Bressler Risk Blog

David Kluft notes: “Can I be adverse to my own client in a lawsuit if they don’t contest liability?” —

• “A VA attorney appeared in a contract action for a Father against his Son and the Son’s Wife. Three days later, he appeared for the Son in a divorce matter against the Wife. There was no informed consent.”
• “He argued that this was not a conflict because the Son never contested the debt to the Father. The lawyer moved for a default in the contract action against the Son (his own client) and the Wife. The wife had moved away by then so she wasn’t properly served with the Father’s complaint or the default motion, but the attorney falsely told the court she had been served.”
• “License revoked for the conflict, the false statement to the court, and other misconduct.”
• The order: here.

Three Skadden lawyers write on: “Navigating the maze of conflict of interest laws for corporate employees taking government roles” —

• “It has been hard to miss the headlines in recent months involving a number of high-profile, high-net worth individuals taking senior positions in the federal government. There have always been wealthy individuals who go into the government, but the sheer number of such appointees and also ultra-wealthy business owners being appointed are testing the conflict of interest laws.”
• “These laws attempt to prevent self-dealing and preserve the objectivity of public officials. However, what often goes overlooked are the significant impacts they can have on not only the appointees but also the companies at which they work (or in which the appointees have significant ownership interests).”
• “For an appointee’s company, the challenges extend far beyond the headlines and into the realm of operational, legal, and reputational risk, as the obligations imposed by conflict of interest statutes can create unexpected complications for businesses whose employees seek or hold public office at the federal, state, or local level. Understanding and navigating these risks is essential not only for the individuals involved, but also for the organizations that may find themselves dealing with new restrictions, disclosure requirements or even prohibitions on doing business with government entities as a result of an employee’s public service.”
  Federal disclosure, recusal and divestment requirements”
• “At the federal level, the primary conflict consideration is the prohibition, contained in 18 U.S.C. § 208, on federal officials participating in decisions (even broad policy decisions) that can affect companies or businesses in which they have financial interests. In addition, Office of Government Ethics rule 5 CFR § 2635.502 covers not only companies in which an official currently has a financial interest but also any company that employed or retained the official during the one-year period before joining the government. However, this rule requires recusal merely from matters where the company is an actual party, as opposed to broad policy decisions.”
• “These prohibitions underpin requirements that incoming officials disclose their financial interests (publicly for senior officials) going back a full calendar year before joining the government, agree to recuse themselves from matters that impact those interests and, where recusal is not feasible given the responsibilities of their office, divest holdings that conflict with those responsibilities. The premise is simple enough, but these requirements can present daunting and unanticipated challenges for both the incoming officials and, in some cases, their employers.”
• “Disclosure forms require not just a list of holdings but the official must assign them a value as well, which can be unwelcome news for the official’s employer if that would result in disclosing sensitive information regarding employment-related assets. For example, this can be particularly problematic for those coming from a private equity background with significant holdings in PE funds and related carried interest vehicles, which are notoriously difficult to value.”
• “Moreover, in many cases the law may require identifying a fund’s underlying holdings, information which is commonly viewed as proprietary and protected by confidentiality agreements. As for the recusal requirement, agreeing to divest from these interests may be the only resolution, but even that step can be challenging if the assets are illiquid.”
• “It can also impose significant costs on the official who may be forced to sell quickly or at an inopportune time. For example, having to suddenly divest a significant ownership interest in a closed-end private equity fund could be a dealbreaker given the difficulty of quickly identifying a qualified buyer acceptable to the fund sponsor. It is generally advisable for potential appointees – even if they do not fall into the ‘ultra-wealthy’ category – to work with the relevant ethics officials early in the process to determine what they may need to sell off in order to determine whether accepting their appointment is financially feasible.”
• “While most of the media attention focuses on federal officials, similar conflict of interest laws exist at the state and local level. Every state has its own rules governing the conduct of public officials, as do many cities, towns and counties — and in many cases, they can be even more stringent than the federal rules with more consequences for an official’s private employer.”
• “Moreover, given that these laws tend to apply broadly to most, if not all, elected and appointed positions in a given state or locality — including, for example, school boards, town councils and zoning commissions — from a company’s perspective, it is far more common to have employees seeking state or local positions that can trigger these consequences than employees entering federal office.”
• “While these laws can present similar disclosure, divestment, and recusal considerations as the federal regime does, many state and local conflict laws impose restrictions well beyond requiring an official to recuse from certain matters. These restrictions can create real risk for a company, particularly when an employee intends to keep their job and serve as a part-time state or local official. For example, in some jurisdictions, an employee may be prohibited from appearing on behalf of his or her employer before not just their own agency, but any agency within their jurisdiction. If the employee’s job duties include regularly interacting with the government, such a restriction may be unworkable.”
• “State and local laws also may bar an official from sharing in any profits generated from government contracts, even if they had no involvement in negotiating or approving the contract in question while wearing their government ‘hat.’ Successfully navigating these types of restrictions could require imposing special compensation arrangements and/or limitations on the employee’s involvement with the work being done under government contracts.”
• “Most importantly, under the strictest laws, the company could face an absolute prohibition against maintaining or entering into new government contracts with the employee’s agency — or even other agencies in the same jurisdiction — regardless of whether the employee has any involvement in the process. For example, California Government Code § 1090 generally prohibits an agency from entering into a contract with a company that employs a member of the agency’s board, even if the employee recuses entirely from the agency’s contract discussions and approval process.”
• “Given the significant risks highlighted above, it is essential for companies to maintain a policy requiring employees to obtain prior approval before seeking or accepting any government position — no matter how minor it may seem. This requirement allows a company to properly vet those requests to protect the company from unforeseen consequences, both legal and reputational.”
• “A particular concern when faced with this dilemma is the fact that many states have labor laws that limit an employer’s ability to restrict the outside activities of its employees, and some specifically protect employees’ rights to serve in public office or participate in political activities. Such laws must be taken into consideration when evaluating potential restrictions or requirements to impose on an employee as a result of conflict laws.”

