Bressler Risk Blog

“Federal Judge Rejects DQ Motion Against State’s Connell Foley Attorneys” —

• “A federal judge has rejected a motion to remove Connell Foley as legal counsel for several state officials, like New Jersey Gov. Phil Murphy and Attorney General Matthew Platkin, in a lawsuit alleging discrimination and racketeering.”
• “At the center of the dispute was Blueprint Capital Advisors’ (BCA) claim that a partner at Connell Foley, who currently represents the defendants, previously provided legal advice to a company principal, creating a conflict of interest. Connell Foley countered that it had proactively screened the attorney from the case out of an abundance of caution.”
• “However, U.S. Magistrate Judge Michael A. Hammer of the District of New Jersey firmly rejected BCA’s argument in an opinion issued Monday. Hammer held that the evidence offered by BCA amounted to ‘vague assertions’ and a ‘spattering of conversations’ that didn’t meet the legal standard for disqualification.”
• “‘BCA has not established an express attorney-client relationship,’ Hammer said. ‘BCA appears to concede as much, and focuses on the existence of an implied relationship.'”
• “In June 2020, BCA, a Black-owned asset management firm, filed a lawsuit in the U.S. District Court for the District of New Jersey against top state officials and others, alleging systemic racial discrimination and retaliation. The firm claims that New Jersey and its Division of Investment excluded it from managing state funds, misused its proprietary investment model, and collaborated with private entities to undermine its business prospects. The case is captioned Blueprint Capital Advisors v. State of New Jersey.”
• “‘At the core of this motion is whether Elnardo J. Webster II, who is now an attorney at Connell Foley, previously represented BCA or one of its principals, Jacob Walthour,’ Hammer said.”
• “‘Walthour claims that in 2016, Webster helped facilitate meetings with state officials, advised on strategic decisions, and provided legal counsel as BCA considered legal action against the state,’ Hammer said. ‘Webster, however, insists that he never gave legal advice, characterizing their conversation as a casual exchange in which Walthour asked if he knew anyone with political connections.'”
• “Walthour described past interactions, including emails and meetings going back to 2016, in which he allegedly sought legal advice from Webster.”
• “The court found that none of these contacts rose to the level of formal or implied legal representation. Notably, Hammer said, the only recorded phone call between the two that lasted longer than a minute occurred four years before the lawsuit was filed. Hammer also noted that Webster is primarily a real estate lawyer with limited litigation experience, making it unlikely he would be consulted for complex civil rights and securities claims in the present case.”

“Ninth Circuit Finds Pollution Exclusion Creates Conflict Requiring Independent Counsel” —

• “In L.A. Terminals, Inc., et al. v. United Nat’l Ins. Co., the Ninth Circuit, applying California law, affirmed in part the trial court’s grant of a policyholder’s motion for summary judgment on the duty to defend and obligation to provide independent counsel under a pollution exclusion. L.A. Terminals, Inc., et al. v. United Nat’l Ins. Co., No. 23-55483, 2025 WL 1024392, at *2 (9th Cir. Apr. 7, 2025).”
• “The insureds were sued for alleged environmental contamination from the operation of a marine terminal and chemical storage facility. The claimants alleged that hazardous materials leaked from storage tanks over a fifty-year period, and the insureds were negligent in storing the hazardous substances. The underlying complaint alleged that the contamination occurred ‘suddenly and accidentally, and over long periods of time.'”
• “The policyholders sought to access their CGL policies from 1982 through 1985, and the insurer issued a reservation of rights under Qualified Pollution Exclusions. The pollution exclusions included a sudden and accidental exception. The insured retained its preferred counsel to defend the underlying lawsuit, and the insurer refused to pay for the insureds’ choice of counsel. Instead, the insurer offered to appoint defense counsel.”
  “The Ninth Circuit’s opinion focuses on two major issues. First, as a threshold matter, whether the insurer had a duty to defend under the pollution exclusion. The court reasoned that the insured bore the burden to prove that the sudden and accidental exception to the pollution exclusion applied. The court noted that in California, ‘sudden refers to the pollution’s commencement and does not require that the polluting event terminate quickly or have only a brief duration[.]’ Id. at *1. The court found that the alleged contamination, which occurred over 50 years ago, could have been ‘sudden’ within the sudden and accidental exception to the pollution exclusion.”
• “Second, the court examined whether the pollution exclusion created a conflict of interest that required independent counsel for the insured. The court noted that ‘[a]lthough an insurer does not necessarily create a conflict merely by defending two parties seeking damages from each other in the same lawsuit, a conflict does exist where the insurer may be subject to substantial temptation to shape its defense to place the risk of loss entirely upon the insured, and independent counsel is necessary in those instances to protect the insured’s interests.’ Id. at *2. The court found a conflict of interest that necessitated independent counsel because ‘[t]he reservation of rights gave [the insurer] both the motive and opportunity to defend more vigorously against a liability theory based on sudden as opposed to gradual pollution.’ Id.”
• “The sudden and accidental exception is common to pollution exclusions. Policyholders should be familiar with the law applicable to their insurance policy and the arguments they can raise. Every state is different and requires a different analysis.”
  Policyholders often want to choose their own counsel, but insurers can be resistant to pay. Unsurprisingly, the policyholder’s choice of counsel is normally more expensive than the carrier’s choice. The creation of a conflict of interest through a reservation of rights is the first place to start when arguing that an insurer should pay for independent counsel. The arguments that the insurer should pay the full rate should focus more on the skill of the policyholder’s choice of defense counsel and desire to protect the insured’s tower. It can also be helpful to combine multiple insurers who are obligated to provide a defense to ‘add up’ to the rate of the policyholder’s choice of counsel.”
• “The reservation of rights gave United both the motive and opportunity to defend more vigorously against a liability theory based on sudden as opposed to gradual pollution. Strategizing in defending the case this way ‘would be to the financial advantage of’ United, creating a conflict and giving rise to a duty on United’s part to provide independent counsel.”

“Willkie Loses Longest-Serving Lawyer Over Trump Surrender” —

• ‘”Joseph Baio worked at Willkie Farr for 47 years. As a partner, he’d served on the firm’s executive committee. Most recently, the dean of the firm’s lawyers worked as a senior counsel. It takes a lot to make someone leave the firm they’ve worked with — and at times helped lead — for almost half a century. But Willkie Farr managed to find a way to alienate its longest-serving attorney when it turned coward and agreed to give Trump $100 million in pro bono legal services and somehow even more in dignity.”
• “Baio informed the current executive committee that he was leaving to ‘join the fight against governmental tyranny, unconstitutional decrees and social injustice, particularly at this critical time,’ a statement that deserves a swelling orchestral accompaniment befitting the end of a courtroom drama. It’s also a succinct acknowledgement of a lawyer’s ethical responsibilities that seems lost on some Biglaw firms right now.”
• “While a number of associates have publicly broke ties over the settlements and some law students are already telling firms in the ‘Order of the Obsequious’ that they are turning their backs on recruiting efforts, Baio is the most senior lawyer to depart a firm over a settlement. He is unlikely to be the last.”
• “Baio’s position as counsel affords him more flexibility than many partners, who cannot bolt on a dime and have to negotiate smooth transitions for their books of business at other firms. But Above the Law is already aware of corporate clients informing surrendering firms that they will take their business elsewhere in light of the concessions, seeing the deals as confirmation that the firms are incapable of standing up for themselves let alone their clients. When clients start threatening to walk in search of firms with backbone — or at least no drama — the partners will start trying to figure out how to move with them.”

“Silvergate Bankruptcy Probe Tainted by Conflicts, Examiner Says” —

• “Bankrupt crypto-bank owner Silvergate Capital’s investigation into its top officers was tainted by conflicts of interest, a court-appointed examiner said. An independent director, Ivona Smith, appointed to probe Silvergate’s collapse into bankruptcy, used the company’s own law firm, which created an ‘inevitable conflict of interest,’ according to a report issued Friday by examiner Stephanie Wickouski.”
• “Smith was appointed Silvergate’s independent director in August 2024, a month before the company filed for bankruptcy. She was asked to investigate possible misconduct by current and former directors and officers, including whether insiders improperly sold shares ahead of Silvergate’s collapse.”
• “But before conducting an investigation, Smith participated in the votes to approve the company’s pre-arranged chapter 11 plan, which included legal releases for those insiders.”
• “In her interview with the examiner last month, Smith said she didn’t recall any discussions of legal releases at that time and considered the releases to be ‘boilerplate,’ according to the examiner’s report. “
• “The bankruptcy court overseeing Silvergate’s wind-down authorized the examiner appointment following a request from Joseph Stilwell, who runs Stilwell Activist Investments. In his request in October, Stilwell, who had recently been elected to the board, alleged that Silvergate’s legacy directors enriched themselves by selling shares while keeping shareholders in the dark for two years. Stilwell also criticized Smith for failing to hire independent legal counsel.”
• “Smith issued her investigation report in December, concluding that pursuing claims against Silvergate’s insiders wouldn’t benefit the bankruptcy estate and recommended granting them legal immunity. But Wickouski, the examiner, said the report failed to support the ‘reasonableness of its conclusions.’ The Smith report hasn’t been made public. “

