Bressler Risk Blog

Bill Freivogel has been quite busy, keeping an eye on all decisions and update conflicts and risk related. With his kind permission, and my continuing thanks for that making some days of this blog thing easy, I’m sharing some of his commentary and detail on his latest spotted stories of note:

Gottlieb v. Beckerle, 2024 WL 678007 (N.J. App. Div. Feb. 20, 2024).

• Derivative action on behalf of Company.
• Company’s board hired Lawyer to conduct an investigation on whether the action should continue. Lawyer was of counsel to Law Firm. Lawyer’s principal occupation is law professor. Lawyer submitted a report recommending that the board should seek dismissal of the suit. On Defendants’ motion to dismiss the case, Plaintiff claimed, among other things, that Lawyer’s recommendation should be rejected because Lawyer and Law Firm had conflicts of interest because they had been representing Company “for over thirty years.”
• The trial court dismissed the case. In this opinion the appellate court affirmed. The court said that, without more, the fact that the law firm doing a derivative action investigation has been representing the company on other matters does not mean the board could not rely upon the investigation.
• The court also noted that Lawyer’s own work for Company had been minimal, that his investigation in this case was quite thorough, and that Lawyer and Law Firm had no relationships with individual Defendants. Therefore, Company’s board was reasonable in relying upon it.

AGI Suretrack, LLC v. Farmers Edge Inc., 2024 WL 693971 (D. Neb. Feb. 20, 2024).

• Patent infringement case.
• Defendant proposes to use lawyer Robert Stoll as an expert witness. Stoll is a partner at Faegre.
• Faegre is not handling this infringement case. But, Faegre has represented Plaintiff and Plaintiff’s parent company, including an executive termination matter, arguably involving information relevant to this case.
• Faegre claims it has screened Stoll from any matters related to this case. Nevertheless, the magistrate judge, in this opinion, has granted Plaintiff’s motion to disqualify Stoll as an expert witness.
• The court distinguished the holding in Commonwealth Ins. Co. v. Stone Container Corp., 178 F. Supp.2d 938 (N.D. Ill. 2001) (also a magistrate judge opinion), which was one of the early cases holding that, for conflicts purposes, a lawyer/expert does not have a client.

Original LULAC Council No. 2 v. Rey Feo Scholarship Foundation, Inc., No. SA-23-CV-1307-XR (W.D. Tex. Feb. 14, 2024).

• The parties are fighting over who has the rights to certain trademarks. Plaintiff moved to disqualify the defendant’s lawyer (“Lawyer”) on former-client (Rule 1.9) grounds. There were two primary issues: (1) whether Lawyer previously represented Plaintiff, and (2) whether the earlier matter was substantially related to this case.
• In this opinion the court denied the motion, on both grounds. The analyses were too routine and fact-specific to be of precedential value.
• The most interesting aspect was that Lawyer had represented a predecessor company to Plaintiff. The court found that the predecessor was too defunct, and predecessor’s relationship to Plaintiff too attenuated, for Plaintiff to claim that Plaintiff had been Lawyer’s client.

Bold, Ltd. v. Rocket Resume, Inc., 2024 WL 589116 (N.D. Cal. Feb. 13, 2024).

• Copyright infringement case. Bold moved to disqualify Resume’s law firm (“Law Firm”). In this opinion the court granted the motion. Lots of lawyers with various affiliations moving around, some of whom had done work for Bold and were later with Law Firm.
• The key issue was substantial relationship under Rule 1.9. Routine analysis of questionable precedential value. Very California-centric.

In re The Norwich Roman Catholic Diocesan Corp., 2024 WL 535120 (D. Conn. Bankr. Feb. 9, 2024).

• The Bankruptcy Court appointed the Unknown Claims Representative (“UCR”) in 2022. This opinion responds to UCR’s application to employ Law Firm as its counsel.
• The problem is that Law Firm as been serving as Debtors’ counsel in a number of other church sexual abuse cases. In denying the application, the bankruptcy judge said that representing the UCR here seems “at odds” with serving “as parish counsel in several other pending bankruptcies.”
• The court discussed the application of Section 327 of the Bankruptcy Act and the distinction between “actual conflicts” and “potential conflicts,” but clearing all that away, this application simply did not pass the “straight-face” test (our phrase, not the court’s).