“Member of RFK Jr’s new vaccine panel withdraws over conflict of interest” —

• “A member of the health secretary Robert F Kennedy Jr’s newly overhauled federal vaccine advisory panel withdrew after a conflict of interest review, a spokesperson has told the Guardian. Dr Michael Ross, who was involved in multiple private healthcare companies, withdrew after review of his financial holdings.”
• “Kennedy unilaterally fired all 17 members of the Centers for Disease Control and Prevention’s (CDC) advisory committee on immunization practices (ACIP) in June, arguing they had too many conflicts of interest.”
• “Ross was among eight of Kennedy’s ideological allies appointed to the committee, after the secretary argued the old members of the committee were subject to too many conflicts of interest.”
• “‘Yesterday, Dr Michael Ross decided to withdraw from serving on ACIP during the financial holdings review,’ a spokesperson for the Department of Health and Human Services (HHS) said.”
• “The spokesperson made the comments after Guardian inquiries about conflict of interest disclosures for new members of ACIP. Although the Trump administration and Kennedy developed a conflict of interest tracker specifically for ACIP members, Kennedy’s appointees have not been added.”
• “The new members of the committee were asked to disclose conflicts of interest before the meeting began on Wednesday. The committee chair Dr Martin Kulldorff and committee member Dr Robert Malone omitted widely reported work in vaccine litigation, and nurse Vicky Pebsworth said she was ‘asked to read’ a statement disclosed ownership of a healthcare stock but said it was below the government ethics office threshold for reporting.”

The conflicts tracker itself is fascinating, and is accessible here: “Conflicts of Interest Disclosures of ACIP Members”

“California AG is sued by his office’s lawyers for outsourcing climate case” —

• “California Attorney General Rob Bonta’s decision to hire an outside law firm to handle a high-profile climate lawsuit has drawn its own legal challenge — from lawyers in his office.”
• “The labor union that represents attorneys in Bonta’s office has filed a lawsuit in Sacramento County Superior Court, saying the California State Personnel Board wrongfully sided with Bonta (D) who enlisted the law firm Lieff Cabraser Heimann & Bernstein in the state’s lawsuit against some of the world’s largest oil companies.”
• “The union — California Attorneys, Administrative Law Judges and Hearing Officers in State Employment (CASE) — argued that hiring outside lawyers violates state law and is dispiriting for the 1,100 attorneys on staff. The climate lawsuit, the union said, ‘are the kinds of cases that attract attorneys to come to work for the state in the first place.'”
• “‘To go hire a high-end law firm, as interesting as the litigation might be, it’s a run-of-the-mill, garden variety legal theory,’ CASE president Timothy O’Connor said in an interview. ‘Why they would need to go out to $1,600-an-hour attorneys for work that we feel is completely within the expertise of our very good and dedicated civil service attorneys is beyond me.'”
• “In court filings, the union said hiring an outside firm ‘deprives civil service attorneys of once-in-a-career opportunities’ and reduces ‘the few incentives that currently exist to entice young attorneys to come to work for the state.'”
• “‘Illegally outsourcing this work will do incalculable damage to the state’s legal workforce,’ the petition states, adding that it would ‘ironically lead to a greater need to outsource more legal work in the future due to a lack of expertise and experience that could be gained on a case like this.’ Bonta should have made certain he had the resources and staff to prosecute the case before it was filed, the union said.”
• “Bonta’s office said in court documents that although it has assigned five lawyers from the office to the case, its attorneys ‘lack sufficient experience and expertise in litigating such a massive lawsuit against an entire industry with nearly limitless legal resources at its disposal.'”
• “In a letter to the union, Bonta’s office called the lawsuit ‘one of the largest, most high-profile, and most significant cases the Department of Justice has ever litigated.’ If the climate cases are successful, the oil industry could be forced to pay hundreds of billions of dollars for harming the public — like tobacco and opioid manufacturers before it.”
• “Judge Shelleyanne Chang has scheduled a hearing in the case for June 27.”
• [UPDATE: At this hearing, the judge issued a tentative ruling rejecting the petition.]

Neither rain nor snow nor sleet nor hail shall keep Bill Freivogel from catching conflicts and crafting commentary. Here’s his latest:

• In re Edison, No. 2025-SC-0193-KB (Ky. June 20, 2025).
  • Lawyer discipline. We rarely report on discipline cases because the alleged conflict of interest is usually secondary to something more serious like stealing client money. Here, the conflict is key.
  • Client A went to Lawyer because a neighbor’s dump truck was damaging a road adjacent to Client A’s property. Lawyer advised Client A the road was public and the neighbor could legally drive his truck on it.
  • Two years later Clients B and C hired Lawyer to bring an action to remove a gate blocking that same road. Lawyer sued the adjoining land owners, including Client A. In that case Client A moved to disqualify Lawyer, and the trial court granted the motion. Client A then filed a Bar complaint against Lawyer.
  • The trial commissioner found that Lawyer had violated Kentucky Rule 1.9 and should receive a public admonition. In this opinion the Kentucky Supreme Court affirmed.
• Allstate Ins. Co. v. Matturro, No. A-0711-24 (N.J. App. Div. June 16, 2025).
  • Plaintiffs are six insurance companies who paid PIP auto accident benefits to various health care providers. Plaintiffs claim that the defendant providers (42 of them) are liable for fraud for claiming payments for unnecessary care, or for no care at all. Law Firm purports to represent 32 of the defendants.
  • Plaintiffs moved to disqualify Law Firm claiming its joint representation was a conflict of interest. The trial court denied the motion, in part because none of the defendants had made claims against each other or sought separate representation. In this opinion the appellate court vacated the trial court’s denial and remanded for “further analysis.”
  • Two instigators brought in various individual doctors and caused the creation of entities in which the doctors participated in the alleged billing fraud. The appellate court ruled that the claim of no conflict did not “pass the straight-face test” (our phrase). All sorts of cross-claims seem inevitable, not to mention the apportionment of liability under New Jersey’s Comparative Negligence Act. Moreover, neither the defendants nor Law Firm provided any agreements or waivers regarding the joint representation.
• Hreish v. Pappas, 24-CV-2284 (JHR)(BCM) (S.D.N.Y. June 10, 2025).
  • In this case various current and former officers of, and investors in, a corporation, ECC, are fighting for control of ECC. ECC’s only asset is a Delaware Chancery Court derivative action claim.
  • Defendants moved to disqualify the lawyer for Plaintiffs (“Lawyer”), primarily because Lawyer is representing individual plaintiffs as well as ECC. In this opinion the magistrate judge denied the motion to disqualify.
  • The history of ECC and the claims and cross claims in this case are bewilderingly complex, and the court’s findings appear to us to be of little precedential value. Essentially, the magistrate judge seems to be saying that because a conflict among the plaintiffs may surface is not enough at this stage to find a violation of N.Y. Rule 1.7.

