Bressler Risk Blog

“Attorneys – Disqualification Appeals Court (Unpublished) [Massachusetts]” —

• “Where (1) a plaintiff sued the defendant, her husband, seeking separate support and (2) the defendant filed a motion to disqualify the plaintiff’s attorney from continuing to represent her, the defendant fell well short of meeting his burden of establishing the requirements necessary to disqualify the plaintiff’s counsel, so a judge’s decision to allow the motion must be reversed.”
• “‘The Probate and Family Court judge granted the defendant’s motion, seemingly on the ground that, because the plaintiff’s attorney had previously represented the parties jointly in the defendant’s adoption of the plaintiff’s minor child, a conflict of interest in violation of Mass. R. Prof. C. 1.9(a), as amended, 490 Mass. 1305 (2022), existed. The plaintiff appeals from that decision. Concluding that the attorney should not have been disqualified, we reverse.'”
• “‘In this instance, we conclude that the judge abused his discretion by granting the defendant’s motion to disqualify. In order to grant the motion, the judge was required to consider both branches of the substantial relationship test… It is a foregone conclusion that the first branch, inquiring whether ‘the current representation [is] adverse to the interests of the former client was satisfied, as the parties oppose each other in the present case… The judge was therefore required to turn to the second branch and consider whether the previous matter was ‘substantially related’ to the present matter such that disqualification was appropriate.'”
• “‘Such an analysis is ‘intensely fact specific.’ Coke v. Equity Residential Props. Trust, 440 Mass. 511, 516 (2003). Here, however, there was no evidence offered in support of the motion. The defendant did not file an affidavit or other documentary evidence, and, although a hearing was held, neither party nor any other witness testified. The only support the defendant offered was a brief and conclusory statement by his attorney at the hearing that ‘there [are] some issues between [the defendant] and that particular child in this case, and so that … is going to be … extremely relevant as to parenting schedule, custody, in this case.’ We are left to wonder, as was the judge below, what those issues could be, how they could become relevant in the present case, or, indeed, what information plaintiff’s counsel possessed about them. … The defendant did not provide an answer to those questions in any of his filings or in his statements before the judge. … Without more, we agree with the plaintiff that the judge abused his discretion by granting the scantly supported motion.'”

As always, with thanks to Bill Freivogel, some of his latest findings:

In re De Cotiis Estate, 2024 BCSC 1024 (CanLII) (S. Ct. B.C. June 13, 2024).

• “Lawyer is representing an heir in an estate proceeding. Lawyer came upon a trove of decedent’s documents in a questionable manner. Notwithstanding that it is highly likely that a number of the documents were solicitor-client communications and subject to privilege protection, Lawyer willy-nilly began using them, and publicizing them, in the estate proceeding and otherwise.”
• “As a result, in this opinion, describing Lawyer’s conduct as “egregious,” the court disqualified Lawyer and his law firm from representing anything or anyone connected to the proceeding. Good summary of Canadian law on misuse of privileged information.”

In re Doug Gross Constr., Inc., No. 24-20166-PRW (W.D.N.Y. June 13, 2024).

• “Chapter 11 Debtor applied to retain Law Firm A as debtor’s counsel. The U.S. Trustee objected. In this opinion the bankruptcy judge granted the application. The problem is that Law Firm A has merged with, Law Firm B. Firm B previously represented the debtor’s principal on tax matters, and the principal is a creditor of the estate. Law Firm B had ceased representation of the principal before the merger.”
• “The court said that the disinterested standard under Sec. 327(a) of the Code is a present one, and because Law Firm A does not represent the principal at present, the standard is met. The court was critical of Law Firm A for the slip-shod way it disclosed these relationships.”

Sanfilippo v. Csombo, 2024 QCCS 1855 (Que. Super. Ct. May 21, 2024).

• “Minority shareholders (“MSs”) are suing Husband and Wife derivatively on behalf of Corporation, claiming in effect, that H and W are looting Corporation. Wife is the majority shareholder and sole director of Corporation, and she has put Husband in charge of Corporation.”
• “Law Firm purports to represent H and W and Corporation in this case. MSs moved to disqualify Law Firm. In this opinion the court held Law Firm may not represent Corporation in this case and ordered the parties to agree on ‘new corporate counsel” for Corporation.”
• “The shareholders agreement could be interpreted to make MSs mere employees, but they are, nevertheless, shareholders, and W and H owed them fiduciary duties. Thus, Law Firm, representing Corporation, would have a conflict of interest.”
• “The court made clear that it was addressing only the conflict and not the merits of the case. The court did, however, find that there was prima facie evidence of H and W’s oppressive misconduct, thus leading to the conflict finding.”

Loepp v. Ford, 2024 WL 2952208 (Wyo. June 12, 2024).

• “Lawyer malpractice case. The trial court granted the defendants’ motion for summary judgement because the plaintiff’s standard-of-care expert was a California lawyer. In this opinion the Wyoming Supreme Court reversed and remanded.”
• “The opinion appears to be a pretty good review of authorities nation-wide.”