“‘One Firm’ or Separate Entities? Vereins’ Growth Bumps Into Conflicts, Liability Concerns” —

• “A venue dispute in a malpractice case against global firm Baker McKenzie has put the structure of Swiss vereins in the spotlight, with many commentators highlighting the existence of unanswered questions about the liability of these entities when a member firm faces malpractice allegations.”
• “Last week’s ruling from an Illinois appeals court defied Baker McKenzie’s request that a case levied by a former client should be relocated overseas where, as the firm stated, ‘witnesses and evidence reside.’ The judges found the plaintiffs supported their allegations regarding the ‘legal unity of liability of defendants’ sufficiently to allow the case to be heard in the state where the firm was founded in 1949.”
• “The case recalls Dentons’ litigation with former client RevoLaze in 2020, when the firm was accused of malpractice for representing the plaintiff in a patent infringement case despite an alleged client-related conflict of interest. At the time, the firm argued that under its verein structure, its U.S. and Canadian offices were separate entities, though, the argument was rejected, with the judge noting that the firm ‘holds itself out to the public as a single firm.'”
• “In Baker McKenzie’s case, the firm is accused of failing to ‘disclose several conflicts of interest’ to a client. Among its defenses is that the client, investment firm Lehram Capital, engaged the firm’s Russian entity Baker & McKenzie CIS-Limited and not the wider firm. Since the suit was filed in 2018, Baker McKenzie’s Russian operations have relaunched as an independent firm in the wake of Russia’s invasion of Ukraine.”
• “In Baker McKenzie’s case, the firm is accused of failing to “disclose several conflicts of interest” to a client. Among its defenses is that the client, investment firm Lehram Capital, engaged the firm’s Russian entity Baker & McKenzie CIS-Limited and not the wider firm. Since the suit was filed in 2018, Baker McKenzie’s Russian operations have relaunched as an independent firm in the wake of Russia’s invasion of Ukraine.”
• “In times of conflict, like the malpractice claim, this model has proven to be ‘a smart way of navigating conflict while keeping work under one roof,’ according to Fort Stratford Partners co-founder Jonathan Fort. ‘A conflict is a huge problem for any international firm regardless of the structure and some clients aren’t going to like that but in a structural way vereins are a smart move,’ Fort said.”
• “Michael McCabe, a D.C.-based managing partner of McCabe Ali and expert witness in malpractice cases, said he doesn’t see a disproportionate number of verein lawyers accused of malpractice or conflicts. In fact, he said vereins ‘bring something to the table’ with talent and global reach.”
• “Yet the Baker McKenzie case suggests a maturation of the verein structure for law firms, as questions about whether liability can be imputed to a parent company have frequently surfaced in corporate law but not in global law firms, at least not prior to emergence of law firms’ use of the verein structure, Robertson [Cassandra Burke Robertson, a law professor at Case Western Reserve School of Law] said”
• “Marketing speak can make the issue a little more fraught, often undermining the divided structure of these entities. Commentators, as well as courts, have noted some vereins send conflicting messages to the market. ‘This is because they present themselves as one unit while legally acting as separate entities,’ explained consultant Tony Williams, a principal with Jomati Consultants.”
• “Baker McKenzie defended against its former client’s claim of legal malpractice, which emerged out of a deal in Russia in 2013, by contending that the client engaged the firm’s Russia-based entity, not the LLP as a whole and the claim had no merit in the U.S. because none its attorneys “in Chicago or anywhere else in the U.S. participated in the Russian litigation regarding the mine.”
• “‘You still see courts that are struggling with the concept of one law firm versus multiple law firms,” McCabe said. ‘Is Baker McKenzie, for example, one gigantic law firm, or is it a dozen or so smaller geographically centric separately created entities that are all within the same overarching family within the Baker & McKenzie brand?'”
• “‘You can’t be a global law firm and say you have 4,000 global lawyers on one hand, but on the other hand [say], ‘We’re not so global and we operate separately even though we are under the same umbrella,’’ McCabe said. ‘There aren’t many cases that talk about this matter.'”
• “A firm’s growth in scale is attended by the higher risk of conflicts, McCabe said, since every client engagement is a potential source of a conflict. This problem is magnified by the global nature of the clients served by global firms, often with complex structures of subsidiaries and joint ventures of their own.”
  “McCabe said vereins need to have a robust conflict checking system because they are ‘convenient targets’ for malpractice claims brought by dissatisfied clients.”
• “‘The benefits of being a Swiss verein or LLP are far more limited these days. I think it won’t be long before people say they are complicated and become limited companies. This would of course come with its own challenges but forward-looking firms might look to move to a different structure,’ said one head of a professional services firm.”