“Justice Department Challenges WilmerHale’s Role in 23andMe Bankruptcy Over Conflict of Interest Concerns” —

• “The legal landscape surrounding 23andMe’s ongoing bankruptcy proceedings took a new turn as the U.S. Justice Department’s bankruptcy watchdog challenged the participation of law firm WilmerHale in assessing privacy matters related to the potential sale of the company’s genetic data. The Department of Justice has expressed concerns over potential conflicts of interest arising from WilmerHale’s dual role. The firm, while representing a law professor tasked with making important privacy-related recommendations, is simultaneously involved with Regeneron Pharmaceuticals Inc. on unrelated matters.”
• “The core of the DOJ’s argument is centered on the risk of WilmerHale compromising their duty of loyalty. This concern stems from the notion that WilmerHale may inadvertently downplay critical privacy considerations concerning the sale of genetic data from 23andMe’s customers, given its obligations to its client Regeneron. According to the DOJ’s filing on the matter, the potential conflict of interest is significant enough to warrant the firm’s removal from these proceedings.”
• “Complicating the scenario further is the outcome of a recent auction where Regeneron was edged out by a nonprofit organization overseen by 23andMe’s former CEO. Despite the auction results, the situation puts a spotlight on WilmerHale’s role and emphasizes the inherent complexities of managing fiduciary duties amidst overlapping professional engagements.”
• “Legal experts within the industry will be closely monitoring the developments of this case, as it underscores the delicate balancing act firms face when grappling with multiple client commitments. The DOJ’s stance invites scrutiny and raises broader ethical questions regarding how law firms manage dual loyalties and potential conflicts.”

“Vancouver lawyer Steve Alexander Parr fined $20,000 for professional misconduct” —

• “Vancouver lawyer Steve Alexander Parr has been fined $20,000 and ordered to pay the Law Society $1,000 in costs for professional misconduct.”
• “In a joint submission to a Law Society Tribunal hearing panel, Parr admitted to acting in a conflict of interest in the course of representing his clients. In May 2020, he represented two clients in relation to a partnership venture but failed to obtain written consent to a joint retainer, advise either client that both had asked to retain him, or explain that information shared by either client would not be confidential. Parr did not advise them that if an unresolvable conflict developed, he would have to withdraw from representing both clients. In addition, from July 2020 to July 2022, Parr continued to represent one client while acting against the interests of his former client in relation to the same partnership venture in which he had jointly represented both.”
• “In accepting his joint submission, the hearing panel Law Society took into consideration an Agreed Statement of Facts, a letter from Parrrs containing his admissions, and the outcomes in prior, similar cases.”
• “The full decision of the hearing panel can be read here. “

“A judge sided with Trump. Behind the scenes, he was lobbying for a nomination” —

• “A Florida state judge was lobbying for a seat on the federal bench. After he sided with the president in a defamation case, Donald Trump gave him one.”
• “Ed Artau, now a nominee to be a district court judge in Florida, met with staff in the office of Florida Republican Sen. Rick Scott to angle for the nomination less than two weeks after Trump’s election last fall, according to a new Senate disclosure obtained by POLITICO. In the midst of his interviews, Artau was part of a panel of judges that ruled in Trump’s favor in the president’s case against members of the Pulitzer Prize Board.”
• “About two weeks after the court published his opinion — which called for the overturning of a landmark Supreme Court case that made it harder for public officials to sue journalists — he interviewed with the White House Counsel’s Office. In May, Trump announced his nomination to the federal judiciary.”
• “Critics raised concerns about Artau’s impartiality at the time of the announcement, in light of his ruling in the Pulitzer case. But the overlapping timeline of that decision with his meetings with Senate staff and the White House Counsel’s Office has not previously been reported.”
• “The president has wide latitude to nominate whomever he wishes to the federal bench. But Artau’s vehement defense of Trump — while seeking a nomination from his administration — ‘raises serious questions about his impartiality,’ Caroline Ciccone, president of watchdog group Accountable.US, said in a statement. The administration’s decision to nominate Artau after that opinion also reflects a pattern of elevating those who have sought to ingratiate themselves with Trump.”
• “‘Coming across as an archpartisan is now perceived as something that can help your cause with President Trump,’ Charles Geyh, a professor at Indiana University Maurer School of Law, said in an interview. ‘The idea that you would have a judge thinking you know, it’s a good idea to go on the warpath in support of the President, is really a new development.'”
• “According to his official Senate questionnaire, Artau met with Scott’s general counsel on Nov. 14 to discuss his interest in the vacancy on the U.S. District Court for the Southern District of Florida. After Sen. Ashley Moody (R-Fla.) was appointed to the Senate in January to succeed now-Secretary of State Marco Rubio, Artau contacted her office to indicate interest in the nomination. At some point after that, Artau said he was informed the senators would recommend him.”
• “On Feb. 12, the court published his opinion in Trump’s favor in the defamation case against the Pulitzer Board, and on Feb. 27, he interviewed with attorneys from the White House Counsel’s Office.”
• “Thereafter, he was informed that he was under consideration for the nomination, and on May 27, he met with Trump, according to Artau’s answers provided in the questionnaire. Trump announced he would nominate Artau to be a district judge in South Florida the next day, writing in a post on Truth Social that Artau has ‘a GREAT track record of restoring LAW AND ORDER and, most importantly, Common Sense.'”
• “In the Senate disclosure, Artau affirmed no one involved in the judicial nomination selection process ‘discussed with [him] any currently pending or specific case, legal issue or question in a manner that could reasonably be interpreted as seeking any express or implied assurances concerning [his] position on such case, issue, or question.'”
• “Artau’s opinion in the defamation case was unusual, in part because the ruling concerned a largely procedural matter. Trump had sued the Pulitzer Board for defamation after he requested that it rescind the 2018 awards given to The New York Times and The Washington Post for their coverage of Russian election interference and ties to Trump’s orbit. The three-judge panel in Florida, including Artau, allowed the case to proceed.”