“Law firm Kirkland sued in class action over MOVEit data breach” —

• “U.S. law firm Kirkland & Ellis, the world’s largest law firm by revenue, has been pulled into U.S. litigation over a wide-ranging data breach linked to a file transfer tool that compromised data at hundreds of organizations.”
• “A proposed class action, opens new tab filed on Friday accused Kirkland and several other companies, including health insurer Humana, of not doing enough to safeguard personal information that was affected by a May 2023 hack of Massachusetts-based Progress Software’s MOVEit Transfer file management software.”
• “Kirkland represented home healthcare agency Trilogy Home Healthcare in its acquisition last year by Humana subsidiary CenterWell Home Health, the lawsuit said. Trilogy allegedly transferred legal files that contained a ‘wide array’ of private information to Kirkland using MOVEit.”
• “The lawsuit named Progress, CenterWell and Trilogy as defendants in addition to Kirkland and Humana. It was filed on behalf of a proposed class of at least 4,700 people.”
• “Kirkland did not inform Trilogy that the software breach affected its files until October, and Trilogy did not notify affected customers until March 2024, according to the complaint.”

“Mondelez, US law firm must face class action over data breach” —

• “Snack food giant Mondelez and U.S. law firm Bryan Cave Leighton must face at least part of a proposed class action over a data breach at the firm that compromised personal information belonging to thousands of Mondelez employees, a Chicago federal judge has ruled.”
• “U.S. District Judge Jorge Alonso on Monday dismissed some of the allegations in the case for now, but he refused to throw out the employees’ negligence claims against Mondelez and 1,200-lawyer BCLP.”
• “As an outside law firm for Mondelez, BCLP possessed personal information on its employees including names, dates of birth, Social Security numbers and addresses, according to the plaintiffs. After hackers gained access to the files in a 2023 breach at the firm, the employees sued both Mondelez and BCLP for failing to safeguard their data.”
• “The judge on Monday kept the plaintiffs’ negligence claims alive against both defendants, and he rejected Mondelez’s argument that it should not be held responsible for the breach of another company’s systems.”

“Data Breaches, Hacking and Ransomware: What Every Lawyer Needs to Know About the Rise in Cybersecurity Incidents” —

• “The rise in cybersecurity incidents should sound the alarm bells for law firms and legal professionals alike. State bar authorities across the country have reported that lawyers are being specifically targeted by those carrying out cybercrimes, including data breaches and ransomware attacks.”
• “These incidents are becoming more prevalent and even harder to detect given the increased use of and reliance on technology by attorneys in connection with the practice of law. This article discusses the obligations that practitioners have when it comes to cybersecurity and practicing law, steps that can be taken to defend against and respond to cybersecurity incidents and potential consequences from the failure to act.”
• “As an initial matter, a cybersecurity policy must be enforced at every level of a law practice, including for attorneys, paralegals, legal assistants, and other employees.”
• “An incident response protocol (IRP) can go a long way in mitigating the harm from cybersecurity incidents and prevent further and unnecessary damage. IRPs should address what and how specific incidents are responded to by members of an organization. This includes, for example, the processes needed for data and information collection or preservation, reporting mechanisms and notice requirements, as well as backup and retention logs. IRPs can save valuable time and ensure that every incident is fully responded to and documented.”
• “In the face of cybersecurity incidents, law firms and lawyers may face potential malpractice, negligence, and privacy-related claims. See In re Mondelez Data Breach Litigation, supra at *2-*3. Clients and affected third parties may also file ethics complaints or grievances with state bar authorities based on relevant RPCs. See, e.g., ABA Model Rules 1.1, 1.6(c), & 1.15(a). Further, there may even be grounds for statutory claims involving HIPAA and the like. Hackers can gain access to sensitive and confidential client information being held by law firms and lawyers, potentially resulting in reputational harm, extortion, demands for ransom in exchange for stolen data and other costs.”
• “Given the pervasiveness of cybersecurity incidents in contemporary law practice, the question can no longer be framed in terms of if, but when an incident will occur.”

“Opioids Lawyers Offer Investors Piece of $100 Million-Plus Win” —

• “A law firm set to earn more than $100 million for its work on opioids cases is packaging its fees and selling it to investors as a security.”
• “Napoli Shkolnik PLLC is pooling its portion of approximately $1.3 billion in settlements with major opioid manufacturers and pharmacies, including McKesson, Janssen, CVS and Walgreens, according to a Securities and Exchange Commission filing. The firm declined to comment.”
• “The move is the latest sign of the growing intermingling of law firms and investors. Securitization is an increasingly common tool in litigation finance, a $15.2 billion industry in which outside funders back lawsuits or invest in yet to be paid settlements, and which has set its sights on large pools of money in mass tort cases.”
• “Securities are often used to package auto, credit and other loans for investors. For law firms set to receive shares of large settlements over time, it gives them immediate access to cash while reducing risk.”
• “Some states and counties in the late 90s securitized parts of settlement awards stemming from far-reaching lawsuits against tobacco companies. The details of similar moves by law firms and private companies are often not made public.”
• “Napoli Shkolnik’s asset report filing with the SEC offers a rare glimpse of how one of the biggest mass tort law firms is being paid for its work and its plans to monetize future winnings now. The document details at least one of the settlements, when it will be paid out and the law firm’s cut.”