“US court says Baker & McKenzie LLP can face malpractice suit in Chicago” —

• “The lawsuit, amounting to US$200 million, was filed by overseas clients attempting to reclaim ownership of a Siberian coal mine, challenging the firm’s handling of the case. By a majority of 2-1, the appellate court rejected the motion to dismiss the case based on the doctrine of forum non conveniens, allowing courts to decline cases that might be more appropriately or conveniently tried elsewhere. Although the alleged misconduct occurred in Russia, the court determined that legal proceedings could not be conducted there, making Chicago – a major operational base for Baker & McKenzie LLP – a suitable venue for the trial.”
• “At the heart of the dispute is whether Baker & McKenzie LLP, headquartered in Chicago, can be held accountable for the actions of its Moscow branch, Baker & McKenzie CIS-Limited. The plaintiffs argue that the firm’s organizational structure – a Swiss verein comprising legally independent entities sharing a brand and certain management functions – does not exempt the Chicago office from liability for the Moscow office’s alleged malpractice.”
• “The claimants, Lehram Capital Investments and its principal shareholder, Daniel Rodriguez, had sought Baker & McKenzie’s services following the detention of a Lehram official by Russian authorities in 2013, shortly after acquiring the coal mine. The lawsuit contends that Baker & McKenzie CIS-Limited’s mishandling of the legal proceedings, including filing in an inappropriate court with a shorter statute of limitations and exposing Rodriguez to dangerous negotiations, led to the loss of the mine.”
• “Baker & McKenzie LLP had proposed London as a more appropriate venue for the case, given the involvement of its London office in the initial review and referral of the coal mine case. However, the plaintiffs maintain that all entities under the Baker & McKenzie brand operate as a single unit, making the Chicago office equally responsible.”

“When Communications Concerning a Client Can Be Withheld From the Client” —

• “Sometimes conflicts arise between law firms and their clients that require lawyers within the firms to seek legal advice. Such situations may include instances where firm lawyers become concerned about potential legal malpractice claims. In such situations, firm lawyers may seek advice from another lawyer within their firm about how to handle the issue. In subsequent litigation with the client, however, such communications may not be protected from discovery, particularly where the firm lawyer whose advice is sought has been involved in the representation of the client.”
• “Magistrate Judge Barbara Moses of the Southern District of New York recently addressed this issue in Bonde v. Wexler & Kaufman, 2023 WL 8756986 (S.D.N.Y. Dec. 8, 2023).”
• “Wexler & Kaufman PLLC (W&K), a law firm, sought to withhold as privileged communications exchanged among W&K personnel and an outside IT consultant after the firm was sued by a former client, Carl Ulfsson Bonde, for legal malpractice.”
• “The case arose out of a spoofing incident where a cybercriminal duped a W&K lawyer into sending the cybercriminal money that belonged to Bonde. In advancing their privilege claim, defendants argued that the withheld communications were made by W&K attorneys acting as general counsel to the firm for the purpose of providing legal advice to the firm and its lawyers in the wake of the spoofing incident. One of the W&K attorneys, however, was simultaneously acting as Bonde’s lawyer.”
• “Moses ultimately concluded that defendants had not sustained their burden to demonstrate that the firm lawyers whose advice allegedly was sought were acting as general counsel to the firm in connection with the communications, and she ordered the communications produced.”
• “After plaintiff moved to compel, Wexler and Kaufman sought to defend the privilege claims on the ground that in connection with these communications, they had ‘assumed the role of general counsel’ and the communications reflected their advising the firm on possible malpractice exposure, preparing a defense to potential claims by Bonde, and reporting the matter to the firm’s insurance carrier. The parties submitted 10 of the challenged communications for in camera review.”
• “Bonde argued that the withheld communications should be produced for two reasons: (1) defendants had not substantiated their claim that the withheld communications involved the provision of legal advice to the firm (as opposed to actions undertaken on Bonde’s behalf to seek the return of the stolen funds), and (2) defendants were barred from invoking the privilege because ethically Wexler could not act as general counsel to the firm on a matter involving Bonde while simultaneously representing Bonde.”
• “Bonde argued that the withheld communications should be produced for two reasons: (1) defendants had not substantiated their claim that the withheld communications involved the provision of legal advice to the firm (as opposed to actions undertaken on Bonde’s behalf to seek the return of the stolen funds), and (2) defendants were barred from invoking the privilege because ethically Wexler could not act as general counsel to the firm on a matter involving Bonde while simultaneously representing Bonde.”
• “Aside from the ethical conflict, which Moses recognized ‘does not, standing alone, vitiate an otherwise available evidentiary privilege,’ she concluded that Wexler and Kaufman had failed to present sufficient evidence to substantiate that either of them had assumed the role of in-house counsel in connection with the challenged communications.”