“Court of Appeals Amends Rules Regarding Client Demands in Engagement Letters and Outside Counsel Guidelines” —

• “On May 14 the D.C. Court of Appeals adopted revisions to D.C. Rules of Professional Conduct 1.6 (Confidentiality of Information), 1.7 (Conflict of Interest: General Rule), 1.16 (Declining or Terminating Representation), and 5.6 (Restrictions on Right to Practice), as largely proposed by the D.C. Bar Rules of Professional Conduct Review Committee. “
• “The amendments limit certain practices that (1) restrict the ability of prospective clients to engage counsel of their choice; (2) impose restrictions on lawyers’ independence and right to practice; (3) restrict a lawyer’s right to retain a copy of a client’s file, including the lawyer’s work product; and (4) restrict a lawyer’s right to make use of general, nonconfidential information acquired in the course of a representation.”
• “Specifically, new language in Rule 1.6(b) clarifies that the defined term ‘secret’ generally does not refer ‘to legal knowledge or legal research, to knowledge the lawyer has obtained about the regulatory environment in which a client operates, or to information that is generally known in the local community or in the trade, field, or profession to which the information relates.’ A new comment to Rule 1.6 explains that agreements restricting a lawyer’s use of information obtained during a representation could raise concerns about the ability of clients to obtain lawyers as well as the ability of lawyers to represent other clients competently and zealously.”
• “Revised comment [25] to Rule 1.7 states that agreements precluding representation of other clients in circumstances that do not preclude representation under the Rules do not expand the scope of the Rules. “
• “Revised Rule 1.16(d) and a new comment indicate that lawyers can ethically retain copies of client documents, as long as the lawyers maintain confidentiality with respect to those documents.”
• “Finally, a new comment to Rule 5.6 states that ‘a lawyer should not agree to restrictions a client seeks to place on the lawyer’s ability to represent other individuals or entities whose representation is not otherwise precluded by these rules if those restrictions would unduly interfere with the general ability of clients to obtain lawyers or lawyers’ ability to engage in public service or would undermine the integrity of the profession.'”
  “The amendments take effect September 15, 2025.”

Always interesting spots by David Kluft: “Can an attorney agree to be bound by a settlement agreement’s non-disparagement clause?” —

• “A TN lawyer representing a plaintiff in a product liability case was presented with a settlement agreement containing a provision that would make the lawyer a party to the agreement and prohibit him from disparaging the defendant corporation thus limiting his ability to use and discuss negative information about the defendant in other cases.”
• “The TN Board of Professional Responsibility opined that the agreement would violate public policy because it would restrict public access to the information, undercut the role of plaintiff’s counsel as an industry watchdog, and create a potential conflicts with the interests of future clients who may have a claim against the defendant. The attorney therefore cannot ethically agree to be bound by the non-disparagement provision.”
• See: Formal Ethics Opinion 2025-F-171

“UK judge warns of risk to justice after lawyers cited fake AI-generated cases in court” —

• “Lawyers have cited fake cases generated by artificial intelligence in court proceedings in England, a judge has said — warning that attorneys could be prosecuted if they don’t check the accuracy of their research.”
• “High Court justice Victoria Sharp said the misuse of AI has ‘serious implications for the administration of justice and public confidence in the justice system.'”
• “In the latest example of how judicial systems around the world are grappling with how to handle the increasing presence of artificial intelligence in court, Sharp and fellow judge Jeremy Johnson chastised lawyers in two recent cases in a ruling on Friday.”
• “They were asked to rule after lower court judges raised concerns about ‘suspected use by lawyers of generative artificial intelligence tools to produce written legal arguments or witness statements which are not then checked,’ leading to false information being put before the court.”
• “In a ruling written by Sharp, the judges said that in a 90 million pound ($120 million) lawsuit over an alleged breach of a financing agreement involving the Qatar National Bank, a lawyer cited 18 cases that did not exist.”
• “In the other incident, a lawyer cited five fake cases in a tenant’s housing claim against the London Borough of Haringey. Barrister Sarah Forey denied using AI, but Sharp said she had ‘not provided to the court a coherent explanation for what happened.'”
• “The judges referred the lawyers in both cases to their professional regulators, but did not take more serious action.”
• “Sharp said providing false material as if it were genuine could be considered contempt of court or, in the ‘most egregious cases,’ perverting the course of justice, which carries a maximum sentence of life in prison.”
• “She said in the judgment that AI is a ‘powerful technology’ and a ‘useful tool’ for the law.”