“‘Lawyers Are Always Responsible’: 5th Circuit Discards AI Disclosure Rule After Pushback” —

• “After pushback from attorneys, the U.S. Court of Appeals for the Fifth Circuit has discarded a proposed rule that would have required lawyers to disclose if they used generative artificial intelligence in crafting a brief.”
• “If adopted, attorneys would have had to check a box confirming that no AI program was used in drafting a filing or, if one were used, certifying that it was reviewed for accuracy by a person. Attorneys who submitted comments said the proposal was unnecessary given existing federal rules.”
• “The decision was met with understanding and approval from some court watchers.”
• “‘Existing rules of practice and procedure and lawyer ethical rules already require that lawyers certify that the facts and law cited are ‘real’ and support the arguments made,’ said former U.S. District Judge Paul Grimm for the District of Maryland.”
• “‘These rules provide ample sanctions if violated, so a special AI rule is not needed,’ added Grimm, now director of the Bolch Judicial Institute at Duke Law School. ‘I hope that other courts find this position persuasive.'”

“Judge Blasts Liberty Mutual in Declaring He Will Not Disqualify Because He’s an Insured” —

• “A federal judge in New Jersey, in a blistering opinion, has refused to disqualify himself from a case involving his insurer, Liberty Mutual, and accused the insurer of seeking his recusal and attacking his integrity because it did not like the substance or tenor of one of his rulings.”
• “­Senior Judge Stanley R. Chesler of the U.S. District Court for New Jersey said Liberty Mutual offered no evidence to support its claim that the judge’s history with the company or a ruling he issued raised the perception of bias.”
• “In a recent motion for disqualification, Liberty Mutual asserted that given the totality of the circumstances involving Chesler and the insurer, it was reasonable to conclude that the judge’s involvement in the case raised questions about bias and impartiality that the law is meant to prevent.”
• “The insurer further maintained that the judge’s failure to disclose his ties with Liberty at the outset heightens the perception of bias.”
• “Chesley found that Liberty Mutual had information about his relationship with the insurer in its possession and could have acted on it at any time but only did so after he denied a summary judgment motion sought by the insurer. Chesley maintains that this matter raises ‘serious questions’ about the conduct of a major national insurer and repeat litigant before the federal courts.”
• “‘Even a cursory reading of Liberty Mutual’s moving papers reveal that the motion and the assertions contained therein in fact constitute a carefully choreographed effort to attack the integrity and ethics of this Court both directly and by innuendo,’ Chesler wrote.”
• “The judge criticized what he termed the ‘untenable proposition’ that any judge who is a policyholder of an insurer must disclose that status and recuse from cases where the insurer is a party. Chesler wrote that that argument ‘would render hundreds, if not thousands, of judges incapable of presiding over large swaths of their dockets’ and thus it cannot be the standard envisioned by the framers of the law.”
• “In its motion for disqualification, Liberty Mutual took the position that the burden of disclosure of potential conflict rested with the judge and he should have disclosed his status as an insured and claimant at the outset of the case. But the judge cited a case noting that if a party’s attorney is aware of the grounds supporting recusal but fails to act until the judge issues an adverse ruling, the recusal motion is not timely.”
• “The judge also said he agreed with Liberty Mutual that a court should disclose when it has knowledge in its possession which could arguably form the grounds for a recusal motion. But, he concluded, none of the reasons offered by Liberty Mutual in fact constitutes grounds for disqualification and, therefore, none of these facts required disclosure.”
• “The insurer cited Chesler’s long tenure as a customer and, in particular, four claims filed while the case was before the court. Liberty Mutual also alleged it had pursued an investigation into jewelry claims filed by the judge and his wife.”
• “The judge dismissed suggestions that his claims history is an issue. He criticized Liberty Mutual for not supplying factual evidence or documents about his claims. He reported he has had 14 claims in his 44 years as an insured of Liberty Mutual and there has never been a dispute. Regarding the four recent claims cited by Liberty Mutual, he said none coincided with his actual involvement in the case, all were settled without dispute, and several were brought by third parties.”
• “He also took issue with Liberty Mutual’s claim that he was investigated. He said he and his wife were never informed about the insurer’s concerns over jewelry claims and thus he could not have been affected by that if it were true.”
• “The insurer further claimed that the judge committed errors and was highly critical and negative in tone towards the insurer in a summary judgment order, which the insurer said raised questions about whether he was being impartial.”
• “In closing his 25-page opinion, Chesler took aim at what he characterized as the insurer’s position that ‘every judge who has an insurance policy with an insurer defendant and presides over a case involving that insurer defendant is required to disclose that policy’s existence, the claims history, and other personal information relating to the judge’s insurance and potentially recuse himself or herself.'”

“Changes Wanted on Law Firm Supervisor Role and Prohibited Client Transaction Rules” —

• “Two of the twelve proposed disciplinary rule changes pending approval by the Texas Supreme Court address the supervisory responsibilities of law firms and prohibited transactions with clients.”
• “Rule 1.08: Conflict of Interest – Prohibited Transactions. The proposed rule replaces the current rule and specifies the requirements with which a lawyer must comply before acquiring ownership or a business interest in property belonging to a client.”
• “Committee Chair Lewis Kinard said a revision was considered necessary because there is often unequal bargaining power during representation between an attorney and the client.”
• “Using the example of a client that wants to write a book about his life but cannot afford to get it published, Kinard said the client’s attorney may want to invest in the book for a share of royalties.”
• “The rule would ban oral agreements, require the agreement be in writing, and states the client get legal advice on the agreement from an independent attorney.”
• “The committee took heed of suggestions from Andrea Lowe, a rules attorney speaking for the Office of Chief Disciplinary Counsel, which raised issues with language in the rule that appeared to create a conflict in certain types of fee agreements.”
• “‘For example, a fee agreement that includes stock in a start-up company to pay for the lawyer’s services requires compliance with Rule 1.08(a). Is such an arrangement adverse to a client who has no other means to afford legal services?’ Lowe said.”
• “Lowe also told the committee to clarify that the rule would not apply to renegotiated fee agreements.”

