here.

You can read more about the firm on their careers page.

And if you’re interested in seeing your firm’s listings here (and reading some kind BRB job board endorsements), please feel free to reach out!