Bressler Risk Blog

“New hire forces law firm’s disqualification” —

• “A law firm could not avoid disqualification by screening a newly hired associate from a client matter in which she had a conflict of interest, the New Mexico Supreme Court has ruled in reversing judgment.”
• “The firm represented a defendant in a long-running real estate dispute. During the course of the litigation, the firm hired an associate who had actively represented the plaintiff in the case during previous employment.”
• “The plaintiff moved to disqualify the firm, contending that the associate’s conflict of interest was imputed to the firm.”
  “The court agreed, rejecting the firm’s contention that disqualification was unnecessary because it had screening procedures in place that kept the associate segregated from the real estate litigation and protected confidential information.”
• “The court held that ‘when an attorney has played a substantial role on one side of a lawsuit and subsequently joins a law firm on the opposing side of that lawsuit, both the lawyer and the new firm are disqualified from any further representation, absent informed consent of the former client. We also specifically conclude under the same rule that screening the new attorney from any involvement in the lawsuit is not an adequate response to the conflict.'”

“Trump fundraiser loses bid to sanction Gibson Dunn in Qatar hacking case” —

• “A U.S. judge on Wednesday denied a motion by former Donald Trump fundraiser Elliott Broidy to sanction law firm Gibson, Dunn & Crutcher over allegations that one of its lawyers had a conflict of interest in defending a man accused of hacking Broidy’s emails.”
• “Gibson Dunn in August 2022 withdrew from the defense of former CIA officer Kevin Chalker and his company Global Risk Advisors in a 2019 lawsuit brought in Manhattan federal court by Broidy, who raised money for Trump and accused Chalker of hacking his emails on behalf of Qatar.”
• “Broidy had accused a Gibson Dunn partner on Chalker’s defense team, former Department of Justice lawyer Zainab Ahmad, of having a conflict because she investigated the alleged hacking while working for Special Counsel Robert Mueller, whose office probed Russia’s interference in the 2016 U.S. election.”
• “The firm denied it had a conflict and said it withdrew when Chalker decided to hire a different firm for business reasons. Ahmad said in a sworn declaration in March that she was never involved in any investigation into Broidy and never learned any confidential information relevant to the case.”
• “Vyskocil wrote that the legal basis for disqualifying a lawyer was high, and that the plaintiffs did not prove Gibson Dunn acted in bad faith. She said evidence suggested that the firm ‘had a good faith basis to believe that Ms. Ahmad did not have a conflict of interest.'”

“Developer Daibes will stick with lawyer despite potential conflict in Menendez case” —

• “Fred Daibes, the North Jersey developer charged alongside U.S. Sen. Bob Menendez in an alleged bribery scheme, will keep his attorney in a separate bank fraud case, despite federal prosecutors warning of a legal conflict of interest.”
• “Daibes is one of five people indicted in the alleged corruption scheme involving New Jersey’s senior senator and his wife, Nadine Arslanian Menendez. Daibes pleaded not guilty last month to charges related to the case, in which Menendez is accused of secretly acting as an agent for the Egyptian government.”
• “At a hearing last month, a federal prosecutor said he believed Daibes’ attorney in the bank fraud case, Lawrence S. Lustberg of Gibbons P.C., faced a potential conflict because he also represents a defendant in the corruption case, Wael Hana. Hana, a halal meat exporter, is accused of bribing Menendez to win the senator’s help in getting favorable treatment from Egyptian officials.”
• “At a Nov. 16 court hearing, however, Daibes said he will keep Lustberg as his attorney. Lustberg did not respond to messages for comment.The corruption indictment shed light on Menendez’s alleged interference with Daibes’ bank fraud charges, saying the senator recommended that President Joe Biden nominate a U.S. attorney he believed he could influence in Daibes’ favor.”
• “‘Mr. Lustberg knows certain facts allegedly relevant to those charges,’ Vikas Khanna, first assistant U.S. attorney for the District of New Jersey, wrote in a letter to U.S. District Judge Susan D. Wigenton last month.”
• “At the October hearing, the government requested that Daibes be made aware of the potential conflict of interest and, if it’s appropriate, sign a voluntary waiver to continue with Lustberg as his attorney.”
• “At Hana’s arraignment in the corruption trial last month, U.S. District Judge Sidney Stein repeatedly asked Hana if he wanted new attorneys. That same day, Hana signed a waiver of any potential conflict of interest involving Lustberg’s representation of Daibes, according to court documents.”
• “Stein noted that Lustberg could be called as a witness in the Menendez case. Hana said he was satisfied with Lustberg even after Stein reiterated that he would not be able to appeal on the grounds that Lustberg was conflicted.”