“Columbia Motion Rebuts Quinn Emanuel’s Sanctions Appeal” —

• “Columbia University is seeking to submit new testimony in an appeal where the university is defending a nearly-$300 million contempt ruling against lawyers at white shoe law firm Quinn Emanuel.”
• “Quinn represented Gen Digital Inc., formerly NortonLifeLock, in a district court case where it was sued by the Ivy League school in 2013 for infringing its patented computer security technology. A jury in 2022 found that Norton owed Columbia $185 million for its infringement of two university patents.”
• “A federal district judge in Virginia later enhanced the award by $296 million, after finding Norton’s lawyers had prevented a French computer scientist who once worked at the company, Marc Dacier, from giving ‘what would almost certainly be damaging testimony to Norton” at the trial.'”
• “Quinn—which has maintained that it couldn’t provide the district court with information it gleaned from Dacier because it also represented him—in early April called the district judge’s sanctions and conflict-of-interest analysis ‘flawed at every turn’ and ‘unaccompanied by even the minimum necessary procedural protections,’ in an opening brief signed by leading appellate litigator Paul Clement.”
• “Columbia on Tuesday asked the Federal Circuit to supplement the record with a fresh sworn statement Dacier gave to the university after he was made aware of Quinn’s appellate arguments. It said the new information ‘contradicts’ the law firm’s arguments about an attorney-client relationship that it characterized as being ‘central to Quinn’s appeal.'”
• “‘Dacier states, among other things, that he did not want Quinn’s representation, that he agreed to that representation only when informed that he had no choice, and that he has no recollection of Quinn ever consulting with him’ before asserting the attorney-client privilege, Columbia wrote in a motion seeking to supplement the appellate record.”
• “Columbia acknowledged in the filing that supplementing an appeal in this way is unusual. But it argued providing the additional information was necessary given the ‘extraordinary circumstances.’ The university said the declaration ‘reveals misconduct in forcing a critical witness into an unwanted attorney-client relationship and then misrepresenting to a court the purported client’s wishes with respect to privilege and other matters.'”
• “It said it filed the motion only after seeking advice from an ethics lawyer who ‘advised that counsel must bring this issue to the Court’s attention.'”
• “Quinn responded Wednesday, calling Columbia’s filing ‘wholly improper.’ ‘This motion marks an after-the-fact effort to rewrite the record on appeal before the Federal Circuit, furthering a narrative of this case that is revisionist and false,’ the firm said in a statement.”

“Town solicitor’s law firm colleague may represent developer” —

• “It would not be a violation of the Code of Ethics for a law firm partner of an attorney serving as the Cumberland town solicitor to represent a landowner seeking the town’s approval of a mixed-use development, the Ethics Commission has decided.”
• “The petitioner, Kelley Morris Salvatore, was appointed solicitor by the town’s mayor, with the Town Council’s approval. In her private capacity, she is a non-equity, contract partner with DarrowEverett in Providence.”
• “There is currently pending before the Cumberland Planning Board an application for a mill conversion to a mixed-use development. The owner of the property associated with the project has asked one of the petitioner’s colleagues at the law firm to represent him.”
• “Having stated that she is prepared to recuse from continuing to provide advice and representation to the town on all matters relating to the project if her colleague assumes representation of the property owner, the petitioner sought guidance from the Ethics Commission regarding whether her colleague could represent the owner of the property.”
• “‘The Ethics Commission acknowledges the Petitioner’s… preparedness to recuse from all matters involving the project if her colleague assumes representation of the owner of the property associated with the project. The Ethics Commission further acknowledges that, because the Petitioner is not an equity partner in the firm and does not share in the firm’s general revenue, she does not stand to be personally financially impacted by her colleague’s representation of the property owner before the planning board, mayor, or town council,’ the commission wrote.”
• “‘Accordingly, based on the facts as represented, the applicable provisions of the Code of Ethics, and previous advisory opinions issued, it is the opinion of the Ethics Commission that, following the Petitioner’s recusal in her role as solicitor on all matters relating to the project, the Code of Ethics would not prohibit the other attorney from the law firm by which the Petitioner is employed from representing the owner of the subject property relative to the project before the Cumberland planning board, mayor, and town council,’ the commission concluded.”
• Full text: Rhode Island Ethics Commission Advisory Opinion 2024-16