“Justice Department Limits Employee Engagement in ABA Events” —

• “The Justice Department will not allow employees to participate in American Bar Association events in their official capacities or on official time, in the Trump administration’s latest salvo against the legal group that has been critical of its actions.”
• “Deputy attorney general Todd Blanche’s Wednesday memo, sent to department employees and obtained by Bloomberg Law, escalates a clash between the administration and the voluntary lawyers’ association. The ABA has publicly denounced recent threats against federal judges and joined litigation against the government.”
• “DOJ employees may not, while acting in their official capacities, ‘speak at, attend, or otherwise participate’ in events hosted by the ABA, nor may they attend them during business hours as employee time is one the department’s ‘largest expenditures,’ the memo said.”
• “The department will no longer use taxpayer funds to pay for travel to ABA events, and employees who participate in events may not use their title in a way that could suggest the department ‘endorses or sanctions’ their personal views or those of the ABA, the memo said.”
• “DOJ employees in policymaking roles may not hold leadership positions in the ABA, renew existing memberships, or ‘write, speak, or otherwise publish materials in ABA-sponsored media of any kind’ without approval, Blanche said. These employees may only participate in ABA events if approved by their component head and the deputy attorney general.”
• “Career staff may attend ABA events and remain members, but any written contributions to the bar association’s published materials must be done off-duty and without government resources. The memo clarifies that employees cannot use any government device, internet access, or research databases to help them prepare materials for the ABA to publish.”
• “Blanche attributed the department’s change in position to the bar association’s recent lawsuit with other organizations challenging the administration’s freeze on foreign aid funding.”
• “‘The Department is actively litigating against the ABA, yet the Department continues to expend taxpayer dollars on ABA events, the ABA continues to use the participation of Department personnel to attract attendance to those events, and the ABA continues to use Department-engagement to legitimize positions it advances that are contrary to the federal government’s policies,’ Blanche wrote.”
• “The ABA is ‘free to litigate in support of activist causes,’ but the department’s speech ‘must be focused on achieving the Department’s core Constitutional mission,’ the memo said.”

“Charles Oakley wants Deputy Mayor Randy Mastro off MSG ejection case, claims ‘conflict of interest’” —

• “Knicks legend Charles Oakley wants First Deputy Mayor Randy Mastro bounced from his legal spat over his infamous 2017 ejection from Madison Square Garden – claiming the lawyer’s bid to stay on the case is a ‘conflict of interest.'”
• “The veteran litigator would be breaching Big Apple ethics rules by continuing to rep the arena, which receives lucrative city tax breaks, while serving as a top honcho in the mayor’s office, Oakley’s lawyer alleges.”
• “‘Courts have consistently doubted that any public servant – let alone a high-ranking official – can simultaneously serve the public while running a private law practice,’ reads a letter filed Wednesday in Manhattan federal court.”
• “Mastro has withdrawn in recent days from matters relevant to the city, like his work on New Jersey’s bid to kill New York’s congestion pricing plan, court records show. But the attorney, who has represented the arena and its billionaire chairman James Dolan in various matters for two decades, is still helping his long-time clients defend Oakley’s suit.”
• “Mastro has agreed to rep the Midtown arena for free, will appear in court in his personal capacity and not as a representative of the city, and has vowed to recuse himself from MSG-related matters while serving as first deputy mayor, a City Hall spokesperson said.”
• “The city’s independent ethics board approved the unusual setup, according to the mayor’s office, after Mastro said that he has very little work left on the case – a claim that Oakley’s lawyer contests – and that he’d request further advice if that situation changed.”
• “But Mastro has not been granted a ‘waiver’ that city employees are required to obtain before moonlighting in private jobs, Oakley attorney Valdi Licul wrote to the court on Wednesday.”
• “The mayor’s office maintains that the board found that, for now, no waiver was needed.”
• “‘New York City’s independent Conflicts of Interest Board evaluated the circumstances of First Deputy Mayor Mastro’s limited continued involvement in the Oakley litigation and advised he could stay on the case during this dispositive phase so long as he recuses himself from any issue involving his client during his city government tenure,’ spokesperson Kayla Mamelak Altus told The Post.”
• “Mayor Eric Adams announced plans to tap Mastro, formerly first deputy mayor under Mayor Rudy Giuliani, to the lofty post in his administration last month.”
• “An earlier bid to appoint him as the city’s Corporation Counsel, or top lawyer, failed after City Counsel members blasted his work representing landlords, anti-congestion pricing groups and other parties during his decades-long legal career.”

“Bar seeks comment on amendment to conflict of interest rule” —

• The Virginia State Bar is seeking public comment on a proposed amendment to Rule 1.9(c) of the Virginia Rules of Professional Conduct.”
• “The proposed amendment to the rule, which governs conflict of interest, would allow a lawyer to use information gained while representing a former client to that former client’s disadvantage ‘when the information consists solely of criminal history information that can be obtained from law enforcement databases or court records.'”
• “In a March 27 release from the VSB, the bar states that the proposal would ‘reduce the number of conflicts faced by criminal defense lawyers,’ as under the current rule, an attorney who learned of a former client’s criminal history during representation would have a conflict when representing a new client if that former client were an adverse witness.”
• “The VSB release also states that the information covered by the amendment is ‘typically provided by the prosecution to any lawyer representing the defendant,’ negating any special advantage for the attorney.”
• “Comments on the proposed amendment to Rule 1.9(c) can be submitted via email to VSB Executive Director Cameron M. Rountree at publiccomment@vsb.org. Comments must be submitted by May 7.”
• “The proposed amendment can be viewed here.”

“Hedge Funds, Private Equity Quietly Invest in Litigation Finance” —

• “Davidson Kempner Capital Management was identified as the funder behind patent cases against Amazon’s Audible Inc. last month, the first time the $35 billion hedge fund was publicly outed as a player in litigation finance.”
• “It’s a rare spotlight on hedge funds’ role in the outside backing of lawsuits, a now $16.1 billion industry that private equity firms and multi-strategy investment managers have been cashing in on for years. Funders dedicated to the sector actively market their services to law firms, but some asset managers choose to remain below the fray with their presence only revealed in court documents or regulatory filings, if at all. “
• “‘The market for capital and litigation finance is much larger than just the traditional litigation funders that advertise,’ said Rebecca Berrebi, a litigation finance broker.”
• “Asset managers often operate as limited partners investing in dedicated litigation finance funds, but they also directly back law firms and cases. Hedge funds co-invest with funders on deals to bankroll mass tort law firms or use insurance policies as collateral for loans. Berrebi says the private credit space is well suited to invest in litigation finance transactions, particularly portfolios.”
• “BlackRock, Ellington Capital, Cliffwater, and Gramercy Funds Management also invest in court fights and the lawyers behind them.”
• “BlackRock didn’t respond to a request for comment. Davidson Kempner, Ellington Capital, Cliffwater, and Gramercy Funds declined to comment.”
• “Funds’ preference to remain in the background could be because financing litigation is overall a small portion of their portfolios. Or because some funders could be backing litigation against companies in which they separately invest. Davidson Kempner last year added a stake in Audible owner Amazon.com, according to a public filing.”
• “Davidson Kempner is financing Audio Pod IP LLC’s suits against Audible Inc. through an LLC, according to the court filing. Lawyers for Audible outed the company in a countersuit filed in a federal court in Manhattan.”
• “‘Audio Pod deliberately reached out beyond its state of formation in Virginia to exploit New York’s robust financial market and obtain funding for its patent-assertion campaign against Audible,’ they said.”

Matthew Marrone at Goldberg Segalla writes: “Lawyers Beware: Litigation Funding Leads to Malpractice” —

• “As recently reported by Law360, a Pennsylvania lawyer and a litigation funder are facing racketeering and malpractice claims. A Pennsylvania federal judge recently declined to dismiss claims brought by a client accusing his former lawyer of engaging in a conspiracy to improperly charge him inflated legal fees to cover high-interest litigation loans.”
• “In the underlying matter, the client/plaintiff retained the lawyer to represent him in a lawsuit claiming he suffered neurological issues stemming from a titanium medical implant after installing a pole with a cell phone antenna near a train station. The client asserts that the lawyer promised him that he would receive a ‘life-changing amount’ of money from the injury suit and encouraged him not to return to work. The lawyer also allegedly encouraged the client to sign a $33,000 litigation funding agreement with a litigation funder, which came with a two-year repayment plan with a 25-percent interest rate.”
• “The suit dragged on, the client alleged, before the lawyer supposedly pushed him to accept a $475,000 settlement. Out of that settlement, the client received only $141,469 after costs and fees were taken out, despite experts stating he was owed nearly $3 million in damages. The final settlement was so small, because the lawyer allegedly took out his own litigation funding with the same funder and then tacked it, with interest, to the client’s bill, the suit claims.”
• “The litigation funder argued the RICO claim must fail, because providing funding as described in the complaint is its ‘precise business’ model. The judge noted that the client alleged ‘unauthorized, secret funding agreements that the enterprise used to defraud him,’ which is enough to support a racketeering claim as ‘facially plausible.'”
• “The judge found further that, because the client alleged that his lawyer ‘made multiple false misrepresentations and withheld material information from him,’ his claims for fraudulent inducement, malpractice, breach of fiduciary duty and civil conspiracy may survive at this stage.”
• “The lesson here? Litigation funding is fraught with peril for lawyers. If your client chooses to use litigation funding, make all efforts to do the following:”
  • “Confirm the client understands the terms of the funding agreement”
  • “Have the client – not you – sign the agreement with the funder”
  • “Avoid signing the agreement on behalf of yourself or your client”
  • “Ensure the client understands that the decision to sign the agreement is his/hers alone, without influence from you”
  • “Advise the client of the option to consult with other professionals (e.g., other counsel, an accountant, or a financial advisor) about the decision to sign the agreement”
  • “Obtain written/signed acknowledgement from the client of the foregoing”