“Allen Matkins Escapes DQ From Land Contamination Suit” —

• “A California federal judge has rejected freight railway operator Union Pacific’s attempt to disqualify Allen Matkins Leck Gamble Mallory & Natsis LLP from its land contamination suit, ruling that there was no conflict of interest stemming from a previous environmental suit.”
• “U.S. District Judge Beth Freeman of the Northern District of California said Wednesday that although former Allen Matkins partner James Meeder previously represented Union Pacific in a similar environmental suit and there was some evidence that could potentially disqualify the firm if it was proven that he shared confidential information with the defendants, the potential delay to proceedings along with evidence outweighing the railway operator’s was enough to avoid disqualification at this stage.”
• “‘Where, as here, defendants have presented persuasive evidence to show that confidential information was not actually exchanged between Meeder and other attorneys at Allen Matkins, the need to maintain ethical standards and maintain public trust in the administration of justice and the integrity of the bar weigh less heavily in the court’s equitable analysis,’ Judge Freeman’s order said.”
• “Union Pacific said in its September bid to have Allen Matkins disqualified that Meeder and partner David Cooke served as legal counsel for legacy company Southern Pacific in a pair of 1990s suits, one over an oil-contaminated property adjacent to a railroad and the other over the contamination of a former railyard site.”
• “Because they represented one of its entities in similar litigation, Union Pacific argued, the attorneys shouldn’t be allowed to represent an opposing party due to the potential for confidential information acquired in those suits to be used against the company.”
• “Union Pacific specifically asserted that Cooke shared confidential information he gained as counsel for a former Southern Pacific environmental manager, Mark Ransom, with his colleague Kamran Javandel, an Allen Matkins partner who represented the Hills.”
• “Judge Freeman determined that the first suit wasn’t related closely enough to be considered a conflict of interest because it was a fraud suit alleging that Southern Pacific misrepresented the property’s pollution status when selling it, instead of a dispute over the contamination itself. The second suit was determined to be closely related as they both included allegations that the railway operator polluted the property with chemical solvents.”
• “When it came to the involvement of the attorneys, Judge Freeman ruled that Cooke didn’t serve a big enough role in the 1990s contamination suit to create a conflict of interest, while Meeder, who retired as a full-time attorney a year before the suit was first filed, was unlikely to have enough opportunities to share confidential information due to his new status as a limited of counsel.”

“Stormy Daniels’ Complaint Against Trump Defense Lawyer Gets Tossed” —

• “New York’s Attorney Grievance Committee closed the books on Tuesday on a complaint filed by adult film actress Stormy Daniels against one of former President Donald Trump’s criminal defense attorneys.
• “In September, a New York judge cleared Trump’s attorney Joe Tacopina of any conflicts of interest involving Daniels, who is a central witness in the pending hush-money criminal case. But Daniels’ attorney Clark Brewster at the time still had a pending complaint against Tacopina with the grievance committee, which also failed.”
• “‘Now both the court and the disciplinary committee have ruled that there was no conflict or ethical violation at all, as I have said from day one,’ Tacopina told The Messenger.”
• “In a CNN interview from 2018, Tacopina told then-host Don Lemon that he could not comment on Daniels because of ‘attorney-client privilege’ tied to her seeking his consultation for legal advice. Tacopina distanced himself from those remarks after joining Trump’s legal team, stating that he never met Daniels, spoke to her or viewed any documents related to her cases.”

