Bressler Risk Blog

“Insurers Wage ‘Logically Inconsistent’ War on Lawsuit Investors” —

• “Some of the largest US insurance companies are ramping up attacks on litigation funders, even as their peers offer related products.”
• “Insurers blame outside funders behind plaintiffs’ lawyers in mass tort cases—like those alleging harm from talc, opioids, and weedkiller Roundup—for flooding the courts and driving up premiums. They’ve promised to keep up the pressure after legislation to impose a 40% tax on funders stalled in Congress, including by refusing to write policies for litigation finance companies.”
• “But the pushback extends beyond the funders fueling mass tort suits. It also targets those who put money behind a wide range of commercial disputes, including many for which insurers offer their own contingent risk policies.”
• “‘I find it logically inconsistent,’ said Ed Gehres, managing partner at Invenio LLP, a law firm focused on litigation finance transactions. ‘Whether they like it or not, the insurance companies cannot escape the fact that they are participants in the monetization of litigation.'”
• “Major insurance brokerage firms like Marsh McLennan, Lockton, Willis Towers Watson, and Alliant offer litigants and law firms policies covering contingent risk. The policies underwrite case dockets, allowing policyholders to get cheaper capital from funders. Some insurers will also directly underwrite funders’ investments.”
• “Still, insurers have joined the chorus of corporate interests to bring more regulation to the $16.1 billion litigation finance industry. Nationwide, Liberty Mutual, and Sentry were among the massive insurers who lobbied on the litigation finance tax bill, public records show.”
• “The leaders of Chubb and Marsh McLennan pledged to continue fighting the industry after the measure was dropped from the sweeping tax and spending bill signed by President Donald Trump on July 4. They said rising jury awards for car accident cases have spiked the price of auto insurance, and blamed litigation finance for driving advertising in mass tort cases.”
• “Marsh, an insurance broker and subsidiary of Marsh McLennan, places contingent risk policies but does not work with litigation funders, according to Daniela Raz, a senior vice president for the company. Raz worked at litigation funder Omni Bridgeway before joining Marsh in 2023 to work in its contingent liability group.”
• “‘Litigants and law firms on the plaintiff side of ‘the v’ seek out insurance solutions for a number of reasons, including that they can retain more proceeds than they would in an uninsured litigation finance transaction,’ she said. ‘Marsh helps those clients by sticking to our knitting, which is insurance.'”
• “Contingent risk policies put insurers at odds with their messaging. The product is often used in the M&A context, insuring against litigation to help a deal move forward, but there are also a variety of products used by and in tandem with litigation funders.”
• “WIP, or ‘work in progress’ insurance, allows law firms to insure their case dockets. The firms can then take out loans from funders against the policies. Funders will also insure their deals to protect their investment or provide funding to pay premiums to insurance companies.”
• “‘Law firms focused on consumer litigation, including mass tort and personal injury cases, raise more concerns for insurers because the defendants in those cases are typically insured,’ said Raz. ‘Conversely, commercial litigation firms specialize in cases alleging claims like antitrust, contract, and IP, in which there is typically no insurance on the defense side.'”
• “The litigation finance industry is typically broken up into two different categories: those who finance commercial cases like antitrust, breach of contract, and intellectual property, and those who issue loans to mass tort and personal injury law firms against their docket of cases. Some funders participate in both areas.”
• “Consumer legal funding involves loans directly to plaintiffs, rather than their lawyers. The loans, against a potential award in a pending legal claim, are used for claimants’ personal expenses, not litigation.”
• “‘It’s three distinct buckets and three distinct purposes,’ said Eric Schuller, president of the trade group Alliance for Responsible Consumer Legal Funding. ‘So why are you lumping them all together and saying we’re going to do a one-size-fits-all?'”
• “For Stef Zielezienski of insurance industry trade group American Property Casualty Insurance Association, the different types of funding are similar enough. The group, which says its members include 1,200 insurance companies, has lobbied on new regulations.”
• “‘The whole thing is third-party litigation finance,’ said Zielezienski, APCIA’s executive vice president and chief legal officer. ‘I prefer to package it together.'”

“J&J Loses Bid To Probe Beasley Allen Talc Litigation Funding” —

• “A special master found Monday there is no reason to believe third-party funders are influencing Beasley Allen Law Firm’s decisions in a massive talc litigation in New Jersey, defeating a subpoena from Johnson & Johnson digging into alleged third-party litigation funding.”
• “Special master Joel Schneider said in an order that the mere fact that Beasley Allen has opposed various settlement offers from the pharmaceutical giant in the multidistrict litigation over J&J’s talcum powder products is not evidence the firm is being controlled by litigation funders; the parties simply disagree about the value of the claims, he said.”
• “‘This is not the first nor will it be the last MDL where counsel for plaintiffs and defendants differ about the settlement value of plaintiffs’ claims,’ Schneider said. ‘Defendants’ effort to portray [Beasley Allen] as a lone wolf with regard to settlement is unavailing.'”
• “Schneider rejected J&J’s argument that it has a ‘right to get to the bottom’ of any possible third-party litigation funding at Beasley Allen. Beasley Allen represents thousands of clients in the multidistrict litigation in the District Court of New Jersey.”
• “Schneider denied a similar discovery request from J&J in July 2024 and said Monday that no new information had come to light to persuade him to decide differently.”
• “‘The [special master] finds that no new relevant developments have been revealed to alter the [special master’s] previous order and, accordingly, defendants’ motion will be denied,’ Schneider said.”
• “In the time since the last ruling on J&J’s third-party litigation funding subpoena on Beasley Allen in July 2024, J&J has pursued a $9 billion settlement via bankruptcy in Texas which was ultimately dismissed in March.”
• “In the New Jersey case, the company claimed that alleged voting irregularities on Beasley Allen’s part during the Texas bankruptcy, as well as the firm’s general opposition to approving that plan, warranted a closer look at any possible third-party litigation funding.”
• “Schneider turned down that argument on Monday, saying ‘voting issues and disputes that arose in the Texas bankruptcy are far removed from the present litigation financing discovery dispute.'”
• “He added that, regarding Beasley Allen’s decision to oppose the Texas bankruptcy settlement, that ‘now is not the time or context to address tangential fact disputes not related to the merits of this action.'”
• “According to Schneider, J&J mounted a new argument at oral argument that Beasley Allen is using its clients’ claims as collateral for different loans, but he said there is also no evidence to support that argument.”