“Lewis Brisbois Faces DQ Bid In Scooter Injury Suit” —

• “The plaintiffs in a lawsuit over a defunct scooter-sharing service in Pittsburgh want to disqualify Lewis Brisbois from representing scooter maker Segway in the suit because the firm is also seeking to represent service operator Spin in its parent company’s bankruptcy proceedings in Florida.”
• “In their disqualification bid, two people who were injured in accidents involving Spin scooters and the family of one rider who was killed cited an apparent conflict of interest. Their issue is with Lewis Brisbois representing Segway-Ninebot in the Pennsylvania state court case against Spin, Segway and the city of Pittsburgh at the same time a different attorney from the same firm is seeking to become ‘special counsel’ to Spin’s parent company, Bird Global Inc., in its Chapter 11 case for claims filed over similar injuries in Los Angeles, Chicago and other cities.”
• “The plaintiffs asked the Allegheny County Court of Common Pleas to bar Lewis Brisbois Bisgaard & Smith from continuing to represent Segway in their suit, which was still awaiting rulings on whether it could sever the claims against Spin so the rest of the case could move forward amid the bankruptcy court’s automatic stay.”
• “Alesia Truxell, as the representative of the estate of Lawrence Chertik Jr., along with Jacob Speller and Jennifer Vining, had sued Pittsburgh, Spin and Segway in September, claiming that the scooters were unsafe for the bumps and potholes of Pittsburgh’s roadways, especially at night when other cities restricted the scooters’ usage.”
• “The Pittsburgh plaintiffs said the firm could not represent Segway in a state court lawsuit including Spin at the same time that it represented Spin in its federal bankruptcy, claiming the parties could have adverse interests in the Pennsylvania case or could give Segway access to information about the plaintiffs that Spin held.”
• “They pointed to the factors in assessing potential conflict of interest that Pennsylvania’s Eastern District federal court had established in 1995’s Dworkin v. General Motors Corp. , which calls for a ‘wall’ between attorneys in the same firm who might represent conflicting clients.”
• “‘There is no indication of a ‘wall’ or ‘screen’ between counsel in the Los Angeles office… representing debtor Spin and counsel for the defendants, herein, Segway Inc. and Segway Discovery, Inc., nor is there any indication of a joint-defense agreement between defendants Segway, Inc. and Segway Discovery, Inc. and debtor Spin,’ the motion said.”

“Sam Bankman-Fried to stick with new lawyers despite possible conflict” —

• “Sam Bankman-Fried, the jailed founder of bankrupt cryptocurrency exchange FTX, appeared in court on Wednesday for the first time since his November fraud conviction and confirmed he wanted to stick with new lawyers despite a possible conflict of interest.”
• “Bankman-Fried, 31, in January hired defense lawyers Marc Mukasey and Torrey Young to represent him through his March 28 sentencing. He could face decades in prison after a Manhattan federal court jury found the former billionaire guilty of stealing billions of dollars from FTX customers.”
• “At a brief hearing before U.S. District Judge Lewis Kaplan in Manhattan, Bankman-Fried said he was comfortable hiring Mukasey and Young even though they also represent the founder of bankrupt cryptocurrency lender Celsius Networks, Alex Mashinsky, who has pleaded not guilty to separate fraud charges.”
• “Kaplan asked Bankman-Fried, who wore a tan jail shirt and chains around his ankles, to describe the possible conflict in his own words. ‘At a high level, they also represent Alex Mashinsky,’ said a clean-shaven Bankman-Fried, whose curly hair has grown longer since his monthlong trial last year.”
• “Bankman-Fried described Celsius as ‘a firm that the firms I ran had business interactions with.'”
• “Bankman-Fried told Kaplan he had consulted with lawyers Mark Cohen and Christian Everdell, who represented him during his trial, about Mukasey’s potential conflict. Bankman-Fried said he also had discussed it with Alexandra Shapiro, another lawyer who will handle his eventual appeal.”
• “Mashinsky, 59, waived his right to a lawyer without any potential conflicts at a hearing on Tuesday before U.S. District Judge John Koeltl. Mukasey and Young said at that hearing that they could fairly represent both Bankman-Fried and Mashinsky.”