“Judge Rules Law Firm in Litigation With Musk Can Hire Ex-SEC Chief Litigation Counsel” —

• “The U.S. District Court for the Southern District of New York ruled Thursday that Bernstein Litowitz Berger & Grossmann can hire as a partner Jorge G. Tenreiro, who held a number of positions at the U.S. Securities and Exchange Commission, including chief litigation counsel, and, most recently, served in the agency’s Office of Information Technology.”
• “Defendant Elon Musk argued that the ‘extremely short time’ that elapsed between the filing of an SEC action over the billionaire’s purchase of Twitter Inc. and Tenreiro’s outreach to BLB&G, which is lead counsel for the plaintiff, the Oklahoma Firefighters Pension and Retirement System, in a class action over the Twitter acquisition, created an ‘appearance of impropriety.'”
• “But U.S. Magistrate Judge Gabriel W. Gorenstein disagreed.”
• “‘[T]he timing of Tenreiro’s departure appears to have been precipitated by his being assigned to detail in an office with a focus unrelated to his prior work and the agency’s offering of a voluntary separation package,’ Gorenstein found. ‘More to the point, given that Tenreiro did not know that BLB&G was counsel in this case until sometime between March 15 and March 17, 2025, the length of the period between Tenreiro’s alleged involvement with SEC actions against Musk and outreach to BLB&G is immaterial.'”
• “Oklahoma Firefighters brought the underlying case, alleging that the defendants, who include Musk, committed securities fraud when Musk concealed his ownership stake in the social media platform X, then operating as Twitter. The putative class action is on behalf of investors who sold Twitter securities between March 25, 2022, and April 4, 2022.”
• “And on April 22, BLB&G asked the Southern District of New York to approve a ‘routine ethical screen’ of Tenreiro, court records show. BLB&G later clarified that the ex-SEC employee accepted an offer of employment from the law firm contingent on the court’s approval of the screening procedures, according to the opinion and order.”
• “Historically, Tenreiro was employed by the SEC from December 2013 to April 2025. Between October 2022 and November 2024, he secured several rulings against prominent digital asset companies as the deputy chief of the SEC’s Crypto Assets and Cyber Unit. In December 2024, Tenreiro was promoted to the agency’s chief litigation counsel.”
• “During Tenreiro’s tenure as chief litigation counsel, the SEC sued Musk in connection with his purchase of Twitter shares. Tenreiro claimed that he did not ‘substantively participate in the SEC investigation’ or any related matter.”
• “In January, Tenreiro began looking for outside work and was transferred to the IT department before his departure from the agency. The next month, an ex-classmate of Tenreiro’s connected him to BLB&G, and Tenreiro claimed that he first became aware of the law firm being counsel in the underlying case in mid-March.”
• “And in the opinion and order, Gorenstein found that the conflict check—which included Tenreiro identifying the cases brought by the law firm and ones connected to the SEC, and a consultation from a ‘professional legal ethics expert’—was sufficient under the Code of Professional Responsibility.”
• “‘For similar reasons, we find that Tenreiro’s ‘likes’ of social media posts do not create an appearance of impropriety, particularly since the posts have nothing to do with the SEC enforcement action against Musk or the instant litigation,’ Gorenstein ruled. ‘Accordingly, we conclude that BLB&G’s screening procedures cure Tenreiro’s conflict of interest.'”

Kerri Riley, Global Head of Conflicts at Quinn Emanuel dropped me a note (I always welcome reader tips!) to note that she’s co-authored an amendment to Rule 7.3 to prohibit solicitation of respondents in domestic violence cases prior to being served: “Proposed Amended Rule of Professional Conduct 7.3” —

• “Amended Rule 7.3 would: Address the documented risks, including a heightened risk of violence and death during separation from an abuser, by ensuring petitioners can complete safety planning and avail themselves of protections afforded by the courts. Creates a clear temporal boundary for when solicitation is permissible; and Address a specific, documented public safety concern.”
• “(f) Even when not otherwise prohibited by this rule, a lawyer shall not solicit professional employment from a respondent in a domestic violence restraining order proceeding in connection with such proceeding, until after the respondent has been legally served with notice of the proceeding and proof of service appears on the court docket.”
• “[5] Paragraph (f) addresses solicitation in domestic violence restraining order proceedings where solicitation of respondents prior to legal service may increase the risk of petitioner facing abuse, violence or even death. This limitation serves the State Bar’s mission to protect the public, as recognized in Business and Professions Code section 6001.1”
• Comments should be submitted using the online Public Comment Form. The online form allows you to input your comments directly and can also be used to upload your comment letter and/or other attachments.

“Judiciary Panel Seeks Comment on Proposal to Require ‘Grandparent’ Corporations Disclosure” —

• The federal judiciary’s Committee on Rules of Practice and Procedure will seek public comment on a proposal to require corporations named in lawsuits to disclose their parent and ‘grandparent’ organizations. The proposed rule was sparked by a suggestion from U.S. Court of Appeals for the Eighth Circuit Judge Ralph Erickson, who raised concerns that a judge could unknowingly hold a financial interest that requires recusal.”
• “‘Although there have not been serious concerns that judges have acted in a biased manner due to the lack of information on corporate grandparents or great grandparents, it can threaten perceptions of the court’s legitimacy and impartiality when a judge presides over a case in which she has an arguable financial interest,’ said Tenth Circuit Judge Allison Eid.”
• “The amendments approved for public comment would require disclosing any ‘parent business organization and any publicly held business organization that directly or indirectly owns 10% or more’ of a party.”
• “‘Requiring disclosure of direct or indirect owners of 10% or more of a party intends to prompt disclosure of grandparents or others who may own a significant share of a party via another intermediate entity,’ Eid said. ‘The language, in our view, is not perfectly precise, but the parties have long been trusted to meet their disclosure obligations.'”
• “The disclosure proposal now goes before the Judicial Conference of the United States and, if approved, to the U.S. Supreme Court for final approval.”