“Trends in Transparency in Patent Litigation Funding” —

• “Over the past decade, third-party litigation funding (TPLF) has risen to prominence in U.S. patent litigation. The high cost of patent litigation can create an obstacle for cash-strapped inventors and non-practicing entities, who increasingly seek out third party funders to fund their patent monetization or enforcement strategies.”
• “At the same time, funders have discovered that the high stakes—and high returns—of patent litigation can create an attractive investment vehicle. Given that alignment of interests, it is no surprise that TPLF in patent cases has surged over the past decade, with some estimates indicating that as of 2021, nearly a third of all patent litigation is now funded.”
• “One key issue that has arisen in funded patent litigation is transparency—in other words, to what extent must funder involvement in a patent infringement action be revealed? This article tackles this issue of transparency in litigation funding of patent cases, and discusses practical impacts for companies involved in patent litigation that may be funded.”
• “The surge in litigation funding has been met with a cry for transparency, not only by companies sued in patent cases, but also by lawmakers.”
• “Three main concerns that have been driving these demands for transparency in TPLF. The first stems from the traditional concepts of procedural jurisprudence and how those issues may be impacted by funder involvement.”
• “Funders may often retain settlement vetoes, select counsel, or drive appeals in ways that some may argue serve investment return profiles more than commercial reality. These issues, if not properly addressed, can be at odds with settled legal and judicial principles, such as conflicts of interest and standing.”
• “These concerns militate against secrecy in funding, and favor transparency, so that conflicts of interest can be fully vetted, the various rules of ethics properly adhered to (e.g., who are the decisionmakers in any given case—the client, or an outside investor), and questions of standing can be properly tested.”
• “Secondly, businesses that are more often on the defense side, and which do not typically rely on litigation funding, will rightly tend to view a lack of transparency on TPLF as unfair, and contrary to their interests.”
• “As a recent example, on Oct. 2, 2024, a group of the largest U.S. corporations signed a letter to the Judicial Conference, urging the Advisory Committee on Civil Rules (Committee) to amend the Federal Rules of Civil Procedure to adopt a uniform rule regarding TPLF disclosure.”
• “The letter cites Federal Rule of Civil Procedure 26(a)(1)(A)(iv) requiring defendants to disclose insurance agreements, to argue that this should apply to plaintiffs for TPLF, under the same rationale that transparency ‘will enable counsel for both sides to make the same realistic appraisal of the case, so that settlement and litigation strategy are based on knowledge and not speculation.'”
• “Other district courts have employed similar local rules requiring disclosure of parties with financial interests, such as Northern District of California’s Local Rule 3-15 and District of New Jersey’s Local Civil Rule 7.1.1.”
• “However, even in districts that allow for discovery into TPLF, courts often require a showing of relevance or good cause, e.g., where the funder has authority to make material litigation or settlement decisions, where there are inadequate protections for interests of the parties, or where there may be conflicts of interest.”
• “The most recent cases have largely continued this trend, with courts evaluating TPLF-related discovery requests on a case-by-case basis, generally granting discovery into the identities of funders, but denying further discovery absent a specific showing of relevance. Samesurf, Inc. v. Intuit, Inc., No. 22-CV-412, 2024 WL 4994338, at *1 (S.D. Cal. Dec. 4, 2024); see also Haptic, Inc. v. Apple, Inc., No. 24-CV-02296, 2025 WL 1569306, at *3 (N.D. Cal. June 3, 2025) (holding valuation-related documents to be relevant but protected by work-product privilege); Entangled Media, LLC v. Dropbox Inc., No. 23-CV-03264-PCP (VKD), 2025 WL 1069896, at *4 (N.D. Cal. Apr. 8, 2025) (allowing partial discovery into a security agreement showing funder’s security interest in the asserted patents).”