“Key Amendments to the New York Rules of Professional Conduct” —

• “Earlier this year the presiding justices of the four Appellate Divisions issued a Joint Order approving amendments to the New York Rules of Professional Conduct. The amendments, which were proposed last year by the New York State Bar Association Committee on Standards of Attorney Conduct (COSAC) significantly alter Rule 1.10, which deals with the imputation of conflicts of interest, and Rule 3.4 regarding fairness to opposing parties and counsel.”
• “Rule 1.10(a) and the Imputation of Personal Interest Conflicts. Prior to its amendment, Rule 1.10(a) stated: ‘While lawyers are associated in a firm, none of them shall knowingly represent a client when any one of them practicing alone would be prohibited from doing so by Rule 1.7 [concurrent representation conflicts], 1.8 [special conflicts of interest] or 1.9 [successive representation conflicts], except as otherwise provided therein. ‘What this meant was that, as a general rule, if one lawyer in a firm was conflicted from representing a client, regardless of the reason, then every other lawyer in the firm would be similarly prohibited from undertaking the representation, regardless of the degree of separation between the conflicted lawyer and the other lawyers in the firm.”
• “Suppose, for example, that Lawyer A is approached about taking on a litigation adverse to a company in which Lawyer A’s spouse owns shares. Lawyer A may be prohibited from taking on the representation if there is a significant risk that Lawyer A’s judgment on behalf of the potential client would be limited by Lawyer A’s financial interest in the company (either directly or indirectly). See NY Rule 1.7(a)(2) (prohibiting representation where ‘there is a significant risk that the lawyer’s professional judgment on behalf of a client will be adversely affected by the lawyer’s own financial, business, property or other personal interests.’)”
• “Under the old version of Rule 1.10, Lawyer A’s conflict would be imputed to the rest of Lawyer A’s firm, regardless of its size or the impact that Lawyer A’s conflict actually had on the other lawyers in the firm.In other words, if there was a significant risk that Lawyer A’s judgment could be impaired by the conflict then that significant risk was imputed to the rest of the firm.”
• “The amendments to Rule 1.10(a) make clear that these type of personal interest conflicts generally will not be imputed to the rest of the firm so long as (1) the conflict is ‘based on a lawyer’s own financial, business, property or other personal interests within the meaning of Rule 1.7(a)(2)’ and (2) a reasonable lawyer would conclude that there is no significant risk that the representation by the other lawyers in the firm would be materially limited or that the independent judgment of those lawyers would be adversely effected. See NY Rule 1.10(a)(1)-(2).This amendment gives law firms more flexibility to assess personal interest conflicts on a case-by-case basis and determine whether a conflict as to the remainder of the firm is actually present.”
• “Rule 1.10(b) and a Law Firm’s Retention of Former Client Information. The courts also updated Rule 1.10(b) to clarify that when all of the lawyers who previously worked on a matter have left the firm, a law firm will not be disqualified from a representation simply because the firm is still in possession of files related to the former client.”
• “While the prior version of Rule 1.10(b) prohibited a representation if ‘the firm’ had confidential information belonging to the former client, the amended version of Rule 1.10(b) only mandates disqualification if ‘any lawyer remaining at the firm has actual knowledge or, or has accessed’ the former client’s confidential information.”
• “Rule 1.10(c) and Screening of Lateral Lawyers. The courts amended Rule 1.10(c) to expressly permit screening of lateral lawyers in certain instances. This is a major development. Before the amendment, Rule 1.10 would impute a lateral lawyer’s conflicts to the new firm in all instances except where the lateral lawyer did not acquire confidential information that was material to the matter at issue.”
• “In practice, this meant that, absent the narrow exception described above, if a lateral lawyer was conflicted from a representation because of the lawyer’s affiliation with their prior firm, the lateral lawyer’s conflict would be imputed to the remainder of the new firm and could be used as a basis to disqualify the new firm.”
• “The recent amendments to Rule 1.10(c) bring the rule closer to Model Rule 1.10(a)(2), which allows screening for lateral lawyers to avoid imputation of conflicts caused by the lawyer’s decision to join a new firm.”
• “While Model Rule 1.10(a)(2) permits screening of lateral lawyers under all circumstances, the amended version of New York Rule 1.10(c) permits screening of lateral lawyers except ‘where the matter is a litigation, arbitration, or other adjudicative proceeding and the newly associated lawyer, while associated with the prior firm, either (i) substantially participated in the management and direction of the matter, or (ii) had substantial decision-making responsibility in the matter on a continuous day-to-day basis.'”
• “In other words, while the new Rule 1.10(c) allows a screen to prevent the imputation of conflicts brought over by lateral lawyers in many circumstances, it will not prevent imputation of conflicts from a lateral lawyer who was a lead lawyer in a litigation matter and has decided to join the firm on the other side of the matter.”
  However, notwithstanding this limitation in the rules, it remains to be seen whether courts, which have generally approved screening, will draw the same distinction when evaluating motions to disqualify. Accord Hempstead Video, Inc. v. Incorporated Village of Valley Stream, 409 F.3d 127, 132 (2d Cir. 2005); Maricultura del Norte, S. de R.L. de C.V. v. Worldbusiness Capital, Inc., 2015 WL 1062167 (S.D.N.Y. March 9, 2015).”
• “As noted, this is a significant development in the New York Rules. Law firms and lawyers looking to move firms regularly struggle to navigate the complicated web of conflicts. How best to do that is the subject of another article, however, the change to allow screening to cure many of the run-of-the-mill conflicts that come up in lateral transitions is a significant step forward.”

“ORDER GRANTING MOTION TO DISQUALIFY DEFENDANT JUMIO’S COUNSEL PERKINS COIE” —

• “The Asserted Patents claim a priority date of July 2015. Perkins represented FaceTec on general corporate and intellectual property mattersduring FaceTec’s infancy, mostly in 2014 and 2015. At the time, FaceTec’s only product was ZoOm. During the course of its representation, Perkins’attorneys served as FaceTec’s outside general counsel and corporate secretary, and worked on FaceTec’s patent prosecution strategy to protect ZoOm. Through an affiliated entity, Perkins took an equity stake in FaceTec as part of its compensation. FaceTec contends thatit gave Perkins confidential information in this era that is nowmaterial to the current litigation.”
• “Inassessing whether the Asserted Patents were obvious as of the claimed July 2015priority date, a potentially key issue will be whether ZoOm’s commercial success at that time was attributable to theinnovative nature of thepatented features,rather than other differentiators. FaceTec’s CEO, Kevin Tussy,attests thatin 2014 and 2015,he provided Perkinswith confidential information about what FaceTec believed made ZoOm innovative. For example, in August 2015, Tussy sent a slide deck to Perkins, which identifiedZoOm’skey differentiators over competing products.Moreover, Tussy attests thatduring that time period,he discussed FaceTec’sstrategies for public relations, investments, marketing, and patent protection of the ZoOm technologywith Perkins’ attorneys. Perkins does not deny it received this information.”
• “It is understandable that Perkins concluded there was no conflict of interestbecause the firmdidnot prosecute the Asserted Patentsor other applications to which the Asserted Patents claim priority, and its patent prosecution work did not relate to the patented technology at issue. Nonetheless,there is a substantial risk that the information acquired by Perkins through its prior representation of FaceTec will become material to the current lawsuit. Therefore,the motion to disqualify Perkins as counselfor Jumio in this litigationis GRANTED.”
• “Perkins’ representation of FaceTec began in early 2014. In February of that year, Lowell Ness—a corporate partner at Perkins—executed a retainer agreement with FaceTec on behalf of the law firm.”
• “Based on the information in the record, it does not appear that Perkins’ patent prosecution work was substantially related to the litigation currently before the Court, nor does FaceTec provide evidence to support that inference.Thus, Perkins’ specific patent prosecution workdoes not provide a basis for disqualification.”
• “By contrast, Perkins’ corporate work and intellectual property counseling is substantially related to the pending litigation. A substantial risk exists that, through its representation of FaceTec, Perkins learned of confidential information that could be material to the resolution of issues in this case.”
• “Finally, Perkins’ implementation of a cautionary screen to wall off any attorney who had previously performed work for FaceTec cannotcure the problem. Ness remains at the firm, and Becker was still associated with the firm at the time Perkins began representing Jumio in this case.”
• “Rule 1.10would allow a cautionary screen to be used to cure disqualification if (1) Perkins was being disqualified based on one of their attorneys’work for a prior firm or work in which that attorney did not substantially participate, and written notice of the screen was provided to the former client FaceTec, or (2)none of the attorneys that receivedthe confidential information at issue wasstill associated with Perkins. Neither of those situations applies here. Accordingly, under Rule 1.10(c), disqualification can only be avoided if the conflict is waived by the former client, FaceTec, whichhas not occurred.”
• “Perkins implemented its internal screen without informing FaceTec of the conflict,and has provided no explanation for that failure. Such notice to the former client is critical to make ‘the interested party aware of the potential threat to its confidential information and the measures taken to prevent the improper use or disclosure of such information’ and to provide ‘an enforcement mechanism, in that the interested party will be able to suggest measures to strengthen the wall, and to challenge any apparent breaches.’ Kirk v. First Am.Title Ins. Co., 108 Cal. Rptr. 3d 620, 648(Ct. App. 2010). No such notice was provided here.”
• For more background on this matter and dispute, see this earlier update.