“Criminal: Motion to disqualify attorney for co-defendant is rejected” —

• “Where two executives of a home health agency were charged with health care fraud and money laundering, the COO’s motion to disqualify the attorney representing the owner was denied. The attorney previously represented the company, and not the COO. And the COO failed to show what, if any, information would be subject to attorney-client privilege.”
• “According to the indictments, Bryant-Taylor served as an owner, director, president and Chief Operating Officer of 1st Adult N Pediatric Healthcare, a home health agency that provided private duty nursing and personal care throughout Virginia. Okocha was an owner, director, vice president and treasurer of 1st Adult.”
• “Bryant-Taylor now moves to disqualify attorney Robert Jenkins from representing co-defendant Okocha. Bryant-Taylor alleges that during Jenkins’ prior representation of 1st Adult, Bryant-Taylor ‘revealed confidential information about herself and 1st Adult and 1st Adult’s legal situation to attorney Jenkins so that he could adequately represent her company in the civil litigation.'”
• “Bryant-Taylor is now ‘concerned that if she goes to trial and chooses to testify in her own defense, that Attorney Jenkins, in the course of representing Josephine Okocha, may use information the Defendant had revealed to him in preparation of the civil suit for purposes of cross examination or in other ways to her detriment and in violation of attorney/client privilege.’ Thus, she asks that Jenkins be disqualified so that her ‘rights to attorney/client confidentiality be fully protected.'”
• “Bryant-Taylor was not in an attorney-client relationship with Jenkins such that she can now invoke attorney-client privilege on behalf of herself. Although she was 1st Adult’s ‘contact person’ for Jenkins during his representation of the company in the civil case, the engagement letter disclaims that she was the client. The letter expressly states that the business was the client and that the firm did ‘not undertake to provide representation, through this engagement, for the individual interests of any such officer, director or employee of 1st Adult.'”
• “At the April 17 hearing, Bryant-Taylor affirmed that she understood 1st Adult was the client in the civil case and that Jenkins had not specifically agreed to represent her as an individual. Her testimony failed to establish that she held a subjective belief that she was in an attorney-client relationship with Jenkins and that such a belief would have been reasonable under the circumstances.”
• “In sum, there is no evidence that Bryant-Taylor was, in fact, Jenkins’s client for the purposes of Va. R. Prof. Cond. 1.9 and principles governing an attorney’s obligations to former clients. She has not demonstrated an ‘actual’ or a ‘serious potential’ conflict of interest between herself and Jenkins arising from his representation of her co-defendant.”

Judicial Ethics Opinion 25-06(B): “A new judge may hire a law student who previously interned at the judge’s prior law firm as a judicial intern” —

• “Digest: (1) A new judge may hire a law student who previously interned at the judge’s prior law firm as a judicial intern.”
  (2) If, while the judge is already under an obligation to disqualify in matters involving the law firm, the judge wishes to provide an opportunity for remittal of disqualification, the judge may disclose both his/her own prior connection to the firm and the judicial intern’s, and allow the parties and their counsel to consider whether or not they wish to remit the judge’s disqualification. However, if the judge learns that the intern was personally involved with a matter at the law firm, the intern should be insulated from that matter, and such insulation cannot be waived or remitted.”
• “Preliminarily, we note that judges are disqualified from presiding in any case involving their prior law firm or its attorney(s) until two years have passed after the completion of any financial relationship between the judge and the law firm (see e.g. Opinions 18-118; 18-46; 16-36; 22 NYCRR 100.3[E][1]).”
• “Assuming the judge can be fair and impartial, the disqualification is subject to remittal after full disclosure on the record (see Opinion 18-118; 22 NYCRR 100.3[F]). As noted in
• “Opinion 21-22(A), where a judge has a disqualifying conflict, it is not the parties’ burden to request the judge’s disqualification. Rather, it is the judge’s burden to disqualify him/herself at the outset, even if the parties are fully aware of the conflict and do not express any concern (see id.).”
• “…the decision whether to engage a student intern is within the discretion of the judge and does not generally raise ethical concerns. Indeed, where the internship is unpaid, we have advised that the anti-nepotism rule does not apply (see Opinion 14-48 [judge may hire third-degree relative as unpaid intern]). Where a conflict arises in a particular case due to the intern’s outside activities or relationships, it is ordinarily sufficient to disclose the connection and insulate the intern (see e.g. Opinions 22-181; 13-80).”
• “One unusual factor here is that this new judge proposes to hire an intern from his/her former law firm, while the judge is already disqualified from hearing matters involving that law firm. During this period, the judge may, of course, simply disqualify in matters where the law firm appears. Should the judge wish to provide an opportunity for remittal of disqualification, however, the judge may disclose both his/her own prior connection to the firm and the judicial intern’s, and allow the parties and their counsel to consider whether or not they wish to remit the judge’s disqualification. However, if the judge learns that the intern was personally involved with a matter at the law firm, the intern’s insulation from that particular matter cannot be waived or remitted”

David Kluft notes: “Can a law student’s summer associate position conflict them from legal clinic work?” —

• “A MD law school asked the MD bar if its clinical program has to run conflict checks to make sure it isn’t adverse to, for example, the clients of a law firm that employed a clinic student the prior summer, or employs the student currently as a paralegal.”
• “The answer is no. Although law students functions as attorneys within the clinical program, they are non-attorneys outside the clinical program, so for conflict purposes there is not a competing loyalty that can limit the obligation to a clinic client.”
• “However, the student still has an obligation to maintain any client confidential information learned from the outside employment.”