“J&J Talc Evidence Gets Review by Ex-Judge at Drugmaker Law Firm” —

• “A retired federal judge will help decide the fate of thousands of Johnson & Johnson baby powder cancer lawsuits even though her law firm represents the drugmaker in other matters. Freda Wolfson was appointed earlier this summer to re-examine how experts analyzed some scientific evidence on the link between J&J’s talc-based powder and cancer. She has deep expertise after conducting a similar inquiry while overseeing suits accusing J&J of hiding its baby powder’s health risks.”
• “The 71-year-old former judge supervised the consolidation of the federal cases for seven years before retiring in 2023 and joining the New Jersey-based law firm of Lowenstein Sandler. That firm represented the J&J unit that first filed for bankruptcy in 2021.”
• “So-called special masters like Wolfson seldom draw public attention, but her role is in the spotlight because conclusions on expert analysis could bolster or doom plaintiffs’ chances of winning big verdicts against J&J. The company already has paid out billions of dollars in damages in state court trials over claims its talc powder caused cancer — a contention that the drug maker has consistently denied.”
• “U.S. District Judge Michael Shipp in Trenton — who inherited the sprawling baby powder litigation from Wolfson — determined before naming her as a special master that she doesn’t have a conflict of interest under federal ethics rules. Shipp found she disclosed her law firm’s ties to J&J and walled herself off from colleagues who work on ‘wholly unrelated’ company matters. Wolfson will evaluate expert evidence that surfaced after she okayed the science underlying the litigation in 2020.”
• “While lawyers on both sides consented to Wolfson’s role and agreed to split her fees, some legal scholars say the appointment is troubling because of the firm’s ties to J&J.”
• “‘It’s really not a good look to pick someone whose law firm represents J&J – even if it isn’t in the baby powder cases,’ said Carl Tobias, a University of Richmond law professor who teaches about product-liability cases. ‘You don’t want to have any appearance of conflicts when it comes to making recommendations on whether these cases should go to trial.'”
• “Wolfson said in an email her prior management of the cases and familiarity with the proper standards for expert-witness testimony makes her well-positioned to review the new evidence. ‘To the extent any potential conflict could be perceived, the parties expressly and knowingly waived any such objection,’ Wolfson said.”
• “The fact that Lowenstein Sandler represents J&J in corporate matters not related to talc doesn’t pose a conflict in the baby powder cases, she said in a June affidavit. A spokesman for the law firm wouldn’t specify what types of cases it handles for J&J.”

“Duterte victims’ lawyer no objection to DQ bid vs ICC prosecutor” —

• “The camp representing victims of the bloody drug war carried out under then-president Rodrigo Duterte said it has no objections if the International Criminal Court (ICC) disqualifies the lead prosecutor who investigated the killings, in line with the ex-leader’s petition.”
• “‘In the case of the Philippines, even if Khan is removed, there won’t be such serious [ramifications],’ human rights lawyer and ICC assistant to counsel Kristina Conti said in an interview Sunday.”
• “Conti made the remark after Duterte’s lead counsel, Nicholas Kaufman, petitioned the ICC to disqualify chief prosecutor Karim Khan, citing concerns over impartiality.”
• “Kaufman told the ICC that Khan had prior involvement in a similar case, representing drug war victims in his capacity as a private lawyer. Details of the defense’s submission were largely redacted, making the timeline unclear.”
• “The defense argued that Khan must be disqualified under Article 42(7) of the Rome Statute, the ICC’s founding treaty, which bars prosecutors from participating in a case where their impartiality might reasonably be doubted. The rule applies if the prosecutor was previously involved in the same or a related case involving the person under investigation.”
• “Conti said that Khan’s current leave due to allegations of sexual misconduct would not significantly impact the legal battle, as deputy prosecutor Mame Mandiaye has taken over to ensure proceedings continue. She also acknowledged Kaufman’s points, saying she had no knowledge of Khan’s alleged prior involvement in an identical case.”
• “Kaufman claimed Khan failed to disclose this ‘blatant conflict of interest’ from the start of the probe until the ICC Pre-Trial Chamber issued a warrant against Duterte on 6 March, questioning the prosecutor’s impartiality.”
• “Khan became chief prosecutor in 2021, succeeding Fatou Bensouda, who began the preliminary probe in February 2018. The investigation officially began on 15 September 2021 but was deferred two months later at Duterte’s request.”
• “In ICC proceedings, victims have an independent role separate from the prosecution. They are represented by a legal representative provided by the court, who may present victims’ views and call their own witnesses, which could include state officials.”
• “Earlier, Conti noted that the ICC may call ‘insider witnesses’ against Duterte, including police officers and other law enforcers — a common practice in international tribunals.”
• “Duterte, 80, has been detained at Scheveningen Prison in The Hague, Netherlands, since his arrest in March in Manila. He is awaiting confirmation of charges on 23 September for one count of crimes against humanity over killings recorded from 1 November 2011 to 16 March 2019, spanning his time as Davao City mayor and president.”