“Adams Case, Big Law Deals Launch Era Rife With Ethical Conflicts” —

• “Albany Law School’s Ray Brescia says judges must probe whether counsel from one of the Big Law firms that made deals with the president can effectively represent defendants in government cases—as the executive order threat still hangs over those firms’ heads.”
• “Almost at the same time that US District Judge Dale Ho was dismissing the prosecution of New York City Mayor Eric Adams on April 2, another major law firm agreed to provide volunteer time on causes preferred by President Donald Trump with the understanding that he will go easy on them.”
• “But these events are connected by more than just time. The apparent quid pro quo that doomed the Adams prosecution, and led Ho to rule that the Trump administration shouldn’t be able to hold the threat of continued prosecution of Adams ‘like the proverbial Sword of Damocles’ over the mayor, is precisely the kind of deal these law firms have struck to avoid executive orders damaging their business. Could Big Law’s wheeling and dealing cause greater havoc in the courts than Adams’s case did?”
• “Ho found he had to dismiss the prosecution of Adams in part because there was credible evidence that the Trump administration had dangled the prospect of abandoning the prosecution of the mayor before him to exact future policy concessions from him. Such an abuse of legal process is illegitimate and undermines a criminal defendant’s rights. Ho determined it was appropriate to not just dismiss the case, but to dismiss it ‘with prejudice’: that is, the Department of Justice couldn’t reinstate it at a later time should it determine Adams wasn’t acceding to the administration’s policy preferences.”
• “The prosecution—and the promise to abandon it—had all the hallmarks of an inappropriate quid pro quo and created a clear conflict that delegitimized the Adams prosecution. When law firms enter into agreements to accede to the demands of the Trump administration, they are creating similar conflicts of interest that threaten the legitimacy of criminal proceedings when they represent defendants in cases brought by the government.”
• “In order to protect the integrity of their proceedings, when judges know or have reason to know that a potential for a conflict exists, they have an affirmative duty to ensure lawyers appearing before them can provide conflict-free representation.”
• “The fact that law firms have struck agreements with the Trump administration raises serious questions about whether they can provide effective assistance of counsel in cases against the government.”
• “What happens if the Trump administration doesn’t like the way in which a particular case is being litigated by one of these firms? What’s to stop the administration from going back to those firms and telling them they should pull their punches, to not be so aggressive in their representation of a particular client that gets under the president’s skin? These agreements don’t provide any assurances that Trump won’t demand more concessions from the law firms.”
• “To ensure that both federal and state courts across the country are protecting the constitutional rights of the defendants before them, judges now must inquire whether any criminal defense attorney from one of these firms that has cut a deal with the Trump administration is operating under a conflict similar to the one that doomed the Adams prosecution.”
• “The outcome in the Adams case is a stain on the DOJ, and the profession as a whole. But it is just one case. As more firms agree to enter into deals with the administration, the potential mischief such agreements can cause in the courts is exponentially greater than the Adams affair and goes beyond just one case. It’s every case in which lawyers from these firms represent the defendants. As more firms take this path, it will create a significant drain not just on the courts that must conduct this review but also on clients themselves should they have to bear the burden of finding new counsel.”
• “There is one way to prevent this chaos though. Courts should start these inquiries immediately. Should judges find the lawyers operating under real constraints, they should disqualify those lawyers where appropriate.”
• “As firms—and their clients—realize that they can’t enter such agreements without it exacting a real cost, perhaps other firms considering whether they should also cut a deal with the Trump administration will think twice before they do so.”

“Kirkland & Ellis in talks with White House to avoid executive order, WSJ reports” —

• “Kirkland & Ellis, the largest U.S. law firm by revenue, is in talks with the White House to avoid an executive order similar to those levied against several of its rivals, the Wall Street Journal reported on Thursday.”
• “The news comes as President Donald Trump wages a pressure campaign against his perceived enemies in the legal profession, leading some major law firms to strike deals with the White House to avoid executive orders seeking to curtail their business with the federal government.”
• “Kirkland has been ranked for years as the top-grossing U.S. law firm by American Lawyer, with a reported $8.8 billion in revenues in 2024, and is known for its work on deals for private equity firms and for litigation.”

“Trump Announces Deal With Doug Emhoff’s Law Firm” —

• “President Trump announced Tuesday another deal with a law firm he had targeted for potential punishment, this time the one that employs Doug Emhoff, former Vice President Kamala Harris’s husband.”
• “Mr. Trump did not say why he targeted the firm. Along with its connection to Mr. Trump’s defeated opponent in the November election, the firm also employs a top investigator for the congressional committee that documented President Trump’s role in the Jan. 6, 2021, attack on the U.S. Capitol, and a litigator who spearheaded a lawsuit that two Georgia election workers brought against Rudolph W. Giuliani in which he was ordered to pay the women $148 million.”
• “Willkie, Mr. Trump said in a Truth Social post, committed to representing clients, no matter their political leanings, and pledged $100 million in pro bono legal work to causes Mr. Trump has championed. The firm, Mr. Trump said, would ‘not engage in illegal DEI discrimination and preferences,’ Mr. Trump announced in a Truth Social post.”

ABA Formal Opinion 516 April 2, 2025: “Terminating a Client Representation Under MRPC 1.16(b)(1): What ‘Material Adverse Effects’ Prevent Permissive Withdrawal?” —

• “ABA Model Rule of Professional Conduct 1.16(b)(1) permits a lawyer to voluntarily end, or seek to end, an ongoing representation if ‘withdrawal can be accomplished without material adverse effect on the interests of the client.’ A lawyer’s withdrawal would have a ‘material adverse effect on the interests of the client’ if it would result in significant harm to the forward progress of the client’s matter, significant increase in the cost of the matter, or significant harm to the client’s ability to achieve the legal objectives that the lawyer previously agreed to pursue in the representation.”
• “A lawyer may be able to remediate these adverse effects and withdraw in a manner that avoids or mitigates the harm that the Rule seeks to prevent. The lawyer’s motivation for withdrawal is not relevant under Model Rule 1.16(b)(1).”
• “Therefore, under the Model Rules, if the lawyer’s withdrawal does not cause ‘material adverse effect’ to the client’s interests in the matter in which the lawyer represents the client, a lawyer may withdraw to be able to accept the representation of a different client, including to avoid the conflict of interest that might otherwise result.”
• “The opinion addresses the meaning of the Rule’s phrase ‘material adverse effect on the interests of the client’ and provides a framework for analyzing when and whether such an effect prevents a lawyer from permissive unilateral withdrawal. The opinion concludes that a material adverse effect is one which, despite a lawyer’s efforts to remediate negative consequences, will significantly impede the forward progress of the matter, significantly increase the cost of the matter and/or significantly jeopardize the client’s ability to accomplish the objectives of the representation.4 In other words, the material adverse effect must relate to the client’s interests in the matter in which the lawyer represents the client.”
• “In the context of litigation, some courts have held that without the client’s consent, a lawyer may not withdraw from a representation to litigate against the now-former client.24 Lawyers who end a representation for this reason have sometimes been disqualified from representing the new client. The so-called ‘hot potato’ rule or doctrine comes from Picker International, Inc. v. Varian Associates, Inc., 670 F. Supp. 1363, 1365 (N.D. Ohio 1987), aff’d, 869 F.2d 578 (Fed. Cir.1989), where the court concluded, ‘a firm may not drop a client like a hot potato, especially if it is in order to keep happy a far more lucrative client.’ “
• “The implication of these decisions is that, even if the lawyer’s withdrawal would otherwise be permissible, the lawyer may not withdraw to litigate against the client whose representation is terminated. But some courts recognize that the principle is not absolute and that it should not necessarily apply when the lawyer’s withdrawal is not significantly prejudicial because, for example, ‘a lawyer’s representation is sporadic, non-litigious and unrelated to the issues involved in the newer case.'”
• “Rule 1.16(b)(1) and other Rules of Professional Conduct do not incorporate the ‘hot potato’ concept for the reason discussed above, namely, that a lawyer’s motivation for invoking Rule 1.16(b)(1) is irrelevant. Even if the lawyer’s reason for invoking Rule 1.16(b)(1) may be perceived as disloyal, the lawyer’s motivation is not relevant. The salient question under Rule 1.16(b)(1) is whether, by withdrawing from a representation, the lawyer will materially adversely affect the client’s interests in the matter in which the lawyer represented the client, not whether the lawyer will be adverse to the client in an unrelated matter after the representation is over.”
• “Courts are, of course, free to exercise their supervisory authority over trial lawyers by disqualifying those who drop a client ‘like a hot potato’ to advocate against that client in another case. Courts may elect to do so as a sanction or remedy for the lawyer’s perceived disloyalty or to remove the incentive for lawyers to end representations for what courts regard as inappropriate reasons. But it does not necessarily follow that the lawyer’s withdrawal, for a purpose of which courts may disapprove, constitutes a violation of the Rules of Professional Conduct for which a lawyer could be professionally sanctioned.”