“Musk’s X Corp faces bid to disqualify law firm in data-scraping case” —

• “An Israeli data-scraping company sued by Elon Musk’s X Corp is taking aim at the social media company’s legal team, telling a judge in San Francisco that X’s law firm Quinn Emanuel Urquhart & Sullivan switched allegiances and must be thrown off the case.”
• “Lawyers at Quinn Emanuel entered the case last week, seeking to file an amended lawsuit accusing Bright Data Ltd of illegally copying data from X, formerly known as Twitter. X’s initial complaint, filed by another firm, was dismissed in May.”
• “Bright Data on Monday [6/10] asked U.S. District Judge William Alsup to disqualify Quinn Emanuel, accusing it of brazenly switching sides and ignoring ethical conflicts.”
• “Quinn Emanuel, a 1,000-lawyer litigation-focused firm, has represented Musk and his companies in court cases involving the U.S. Securities and Exchange Commission and other matters.”
• “Bright Data Ltd said it had hired lawyers from Quinn Emanuel in 2023 to evaluate its litigation strategy in a related matter involving Facebook parent Meta Platforms Inc, paying the firm nearly $40,000.”
• “Although the individual Quinn Emanuel lawyers hired earlier by Bright Data do not appear on X’s recent filing, the entire firm owes a duty of loyalty and confidentiality to Bright Data, the company argued in Monday’s filing.”
• “‘Lawyers may switch firms, but firms may not switch sides. Quinn must be disqualified,’ Bright Data said.”
• “Alsup on Tuesday ordered Bright Data to re-file its disqualification motion after the data scraper apparently misidentified key dates in the filing. ‘If these dates are inaccurate, it undermines the integrity of the entire motion,’ Alsup wrote.”

“Ex-Morgan Stanley Broker Seeks to Overturn $5 Million Award in Recruiting Loan Case” —

• “A former Morgan Stanley broker in Florida has asked a court to toss an arbitration award issued last month requiring him to repay the wirehouse over $5 million tied to a recruiting loan that it said became due when he left the firm.”
• “Federico Cardona, who is now based in Guaynabo, Puerto Rico, claims that the decision should be vacated because the sole public arbitrator had allegedly failed to report that he had previously served on panels for six cases in which Morgan Stanley was a party.”
• “Cardona also alleged that the nearly $130,000 in legal fees that Morgan Stanley was awarded constituted ‘blatant overbilling,’ according to the complaint filed on Wednesday in Florida state court.”
• “‘The bedrock of the legal system requires full disclosure of conflicts and potential conflicts by jurors and arbitrators, and this case involves yet another prejudicial failure of an arbitrator’s material failure to disclose ongoing conflicts,’ Cardona’s lawyer, Seth I. Rubinson in Houston, wrote in the complaint. “
• “Claims such as Cardona’s appear to be a long shot as courts are largely deferential to arbitrators. Federal and state law provide narrow grounds for a judge to vacate an award, including that there was ‘evident partiality,’ corruption or misconduct ‘prejudicing the rights of a party to the arbitration proceeding,’ according to the Florida arbitration act.”
• “It may also be challenging for Cardona to contest the award or show that the arbitrator was biased because he did not participate in the proceeding.”
• “The six prior Morgan Stanley cases which the arbitrator, Langfred W. White, presided over included customer complaints and other promissory note claims dating back to 2009, according to a review of awards that Cardona attached to his lawsuit. White and his co-panelists found in favor of Morgan Stanley or other claimants in most cases but ruled against the firm in a customer dispute in 2019 in which the wirehouse was ordered to pay over $242,000.”

“SUPPLEMENTAL MEMORANDUM IN SUPPORT OF MOTION TO DISQUALIFY COZEN AND O’CONNOR LAWYERS” —

• “Moments ago, Judge Baylson issued a Supplemental Memorandum faithfully disclosing additional facts of his relationship with Stephen Cozen and the Cozen firm. In light of those facts,it strains credulity that Mr. Cozen and his firm did not enter this case for any reason other than to trigger Judge Baylson’s recusal.”
• “As recently as May 17, 2024, Mr. Cozen and other members of his firm socialized with Judge Baylson at Mr. Cozen’s invitation to a box at a Phillies game.”
• “In accepting the invitation, Judge Baylson had no way of knowing that doing so might impact these cases since, for four years, Cozen has had absolutely nothing to do with this litigation. But, Mr. Cozen and his firm certainly knew about hosting Judge Baylson at theirPhillies outing when the Cozen attorneys entered their appearances.”
• “The conclusion is regrettably unavoidable that the Cozen lawyers entered their appearances either to force Judge Baylson’s recusal or, in the absence of recusal,to raise the appearance of their favored status in the eyes of the Court because of personal relationships.”
• “Whether or not that was their intent, those are undeniable facts.1That is highly improper and their appearances should be rejected.For the foregoing reasons and those set forth in their opening Memorandum of Law, Plaintiffs respectfully submit that the Court should enter an Order disqualifying Stephen A. Cozen, Elizabeth A. Malloy and Cozen O’Connor from representing the Defendant in these cases and that their entries of appearance be stricken.