“Workday Wants Firm DQ’d Over Privileged Info In Atty’s Suit” —

• “Attorneys at Webb Law Group APC should be disqualified from representing an ex-Workday Inc. attorney in his bias suit against the company and should face sanctions for their ‘egregious behavior’ in disclosing privileged information in a publicly filed document, Workday told a California federal magistrate judge.”
• “A draft of a proposed second amended complaint Anthony C. Hill’s lawyers at Webb Law shared with Workday during the course of his race and disability bias suit included privileged and confidential information that Hill learned during his work as senior counsel for Workday, the finance and human resources platform explained in a motion Tuesday.”
• “Even though Workday informed Hill’s attorneys that the draft amended complaint contained the privileged information and asked them to remove or redact it, they filed the complaint anyway, including the confidential information, the company said in a motion to disqualify and sanction Webb Law.”
• “‘Plaintiff’s attorneys were on notice that information contained in the SAC was privileged information plaintiff himself could only be aware of in the course of providing legal advice to Workday, they were given the opportunity to rectify the issue prior to filing, and instead of engaging with Workday on a matter as important as the attorney-client privilege, they intentionally filed the privileged and confidential information on the public docket,’ Workday asserted.”
• “Once the proposed amended complaint was filed, Workday asked Hill to file a motion to remove the incorrectly filed document, but Hill’s attorneys refused. When Workday contacted the court to request that the document be locked, those lawyers emailed the ECF help desk to demand that the document be made publicly available.”
• “Workday then moved to seal portions of the second amended complaint, but Hill opposed Workday’s motion despite conceding that it contained privileged information, according to the company.”
• “Webb Law’s actions over the course of the incident ‘appear calculated to cause injury,’ according to Workday, which said that Hill’s attorneys could have engaged with the company to resolve the issue, sought guidance from the court, or provisionally filed the proposed amended complaint under seal.”
• “But instead of taking any of these ‘reasonable, efficient and burden-free options,’ Webb Law chose to disclose the information in its filing and interfered with Workday’s steps to prevent public disclosure, according to Workday.”
• “‘The law is clear that where, as here, an attorney who comes into possession of an adversary’s privileged or other confidential materials uses such materials to gain advantage, including to prepare pleadings, the attorney is subject to disqualification,’ Workday said.”

David Kluft notes: “Can I represent two employees in a failure to promote case if there was only one promotion available?” —

• “Two employees of a NYC municipal agency sued for employment discrimination after the agency promoted someone else instead of them to a job opening.”
• “The agency argued that both employees couldn’t be represented by the same counsel, because there was only one promotion available (a disputed point) and the plaintiffs would be competing with each other to recover for denial of a single promotion.”
• “The federal court found that, at least at the liability stage of the proceeding, each plaintiff only had to prove their qualifications relative to the person that got the job, not relative to each other.”
• “The Court acknowledged a potential for conflicts of interest, depending on the jury’s damages methodology, but found that ‘Plaintiffs could waive most conflicts imaginable under the possible methodologies,’ so with the appropriate informed consent, competent and diligent representation was possible.”
• Decision: here.

“NC Atty Says Ex-Wife Has No Claim To Firm’s Future Earnings” —

• “An intellectual property lawyer in North Carolina told the state’s top court that his ex-wife isn’t entitled to half the value of his law firm in their divorce, arguing that whatever he earns from the firm’s goodwill in the future can’t be divvied up as part of the marital estate.”
• “Jason M. Sneed of Sneed PLLC said in a reply brief Thursday in the North Carolina Supreme Court that neither his firm’s personal goodwill tied to his experience and reputation as a lawyer nor its enterprise goodwill stemming from the value of the business itself count as marital property under state law.”
• “Personal goodwill is never included, Sneed said, and enterprise goodwill in a solo practice like his is indistinguishable from the professional who runs it.”
• “‘Under the equitable distribution statute, marital property only includes property acquired during the marriage and before separation,’ Sneed said. ‘But future earnings are property necessarily acquired after separation. Goodwill, as future earnings, doesn’t meet the statutory definition.'”
• “According to the brief, the North Carolina Court of Appeals was therefore wrong to affirm the trial court’s equitable distribution order requiring Sneed to pay his ex-wife Charity Johnston $1.55 million, or half the value of Sneed PLLC on the day of their separation.”
• “Sneed is a former Alston & Bird LLP partner who opened his own boutique intellectual property practice in 2011, according to his LinkedIn profile. He divorced Johnston in 2016 after accusing her of infidelity, setting off a decade-long dispute over how to divide up their marital estate.”
• “At trial in 2021, a business valuation expert testified that Sneed PLLC was worth $3.1 million as of the date of separation. According to court filings, the expert said that roughly 90% of the firm’s value derived from Sneed’s personal goodwill, while the remaining 10% was enterprise goodwill.”
• “In September 2022, a judge awarded Johnston half the value of her ex-husband’s law firm, which was to be paid out in monthly installments of roughly $8,600 over 15 years,court documents state. The North Carolina Court of Appeals affirmed that decision in May 2024.”
• “On appeal to the state’s high court, Sneed has argued his law firm’s goodwill should never have been lumped into the marital estate since it represents future earnings after the date of separation.”
• “In response, Johnston pointed to North Carolina Supreme Court precedent in which she said the justices found goodwill in a professional corporation is marital property. She also said her ex-husband failed to preserve his arguments as to enterprise goodwill on appeal.”

“Federal court filing system hit in sweeping hack” —

• “The electronic case filing system used by the federal judiciary has been breached in a sweeping cyber intrusion that is believed to have exposed sensitive court data across multiple U.S. states, according to two people with knowledge of the incident.”
• “The hack, which has not been previously reported, is feared to have compromised the identities of confidential informants involved in criminal cases at multiple federal district courts, said the two people, both of whom were granted anonymity because they were not authorized to speak publicly about the hack.”
• “The Administrative Office of the U.S. Courts — which manages the federal court filing system — first determined how serious the issue was around July 4, said the first person. But the office, along with the Justice Department and individual district courts around the country, is still trying to determine the full extent of the incident.”
• “It is not immediately clear who is behind the hack, though nation-state-affiliated actors are widely suspected, the people said. Criminal organizations may also have been involved, they added.”
• “It is not immediately clear how the hackers got in, but the incident is known to affect the judiciary’s federal core case management system, which includes two overlapping components: Case Management/Electronic Case Files, or CM/ECF, which legal professionals use to upload and manage case documents; and PACER, a system that gives the public limited access to the same data.”
• “In addition to records on witnesses and defendants cooperating with law enforcement, the filing system includes other sensitive information potentially of interest to foreign hackers or criminals, such as sealed indictments detailing non-public information about alleged crimes, and arrests and search warrants that criminal suspects could use to evade capture.”
• “The hack is the latest sign that the federal court filing system is struggling to keep pace with a rising wave of cybersecurity threats.”