“OtterBox Rival Can’t DQ Counsel In Phone Case Patent Feud” —

• “Phone case maker Jefferson Street can’t block Merchant & Gould PC from representing Otter Products LLC based on claims that the firm filed the application for the patents-in-suit, as a Colorado magistrate judge found that Jefferson Street was a separate entity from the patent holder and that there was no evidence showing the firm breached its ethical duties.”
• “U.S. Magistrate Judge Susan Prose said in a Tuesday order that Merchant & Gould filed the patent application for Elizabeth Inc., but Elizabeth never transferred its former relationship with the firm to Jefferson Street Holdings LLC, which does business as Cradl Ltd.”
• “In addition, Judge Prose found that despite Cradl’s claims that Merchant & Gould’s Denver office is small and would make it difficult to uphold an ethical wall, there were no facts suggesting that the size of the law office would cause it to breach its duties to Elizabeth.”
• “‘Based on a careful review of the entire record, this court finds no grounds for employing the extreme remedy of disqualification,’ Judge Prose said.”
• “According to Cradl, the court should reject arguments from Merchant & Gould that there is no conflict because it represented Elizabeth, not Cradl, and that it didn’t prosecute the patent claims in this case because they’re different from the application it filed. Cradl argued that just because Elizabeth’s owner Elizabeth Dining spun out Cradl to another company ‘does not mean that M&G is free to ignore its ethical duties to its former client.'”
• “Otter struck back in August, arguing that the assignment of a patent doesn’t also transfer an attorney-client relationship related to that patent. Otter also argued that Elizabeth still exists as its own entity and isn’t the parent company of Cradl despite sharing the same owner, who invented the patents-in-suit.”
• “Beyond that, Otter said the engagement letter Elizabeth 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.'”

“Allen & Overy data hit by hackers in ransomware attack” —

• “Allen & Overy, the ‘magic circle’ law firm, has suffered a cyber attack on its systems, making it the latest big corporate to fall victim to a ransomware hack.”
• “A&O confirmed it had ‘experienced a cyber security incident impacting a small number of storage servers’, after posts on social media platform X on Wednesday claimed the hacking group LockBit had attacked the legal giant and threatened to publish data from the firm’s files on November 28.”
• “‘Investigations to date have confirmed that data in our core systems, including our email and document management system, has not been affected,’ A&O said on Thursday. ‘As a matter of priority, we are assessing exactly what data has been impacted, and we are informing affected clients.’”
• “The UK’s National Cyber Security Centre has warned that law firms present an attractive target for hackers due to the wealth of information they hold on companies across most sectors and regions. Hackers such as LockBit target companies and governments with ransomware that disables access to computer systems. Groups then often demand payments or threaten to release private data and communications.”
• “‘Our technical response team, working alongside an independent cyber security adviser, took immediate action to isolate and contain the incident,’ A&O said. ‘We appreciate that this is an important matter for our clients, and we take this very seriously. Keeping our clients’ data safe, secure, and confidential is an absolute priority.”

“Allen & Overy risks losing trust if it stays silent on cyberattack” —

• “The Australian arm of Allen & Overy risks losing trust with clients and the public if it stays silent on the cyberattack the international legal firm suffered last week, the former boss of the government’s cybersecurity agency said.”
• “Alastair MacGibbon, the former head of the Australian CyberSecurity Centre and an adviser to two prime ministers, told The Australian Financial Review that ‘the fact [Allen & Overy] is not making any comment is unhelpful’. The firm, which has approximately 25 partners and 130 fee-earning lawyers in Australia, counts critical infrastructure assets NBN Co and Port of Melbourne among its Australian clients. Russian-linked hacking group LockBit is threatening to release files stolen from the London-based firm on the dark web from November 28.”
• “Mr MacGibbon, who is now chief strategy officer at CyberCX, said ‘I suspect, since they are a law firm, they are spending most of their time worrying about the legal implications of speaking’.”
• “Earlier this year, Australia’s largest law partnership, HWL Ebsworth, had 2.5 million files stolen in a cyberattack, affecting major banks, insurers and 65 government agencies.”
• “Overseas, major law firms including DLA Piper, K&L Gates and Kirkland & Ellis have all fallen victim to cyberattacks in recent years.”

“Hackers are exploiting ‘CitrixBleed’ bug in the latest wave of mass cyberattacks” —

• “Security researchers say hackers are mass-exploiting a critical-rated vulnerability in Citrix NetScaler systems to launch crippling cyberattacks against big-name organizations worldwide.”
• “These cyberattacks have so far included aerospace giant Boeing; the world’s biggest bank, ICBC; one of the world’s largest port operators, DP World; and international law firm Allen & Overy, according to reports.”
• “Thousands of other organizations remain unpatched against the vulnerability, tracked officially as CVE-2023-4966 and dubbed “CitrixBleed.” The majority of affected systems are located in North America, according to nonprofit threat tracker Shadowserver Foundation. The U.S. government’s cybersecurity agency CISA has also sounded the alarm in an advisory urging federal agencies to patch against the actively exploited flaw.”