“Texas Bankruptcy Scandal Draws Judge’s Concerns Over No-Recusal” —

• “A Texas court case involving two major law firms, a disgraced ex-bankruptcy judge, and the judge’s live-in attorney girlfriend left a federal judge deeply concerned, she said Thursday during the first hearing in the evolving scandal.”
• “Alia Moses, chief judge of the US District Court for the Western District of Texas, said that it was ‘mandatory’ for Jones disqualifying himself on any case his girlfriend, former Jackson Walker partner Elizabeth Freeman was involved in.”
• “At one point, Moses cut off Freeman’s lawyer who said Jones didn’t have to recuse because the two weren’t married, saying, ‘this should have been very clear to any judge.'”
• “The hearing marked the first court proceeding for the ex-judge in the scandal since a bombshell lawsuit rocked the bankruptcy world in October, unearthing a tightly-guarded romantic relationship between Judge David R. Jones of the US Bankruptcy Court for the Southern District of Texas and Freeman, his one-time clerk.”
• “Moses said Jones failing to disclose the relationship gives her ‘heartburn just a little bit.'”
• “The scandal has seemingly impacted Houston as a popular destination for bankruptcy firms—a reputation Jones helped establish through rule changes aimed at resolving complex cases with fast, consistent decisions. Jackson Walker regularly represented clients before Jones while it employed Freeman, who raked in $1.1 million in fees the judge approved while they kept their relationship under wraps.”
• “Michael Van Deelen, the plaintiff, was a shareholder in a bankruptcy case that played out in Jones’ court. He’s alleging a conspiracy that wiped out his entire investment of 30,000 shares in McDermott International, Inc. stock. He’s seeking at a minimum costs he incurred as a pro se litigant to challenge Jones’ authority to hear the case.”
• “Moses didn’t rule from the bench. She said Jones should’ve disqualified himself from cases that Freeman worked on, but that she’s not convinced that his failure to do so impacted Van Deelen in the bankruptcy.”
• “‘That’s a difficult part about this case,’ she said, adding the bankruptcy proceeding was “no doubt unfair.” Moses said she lacks authority to toss the McDermott judgment but it gives the potential for a judge to ‘misbehave, walk into court, issue an order, then be completely absolved’ gives her pause, she said.”
• “Moses questioned why Kirkland & Ellis, which maintains a Houston office, needed Jackson Walker’s assistance to litigate dozens of bankruptcy cases in Jones’ Houston court. ‘The need was for that one connection, Mrs. Freeman, wasn’t it?’ she said.”
• “Kirkland portrayed Van Deelen as unhinged, saying his lawsuit advances a baseless conspiracy and continues a pattern of irrational behavior. The firm showed through court records Van Deelen was suspended from coaching a little league team for using profanity, and also barred from school property for using inappropriate language and obscene hand gestures at a wrestling match.”
• “The hearing came two weeks after Jackson Walker dropped a blockbuster allegation shifting blame from the firm to Jones. A partner at the firm, Matthew Cavenaugh, said he was asked by Jones to file a potentially false court disclosure about his relationship with Freeman, the firm said in court papers.”

“Texas Bar Hopes to Get in Line With Nation on Conflict Rule for Attorneys” —

• “One of 12 disciplinary rules pending approval of the Texas Supreme Court would bring Texas in line with other states, and make it harder for parties to ‘conflict-out’ law firms because of who they hire.”
• “A rule titled ‘Imputation of Conflicts of Interest: General Rule,’ also known as the “screening rule,” was approved by 80.36% of the voting bar members in their April referendum. It is now under review by the high court, which is set to decide its fate by the end of summer.”
• “In the event a client of the departed law firm looks to retain the law firm that now employs the relocated lawyer, the current rule views this as a conflict.”
• “The argument for revising the rule comes down to technology and with it the ability through electronic management systems and other tools to screen lawyers based on whether they had actual knowledge of a case because they worked on some aspect of it, versus having just coincidentally worked at the former firm.”
• “This type of screening is working in many other states and has been allowed to a limited extent with regard to former government lawyers moving to the private sector, Kinard said. This would be the first time it would apply to Texas law firms.”
• “The current rule has been a problem, Kinard noted, when it comes to lawyers’ mobility since it hinders their ability to switch firms. It is a particularly thorny issue for associates.”
• “‘Firms merge, they dissolve. These associates, especially, don’t often have much control over the changes,’ Kinard said. ‘This way, it protects the non-involved lawyers, the new law firms and the clients of the new law firm.'”

“Concerns raised in how Memphis law firm was chosen for investigation into MNPD allegations” —

• “Nashville Mayor Freddie O’Connell is responding to allegations that high-ranking officers with the Metro Nashville Police Department lobbied state legislators to get a law passed. That law weakened police oversight boards across the state.”
• “O’Connell agreed to the Metro Community Review Board’s request for a third party firm to investigate the claims. However, some are already raising concerns about the process and how the independent law firm was chosen.”
• “Mayor O’Connell announced Friday that Memphis-based Butler Snow law firm would take on the investigation into Garet’s claims, led by former U.S. attorney Edward Stanton, who had previously worked under President Obama’s administration.”
• “The Metro Legal Department recommended Stanton, according to O’Connell. However, Metro Legal is involved in upcoming discussions between the CRB and MNPD, on what access the CRB will have to police documents under the new law, when looking into a citizen complaint over an officer.”
• “The CRB hired its own outside, non-city attorney for those negotiations, as board members believed it would be a conflict of interest to have Metro Legal representing both MNPD and the CRB. Metro Legal has also publicly taken a similar stance as MNPD, regarding its viewpoint of the new law.”
• “After the announcement, some are saying it’s a conflict of interest that Metro Legal helped pick the firm handling the investigation. CRB board members have told Fox 17 News that Metro Legal is, in effect, representing MNPD during upcoming negotiations, which stem from the fallout of the law at the center of the investigation.”
• “One MTSU political professor, Sekou Franklin, posted on X, ‘I am skeptical and don’t trust this process. Reading between the lines, Metro Legal/Law Department has its hands on this investigation. Metro Legal has been against police accountability and Drake has been right there with Metro Legal.'”
• “CRB Chair Alisha Haddock responded to FOX 17 News with a statement:
  • “We are grateful to Mayor O’Connell for stepping in and ensuring the investigation of the 61-page complaint filed by a former MNPD Lieutenant will be handled by a third party entity. Although the CRB would have liked to have had a greater role in choosing the investigative body, the CRB must be made aware of the process and progress of the investigation through its duration, as it is our duty to ensure complaints of police misconduct of any kind are taken seriously, leads to the truth, and creates a safer Nashville for everyone.”
• “‘Mr. Stanton will oversee the investigation,’ said Metro Legal Director Wally Dietz at the press gathering. ‘It will not be just him. It will be in particular one of his partners Keenan Carter who works with him, plus other attorneys at that firm. He will oversee it. He will work in conjunction with the office of OPA It’s very possible he will make recommendations about policies which we will gladly receive and consider.'”