“2 Law Group Data Theft Hacks Affect 282,100 Patients” —

• “Two Florida-based law firms with offices in other states are notifying 282,100 people whose healthcare and other information was potentially compromised in separate data theft incidents. One of the firms admitted to paying a ransom to prevent its data from being leaked on the darkweb.”
• “The much larger of the two breaches was reported by Coral Gables, Florida-based Zumpano Patricios PA, which practices in five U.S. states and has satellite offices in several other countries. ZP Law told the U.S. Department of Health and Human Services on July 3 that its hack affected the HIPAA-protected health information of nearly 280,000 people.”
• “The ZP Law data potentially affected by the hack varies by individual but included information such as names, healthcare provider names, member ID numbers, health insurer information, dates of service, amounts charged and paid, Social Security numbers, clinical coding information and medical records, the firm said.”
• “The second recent law firm breach was reported by Palm Beach Gardens, Florida-based LaBovick Law Group, which has offices in the Sunshine State and Massachusetts.”
• “LaBovick told the Maine attorney general on July 16 that an October 2024 hacking incident affected 2,825 individuals.”
• “Information potentially compromised varies among individuals but included names, addresses, dates of birth; Social Security numbers; driver’s license numbers, state-issued ID numbers, bank account information; health insurance ID numbers and policy numbers, health insurance claims history, and medical history and records.”
• “LaBovick paid an undisclosed ransom in November 2024 and said ‘the cybercriminal confirmed’ that the law firm’s data has been deleted and would not be leaked.”
• “Attorney Paul Hales of the Hales Law Group, which is not involved with either the ZP Law or LaBovick Law cases, said a ransom demand puts a law firm in a precarious position of negotiating with cybercriminals.”
• “‘Every law firm should carefully evaluate the ethical, legal and business consequences to prepare its response to a ransom demand. This is also a critical continuing legal education topic,’ he said.”

“Wiley Rein Law Firm Breached by Chinese Hackers” —

• “Bloomberg has reported that Washington D.C. law firm Wiley Rein LLC was breached last year by Chinese hackers. It was by no means alone in its misery. The European Union council, Halliburton and others suffered the same fate.”
• “Byzantine Candor, the team of hackers responsible, is known in security circles as the Comment group for its trademark of infiltrating computers using hidden webpage computer code known as ‘comments.'”
• “30 North American security researchers watched the hackers work and documented their findings. 20 victims were identified, many of whom had data that could give China an advantage as it seeks to become the world’s largest economy. The targets included lawyers pursuing trade claims against the country’s exporters and an energy company getting ready to drill in waters claimed by China.”
• “A former FBI official calls the hackers’ activity ‘the biggest vacuuming up of U.S. proprietary data that we’ve ever seen. It’s a machine.'”
• “Exploiting a hole in the hackers’ own security, the researchers created a digital diary, logging the intruders’ every move as they snuck into networks, shut off anti-virus systems, camouflaged themselves as system administrators and covered their tracks, making them invisible to their victims.”
• “Byzantine Candor was linked to China’s military, the People’s Liberation Army, by a 2008 diplomatic cable released by WikiLeaks. Two former intelligence officials verified the essence of the document.The hacking group has been active at least since 2002 and is thought to have penetrated more than 1000 entities.”
• “National Security Agency director Keith Alexander said earlier in July that cyber espionage constitutes ‘the greatest transfer of wealth in history,’ and cited a figure of $1 trillion spent globally every year by companies trying to protect themselves.”
• “Of the 10 Comment group victims reached by Bloomberg, those who learned of the hacks chose not to disclose them publicly, and three said they were unaware they’d been hacked until contacted for this story.”
• “Wiley Rein apparently did know, according to the Bloomberg story.”
• “Dale Hausman, Wiley Rein’s general counsel, said he couldn’t comment on how the breach affected the firm or its clients. Wiley Rein has since strengthened its network security, Hausman said. Well, that’s good – if a tad late. My question is – and I’d sure like an answer – did the firm notify its clients? D.C. does have a data breach notification law – and most experts believe that ethical rules require firms to notify clients.”