“Proposed Advisory Opinion 24-1 Regarding Lawyers’ use of Generative Artificial Intelligence – Official Notice” —

• “The Florida Bar Board of Governors’ Review Committee on Professional Ethics has issued Proposed Advisory Opinion 24-1, reprinted below.”
• “The board will consider any comments received at a meeting scheduled to be held on Friday, January 19, 2024, at the AC Hotel in Tallahassee, Florida. Comments must contain the proposed advisory opinion number and clearly state the issues for the committee to consider.”
  • “Due to these concerns, lawyers using generative AI must take reasonable precautions to protect the confidentiality of client information, develop policies for the reasonable oversight of generative AI use, ensure fees and costs are reasonable, and comply with applicable ethics and advertising regulations.”
  • “A lawyer’s first responsibility when using generative AI should be the protection of the confidentiality of the client’s information as required by Rule 4-1.6 of the Rules Regulating The Florida Bar.”
  • “When using a third-party generative AI program, lawyers must sufficiently understand the technology to satisfy their ethical obligations. For generative AI, this specifically includes knowledge of whether the program is ‘self-learning’. A generative AI that is ‘self-learning’ continues to develop its responses as it receives additional inputs and adds those inputs to its existing parameters. Neeley, supra n. 2. Use of a ‘self-learning’ generative AI raises the possibility that a client’s information may be stored within the program and revealed in response to future inquiries by third parties.”
  • “Existing ethics opinions relating to cloud computing, electronic storage disposal, remote paralegal services, and metadata have addressed the duties of confidentiality and competence to prior technological innovations and are particularly instructive… While the opinions were developed to address cloud computing, these recommendations are equally applicable to a lawyer’s use of third-party generative AI when dealing with confidential information.”
  • “It should be noted that confidentiality concerns may be mitigated by use of an inhouse generative AI rather than an outside generative AI where the data is hosted and stored by a third-party. If the use of a generative AI program does not involve the disclosure of confidential information to a third-party, a lawyer is not required to obtain a client’s informed consent pursuant to Rule 4-1.6.”
  • “While Rule 4-5.3(a) defines a nonlawyer assistant as a ‘a person’, many of the standards applicable to nonlawyer assistants provide useful guidance for a lawyer’s use of generative AI.”
  • “First, just as a lawyer must make reasonable efforts to ensure that a law firm has policies to reasonably assure that the conduct of a nonlawyer assistant is compatible with the lawyer’s own professional obligations, a lawyer must do the same for generative AI. Lawyers who rely on generative AI for research, drafting, communication, and client intake risk many of the same perils as those who have relied on inexperienced or overconfident nonlawyer assistants.”
  • “Second, a lawyer must always review the work product of a generative AI just as the lawyer must do so for the work of nonlawyer assistants such as paralegals. Lawyers are ultimately responsible for the work product that they create regardless of whether that work product was originally drafted or researched by a nonlawyer or generative AI.”

“California Bar to Vote on AI Guidelines Over Disclosure, Billing” —

• “California State Bar committee is calling for state lawmakers to consider regulations on non-lawyer use of AI legal products and recommending guidance for attorneys who use the technology.”
• “Generative AI’s increasingly sophisticated legal tools hold the promise of improving access to justice by offering free or low-cost legal advice to people who can’t pay for an attorney. But ‘while generative AI may be of great benefit in minimizing the justice gap, it could also create harm if self-represented individuals are relying on generative AI outputs that provide false information,’ the conduct committee said.”
• “The committee is calling for the board of trustees to work with California’s legislature and supreme court to determine if the unauthorized practice of law needs to be more clearly defined, and whether legal generative AI products require licensing or regulating.”
• “The California committee’s recommendations also include non-binding best practices for lawyers using generative AI but stop short of setting ethics rules. It described the proposed guidelines as an ‘interim step to provide guidance on this evolving technology while further rules and regulations are considered.’”
• “The ‘practical guidelines’ ask attorneys to consider disclosing to clients when they use AI in their representation, and to not charge hourly fees for the time saved by using generative AI. Costs associated with generative AI may be billed ‘in compliance with applicable law,’ according to the guidelines.”