“Take Your Clients at Their Word…At Your Own Risk” —

• “The ABA amended Model Rule 1.16 in 2023, requiring lawyers to actively assess whether a client intends to use legal services for fraud or crime, imposing a duty to investigate suspicious circumstances before and during representation.”
• “Lawyers can face disciplinary action and civil liability for failing to detect or respond to client misconduct, even if they lacked actual knowledge but were negligent or willfully blind to red flags.”
• “Lawyers should evaluate client identity, service nature, jurisdictions involved, and financial flows to assess risk and avoid inadvertently facilitating illegal activity.”
• “Picture this scenario. A client hires you to represent him as the purchaser in a real estate transaction. At the initial consultation, he is insistent that you act as escrow agent. You are surprised when the wire for the transaction comes in from a Russian bank. Your client assures you that everything is on the up and up. The deal closes and everyone walks away happy. Six months later, you get a call from an investigator from the Attorney General’s Office asking you about your client’s involvement in the transaction. It turns out the entire transaction was a scheme to launder money.”
• “This is just one of the ways that unscrupulous clients can take advantage of lawyers’ services for illegal schemes. As regulated professionals, lawyers must be on guard as they are subject to both civil liability and disciplinary consequences. These two enforcement frameworks have apparently different standards when it comes to an attorney’s obligation to investigate its client for fraud, although these two standards are shifting closer together with time.”
• “The American Bar Association’s Model Rules of Professional Conduct have long provided guidance to state supreme courts and legal regulators as they develop lawyer regulation and state rules of professional conduct. While some have argued that the ABA Model Rules were long silent on whether lawyers had an affirmative duty to investigate their client to ensure that the lawyer’s services were not being utilized for illegal means, recent amendments to Model Rule 1.16 clarify a lawyer’s duty to do so.”
• “Traditionally, lawyers could act upon their client’s instructions without doubting their bona fides unless the lawyer had actual or constructive knowledge of the client’s illegal or fraudulent motives. See, e.g., Monroe H. Freedman, Personal Responsibility in a Professional System, 27 CATH. U. L. REV. 191, 200 (1978) (criticizing the practice of ‘assum[ing] the worst regarding the client’s desires’). As use of lawyers to further money laundering, terrorism financing, and other illegal conduct appears to have proliferated, or at least entered the mainstream consciousness, the legal profession has suggested stronger requirements for lawyers to root out such bad actors before they get roped into a criminal enterprise.”
• “In 2023, the American Bar Association amended Model Rule 1.16 (Declining or Terminating Representation) to highlight the responsibility of attorneys to monitor for clients’ nefarious motives. Prior to the change, Model Rule 1.16 listed several scenarios where a lawyer would be prohibited from representing a client, stating, ‘a lawyer shall not represent a client, or where representation has commenced, shall withdraw from the representation of a client if’ any of those factors are present. The factors enumerated were if ‘the representation will result in violation of the Rules of Professional Conduct or other law,’ ‘if the lawyer’s physical or mental condition materially impairs the lawyer’s ability to represent the client,’ or ‘the lawyer is discharged.’ This provision did not specifically address clients who seek to use lawyers’ services to further a crime or fraud.”
• “After the amendment in 2023, Model Rule 1.16(a) now states, ‘A lawyer shall inquire into and assess the facts and circumstances of each representation to determine whether the lawyer may accept or continue the representation.’ In addition to the scenarios listed in the old Rule where an attorney could not represent a client, the new Rule explicitly prohibits representation where ‘the client or prospective client seeks to use or persists in using the lawyer’s services to commit a crime or fraud, despite the lawyer’s discussion . . . regarding the limitations on the lawyer assisting with the proposed conduct.'”
• “As the official comments to the Rule explain, this Rule change ‘imposes an obligation on a lawyer to inquire into and assess the facts and circumstances of the representation before accepting it.’ Rule 1.16 [comment 1].”
• “Does this mean that you have to hire a private investigator any time you want to take on a new client? According to the official comments, no:”
• “The required level of a lawyer’s inquiry and assessment will vary for each client or prospective client, depending on the nature of the risk posed by each situation. Factors to be considered in determining the level of risk may include: (i) the identity of the client, such as whether the client is a natural person or an entity and, if an entity, the beneficial owners of that entity, (ii) the lawyer’s experience and familiarity with the client, (iii) the nature of the requested legal services, (iv) the relevant jurisdictions involved in the representation (for example, whether a jurisdiction is considered at high risk for money laundering or terrorist financing), and (v) the identities of those depositing into or receiving funds from the lawyer’s client trust account, or any other accounts in which client funds are held.”
• “As of now, Maryland, Massachusetts, North Dakota, Oregon, and Wyoming have adopted the Model or similar amendments. Jurisdictions in which proposals are under consideration are: Alaska, Arizona, DC, New York, and Washington. Even if a state has not adopted this rule, a state make take the position, as the ABA did prior to the rule change, that the duty to proactively, not reactively, avoid contributing to clients’ crimes and frauds, is implicit in the duties of the existing rules. See ABA Formal Ethics Opinion 491 (2020). For example, the Colorado Bar Association published an opinion in 2021 cautioning that a lawyer who is willfully blind, in other words, who ‘(1) subjectively believes that there is a high probability that a fact exists; and (2) takes deliberate actions to avoid learning that fact,’ would be deemed to have actual knowledge. Colorado Bar Association Formal Opinion 142 (2021) citing Global-Tech Appliances, Inc. v. SEB S.A., 563 U.S. 754, 769 (2011).Accordingly, ignoring ‘obvious indicators of the client’s intent to use the lawyer to facilitate a criminal or fraudulent act’ would probably be considered misconduct. See Colorado Bar Association Formal Opinion 142 (2021).”
  The Civil Liability Framework”