“OptumRx Moves To DQ Motley Rice In Utah Opioid Case” —

• “Pharmacy benefit manager OptumRx has moved to disqualify Motley Rice LLC from representing the state of Utah in an opioid crisis lawsuit, claiming the firm clearly violated ethical rules by investigating OptumRx on behalf of government entities, then suing OptumRx in a private capacity.”
• “In a motion filed Thursday, OptumRx said Motley Rice’s representation of Utah blatantly violates Rule 1.11(c) of the Utah Rules of Professional Conduct, which prevents attorneys from using ‘confidential government information’ obtained when they were ‘a public officer’ in private lawsuits.”
• “A few years ago, Motley Rice represented Hawaii, Chicago and Washington, D.C., as those governmental entities investigated whether to sue pharmacy benefit managers, or PBMs, like OptumRx for allegedly exacerbating the opioid crisis.”
• “In that capacity, Motley Rice attorneys were deputized as special assistant attorneys general and were acting on behalf of the government with powers not available to private litigants, OptumRx said. In that capacity, Motley Rice sought and obtained troves of confidential information from OptumRx, the motion said.”
• “Now, Motley Rice represents Utah as a private client suing OptumRx over the exact same issue and could very well use that confidential information to its advantage, OptumRx claimed.”
• “‘The rule is designed to protect against abuses of government power and the erosion of public trust,’ OptumRx said. ‘The concerns are so grave that the rules prohibit a former government lawyer from taking on a representation in which they theoretically could use confidential government information to their opponent’s material disadvantage — even if they do not use the information at all.'”
• “Anticipating the common rebuttal that its disqualification motion is nothing but a cynical ploy to disadvantage Utah in the litigation, OptumRx urged U.S. District Judge David Barlow to take its allegations seriously. ‘Simply put, this motion is not a litigation tactic,’ OptumRx said. ‘It is grounded in legitimate and clear-cut ethical concerns.'”
• “To bolster its case, OptumRx pointed to an ethics opinion it commissioned from two legal ethics experts, Sari Montgomery of Robinson Stewart Montgomery & Doppke LLC and Wendy J. Muchman, a professor at Northwestern University Pritzker School of Law. Muchman is on the American Bar Association’s Standing Committee on Ethics and Professional Responsibility.”
• “‘There can be no more obvious violation of Rule 1.11(c)’ than Motley Rice’s violation here,’ the motion said, quoting from Muchman and Montgomery’s opinion.”
• “OptumRx has previously attempted to disqualify Motley Rice on the same basis in other cases. Thus far those attempts have all failed.”
• “Before OptumRx filed its disqualification motion in the MDL, U.S. District Judge Dan Aaron Polster warned OptumRx’s attorneys that doing so would damage the ‘level of professional cooperation’ among the attorneys in the case and ‘will clearly have negative repercussions for your clients,’ according to a transcript.”
• “Judge Polster ultimately denied the motion in March 2024, finding that while Motley Rice’s previous investigations of OptumRx on behalf of government entities do raise troubling ethical questions, ultimately those concerns are moot because OptumRx is required to turn over the same documents Motley Rice obtained in civil discovery for the MDL anyway.”
• “‘The MDL Repository Orders require OptumRx to produce the investigation documents in the MDL, where all other plaintiffs’ attorneys can use them,’ Judge Polster wrote. ‘It is obvious that Motley Rice’s possession and knowledge of the Investigation documents cannot, by itself, cause a material disadvantage to OptumRx, when every other plaintiff’s attorney also has them.'”
• “On a straightforward letter-of-the-law basis, OptumRx said that whether the information Motley Rice obtained while deputized as a government attorney ultimately ends up available in civil discovery shouldn’t matter. That information is clearly ‘confidential government information,’ so Motley Rice is clearly prohibited from suing OptumRx from the get-go.”

Several lawyers from Fasken explore: “Private Equity Exits: When Might Seeking Term-End Liquidity Create A Conflict?” —

• “Nominee directors are central to private equity: significant investors in a portfolio company expect to have strategic input into the company’s business.”
• “But nominee directors can also face potential conflicts of interest in certain circumstances. The recent ruling of the Delaware Court of Chancery in Manti Holdings provides an example in the context of the sale of a portfolio company near the end of a private equity fund’s term.1 We explore the ruling and highlight what nominee directors in Canadian portfolio companies should know.”
• “Our key practical takeaways include:”
  • “The ruling sets a high bar for when a fund seeking to liquidate its interest in a portfolio company to timely distribute funds to its investors might create a potential conflict of interest for a nominee director of the fund on the company’s board.”
  • “That the private equity business model incentivizes funds to timely liquidate their interest in portfolio companies to close a fund and pay investors on schedule is insufficient to demonstrate a potential conflict of interest. Specific evidence that meaningful pressure was exerted on a nominee director towards this end is needed.”
  • “The fiduciary duties of nominee directors in Canada differ somewhat from those in Delaware. Nonetheless, the ruling and facts in Manti Holdings remain both insightful and instructive in the Canadian context.”
• “The plaintiffs brought two related claims, including that the two nominee directors of the PE Fund had breached their fiduciary duty to PortCo.2 Each of the two nominee directors were also officers or directors of the PE Fund. The key question for the court was whether the transaction gave rise to a conflict of interest on their parts.”
•  “The plaintiffs argued that such a conflict had arisen, and their basis was that the PE Fund’s 10-year term was set to expire on September 30, 2017, i.e., shortly after the sale of PortCo closed on September 13, 2017. They argued that the sale of PortCo had not been driven by what was in the company’s best interests, but what was in the best interests of the PE Fund; specifically, the desire for the PE Fund to liquidate its interest in PortCo to facilitate the timely distribution of proceeds to the PE Fund’s investors.”
• “The court did not agree that a conflict of interest had arisen, and its reasoning was twofold. First, it disagreed with the plaintiffs that the general business model of private equity was such that the PE Fund “thought it necessary to sell [PortCo] immediately, consequences (and price) be damned”.3 Second, it underscored several elements of the particular circumstances of PortCo’s sale that undercut the plaintiffs’ argument that the PE Fund was motivated to conduct a “fire sale” of PortCo.4″
• “To prove a liquidity-driven conflict… it is not enough to show a general interest in investors that a fund adhere to a timeline; a plaintiff must show sufficient evidence “of a cash need” that explains why “rational economic actors have chosen to short-change themselves.” “[S]weeping characterizations” of the “industry writ large” are insufficient. And the private equity lifecycle “is not so formulaic and structured that the cycle itself [can] support an inference of a liquidity-based conflict.”10”