“Beasley Allen’s Andy Birchfield Faces Evidentiary Hearing on Disqualification” —

• “Plaintiffs attorney Andy Birchfield will face an evidentiary hearing next month on whether to disqualify him and his firm from the talcum powder litigation.”
• “Judges in both state and federal courts in New Jersey found that more evidence was needed to determine whether Birchfield and Beasley Allen, based in Montgomery, Alabama, should be disqualified based on an alleged conflict of interest.”
• “‘Based on the conflicting factual information provided by all parties, this court finds that it cannot confidently decide this issue on the basis of the information contained in the papers,’ he [Atlantic County Superior Court Judge John Porto] ruled in a Jan. 31 order. ‘Therefore, the court finds that an evidentiary hearing is necessary to determine witness credibility and if the defendants met their burden regarding disqualification of Beasley Allen.'”
• “Porto’s order said both James Conlan, a former partner at Faegre Drinker Biddle & Reath, and Birchfield must testify at the hearing. On Feb. 14, he told lawyers he needed to hold the hearing to determine the credibility of the witnesses, which could also include Johnson & Johnson’s worldwide vice president of litigation, Erik Haas, and one of its key attorneys, Barnes & Thornburg partner James Murdica, in Los Angeles.”
• “‘I’m looking at, really, narrowing down, zoning in with a microscope, saying, I’m looking at what happened; what went on; why does Johnson & Johnson have these thoughts; what actually happened; what do we have in terms of documentation or is it just testimony; and then I need credibility,’ he said, according to a transcript.”
• “On Feb. 9, following oral argument on the disqualification motion, U.S. Magistrate Judge Rukhsanah Singh, in the District of New Jersey, agreed that ‘more information is required to determine the issue of disqualification here… Additional information, including credibility determinations, would aid the court in determining whether such a severe remedy of disqualification is appropriate,’ he held.”
• “The evidentiary hearing would involve both judges and take place in Atlantic City, New Jersey, where Porto is overseeing the talc multicounty litigation in New Jersey state courts.”
• “The motions alleged that Birchfield struck a partnership with Conlan, a former lawyer with Johnson & Johnson. Conlan now runs Legacy Liability Solutions LLC, which, along with Birchfield, proposed a $19 billion deal to resolve the talc lawsuits against Johnson & Johnson.”

“L.A. Firm, Attorney Subject of Malpractice, Breach of Fiduciary Duty Suit for ‘King Fury 2’ Movie” —

• “A film production company is seeking over $60 million in damages and alleges a Los Angeles law firm and its attorney committed legal malpractice and breached their fiduciary duty while involved in an overseas film production.”
• “Shanghai-based Creasun Entertainment USA Inc., filed suit against Loeb & Loeb and attorney, Michael Helfant, who is of counsel to the firm, in Los Angeles County Superior Court last week. Creasun claims the defendants failed to diligently represent its interests when the company retained the firm and Helfant to negotiate its financing for the film ‘King Fury 2,’ set to star Arnold Schwarzenegger and Michael Fassbender, among others.”
• “Creasun became involved with the production after film producer Alex Lebovici approached Minglu Ma, the company’s chairman, about an investment opportunity in the film. The suit claims Lebovici and the defendants also ‘secretly developed an attorney-client relationship’ which created a conflict of interest when they represented Creasun in negotiations with Lebovici and his business partners.”
• “When Ma visited Bulgaria for the movie’s production, she claims she learned of alleged fraudulent activity with the film’s budget. Despite only investing $3 million at the time, the film had over $4 million in its account, and producers told Ma it ‘was a simple accounting error,’ the complaint said.”
• “Creasun’s denied access to real time bank statements for the movie production led it to attempt to obtain an audit of the film’s finances, but the company learned there was no contractual mechanism to enforce its right to access the records, the complaint said.”
• “After Creasun refused to put more money into the film’s production and faced pressure from Helfant to continue its investment, Creasun and Ma were then sued in a civil action for damages by a German producer. Creasun then filed a cross-complaint against the German producer, Lebovici, and others which resulted in considerable attorney fees as a consequence of negligent legal services from the defendants, the complaint said.”