“Jackson Walker Says Attorney Lied About Romance With Judge” —

• “A onetime partner at the Texas law firm Jackson Walker failed to disclose the full truth about an alleged romantic relationship she had with bankruptcy Judge David R. Jones, the firm said.”
• “The attorney, Elizabeth Freeman, initially denied in 2021 that she was in a ‘current’ relationship with the prominent Texas bankruptcy judge, but admitted that they’d had a past relationship, Jackson Walker said in a court filing Monday. The firm only learned in 2022 that those statements were ‘possibly false or at least no longer true,’ it said.”
• “The new information comes as the Justice Department’s bankruptcy watchdog, the US Trustee’s office, is challenging at least $13 million in fees the firm collected following revelations that it didn’t disclose allegations of a romantic relationship between Jones and Freeman.”
• “Jones, who sat on the Houston-based bankruptcy court for 12 years, announced last month he would resign after admitting to a long-term relationship with Freeman. Freeman previously worked at Jackson Walker and, before that, as a clerk to Jones himself. She left the firm in December 2022.”
• “The firm reiterated its stance that it first became aware of allegations of a relationship between Jones and Freeman in March 2021. After learning of the allegations, the firm said, it tapped outside counsel at Holland & Knight to help it probe the situation.”
• “Jackson Walker in an August 2021 draft letter to Holland & Knight said Freeman had ‘confirmed that there is no current romantic relationship between herself and Judge Jones and that none is expected going forward.’”
• “Jackson Walker noted that as part of its handling of the allegations, it disclosed the situation in 2021 to Kirkland & Ellis, the powerhouse restructuring firm that was its co-counsel in a bankruptcy case at the time.”
• “Jackson Walker said Freeman denied that the relationship was ongoing when the firm confronted her about it in 2022, but she later admitted to a current romantic relationship. Jackson Walker then launched discussions with her and her attorney ‘that ultimately resulted in her separation from the Firm,’ the filing said.”

“Was Nixon Peabody’s Representation of Trump ‘Worth a Conversation’ With Other Partners?” —

• “Nixon Peabody’s representation of Donald Trump in federal litigation—and whether any firm partners were notified of the representation in advance—is getting more notice, as legal industry observers point to the untraditional and perhaps ‘imprudent’ approach the law firm took in reportedly bringing on the former president as a client.”
• “Observers say a pre-hiring meeting with other lawyers should have occurred because of the potential impact on other clients and on the firm’s business operations.”
• “‘Not as a matter of principle or otherwise, but as a matter of management hygiene, it probably should have been aired in advance and not announced as a ‘fait accompli,’’ noted Bruce MacEwen, a New York-based law firm consultant.”
• “Am Law 200 firms rarely represent Trump, a lightning rod for controversy and often one that corporate clients disagree with. Trump continues to rely on small firms and solo practitioners for the myriad of indictments and other litigation entangling him. One of the most recent Am Law 200 lawyers to represent Trump, Todd Blanche, left Cadwalader Wickersham & Taft to open his own shop in April.”
• “According to reports by Above the Law, Nixon Peabody CEO and managing partner Stephen Zubiago reportedly told surprised members of the Boston-based firm on Nov. 6 that he authorized the firm taking on Trump as a client without disclosing it to partners beforehand.”
• “In a statement to Law.com, Allison McClain, chief communications officer for Nixon Peabody, said the firm performed a conflict check on Trump just as it does ‘for any new representation at the firm.’ She did not respond to a question about whether other lawyers were informed about Trump being a client after the check was completed.”
• “In interviews, law firm consultants and marketing advisers said if Nixon Peabody’s leadership took on the case without consulting the partnership at large, it was within the firm’s right and law firms may take on controversial clients. But several said they wouldn’t advise a firm leader to leave the partnership in the dark on an issue like this.”
• “Even if a firm decides to take a case based solely on its subject matter, the public will link the firm with the client if it’s one with Trump’s celebrity status, MacEwen said. ‘The question is, ‘Who is the client?’’ MacEwen said. ‘If you’re a firm that represents Donald Trump, well, guess what? That’s who you are. I don’t care if it’s a parking ticket.’”
• “Alexa Ross, an Atlanta-based attorney and law firm consultant, noted that prior to engaging with a client, a lawyer or law firm performs ‘reasonable procedures, appropriate for the size and type of firm and practice’ to determine any ‘actual or potential conflicts of interest,’ according to Rule 1.7 of the American Bar Association’s (ABA) Rules of Professional Conduct.”
• “‘This is not a simple Republican versus Democratic situation. All partners—Republicans, Democrats, independents and others—should have been afforded the opportunity to think about the potential ramifications of the representation and determine whether to undertake it,’ she said. ‘The partnership, not the originating partner alone, had the right to decide whether to accept the representation.’”
• “Denver-based law firm marketing consultant Meranda Vieyra said she was unsure if it was ‘practical’ that a firm the size of Nixon Peabody could call a meeting of its partners every time it was considering a new client. Nixon Peabody has about 570 lawyers in 15 offices in four countries.”
• “But she added that a firm probably should inform all its lawyers and staff it is considering a client like Trump—who is facing four indictments while being the front-runner for the Republican nomination for president in 2024.”