“Law Firms Can Now Be Criminally Liable for Wage Theft. Is Yours?” —

• “When Governor Kathy Hochul signed an amendment to the New York Penal Law this past fall, designating ‘wage theft’ as a form of criminal larceny, she and the State Legislature targeted ‘bad faith’ employers who violate New York’s Labor Law by improperly withholding timely payment of their employees’ earned wages.”
• “The most recent amendment to this statute—adding ‘wage theft’ as a form of larceny under the criminal code–was signed into law by Governor Kathy Hochul on September 6, 2023 (Senate Bill S2832A). It became effective immediately. The new law does not include any carve-out provisions or exemptions for particular positions or industries and as such, covers the legal profession.”
• “The new amendment adds ‘compensation for labor or services’ to the definition of “property”, thereby establishing ‘wage theft’ as another way in which an employer can commit the crime of larceny. Notably, the new wage theft larceny law is in addition to, and does not replace, existing criminal wage theft offenses in New York that apply to employers and their officers and agents for ‘failing to pay the wages of any of [their] employees.'”
• “This legislative action followed a 2023 announcement by the Manhattan District Attorney’s Office that it had partnered with the New York State Department of Labor to create the Office’s first-ever ‘Worker Protection Unit’ to investigate and criminally prosecute wage theft charges against companies and executives that ‘steal’ wages.”
• “In recent years, a number of out-of-state law firms with satellite offices in New York have been accused of wage theft when they failed to pay accrued wages owed to a former employee under his productivity-based compensation formula. The employers claimed that upon the attorney’s termination of employment, he automatically forfeited his percentage share of all post-termination collections—even those which were attributable to his pre-termination services on the employer’s behalf.”
• “Such a financial penalty is intended to discourage employed attorneys from leaving the law firm.”
• “For those employed attorneys who choose to leave nonetheless, the scheme enables the law firm to unjustly enrich its profit-sharing partners by allowing them to share among themselves the money that their law firm should have paid instead to their former employee as W-2 salary.”
• “Law firms should review their payroll practices to make sure that their employees (and former employees) receive the compensation they are promised in a timely manner in order to avoid the significant penalties associated with wage theft in New York. Employers should also examine their wage payment practices to ensure: (1) that employees are paid the correct amount and on time; (2) that all statutorily-mandated notifications from the employer to its employees are adhered to; and (3) that accurate payroll records are maintained which establish that their employees have been paid properly.”

“NJ Bar Warns of AI’s Impact on Billing in Guidance for Lawyers” —

• “Lawyers using AI tools must be careful not to run afoul of rules about ethical billing practices, a New Jersey State Bar Association task force warned.”
• “AI tools for lawyers are promising to make some legal work more efficient, which ‘could significantly disrupt the industry’s traditional hourly billing model,’ the New Jersey task force said.”
• “‘Significant use of these technologies may conflict with current billing practices’ under the American Bar Association’s model rule 1.5(a)(1), the task force added. That rule describes a reasonable fee as being based on the amount of time, work, skill and difficulty a legal service entails.”
• “The California bar’s practical guidance on generative AI said lawyers can use AI to work more efficiently, but ‘must not charge hourly fees for the time saved by using generative AI.’
• “New Jersey appointed a task force late last year made up of 27 lawyers and AI experts. Their report, issued Friday, includes recommendations and is intended to serve as a ‘practical resource.'”

“Fox’s Tubi sues law firm over ‘manufactured’ mass arbitration claims” —

• “Fox Corp’s streaming TV subsidiary Tubi has sued a plaintiffs’ law firm for allegedly manufacturing tens of thousands of meritless discrimination claims against it in the hopes of coercing a settlement.”
• “In a lawsuit filed Friday, in Washington, D.C., federal court, Tubi accused the firm Keller Postman of filing nearly 24,000 uninvestigated complaints of discrimination with private arbitration service JAMS, putting the streaming company on the hook for $48 million in upfront arbitration fees unless it settled.”
• “Keller Postman in May demanded a total of $71.2 million to settle the claims, or $3,000 per claimant, Tubi alleged. It accused the firm of ‘weaponizing the arbitration process,’ calling it a pioneer of ‘mass arbitration’ that relies on unethical client solicitation and abuse of arbitration fee provisions.”
• “‘Keller Postman manufactured claims against Tubi, failed to conduct an investigation to learn specific facts about each of its clients’ claims, and filed tens of thousands of cookie-cutter claims to force Tubi into an arbitration that should not be taking place,’ the lawsuit said.”
• “Tubi said Keller Postman filed 23,736 arbitration demands alleging discrimination through targeted advertising based on age, gender or sex. The demands did not identify the ads or the claimants’ age, gender or sex, the lawsuit said.”
• “Lawyers for Tubi declined to comment.”