“Law firm Quinn Emanuel accused of turning on ex-client in fintech case” —

• “A financial technology provider previously represented by Quinn Emanuel accused the law firm of betraying its loyalties and violating ethics rules by taking the case of a former executive suing the company over his termination.'”
• “In a filing in the case in California federal court on Thursday, Pagaya Technologies asked a judge to disqualify Quinn Emanuel from representing Hugh Edmundson in the lawsuit he filed in June.’
• “In the new filing Pagaya and its hedge fund affiliate Theorem Technology accused Quinn Emanuel of breaking attorney ethics rules in its new work for Edmundson, a former top executive at Theorem. Pagaya had acquired Theorem last year.'”
• “‘The firm is a repeat offender, having been disqualified multiple times for this exact misconduct,’ lawyers for Pagaya and Theorem at law firm Gibson Dunn wrote. Pagaya said Quinn Emanuel had ‘brazenly violated its ethical obligations by turning around and suing its own client.””
• “Quinn Emanuel in a statement on Friday said ‘Pagaya is no longer a client, and our current work is not related to what we did for them before.””
• “In a statement on Friday, a spokesperson for law firm Gibson Dunn said ‘Quinn Emanuel is suing its former client over matters about which it previously advised — a clear conflict of interest that courts have not hesitated to disqualify firms for in the past.””
• “In an April letter from Quinn Emanuel to Edmundson’s attorneys, which was included in the court file, the firm had said the ‘suggestion of a conflict on the part of Quinn Emanuel is false and inaccurate.””
• “The firm also said it had set up ‘appropriate ethical screens out of an abundance of caution’ to separate its prior work for Pagaya with its representation of Edmundson.'”
  Edmundson’s lawsuit accused Pagaya and Theorem of wrongful termination, retaliation and other claims stemming from his firing in April from Theorem, where he was chief investment officer. Edmundson founded Theorem in 2014.'”
• “Edmundson alleged that ‘almost immediately after the merger closed, defendants began systematically dismantling Theorem’s independence and strategic decision-making authority.””
• “Quinn Emanuel provided legal work last year to Pagaya on non-compete and non-solicitation provisions related to Theorem employees, Pagaya said. It further alleged that Quinn Emanuel’s prior work for the company has created a ‘direct and incurable conflict of interest.”

“West Vancouver demolition order halted after appeal court finds judge had conflict” —

• “B.C.’s appeal court has overturned an earlier decision upholding a demolition order for a West Vancouver mansion.”
  “Homeowner Rosa Dona Este was successful in her bid to overturn the earlier court decision, after it was found the judge who allowed the order to go ahead had previously worked for a law firm representing the municipality and had consulted on the matter of Este’s home.”
  “Este had argued against the judge’s decision about the validity of the demolition order but also raised concerns over the judge’s involvement in the case before being appointed to B.C.’s Supreme Court.”
  “‘According to Dr. Este, the judge also erred by failing to recuse herself based on a reasonable apprehension of bias,’ said the appeal court’s decision, handed down earlier this month.”
  “‘Este raised this issue prior to the hearing and advanced an application asking the judge to recuse herself on this basis. The judge dismissed the application, noting that almost seven years had elapsed since she had worked at the firm and stating she could not recall having ever been involved in the file or related matters.'”
  “While Judge Francesca Marzari had said previously that she did not recall working on the case involving Este’s home, a lawyer for the West Vancouver district later filed an affidavit that said Marzari ‘had sent an email to employees of the District advising them on matters related to the possible demolition of Dr. Este’s home.'”
  ‘This information about the judge’s prior involvement in the matter under appeal is clearly relevant to Dr. Este’s allegation of apprehension of bias. For the reasons that follow, I conclude Dr. Este’s applications must be granted,’ wrote appeal court Justice Bruce Butler.”
  “Butler noted that if the appeal were refused, ‘steps could be taken that could lead to irreparable harm to Dr. Este.'”
  “‘The balance of convenience, and particularly the overriding concern for maintaining judicial independence and impartiality, weighs in favour of granting a stay,’ he wrote.”
  “The property in question is a 6,000-sq.-ft. waterfront home at 2668 Bellevue Ave. and was bought in 2003 by Este and her mother, Mina Esteghamat‑Ardakan. Este lived in the home until 2015 when a fire caused extensive damage.”
  “The home remained uninhabited and in a derelict state until 2020 when, following a number of neighbour complaints, the district ordered it demolished.”
  “Complications arose when the district found Este had rebuilt parts of the home without having sought proper permits or permission from her co-owner.”