November has been a busy month for Bill Freivogel. Some of his updates posted here, with kind thanks. As always with Bill, it’s the little bits of thought and commentary among the summaries that make it all a rewarding read:

• Shenzhen Long King Logistics Co., Ltd. v. Hop Wo Int’l Trading, Inc., 22-CV-10682 (VEC) (S.D.N.Y. Nov. 3, 2023).
  • This is a breach of contract case involving Defendant’s failure to pay shipping fees for nine containers shipped from China to New York. Law Firm represents Plaintiff. Defendant moved to disqualify Law Firm because Law Firm had earlier represented Defendant in analyzing individual warehouse leases.
  • In this opinion the court denied the motion holding that Defendant was not a current client of Law Firm.
  • The somewhat interesting aspect is the court’s characterization of each lease review as individual representations that ended at the conclusion of each review. The court noted the absence of any written expression of a continuing representation. The court also said Defendant’s subjective feeling that the representation was continuing did not make it so. As to the court’s former-client analysis, it was too routine for additional comment here.
• Take2 Techs. Ltd. v. Pac. Biosciences of Cal., No. 5:23-cv-04166-EJD, 2023 WL 7346246 (N.D. Cal. San Jose Div. Nov. 6, 2023).
  • Law Firm represents Plaintiff in this patent-related case. Lawyer moved from Law Firm to the in-house law department of Defendant. Plaintiff moved to disqualify Lawyer and the entire law department of Defendant.
  • In this opinion the court granted the motion as to Lawyer. And, the court found that Lawyer had “substantially” participated in this matter while at Law Firm. The court said that if Lawyer had joined a “conventional law firm,” the entire firm would be disqualified under California’s screening rule. However, the court noted that conflicts law regarding in-house law departments was undeveloped. The court declined to disqualify Defendant’s entire law department, but said that some limitations should be put on Lawyer’s relationship with specific members of the law department. The court ordered the parties to confer and agree on those limitations.
• Hawkins v. DePuy Orthopaedics, Inc., 2023 WL 7292164 (D.D.C. Nov. 6, 2023).
  • This is one of a series of cases dealing with injuries from allegedly defective hip replacement systems. Expert had originally done consulting work for Manufacturer/Defendant. Expert has now shown up as an expert for injured plaintiffs, including Plaintiff here.
  • This was a very fact-intensive analysis resulting in the disqualification of Expert. We will spare you with specifics. The court concluded that Defendant had an expectation of confidentiality from Expert and that Defendant had shared confidences relating to this case with Expert. Thus far, Expert has been disqualified in six cases against Defendant and allowed to remain in one.
• In re Mignott, 2023 WL 6976464 (Ga. Oct. 24, 2023).
  • Lawyer learned information from a “prospective client,” not an “actual client.” Lawyer later revealed that information in a proceeding adverse to the prospective client.
  • All that occurred prior to Georgia’s adoption of Rule 1.18. Disciplinary officials found Lawyer had violated Rules 1.8 and 1.9 and ordered Lawyer suspended.
  • In this opinion the court reversed, saying Lawyer had not acted unethically because rules in effect at the time of the charged conduct did not accomplish what Rule 1.18 was intended to do.
• In re Blue Cross Blue Shield Antitrust Litig. MDL 2406, No. 22-13051 (11th Cir. Oct. 25, 2023).
  • This is an appeal from a trial court approval of a settlement agreement of a class action against Blue Cross Blue Shield. One objection is that the same counsel and class representatives are representing both an injunctive class and a damages class.
  • In this opinion the appellate court rejected that objection. “Given the near-complete overlap in class membership, [the objector] does not offer any evidence that one class was harmed by conduct that benefitted the other.” [Our note: The background of this case involving the provision of health insurance to “subscribers” and “providers” under the antitrust laws is too complex for treatment here. You are on your own.]