“Narrow AML rules allow lawyers to act for ‘lawful but awful’ clients” —

• “The narrow focus of the anti-money laundering (AML) regime on criminality leaves solicitors ‘free to facilitate and legitimise the flow of corrupt capital while staying within the bounds of the law’, a major report has warned.”
• “Campaign group Spotlight on Corruption also found ‘surprisingly little visibility’ in Solicitors Regulation Authority (SRA) guidance, as well as individual law firms’ own codes, of ‘the overriding ethical commitment to safeguard the public interest’.”
• “‘Given the regulatory gap in the AML regime, there is an urgent need for guidance about how the SRA’s high-level principles should shape ethical decision-making by lawyers and law firms around kleptocratic wealth,’ it said.”
• “The report, Gatekeepers, Enablers or Technicians?, presents the findings of academic research exploring the role of solicitors in England and Wales in relation to kleptocracy, state capture (where illicit activities are legalised by a ruling elite) and ‘grand corruption’, and the question of whether lawyers should take on work which is ‘lawful but awful’.”
• “The AML regime was a ‘vital safeguard’ against illicit finance, ‘but its narrow focus on criminal activity means it does not adequately capture the proceeds of kleptocracy, state capture and grand corruption’, it said.”
• “It was perfectly possible, for example, that a solicitor doing comprehensive AML checks on a foreign politically exposed person (PEP) seeking to buy a luxury London property using the profits from a lucrative state contract in a kleptocratic regime would find no evidence of criminality and no grounds to suspect money laundering.”
• “Indeed, the PEP may well offer documentary evidence showing the contract was lawfully awarded through an official process that included sign-off at the highest levels of state power. ‘Their kleptocratic wealth is illicit, but not necessarily illegal.'”
• “This gap was even more obvious on the reputational side of enabling, where lawyers provided reputation laundering tactics, from online reputation management, setting up philanthropic foundations and donating to political parties, to ‘lawfare tactics which aim to silence critics’.”
• “This all meant ‘a major regulatory gap in the UK’s defences against dirty money, currently filled by the choices that lawyers and law firms make in accepting or refusing this work.'”
• “But the report found a tendency among solicitors towards ‘ethical minimalism’, or viewing legality as the primary benchmark for professional conduct rather than broader moral considerations.”
• “‘This position has come under challenge from both those within the profession and those outside it, sparked by a range of ethical concerns relating to kleptocratic wealth, environmental harms and human rights issues.'”
• “Many lawyers defended decisions to act for clients with kleptocratic wealth by pointing out that if they turned it down, another firm would simply pick up that business, the report observed. This meant ‘systemic change requires a shift in professional norms’.”
• “In the absence of a clear regulatory or ethical framework, firm culture, geopolitical developments and reputations concerns drove decision-making around client selection.”
• “Spotlight’s review of 20 unnamed firms showed that their statements on responsible business practices addressed environmental, social and governance issues in broad terms, but had nothing on kleptocracy or grand corruption.”
• “Interviews carried out for the research suggested that, in practice, the ‘ethics’ of client selection tended to be conflated with AML compliance.”
• “‘As one lawyer described it, the compliance department is the ‘ethical conscience’ of the firm. This also illustrates how compliance can easily be treated as separate layer of red tape rather than embedded processes which shape firm culture.”
• “‘Given the pecking order within hierarchical firm structures, concerns raised by compliance officers or junior lawyers can easily be disregarded or downplayed by senior partners who manage client relationships and bring in their business.'”
• “Without client selection being based on a coherent ethical framework, it went on, there was ‘a lack of clarity and consistency’ in how lines are drawn on kleptocratic wealth.”
• “One senior lawyer commented: ‘We all dropped our Russian clients overnight – but no one asked us about the Gulf states.'”
• “The interviews also revealed that reputation was often used ‘as a proxy for ethics’, shifting the focus from ethical complexities to a reputational challenge of justifying work for a particular client to the public – ‘or opportunistically marketing this high-risk appetite to prospective clients’.”

“Solicitor suspended after client’s millions pass through bank account” —

• “The first solicitor ever prosecuted for ‘tipping off’ a client about a money laundering investigation has now been suspended from practice for allowing a client to use his firm’s account as a banking facility. The Solicitors Disciplinary Tribunal (SDT) also fined Osmond Solicitors’ compliance officer.”
• “The Solicitors Regulation Authority’s (SRA) investigation was triggered by William Osmond’s arrest by the Serious Fraud Office (SFO) in 2019.”
• “The SRA alleged that the London firm received and paid out £388m in multiple currencies on behalf of an overseas businessman, ‘Person A’, and charged him nearly £1.2m in fees. From 2003 to 2019, the firm acted for Person A, or a company owned or controlled by him, on approximately 132 matters and he accounted for about 10% of its turnover.”
• “William Osmond, who qualified in 1979, was the owner and manager of the firm, and Person A’s main point of contact. He admitted breaching the SRA accounts rules and also contributing to the firm’s anti- money laundering failures by failing to conduct ongoing monitoring of its business relationships or applying enhanced customer due diligence.”
• “In mitigation, Mr Osmond pointed out that none of the transactions had resulted in loss to any client or third party and he had not profited from them. Once he became aware of the banking facility rules, he added, he stopped making payments and returned all the funds held by the firm to Person A. The SDT said allowing use of client account in this way, ‘for no other reason than the convenience of a client’, was a very serious breach of the rules.”
• “It said: ‘Aside from the firm’s own written anti-money laundering policies, controls and procedures, there was clear guidance from the Law Society and the SRA warning of the need to mitigate the risks of the firm’s services being used for money laundering, which [Mr Osmond] should have been aware of.’ Despite the mitigation, the SDT considered that the misconduct was serious enough to consider striking off Mr Osmond.”

“Lawyers worried by over-reliance on SRA discretion post Dentons” —

• “Specialist regulatory lawyers have expressed concern that the High Court ruling in the Dentons case places too much reliance on the Solicitors Regulation Authority’s (SRA) view of the seriousness of rule breaches.”
• “On Tuesday [3/11], Mrs Justice Lang said there was ‘no universal requirement’ that breaches of SRA rules could only amount to professional misconduct if they were serious, culpable and reprehensible.”
• “‘Such requirements only arise where they are inherent in the rule in question,’ she said. This was not the case when it came to anti-money laundering (AML) rules and so she quashed the decision of the Solicitors Disciplinary Tribunal (SDT) to clear Dentons.”
• “The judge said SRA guidance that only serious breaches of the AML legislation would progress to disciplinary proceedings was ‘a safeguard against over-zealous enforcement’; it meant that ‘trivial breaches will not be prosecuted’.”
• “Jayne Willetts – who runs her specialist eponymous firm in Birmingham – said the effect of the ruling was to remove from the SDT the ability to determine whether a breach was so minor that it did not represent professional misconduct.”
• “‘The tribunal is best placed to make these decisions with its experience and independence and to make these decisions to protect the public.”
• “‘Not all breaches represent a risk to the public. Not all breaches warrant a sanction. The notion as advanced by the judge that the SRA can be relied upon to make that distinction is not borne out by experience to date.'”
• “Former SRA adviser Paul Wightman, a barrister and consultant at strategic and compliance consultancy DG Legal, described the decision as ‘overly legalistic’.”
• “‘Punishing firms with otherwise exemplary systems and controls for breaches that are acknowledged to be inadvertent and committed in good faith seems to me to be regulation for regulation’s sake.'”
• “Mr Wightman said few people would be reassured by the SRA guidance, arguing that giving the SDT discretion to find minor breaches were not misconduct was ‘a much greater protection against over-zealous enforcement’.”
• “Michelle Garlick, a partner at Weightmans and head of its Compli service, said: ‘Whilst it is an understandable decision legally, it will be interesting to see what happens next, whether it be a further appeal, another full SDT hearing or an agreed outcome.”
• “‘The SRA will be encouraged by the decision but I hope it reviews carefully it’s enforcement strategy and internal application of it to be clearer about what serious actually looks like in practice and only pursues disciplinary proceedings in circumstances which properly fit that criteria.'”
  “Paul Bennett, a partner at Bennett Briegal, said he was not surprised by the decision but his concern was that it enhanced the SRA’s enforcement discretion beyond AML.”