“Suspension for solicitor who acted on both sides of case” —

• “A solicitor whose firm acted for both sides in litigation over a debt, despite him being told of the obvious conflict, has been suspended for six months.”
• “The Solicitors Disciplinary Tribunal (SDT) heard that Satnam Singh Talwar did not respond either when a paralegal at his firm pointed out the Solicitors Regulation Authority (SRA) rules or when debt collection firm Equivo did the same in declining his instructions, telling him that he was ‘clearly conflicted’.”
• “The tribunal said the case ‘served as a stark reminder to members of the profession to take great care and caution not to place themselves in a position where they act when there is a conflict of interest or the risk of one occurring’.”
• “Mr Talwar, 51 and admitted in 2003, was director and owner of City firm QC Law/Queens Court Law, and held all the compliance roles at the time.”
• “According to a statement of agreed facts and outcome approved by the tribunal, the SRA explained that QC Law acted for Client A over a debt and obtained default judgment against Ms L on 8 July 2022.”
• “Four days later, Ms L instructed QC Law to apply to set aside the judgment, becoming Client B.”
• “As required by the conflicts policy Mr Talwar had only approved that April, a paralegal drew his attention to the conflict, but Mr Talwar went ahead and filed the application to set aside the judgment.”
• “This was accompanied by a statement from the client, drafted by Mr Talwar, which acknowledged that she had instructed the same law firm as the claimant, but that there were safeguards in place to avoid any conflicts.”
• “On the same day, Client A instructed QC Law to enforce the debt and it contacted Equivo. But eight days later, it asked Equivo to stop.”
• “Equivo declined to act on the matter on 12 August and Mr Talwar replied that, as the compliance officer, he would consider what to do next. But it was not under October that the firm ceased to act for both clients, with the paralegal having sought advice from the SRA’s ethics helpline.”
• “Soon after, Client A’s new solicitor asked why Mr Talwar did not seek her consent to act for Client B and why it took three months to inform her that it was. Mr Talwar replied to say that he had decided in mid-August to stop acting, accepted he had breached the SRA code, that he would make a self-report to the SRA. He did not, however, and the SRA was alerted six months later by Client A’s solicitor.”
• “Mr Talwar admitted he had acted with a lack of integrity and been reckless in acting when was there a conflict.”

“Atkins-led SEC Recognizes that Conflicts of Interest must be ‘Material’ in Complaint alleging Fraud and Breaches of Fiduciary Duties by Investment Adviser” —

• “SEC v. Nagler is the second enforcement action charging an investment adviser with undisclosed conflicts of interest since Chair Paul Atkins began his tenure on April 21, 2025. The Securities and Exchange Commission (SEC) announced the first of those cases, In the Matter of Transamerica Retirement Advisors, LLC (‘Transamerica’), just four days after Chair Atkins took office, on April 25, 2025.”
• “Both filings acknowledge the SEC’s obligation to allege conflicts of interest that are ‘material’ to investors in connection with alleged breaches of fiduciary duties under the Advisers Act.3 In this regard, the filings are consistent with the First Circuit’s recent decision in SEC v. Commonwealth Equity Servs., LLC, which vacated a United States District Court’s grant of summary judgment to the SEC on the basis that a jury should decide whether the conflicts at issue were ‘material.’4 “
• “Nagler also serves as a reminder for advisers to check their ‘may’ disclosures in light of developments in their business, and that the SEC’s antifraud jurisdiction extends to state-registered advisers with assets below the threshold for registering with the Commission.”
• “On June 2, 2025, the SEC filed a litigated action against David A. Nagler (‘Nagler’) and his investment advisory firm, New Line Capital, LLC (‘New Line’), alleging fraud and breaches of fiduciary duties under the Investment Advisers Act of 1940 (‘Advisers Act’).5 The complaint alleges that Nagler and New Line promised to ensure their advisory clients never paid advisory fees exceeding 2.0% of assets under management when, the SEC claims, many of their clients paid more than that amount.6 “
• “The complaint further alleges that Nagler and New Line hid material conflicts from clients by failing to disclose Nagler’s practice of charging additional fees on a discretionary basis without first obtaining client approval.7 According to the SEC, New Line’s brochures disclosed that clients ‘may’ be charged discretionary fees, but further stated that New Line would provide clients with an agreement specifically addressing any such fees.8 The SEC interpreted this as an assurance that discretionary fees would not be charged without advance client approval.9 “
• “In the SEC’s view, the failure to disclose discretionary fees – and Nagler’s financial interest in charging them – denied clients a full and fair opportunity to determine whether to continue using New Line’s advisory services.10 Importantly, given the SEC’s opportunity to frame its allegations in the context of a litigated action, the complaint explicitly alleges facts to support an allegation that the undisclosed conflict was ‘material’ instead of holding to the Enforcement Staff’s previously stated position, recently rejected in Commonwealth Equity Servs., LLC, that investment adviser conflicts are per se material.11”
• “Nagler reads as a variation on the typical ‘may’ disclosure case (in which the SEC alleges that disclosing the possibility of conduct is misleading when that conduct is actually underway) because New Line allegedly told clients not only that discretionary fees ‘may’ be charged, but that such fees would not be charged without advance notice. Arguably, the alleged promise to provide advance notice minimized the effectiveness of the disclosure that discretionary fees could be charged in the future and exacerbated the lack of disclosure when New Line actually charged those fees without notice. The SEC’s litigation release, however, emphasizes that New Line misled investors by disclosing that it ‘may’ offer hourly fee services ‘when, in fact, New Line was providing such services,’ and Transamerica, which the SEC released early in Chair Atkins’s tenure, involved the typical ‘may’ fact pattern. “
• “Together, these cases signal that an Atkins-led SEC may stay the course in bringing disclosure cases involving potential conflicts (in line with the Commission’s June 5, 2019 guidance for investment advisers)12 and provide an apt reminder that advisers should regularly review ‘may’ representations when drafting and updating disclosure documents.”
• “Nagler is noteworthy for the additional reason that it concerns a state-registered investment adviser that had de-registered with the Commission five years before the conduct at issue, in 2014.13 Just as the SEC’s antifraud jurisdiction can extend to transactions in securities that are not publicly traded or registered with the Commission, it extends to investment advisers who are not SEC-registered or do not meet the requirements for registration.”
• “Approximately six weeks into Chair Atkins’s tenure, it remains to be seen whether disclosure cases against investment advisers will be a significant part of the SEC’s Enforcement agenda, including because a new Director of Enforcement has yet to be announced, but Transamerica and Nagler provide an early indication that these cases are not among the new administration’s strongly disfavored categories of enforcement actions. “