“Investor Wants Fla. CBD Co.’s Atty DQ’d In Fraud Suit” —

• “An investor in a Florida health goods company asked a federal judge Wednesday to disqualify an attorney from representing a company principal, saying the attorney should instead testify at trial because he knows about relevant contract negotiations.”
• “Aaron Silberman and his investment firm AMJ Misil AB LLC submitted a motion to disqualify attorney Felipe Rubio from representing defendant Florencia Hane after he failed to appear on her behalf just two weeks before trial. Silberman included Rubio in his witness list for trial because defendants shared his name in an initial disclosure document, saying he had knowledge regarding Silberman’s fraud claims and the drafting of a membership interest purchase agreement in question.”
• “‘Defendants may not now withhold this evidence at trial under the pretense of attorney-client privilege,’ Silberman argued, adding, ‘here, defendants, the holders of any attorney-client privilege between them and attorney Rubio, have put attorney Rubio’s knowledge at issue as discoverable information through their Rule 26 initial disclosures, thereby waiving the attorney-client privilege as to all related privileged matters on the same subject.'”
• “In his suit filed in May 2020, Silberman claims he was lied to about Premier Beauty and Health LLC’s CBD products and prospects when its principals, Florencia Hane and Silberman’s uncle Jorge Hane, courted him for his investment and promised him a job.”
• “Based on the record of evidence, Silberman believed Rubio would testify that he first drafted a member interest purchase agreement between Premier and AMJ that would have allowed Florencia Hane to deposit $100,000 of the investment funds in an account of her choice, according to his memorandum.”
• “‘Plaintiff AMJ never agreed to that and never signed that initial membership interest purchase agreement drafted by attorney Rubio, but defendant Florencia proceeded to transfer … $100,000.00 of plaintiff AMJ’s investment funds to ‘an account of her choice’ anyway, thereby misappropriating … AMJ’s investment funds,’ Silberman said.”
• “Because Rubio’s testimony at trial would be adverse to Florencia Hane, Silberman said his disqualification as her counsel is necessary.”
• “‘Indeed, attorney Rubio’s testimony will, among other things, be adverse to defendant Florencia’s claims that … she did not misappropriate plaintiff AMJ’s investment funds. Consequently, plaintiffs respectfully request that this honorable court disqualify attorney Rubio as defendant Florencia’s counsel,’ Silberman said.”

“Alston & Bird Kicked Off California Copyright Case Over Conflict” —

• “Alston & Bird LLP has been sidelined in a copyright spat between the owner of the My Perfect Resume website, Bold Limited, and rival site operator Rocket Resume Inc.”
• “Lawyers in the firm’s intellectual property practice group had been representing Rocket, which is defending against Bold’s claims it copied from the My Perform Resume site in a suit in the US District Court for the Northern District of California. But that representation ended as Judge Beth Labson Freeman disqualified the firm due to its prior representation of Bold in IP matters over a four-year period from 2013 to 2017.”
• “Five current Alston & Bird partners ‘had a sufficiently direct relationship with Bold such that the Court may presume that these attorneys obtained confidential information,’ Freeman wrote in an order docketed Tuesday granting Bold’s motion to disqualify the firm.”
• “Freeman also found that one of the prior Bold matters in which Alston & Bird represented the company was sufficiently similar to the current copyright case to require disqualification.”
• “Rocket had argued the current litigation was about a Bold database registered with the US Copyright Office in late 2020, more than five years after Alston & Bird lawyers ceased doing work for Bold. The company urged Freeman not to bar two Alston & Bird attorneys, Chaka Patterson and Dana Zottola, who hadn’t been staffed on any of the older Bold matters.”
• “Zottola hasn’t made an appearance in the case but Rocket said she’s worked as an adviser to the company. She’s also married to Stephen Zimmerman, Rocket’s founder and CEO and a co-defendant in the case, according to the court’s order.”
• “‘The overlap of factual and legal issues between the prior and current representations indicates that information about Bold’s copyright registration and enforcement practices and its IP portfolio are material to the evaluation, prosecution, settlement, or accomplishment in this case,’ Freeman wrote.”