“Opioid Defendants Appeal Judge’s ‘Untenable’ Order on Special Master DQ” —

• “Two companies have appealed a judge’s order refusing to disqualify the special master in the opioid multidistrict litigation after he inadvertently hit ‘reply all’ on an email meant for himself.”
• “Polster, of the Northern District of Ohio, ruled that the email was protected under judicial deliberative privilege, but the petition says the judge abused his discretion. Cohen, the petition says, never asserted such a privilege.”
• “The Sixth Circuit petition clarified that it was not seeking to disqualify Cohen in cases involving other defendants, only the pharmacy benefit managers. The petition, filed on Monday, comes after Polster ordered the parties on Oct. 27 to ‘work with Special Master Cohen to address any disagreements’ in the bellwether trial plan.”
• “‘They should not be forced to participate in proceedings before a special master whose disclosed thoughts—even if disclosed inadvertently—would lead any reasonable person to question his impartiality,’ the petition says.”
• “Lawyers were in the midst of scheduling bellwether trials when Cohen accidentally hit ‘reply all’ in an Aug. 28 email with notes to himself. 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).'”
• “‘Under the district court’s rule,’ the petition says, ‘a judicial officer who reveals an improper bias against a litigant could avoid disqualification so long as he claims that he intended for the message to remain private. That is not and should not be the law.'”

“Report Raises Security Concerns About Australian Law Firms Acting for Chinese Entities” —

• “Chinese enterprises pursuing ownership of Australia’s critical infrastructure and critical minerals are using law firms to circumvent Australia’s foreign transparency and interference laws, a recent report claims.”
• “‘Law firms operating in Australia have been engaged by advanced technology companies that the Five Eyes [intelligence alliance between Australia, Canada, New Zealand, the U.K., and the U.S.] consider high-risk vendors, social media giants that refuse to appear at Australia’s foreign interference inquiries, and PRC state-owned energy leaders that have majority ownership in Australian electricity companies,’ the report states.”
• “‘Meanwhile these law firms are entrusted with legal engagements involving Australia’s critical infrastructure and Australian Government entities responsible for countering national security risks.’”
• “Law firms say they are just providing legal advice, but Potter said Internet 2.0 found that firms are promoting the signing of memorandums of understanding with the Chinese government in Hong Kong for its Belt and Road initiative.”
• “The Belt and Road Initiative is a global infrastructure development strategy adopted by the Chinese government in 2013 to invest in more than 150 countries and international organizations.”
• “‘That’s not law work, that’s lobbying,’ Potter said.”
• “The report states that law firms are providing foreign entities with ‘legitimacy and confidentiality’ as they pursue their strategic objectives in Australia, and this risks helping them circumvent the intent of Australia’s foreign transparency and interference laws.”
• “In particular, he said some law firms have email accounts for lawyers in different countries on the same domain—using a .com.au address for Australian and foreign emails, for instance. This is considered a bad idea because if an organization is hacked in one country it is easier for them to be hacked in another, he said.”
• “The report singled out Ashurst. Public mail exchange records show that the email accounts of Ashurst employees based in the People’s Republic of China share the same email servers as their Australian counterparts, it said, which results in ‘a lack of infrastructure isolation risking exposing Australian email traffic to PRC’s intelligence laws.’”
• “The report says that IP Australia, the Australian government agency responsible for administering the country’s intellectual property law, lists Ashurst as Huawei’s firm for legal services for intellectual property filings in Australia. It also quotes a Bloomberg report saying that Huawei delivered a malicious software update to Australian telecommunication networks in 2012, before Australia classified Huawei as a high-risk vendor alongside the Five Eyes.”
• “Responding to the claims, an Ashurst spokesperson said the firm did not contribute to the Internet 2.0 report and was not contacted by the report researchers to comment on its position.”
• “‘We are not able to comment on individual clients or security measures, but the report contains inaccuracies, including in relation to our IT systems and the clients that we act for,’ the spokesperson said.”
• “The report also singles out King & Wood Mallesons, saying that the email accounts of firm employees based in Hong Kong share the same email servers as their Australian counterparts, ‘a lack of infrastructure isolation risking exposing Australian email traffic to PRC’s 2018 Hong Kong National Security Law.’”
• “The firm’s Swiss verein structure enables it to operate as an international firm while maintaining separate local partnerships—KWM Australia, KWM China and KWM Hong Kong, the spokesperson said.”
• “KWM maintains separation of IT systems between KWM Australia and other parts of the KWM network, and these systems are subject to rigorous security audits to satisfy internal and client obligations and expectations, she said. ‘We take our legal and fiduciary duties seriously and use robust conflict checking systems and business acceptance protocols.’”