“Court of Appeals Reverses Professional Negligence Sanctions Against Scrudder Bass” —

• “The Georgia Court of Appeals recently overturned half a million dollars in professional negligence sanctions against law firm Scrudder Bass Quillian Horlock Lazarus & Adele.”
• “Doing so, the court found a DeKalb County trial court abused its discretion by issuing the penalty and addressing a firm’s duty of confidentiality when a conflict is discovered which requires the firm’s immediate withdrawal from the case.”
• “Four years later, at the outset of the trial, Scrudder Bass told the court it just became aware of a conflict of interest and would need to withdraw because it could no longer represent all three clients. When asked when it became aware of the conflict, the firm said it would have arisen years ago, but the information it received that morning was ‘brand new’ and it had only just begun investigating its legal and ethical obligations.”
• “The trial court scheduled a hearing on Scrudder Bass’ emergency motion to withdraw, but the firm instead asked for an in-camera revue because it couldn’t publicly disclose the basis for the conflict because of client confidentiality.”
• “The judge, however, refused to grant an in-camera review and instead declared a mistrial and ordered the defense to pay a half-million dollars in sanctions, reasoning that the plaintiffs would have to completely redo their work in preparation for a new trial and Scrudder Bass should have been aware of the potential conflict when it came on as counsel because Green testified she wasn’t sure where the work order entries in question came from the year before. The order also noted that the disclosure of conflict itself wasn’t improper, but rather the timing of the disclosure because it unnecessarily expanded the proceedings.”
• “The unanimous opinion, authored by Presiding Judge Stephen Dillard, reasoned that the firm did the right thing by withdrawing, and even if it had known about the conflict of interest before such a late stage in the proceedings, withdrawing wasn’t a severe enough offense to warrant so much sanctions—though he said his analysis might be different if the evidence showed the firm purposefully waited until the last possible minute.”
• “He cited the trial court’s refusal of an in-camera review as a second error. ‘doing so, the trial court erred in suggesting that it could not hear such evidence without risking disqualification,’ Dillard explained.”
• “At oral argument, many of Dillard’s questions focused on this decision to not grant in-camera review and indicated some skepticism toward whether the trial court judge was correct in refusing it. Dillard asked the defendant-appellants if the judge was fully aware of the details of the conflict and, had he considered those details, could have led him to make a different decision. Judge Trenton Brown noted that the plaintiff-appellants said there was a thorough hearing after Jacobs denied in camera review, and whether after that hearing, in camera review would have been beneficial.”
• Decision here.

“Solicitor’s reprimand challenge backfires with tougher penalty for acting in conflict” —

• “The founder of an NSW boutique firm was hit with a harsher penalty after appealing the reprimand she received for acting in conflict by representing both a longstanding client and her family members.”
• “Maria Di Giovanni, a founder of Iron Cove Law in Drummoyne, was ordered to complete an ethics course and issue an apology to a client she had known for a decade and had formed a relationship with that was “closer to friendship” than solicitor-client.”
• “In May 2023, the Council of the Law Society of NSW found Di Giovanni engaged in unsatisfactory professional conduct by advising both the client and her family members in a commercial property conveyance of a multimillion-dollar property in Sydney.”
• “The council originally imposed a reprimand and ordered that she undertake an ethics course, which, ‘to her credit,’ Di Giovanni completed despite challenging the findings simultaneously.”
• “This month, NSW Civil and Administrative Tribunal (NCAT) principal member Aaron Suthers and senior member Michelle Sindler said Di Giovanni’s conduct in the appeal ‘indicates that she has not learnt from the course in respect of having gained an understanding of the fundamental complications of acting for both parties.'”
• “Given Di Giovanni’s evidence that conveyancing forms ‘a considerable part of her practice,’ she was ordered to complete a further course on informed consent and how conflicts arise.”
• “The tribunal was told that by the time of the conveyancing, the client was struggling with regulatory compliance issues from owning a commercial property in a superannuation fund – which Di Giovanni also acted for – and this was ‘exacerbated’ by his wife’s death.”
• “The client had asked Di Giovanni to assist with selling the property but, when he changed his mind, Di Giovanni discussed the potential advantages of a private sale and advised him ‘certain members of her family … may have an interest in purchasing it.'”
• “After the contract was executed, Di Giovanni wrote to her family members about the potential dangers of acting for both parties and advised them the firm would cease acting if this became an issue. She did not issue this same advice to the client at that time.”
• “When the client said he wanted to resile from the contract, Di Giovanni did not cease acting. Instead, she attempted to negotiate mutual rescission, with the client’s company to pay the family member’s reasonably incurred costs. NCAT said this did not work.”
• “It was then that Di Giovanni told the client it ‘may be prudent for you to obtain independent legal advice.'”
• “The client alleged in a letter to the Law Society that he ‘felt like the property had been stolen from under my nose by my solicitor and sold to her relatives for the same price I paid for it two years earlier.'”