“Latham & Watkins cuts off its Hong Kong lawyers from international databases” —

• “US law firm Latham & Watkins is cutting off automatic access to its international databases for its Hong Kong-based lawyers, in a sign of how Beijing’s closer control of the territory is forcing global firms to rethink the way they operate.”
• “The world’s second-highest-grossing law firm has told staff that while Hong Kong will have access by default to China documents, from this month they will not be able to see other content in its international databases unless specifically given permission, according to two people with knowledge of the matter.”
• “The move underscores the growing difficulties for global companies operating in a city that made its name as an international financial hub. It comes after Beijing introduced new anti-espionage and data laws restricting information flows out of the country.”
• “Latham & Watkins is now ‘treating Hong Kong as the same as mainland China,’ one of the people said, as US firms grow wary over Beijing’s closer control of the territory. The law firm declined to comment.”
• “It is already considered best practice to wall off confidential client data, restricting access only to those who need to see it. However, the change will mean staff in Hong Kong no longer have default access even to non-private files from outside China.”
• “Latham & Watkins is also separating its Hong Kong office database from the rest of Asia — its offices in Seoul, Singapore and Tokyo — to create a new ‘Greater China’ database shared with the Beijing office, the people said.”
• “‘There’s definitely a concern over the new [Hong Kong security law] . . . that essentially puts Hong Kong data laws on par with China’s,’ the first person added.”
• “‘What it means is if you have . . . raids in Hong Kong, law enforcement [can only] access Hong Kong and China databases,’ the second person said.”
• “Beijing’s political crackdown on Hong Kong, with a sweeping national security law imposed on the city in 2020, has silenced dissent, curbed civil freedoms and dented the once freewheeling territory’s appeal for foreign investors and businesses.”

“Law firm Proskauer settles trade secrets fight with ex-COO” —

• “U.S. law firm Proskauer Rose on Thursday [Feb 1] said, opens new tab it has struck a settlement agreement with its former chief operating officer, whom it accused of stealing a trove of confidential information and trying to recruit other firm employees to a competitor.”
• “As part of the deal, Proskauer Rose and the former executive, Jonathan O’Brien, asked a federal judge in Manhattan to issue an order, opens new tab barring O’Brien and others from using any of Proskauer’s proprietary and confidential information.”
• “Other settlement terms reached between the firm and O’Brien were not disclosed. Lawyers for Proskauer and O’Brien did not immediately respond to requests for comment. A spokesperson for the firm also could not be reached.”
• “The settlement ends Proskauer’s year-old lawsuit against O’Brien, who was fired in December 2022 as he was poised to join rival firm Paul Hastings.”
• “Proskauer alleged O’Brien downloaded 34 gigabytes of data before his planned departure to Paul Hastings. The firm said he took financial performance data, client lists and profitability metrics, compensation records and evaluations of every one of Proskauer’s more than 200 partners.”
• “O’Brien denied Proskauer’s claims that he planned to take its secrets to another employer. He said he downloaded the data in order to work during a two-week vacation to Mauritius that coincided with his planned final days at the firm.”

“Dechert to Settle UK Hacking Claim From Aviation Executive” —

• “Dechert will pay a multimillion-dollar settlement to resolve a claim in the UK that it participated in an illegal scheme to hack aviation executive Farhad Azima.”
• “The two sides disagree on how big the settlement will be. Dechert said in a statement it agreed to pay $3.8 million (£3 million) plus Azima’s ‘costs, which have yet to be agreed between the parties or determined by the court.'”
• “An Azima spokesman, Tim Maltin, said the settlement will come out to nearly $15 million, including $11 million in costs and $3.8 million in damages.”
• “‘While this substantial payment resolves Mr. Azima’s limited claim in the UK, Mr. Azima will continue to pursue the significant claims he has brought against Dechert and others based on their conduct against him in the US and the damages they caused him there,’ Maltin said in a statement.”
• “Dechert, a Philadelphia-based law firm with offices around the world, has faced multiple lawsuits from Azima alleging that it participated in an illegal hack of his computer systems while working for one of the United Arab Emirates.”
• “The accusations center around the emirate, Ras Al Khaimah, which hired Neil Gerrard, once a top white-collar lawyer in Dechert’s London office, in 2013 to aid an investigation into the former head of the emirate’s investment fund.”
• “Azima, who once did business with the fund, has claimed he became a target of Ras Al Khaimah due to his efforts to publicize its human rights abuses. He was hacked and his emails were dumped online as part of an effort by the emirate to gain leverage in a court spat over a prior commercial agreement, Azima claimed in his US lawsuit.”
• “His case against Dechert, which is pending in New York’s Southern District, also names Gerrard and one other former Dechert lawyer as defendants. Dechert last June asked the court to dismiss the lawsuit, arguing in part that the suit failed to adequately support claims including witness tampering and obstruction of justice.”