Law Society Online Class: “Compliance with the LOCS:23 UK GDPR Certification Standard (Monday 28 April 2025)” —

• “On 1 February 2024, the UK Information Commissioner’s Office (ICO) approved a UK GDPR certification scheme for legal service providers, enabling them to demonstrate that they comply with UK data protection law. “
• “The Legal Services Operational Privacy Certification Scheme (LOCS:23) defines how legal service providers can best manage clients’ personal data in compliance with the UK GDPR. “
• “Join us for this online classroom, where our expert speakers, Stephanie Pritchett and Ben Wootton, will explain what the LOCS:23 scheme entails and who and what it applies to. They will also explain the difference in becoming LOCS:23 Ready or LOCS:23 Certified, as well as the benefits of achieving and risks of not achieving compliance with LOCS:23 or the UK GDPR more generally. Organisations will also benefit from their insights and tips on managing LOCS:23 audit processes, and in meeting the LOCS:23 controls. “
• “There will be an opportunity for Q&A, and Stephanie and Ben will then open the floor to gather feedback from attendees on their LOCS:23 and/or wider UK GDPR compliance journey. They look forward to answering delegate questions. “
• “This online classroom will be held on Monday 28 April 2025 from 12:30pm to 14:00pm. “

Law Society Book: “Essential Q&A guidance for all compliance officers” —

• “Conflicts of interest are rarely easy to assess for law firms. It is the classic judgement issue: professional obligations and case law are fact-specific. Any black-and-white conflict issue, the office dog will avoid. But more complex conflict queries require in-depth knowledge of the rules and facts, thinking time, and outstanding recording-keeping to justify withdrawal or continuing, if the perceived conflict does not exist.”
• “This book is written in a question-and-answer format to tackle the practical challenges of conflicts of interest, confidentiality and disclosure for solicitors and compliance officers for legal practice. This layout is incredibly helpful in practice and I have continued to refer to this book when advising client law firms.”
• “The areas covered include the regulatory starting point in respect of overviewing the rules, and dealing with conflicts of interest both in terms of a solicitor and client conflict (known as an ‘own interest’ conflict or a conflict between two clients), confidentiality and duty of disclosure.”
• “The common conflict of interest scenarios are a little basic for my personal preference, though these are the sometimes basic questions asked by my law firm clients. In the next edition, I would like to see more complex examples, an exploration of how confidentiality should be central to conflict analysis, and some additional case law, including SRA and SDT disciplinary cases so that firms can see how the rules are utilised. But this is a minor quibble.”
• “The Risk Management Discussions and Solutions chapter is particularly useful from a COLP’s perspective and probably justifies the purchase price on its own. This book should be available to all COLPs because the issues permeate both contentious and non-contentious work. It is also a very useful additional resource for considering regulatory and ethical duties arising in an area with which the profession has struggled for some years. Given the SRA’s ever-increasing, proactive investigation and fining powers, this is a sensible risk management area to look at.”

“After probing fund managers’ approach to valuations, the FCA shifts its focus to conflicts more generally” —

• “Key takeaways”
  • “In its review of private market valuations, the FCA found that firms need to improve processes for identification and documentation of potential conflicts of interest.”
  • “The FCA found weakness in governance, identifying, documenting and addressing conflicts of interest, and having defined processes for carrying out ad hoc valuations.”
  • “Following this review and the publication of its findings, the FCA launched a wider review into conflicts of interest.”
    “In anticipation of the FCA’s increased focus on this area, firms should ensure that their conflicts of interest policies are implemented with appropriate rigor, taking account of the FCA’s findings.”
• “On 5 March 2025, the UK Financial Conduct Authority (FCA) published a report outlining its findings from an earlier review conducted on private market valuations (Valuations Review).”
• “One of the main outcomes of its Valuations Review was that firms need to improve processes for the identification and documentation of potential conflicts of interest in their valuations process to increase the independence of their valuation functions.”
• “Shortly before publishing its findings in connection with the Valuations Review, the FCA announced on 26 February 2025 in a Dear CEO letter addressed to asset managers that it will be conducting a multi-firm review of conflicts of interest at firms managing private assets (Conflicts Review). In addition to a review of conflicts practices, the Dear CEO letter also announced:”
  • “(i) A multi-firm review of the application of the Consumer Duty in model portfolio services,”
  • “(ii) Review of private funds’ financial crime systems and controls,”
  • “(iii) Continued focus on liquidity risk, and”
  • “(iv) Engagement with firms that offer sustainability-related products in connection with sustainability disclosure and anti-greenwashing rules.”
• “This alert focusses on the conflicts aspects and provides an overview of the current conflicts rules, the reasons for the Conflicts Review and the potential implications on businesses that hold private assets. It will be relevant to institutional investors and managers of private assets including private credit and private asset funds.”
• “The key principles applicable to alternative investment funds (AIF) in the UK are set out in Chapter 10 (Conflicts of Interest) of the FCA’s Senior Management Arrangements, Systems and Controls sourcebook (SYSC). By way of summary, the key requirements with which AIF managers need to comply include:”
• “Taking all reasonable steps to avoid conflicts of interest, including those arising between the AIF manager and the AIF, among AIFs, and between clients of the AIF manager; Maintaining and operating effective organisational and administrative arrangements to identify and prevent or manage conflicts of interest; and Disclosing any conflicts of interest to investors where the AIF manager does not have reasonable confidence that any risk of damage to the interests of the client will be prevented.”
• “The FCA is concerned about the impact poorly managed conflicts of interest may have on asset valuations. In its Valuations Review, the FCA found that valuation-related conflicts were often documented generically rather than identifying specific conflicts in respect of particular products or transactions (Section 21.2.2).”
• “The FCA is focussed on firms that operate multiple intersecting business lines, continuation funds, co-investment opportunities or that partner with other financial institutions, thereby creating an increased likelihood that a conflict of interest could arise.”
• “As stated above, the FCA is concerned with the implications of inaccurate price valuations and the impact this has on investor decision-making. Obscuring price transparency is detrimental to informed decision-making by investors, which increases investor risk across the market both in terms of the severity and likelihood of adverse consequences.”
• “In particular, the FCA states that the Conflicts Review will focus on the use of governance bodies and reviews by the ‘three lines of defence’ to ensure policies are effectively implemented. In its letter, the FCA emphasises its expectation that conflicts policies must evolve to meet requirements of increasingly complex private markets.”
• “When conducting its Conflicts Review, the FCA is likely to select firms that operate intersecting business lines which may give rise to conflicts of interest including firms that have in-house valuation functions and make use of continuation funds.”
• “The precise implications of the Conflicts Review will depend on the FCA’s findings. Potential outcomes could include the issuance of fresh guidance on conflicts or a consultation on amendments to the conflict rules.”
• “Mangers of funds should act now to review and evaluate conflict-of-interest risks to improve their current governance and control processes in line with the FCA’s Valuations Review recommendations.”
• “The FCA has put firms on notice that it will be following up with firms where senior investment professionals were voting members in valuation committees, to understand how their position as voting members is consistent with the independence of the decisions made and whether their role compromises independent oversight and challenge.”
• “Any firms currently operating in ways that are inconsistent with the FCA’s expectations, including in particular those that were subject to the Valuations Review and have performed poorly in relation to their peers, should take action to ensure that they take steps to improve performance in this area. Firms may find the following questions helpful when considering how they manage the conflicts risks that they face:”

Already this year, I’ve had several stimulating conversations with risk and HR leaders who have provided suggestions and inputs for the 2025 compensation survey exercise. Each year, we try to do better!

Today’s post is just a brief commercial for the 204 report, and a targeted offer of aid to a specific segment of risk staffers who might want some data in support of their career paths. More below.

The Report

When people (who didn’t participate directly and receive their complimentary copy) reach out looking to secure a copy of the report, it’s typically one of two scenarios:

• A manager looking for comprehensive data across roles, geographies and firm demographics, in order to inform hiring budgets and/or staff compensation adjustments
• An individual looking for specific information regarding their particular role and compensation level (typically to benchmark their current comp or inform job hunting negotiation)

That’s why I offer a few paths to and forms of comp data:

1. Firms can pay a fee to secure an internal use only copy of the survey directly from me. (Copyright registration on file, sharing would be risky, folks!)
2. This year, firms can alternatively reach out to my 2024 report sponsor, who secured limited redistribution rights, which can enable you to bypass the fee if you want to talk to those nice folks.
3. Individuals can pay a much lower fee to receive a personalized benchmark. This provides a select view of compensation data, based on their particular role, geography, and firm size band.

The Select Offer

If you’re a risk management professional, working at a law firm that has made public, disappointing decisions in response to recent executive demands, and you’re exploring pursuing new employment, I want to help.