“Alta. CA allows law firm to continue representing estate beneficiary, finds it was not in conflict” —

• “The Alberta Court of Appeal has affirmed the decision allowing a law firm to continue representing an estate beneficiary, finding that it did not act in conflict.”
• “In Konkolus v Balanko, 2023 ABCA 303, Jody Balanko is the personal representative of the estate of Elvyn Balanko, also known as Alvin Balanko. Jody and her sister, Peggy Konkolus, are the estate’s primary beneficiaries.”
• “In November 2022, the court declared that Dentons Canada LLP may continue to act for Peggy Konkolus. Jody contended that Dentons acted for Peggy in litigation relating to her actions as the former power of attorney for Alvin Balanko before his death and for her as a beneficiary of the estate. Jody argued that, depending on the issue, Dentons takes whatever position is more favourable to Peggy as either former power of attorney or beneficiary. Jody asserted that this causes Dentons to take contrary positions and act in conflict, which justifies their removal as counsel.”
• “Peggy argued that Dentons only started acting for her in her capacity as former power of attorney following her father’s death and that Dentons had never acted for the estate.”
• “The chambers judge found no conflict existed as she was not persuaded by the contents of a letter submitted by Jody and considered the other evidence speculative and not persuasive. The Alberta Court of Appeal affirmed the chambers judge’s decision, finding that he made no palpable and overriding error.”

“Rogers Communications says it is justified in withholding board information from Rogers sisters: court filing” —

• “Rogers Communications Inc. RCI-B-T says in a new court filing that it has ‘rational’ and ‘justifiable’ reasons for withholding some board information from two of its directors, Melinda Rogers-Hixon and Martha Rogers.”
• “Last month, Ms. Rogers-Hixon and Ms. Rogers, who are sisters, launched a legal challenge to obtain the documents, reigniting a long-standing feud between warring factions of the family that controls the Toronto-based telecom giant.”
• “In its rebuttal, filed in the B.C. Supreme Court on Monday, the wireless giant says it has ‘significant concerns’ about the sisters’ conduct and their choice of counsel.”
• “Ms. Rogers-Hixon is represented by Walied Soliman, the Canadian chair of Norton Rose Fulbright, a firm that also works for Telus Corp. T-T, one of Rogers’s main competitors. Rogers argues this is a conflict of interest as commercially sensitive information could make its way to Telus through the law firm.”
• “The company says it asked Ms. Rogers-Hixon to terminate the firm or to enter into an undertaking that board materials and discussions would not be shared with the firm but she has refused.”
• “‘Given the Petitioners’ conduct, including in retaining as counsel a law firm that is the longstanding and principal advisor to one of [Rogers]’s two fiercest competitors and is actively representing the interests of that competitor directly adverse to [Rogers], [Rogers] is not only entitled but obligated to limit their access to confidential board materials until such a time as the Petitioners and their counsel are prepared to enter into appropriate undertakings to protect those materials,’ the court filing reads.”
• “The sisters have argued that the company’s refusal to give them access to the same information other directors are privy to is ‘oppressive and unfairly prejudicial.’ They say they need access to unredacted documents to make informed decisions and properly perform their duties as directors.”
• “The company noted in its response that it is conducting an independent investigation into the sisters’ conduct as directors and that the review has not yet concluded.”

Once again, Lucian and Trisha promise more ethics fun in an hour than lawyers should be allowed to have with their annual update: “WEBINAR — 2023 Legal Ethics Year in Review” —

• Join Lucian Pera and Trisha Rich for a rollicking one-hour review of the most important developments of the last year (or so) in legal ethics and lawyering.
• They will distill practical guidance from ethics opinions and case law from all over and review what lawyers should know to protect their clients and themselves and practice more effectively.
• Topics will include:
  • NewLaw developments and lawyer regulatory reform
  • Ethical (and unethical) witness preparation
  • The latest cases on advance waivers of conflicts of interest
  • The first lawyers disciplined for falling for wire transfer frauds
  • Ethical (or unethical) deception in investigations
  • Using artificial intelligence (AI) ethically and responsibly
  • Continuing lawyer cybersecurity dangers … and more!