“Conflict ‘inherent’ for firms with public, private clients: Scyne” —

• “The PwC spin-off tells a[n Australian] parliamentary committee its mission is ‘purpose over profit’ compared to other big four firms, which have failed to divest their government work.”
• “Firms that consult for the public and private sector have ‘inherent’ conflicts of interest that cannot be resolved unless they divest their government work like PwC, according to Scyne Advisory director Adrian Loader.”
• “Mr Loader, who is also the co-founder of Allegro Funds, the private equity investor that purchased Scyne from PwC for $1, said the firm could only be ‘conflict-free’ as a corporation without private clients. “
• “‘[Scyne] had to be its own corporate, rather than a partnership, and therefore a different legal entity. And it had to be conflict-free from private sector companies, because of the inherent conflict of interest,’ he told a NSW upper house committee into consulting services on Monday.”
• “When asked by Greens MP and committee chair Abigail Boyd whether this meant there was an inherent and existing conflict of interest in the other big accounting firms – EY, Deloitte and KPMG, which had yet to separate their government consulting arms – Mr Loader said ‘it goes further than that.'”
• “Mr Loader singled out partners doing work ‘for both sides’ as being ‘where the inherent conflict is.'”
• “Managing partner Richard Gwilyn told the committee that Scyne’s goal was to carry out ‘for-purpose work in a commercial manner’ and it held itself to ‘different’ standards that would see it refrain from pursuing ‘profit over purpose.'”
• “‘The ethics frameworks that we’ve put in place we do believe are different in the way in which we have looked at governance, the independent board members that we have in our organisation, and the standard that we are going to try and hold ourselves to is one that is different,’ he said.”

“Client Says Kasowitz Benson Torres Owes $100M for Alleged Conflict of Interest” —

• “Kasowitz Benson Torres was named a defendant in a summons in New York state court Wednesday by a real estate investment client seeking at least $100 million in relief. The Am Law 200 firm and a former partner were allegedly acting in the interest of parties adverse to the client in a real estate development project.”
• “Kasowitz Benson and partner Douglas Heitner are accused of acting against the interests of client 111 West 57th Investment and affiliated entities throughout the financing of a real estate development project for the benefit of the firm’s longtime clients, including sponsors, managers and developers involved in the project.”
• “The firm’s allegedly conflicted loyalties, particularly in a 2017 strict foreclosure dispute, led to the loss of an ‘extremely valuable asset’ for 111 West 57th Partners, an affiliated entity of 111 West 57th Investment listed as a plaintiff, according to the summons.”
• “On Thursday, a representative of Kasowitz provided the following response to the summons. ‘This threatened lawsuit is yet another meritless filing by a serial litigator now on his sixth set of lawyers who has met defeat repeatedly in state and federal court in numerous lawsuits he has filed related to his failed investment in this groundbreaking 57th Street project, including suits against lenders, insurers, partners and now apparently law firms. Kasowitz has never even represented this person, let alone done anything wrong, and will seek sanctions if any complaint is frivolously filed. Indeed, filing a summons and notice with a ludicrous monetary demand in order to seek headlines is itself unethical and improper which we will address in the appropriate forum.'”

“US Prosecutors Call for Hearing Amid Potential Conflict of Interests in Alex Mashinsky and SBF Cases” —

• “The US government raised concerns about potential conflicts of interest in the ongoing criminal cases of FTX and Celsius Network founders Sam Bankman-Fried and Alex Mashinsky on February 6. The area of concern surrounds the legal representatives handling both cases.”
• “In a court filing, the US government outlined its concerns to Judge Lewis Kaplan in the Celsius and FTX cases and their founders.”
• “In the document, the US prosecutors requested a Curcio hearing to address a conflict of interests in both cases. The decision ensued upon the identification of Marc Mukasey and Torrey Young as legal counsels representing Celsius Network founder Alex Mashinsky, and Sam Bankman-Fried (SBF), the disgraced CEO of FTX.”
• “The two attorneys were said to have previously filed a notice of appearances for SBF on January 9 and now represent Alex Mashinsky. Given this, the prosecuting team has requested a hearing for the defendants to waive their rights to be represented by the attorneys.”
• “Additionally, the core objective of the Curcio hearing is for the court to determine the severity of the conflict and how to proceed. The court could dismiss both counsels if a major conflict of interest is identified.”
• “In the ongoing legal case with the US government, Celsius’ founder Mashinsky has admitted lending funds to FTX subsidiary Alameda Research. In return, Alameda Research paid back these loans using customers’ funds. Given that Alameda Research, FTX, and Celsius are standing trial for criminal charges, US prosecutors have stated that this could present a strong ground for conflict of interest.”
• “If legal materials could cause rifts between both parties, the current legal representatives will be limited in sharing such information. Both defendants were found guilty of multiple criminal charges involving fraud and promoting unregistered security tokens. SBF is set for a trial sentencing on March 28.”