To do that, I’m offering individuals in this particular segment a complimentary personal salary benchmark report. (Those high-power partners, with books of business and lateral prospects, have plenty of options and support, if they want it. For the risk crew, this isn’t much, but it’s something I can do.)

Feel free to get in touch with me (you can respond to this email, message me on LinkedIn, or reach out via your personal email).

I’m also always happy to connect with any individual who didn’t participate in the survey but wants a personal benchmark. That fee isn’t designed to be onerous, more to encourage future participation.

But the free offer is for this particular group, which hopefully doesn’t grow. And it’s for a limited (undetermined) time.

As always, with thanks, the latest from Bill Freivogel:

• Sheldon-Lee v. Birch Horton Bittner, Inc., No. S-18214 (Alaska March 21, 2025).
  • “Legal malpractice case. The trial court granted summary judgment for the defendant law firm on statute of limitations grounds. In this opinion the Alaska Supreme Court reversed. The only issue of possible interest to this audience is the court noted the failure of a law firm to tell a client about the law firm’s conflict of interest could toll the running of the statute.”
• Salerno v. Family Heritage Life Ins. Co., 2025 WL 843387 (N.D. Ohio March 18, 2025).
  • “Plaintiff is suing Defendant for compensation. Defendant offered the opinion of its own vice president (‘Expert’) to opine on the present value of Plaintiff’s earnings. Plaintiff moved to disqualify Expert.”
  • “In this opinion the court denied the motion. Expert was not involved in the periodic review of Plaintiff’s work or in Defendant’s decision regarding denial of Plaintiff’s compensation. Thus, Expert’s relationship with Defendant goes to the weight of his testimony and is grist for cross-examination.”
• Gross v. Scottsdale Ins. Co., 2025 WL 885853 (N.D. Cal. March 21, 2025).
  • “This is a discovery dispute involving privilege and work-product. In the opinion the court acknowledged in California the insurer, absent a conflict, has two clients.”
• Lukoil Pan Ams. LLC v. Phoeninca Invs. LLC, No. 653336/2024 (N.Y. Sup. Ct. N.Y. County March 17, 2024).
  • “A global law firm (‘Law Firm’) represents Plaintiff. Defendant moved to disqualify Law Firm, claiming Law Firm represented Defendant in 2016-17.”
  • “In this opinion the court denied the motion. First, the court noted Law Firm never represented Defendant; it represented one of the companies that formed Defendant (‘Other Client’).”
  • “Second, in the earlier matter, Other Client agreed to Law Firm’s engagement terms, which provided only Other Client was a client. The engagement terms also included an advance waiver, which the court said applied here.”
  • “Last, because the conduct complained of in this case occurred after the completion of Law Firm’s earlier work for Other Client, the matters were not related.”
• Johnson v. Dep’t of Transp., 2025 WL 829714 (Cal. App. 3d Dist. March 17, 2025).
  • At some point, in this employment-related case, Defendant’s lawyer sent to Plaintiff’s supervisor at Defendant (“Supervisor”) an email about the case. The opinion does not say what was in the email or why Defendant’s lawyer sent it to Supervisor. Supervisor sent an image of the email to Plaintiff (the enemy, no less). Plaintiff gave it to his lawyer (“Lawyer”). Lawyer dutifully notified Defendant about receipt of the image. Lawyer then showed the email around to others, including three of Plaintiff’s experts. When the smoke cleared, Defendant moved to disqualify Lawyer and Plaintiff’s experts. The trial court granted the motion. In this opinion the appellate court affirmed. Among other things, the appellate court said that upon receipt of the email, Lawyer had a duty to ascertain whether it was privileged before disseminating it. [Our note: This is an exhaustive opinion on whether the email was privileged, whether the privilege was waived, the receiving lawyer’s duties, and so forth. The appellate court’s cites are numerous and almost all California cases. However, the reasoning would seem valid in any U.S. jurisdiction where authorities are relatively scarce.]

“International Lawyers Headed to the US Advised to Take More Precautions” —

• “Getting ready to head to New York for the legal industry conference LegalWeek, Toronto lawyer Monica Goyal was paranoid that U.S. border authorities were going to search her phone.”
• “As a technology lawyer who has been widely recognized by the legal industry, Goyal’s standard travel procedure is to keep minimal things on her phone. For instance, she has no social media apps. Despite that, stories of detentions, questioning, and refusals of entry at the U.S. border had her spooked.”
• “Lawyers say her concerns aren’t misplaced, as the Trump regime is not only laser-focused on the legal profession but is implementing what one lawyer called ‘extreme vetting,’ both at border crossings and ‘integrity-based stops.'”
• ‘The Trump administration is reaching to, and exploring, the limits of its authority to search phones, laptops, tablets, and other similar devices,’ said Bo Cooper, a Washington, D.C.-based partner and head of Fragomen, Del Rey, Bernsen & Loewy’s government strategies and compliance group.”
• “Regardless of the current environment, privacy lawyer David Fraser said anybody crossing a border has a reduced expectation of privacy so they should proactively take steps to guard personal information, and in the case of lawyers, particularly, any privileged material on electronic devices.”
• “Similar warnings have been issued to U.S. citizens traveling to China for years. But heightened concerns about what could happen at U.S. border crossings are recent.”
• “‘The best step that any lawyer can take in traveling internationally is essentially to remove all privileged material from your laptop, from your tablet, and from your smartphone. If you need access to those materials while you’re traveling, use a cloud-based service,’ Fraser said.”
• “Asserting solicitor-client privilege may have worked to protect lawyers’ devices from searches in the past, but the reality is border officials in the U.S. can search electronic devices without any grounds whatsoever, said Robert Currie, a professor at Dalhousie University’s Schulich School of Law in Nova Scotia.”
• “Once your device is open, border officials may review what’s on it, copy files, and analyze the data.”
• “Currie said the law around border searches in the U.S. is ‘fractured’ with opinions from various appellate courts saying different things.”
  ‘But generally speaking, [U.S.] border search law has essentially said they can mostly do arbitrary searches of things people have with them at the border,’ Currie said.”
• “The best advice is to cross the border with clean devices. But even if you’ve scrubbed your phone of social media apps, Fraser noted that at the border, you are obliged to answer questions honestly. So, if border guards ask for your account passwords, you have to give them up or face potential detention.”
• ‘That may be something that lawyers and others want to turn their mind to in terms of what’s out there in their digital footprint,’ said Fraser.”

“Standing Up to Trump Is Good for Big Law’s Business. No, Really” —

• “Albany Law professor Ray Brescia says Paul Weiss’s agreement with President Donald Trump may send a message that the law firm won’t zealously advocate for their clients against the US government.”
• “Critics inside and out of the legal profession have derided Paul Weiss’ decision to reach an agreement so President Donald Trump would revoke an executive order punishing the firm for its past political actions and hobbling its ability to represent clients.”
• “Some begrudgingly have accepted the firm’s justification—that the potential to lose business was far too great. But no one should welcome a situation in which lawyers can be cowed by the US government. In fact, a client should seek out lawyers who will fight for their interests and rights without fear that doing so could anger the government.”
• “In the high-priced world of Big Law, lawyers often are recruited from government agencies precisely because of their relationships with the government lawyers who might appear on the other side of client disputes. This can take the form of a white-collar criminal defense case before the Department of Justice, an application for a business merger before the Federal Trade Commission, or an energy company looking for regulatory approval for a new power plant from the Environmental Protection Agency.”
• “Clients want lawyers who can handle such cases competently and probably would prefer those who have effective relationships with regulators on the other side of the table.”
• “But no client should want a lawyer whose very claim to fame is that they will capitulate to this administration—or any administration—when the chips are down.”
• “If a government adversary knows the law firm on the other side of the table is more concerned about maintaining its reputation for having a good relationship with the government than winning, what won’t the other side ask for? When will the demands imposed on those lawyers’ clients end? What negotiating power will a lawyer with such a reputation, and for maintaining that reputation, have?”
• “In any negotiation, a lawyer always must present at least a credible threat that they will turn down an offer, go to the mat for a client, take a case to trial, or break off the negotiations. A lawyer who wants to stay in the good graces of the government can’t mount such a credible threat.”
• “It’s fine for a lawyer to have a reputation as an honest broker or a straight shooter. But an advocate who cares more about their reputation and relationships with the powerful than representing their client is antithetical to our adversarial system and inconsistent with legal professional values.”
• “A go-along-to-get-along attitude won’t serve many—if any—clients well. And when push comes to shove, a lawyer concerned with maintaining a reputation as an administration-cowing lawyer isn’t likely to fight for a client’s interests.”
• “It is for this reason that any firm trying to justify capitulation to the government pressure over possibly losing clients should ring so hollow. Knowing what’s at stake, informed consumers of legal services should recognize the risks associated with capitulating to governmental overreach, even in the business context, far outweigh their perceived benefits.”
• “Clients should send market signals of their own, showing they prefer lawyers who will fight for them when they need them to, and not care more about remaining in the good graces of the government.”
• “Not many private lawyers or advocates would look forward to having Paul Weiss attorneys on the other side of the negotiating table. But for the first time in its 150-year history, lawyers for the federal government might be all too happy to sit down with them.”

“Indictment Of Partner Does Not Disqualify Firm” —

• “The New Jersey Appellate Court affirmed the denial of a motion to disqualify a law firm based on the indictment of a partner who withdrew after the criminal charges were brought:
  • ‘Plaintiff Penelope Mauer appeals from the trial court’s July 31, 2024 order denying her motion to disqualify the law firm of Brown & Connery LLC (B&C) as counsel for defendants. The primary issue on appeal is whether the indictment of William Tambussi, Esq. (Tambussi), a law partner at B&C, creates a conflict of interest requiring the disqualification of the entire law firm from representing defendants in this action. We conclude no conflict of interest exists under the circumstances presented and therefore affirm the trial court’s decision.’
  • ‘In June 2024, the State indicted Tambussi, alleging that he participated with George Norcross in crimes related to the development of the Camden waterfront. The indictment states Tambussi ‘is an attorney and partner’ at B&C and ‘the long-time personal attorney to’ Norcross. It alleged Norcross and his associates extorted and coerced others to acquire property and development rights and that Tambussi ‘was an active participant in the Norcross Enterprise’s plot to use . . . Camden’s government to bring a condemnation action’ against a developer.’
• “Tambussi then withdrew and was replaced by other counsel from his firm:
  • ‘Against the backdrop of Tambussi’s indictment and B&C’s continued representation of defendants, plaintiff filed a motion to disqualify the law firm. Specifically, she contended B&C had an unwaivable conflict of interest due to the Attorney General’s indictment of Tambussi. Relying on Rule of Professional Conduct (RPC) 1.7(a)(2), plaintiff argued Tambussi’s indictment created a ‘significant risk that the representation of one or more clients will be materially limited by the lawyer’s responsibilities to another client, a former client, or a third person, or by a personal interest of the lawyer.’ She asserted this conflict was imputed to the other lawyers associated with B&C under RPC 1.10.’
  • ‘Contrary to plaintiff’s arguments, the indictment of Tambussi does not create a positional conflict requiring B&C’s disqualification. Notably, the DOL has not determined a positional conflict exists, as required by the AG Guidelines. Id. at 3. Indeed, Cohen, who is fully aware of the underlying litigation and plaintiff’s motion to disqualify, certified the DOL has not terminated B&C’s representation of defendants or requested their withdrawal. Defendants also certified they desired the continued representation by B&C. ‘
  • ‘Moreover, the indictment named Tambussi individually as a defendant. Tambussi did not perform any substantive work in this case prior to the indictment. Additionally, the allegations against Tambussi regarding certain real estate transactions in Camden are far afield from plaintiff’s underlying CEPA and breach of contract claims in this consolidated matter.’
  • ‘Thus, in defending against plaintiff’s employment-based claims, B&C will not be required to advocate a position that is inconsistent with or prejudicial to the State’s interest in prosecuting unrelated criminal charges against Tambussi.’
  • ‘Plaintiff’s argument presupposes Tambussi in fact had a conflict based on his indictment. However, we need not reach that issue because even if we assume, for the purposes of this appeal, he had a conflict under RPC 1.7(a)(2) based on ‘there [being] a substantial risk that the representation of one or more clients will be materially limited . . . by a personal interest of the lawyer,’ that does not end the inquiry. A finding that Tambussi had a conflict based on his ‘personal interest,’ in turn, requires us to consider whether his purported conflict under RPC 1.7 is imputed to B&C under RPC 1.10. Assuming a conflict exists for Tambussi under RPC 1.7(a)(2) because of a personal interest as a result of the indictment, there would be no imputed conflict to B&C under RPC 1.10 because no conflict is imputed when the purported conflict is ‘based on a personal interest of the prohibited lawyer,’ provided the personal interest ‘does not present a significant risk of materially limiting the representation of the client by the remaining lawyers in the firm.’ Plaintiff has made no such showing here.’

“Judges cannot provide analysis on executive orders, MD ethics panel says” —

• “Maryland judges cannot provide bar association members with information or legal analysis on White House executive orders, the Maryland Judicial Ethics Committee found in an opinion published on Tuesday.”
• “The opinion, published in response to a judge and a Maryland State Bar Association section council member’s inquiry, states that a judge’s participation in providing legal analysis on the White House executive orders ‘might reasonably raise a question of impropriety,’ contrary to the Maryland Code of Judicial Conduct.”
• “‘Although judges appropriately participate in general educational activities through the MSBA and other bar organizations, in our view, for the current and recalled/senior judges who serve on these MSBA committees, the evaluation and analysis of White House Executive Orders is so specific that it would constitute the practice of law and, moreover, can be seen as indirectly advising the members’ clients themselves,’ the Maryland Judicial Ethics Committee wrote.”
• “The ethics committee added that providing legal analysis on executive orders could also be viewed as engaging in ‘partisan political activity,’ which is prohibited by the judicial conduct code.”
• “In the opinion, the ethics committee also recognized that the executive orders have spawned numerous lawsuits nationwide, mostly in federal courts, but noted that similar lawsuits could be filed in Maryland courts—a fact that could potentially call into question a judge’s independence, integrity and impartiality.”
• “Raphael Santini, president of the MSBA, said the ethics committee’s opinion addresses a limited issue and has a narrow application.”
• “‘We respect the opinion of the Judicial Ethics Committee, and it should be observed in this narrow application by all members of our profession,’ Santini said in a statement on behalf of the MSBA. ‘We will continue to welcome judicial participation in a wide variety of MSBA activities, including continuing legal education, events, leadership and more as allowed under this opinion and prior opinions.'”

“Big Law’s Peril From Trump Orders Is Shown in Court Filings” —

• “WilmerHale and Jenner & Block laid bare the existential risks Donald Trump’s orders pose as the law firms rushed into court to stop the president. Trump’s directive to cut companies’ federal contracts for which WilmerHale has done work could affect 21 of the firm’s top 25 clients, the firm said in its March 28 lawsuit. The order threatens ‘the very viability of the firm’s business model,’ WilmerHale said.”
• “WilmerHale’s loss of clients who are contractors ‘would be a devastating blow,’ US District Judge Richard Leon said late on March 28. ‘This says nothing of the potential clients who may not even consider hiring’ the firm because of contract worries, he said.”
• “Leon temporarily blocked Trump’s order against WilmerHale in part, while in a separate courtroom US District Judge John Bates for now halted the directive against Jenner & Block. The blocking actions late on March 28 follow Perkins Coie’s March 12 win of a temporary order stopping part of Trump’s directive against that firm.”
• “Despite the temporary wins, details about the orders in the March 28 lawsuits filed by WilmerHale and Jenner & Block show the devastation the directives threaten for the firms’ bottom lines. Together the two firms collected more than $2 billion in revenue in 2023, according to the American Lawyer.”
• “More than 40% of Jenner & Block’s revenue last year came from clients who are US contractors, subcontractors, or affiliates, the firm said in its lawsuit. ‘If we lost that business, or even a portion of it, it would be a serious threat to the firm’s financial health,’ firm chair Thomas Perrelli said in a court filing.”
• “The devastating effects spelled out in the firms’ lawsuits show why big law operations have been so quick to fight Trump’s orders. They also help explain why Paul Weiss and Skadden moved so fast to strike deals with the president.”
• “A key question going forward for law firms facing Trump’s ire is what clients prefer they do—and whether those customers will stand by them in a fight with the president.”
• “‘The critical question is how will the clients respond,’ said Jeffrey Gordon, a professor at Columbia Law School. ‘It’s up to them in a certain way.'”
• “Trump’s orders targeting law firms cut to the heart of their operations by limiting lawyers’ access to federal buildings—access they need to do their jobs—and by discouraging companies with US contracts from using the firms’ services.”
• “WilmerHale showed how much is at stake by the lawyer it hired to battle Trump—Paul Clement, a conservative who is one of the top US Supreme Court litigators of this era.”
• “Jenner & Block said the portion of Trump’s order that restricts firm lawyers from accessing government buildings is particularly painful.”
• “Unlike many other law firms, nearly 90% of Jenner’s attorneys focus on litigation, the firm said in a court filing. It currently has around 540 active matters pending before US courts and agencies that require access to federal buildings and officials, Perrelli said.”
• “Part of the order barring Jenner’s lawyers from federal spaces is already being enforced, the firm said. The Justice Department told a firm client not to bring Jenner to an April 3 meeting.”
• “Clients are already asking about how the order will hurt the firm’s ability to attend future meetings with other government agencies, according to Jenner’s filing.”
• “‘Partners at the firm have spent hundreds of hours, collectively, speaking with clients about the order and its implications,’ said the firm, which is being represented by Cooley’s former litigation chair Michael Attanasio.”
• “Like WilmerHale, Jenner expressed concern over preserving the confidentiality of attorney-client relationships.”
• “‘I can understand the short-term capitulation,’ said Adam Badawi, law professor at the University of California at Berkeley. ‘But you’re putting yourself under the thumb of this administration for the next four years.'”