“OptumRx Moves To DQ Motley Rice In Utah Opioid Case” —

• “Pharmacy benefit manager OptumRx has moved to disqualify Motley Rice LLC from representing the state of Utah in an opioid crisis lawsuit, claiming the firm clearly violated ethical rules by investigating OptumRx on behalf of government entities, then suing OptumRx in a private capacity.”
  “In a motion filed Thursday, OptumRx said Motley Rice’s representation of Utah blatantly violates Rule 1.11(c) of the Utah Rules of Professional Conduct, which prevents attorneys from using ‘confidential government information’ obtained when they were ‘a public officer’ in private lawsuits.”
  “A few years ago, Motley Rice represented Hawaii, Chicago and Washington, D.C., as those governmental entities investigated whether to sue pharmacy benefit managers, or PBMs, like OptumRx for allegedly exacerbating the opioid crisis.”
  “In that capacity, Motley Rice attorneys were deputized as special assistant attorneys general and were acting on behalf of the government with powers not available to private litigants, OptumRx said. In that capacity, Motley Rice sought and obtained troves of confidential information from OptumRx, the motion said.”
  “Now, Motley Rice represents Utah as a private client suing OptumRx over the exact same issue and could very well use that confidential information to its advantage, OptumRx claimed.”
  “‘The rule is designed to protect against abuses of government power and the erosion of public trust,’ OptumRx said. ‘The concerns are so grave that the rules prohibit a former government lawyer from taking on a representation in which they theoretically could use confidential government information to their opponent’s material disadvantage — even if they do not use the information at all.'”
  “Anticipating the common rebuttal that its disqualification motion is nothing but a cynical ploy to disadvantage Utah in the litigation, OptumRx urged U.S. District Judge David Barlow to take its allegations seriously.”
  “‘Simply put, this motion is not a litigation tactic,’ OptumRx said. ‘It is grounded in legitimate and clear-cut ethical concerns.'”
  “To bolster its case, OptumRx pointed to an ethics opinion it commissioned from two legal ethics experts, Sari Montgomery of Robinson Stewart Montgomery & Doppke LLC and Wendy J. Muchman, a professor at Northwestern University Pritzker School of Law. Muchman is on the American Bar Association’s Standing Committee on Ethics and Professional Responsibility.”
  “”There can be no more obvious violation of Rule 1.11(c)’ than Motley Rice’s violation here,’ the motion said, quoting from Muchman and Montgomery’s opinion.”
  “OptumRx has previously attempted to disqualify Motley Rice on the same basis in other cases. Thus far those attempts have all failed.”
  “Motley Rice plays a leadership role in the national multidistrict litigation over the opioid crisis, and OptumRx moved to disqualify the firm in late 2023.”
  “Before OptumRx filed its disqualification motion in the MDL, U.S. District Judge Dan Aaron Polster warned OptumRx’s attorneys that doing so would damage the ‘level of professional cooperation’ among the attorneys in the case and ‘will clearly have negative repercussions for your clients,’ according to a transcript.”
  “Judge Polster ultimately denied the motion in March 2024, finding that while Motley Rice’s previous investigations of OptumRx on behalf of government entities do raise troubling ethical questions, ultimately those concerns are moot because OptumRx is required to turn over the same documents Motley Rice obtained in civil discovery for the MDL anyway.”
  “‘The MDL Repository Orders require OptumRx to produce the investigation documents in the MDL, where all other plaintiffs’ attorneys can use them,’ Judge Polster wrote. ‘It is obvious that Motley Rice’s possession and knowledge of the Investigation documents cannot, by itself, cause a material disadvantage to OptumRx, when every other plaintiff’s attorney also has them.'”
  “OptumRx begged to differ, however.”
  “‘So far, the courts that have ruled on the motions have denied them based on several legal and factual errors, all of which trace back to the MDL court’s ruling,’ OptumRx said. ‘Each of those decisions was wrong.'”
  “On a straightforward letter-of-the-law basis, OptumRx said that whether the information Motley Rice obtained while deputized as a government attorney ultimately ends up available in civil discovery shouldn’t matter.”
  “That information is clearly ‘confidential government information,’ so Motley Rice is clearly prohibited from suing OptumRx from the get-go.”
  “‘If a government lawyer could use confidential government information to the adverse party’s material disadvantage in the civil litigation, then the lawyer must decline the representation,’ OptumRx said. ‘The potential for misuse is so acute and the concerns are so grave that the mere possibility that the attorney could use the information requires disqualification.'”
  “Beyond that, OptumRx said Motley Rice did obtain information in the course of its investigations that still hasn’t been turned over in discovery in the MDL or other lawsuits, including ‘mental roadmaps and strategic insights about OptumRx.'”
  “Neither party responded Friday to requests for comment.”

“How Trump’s personal attorney wound up investigating the Epstein case at DOJ” —

• “Five months ago, Todd Blanche was asked at his Senate confirmation hearing whether being President Donald Trump’s lawyer in his hush money trial and other cases meant he would have a ‘continuing duty of loyalty and confidentiality’ to his former client even after becoming deputy attorney general.”
• “‘Yes,’ Blanche responded, citing his ‘attorney-client relationship with President Trump.'”
• “Now that loyalty — and the question of a potential conflict of interest — has become a key component of the questions swirling about Trump’s friendship with Jeffrey Epstein, who was charged with sex trafficking and died in prison in 2019. The second-ranking Justice Department official is at the center of a controversial effort to reexamine the Epstein case, the results of which could reopen high-stakes litigation that concluded years ago and play a role in defining aspects of Trump’s legacy.”
• “After weeks of furor about whether the Justice Department would release much of its file on Epstein — and amid speculation about whether the file had information about Trump and others — Blanche traveled to Florida to interview Epstein’s longtime partner, Ghislaine Maxwell, who is serving a 20-year sentence for sex trafficking.”
• “Maxwell spent nine hours over two days last week answering every question posed by Blanche, according to Maxwell’s attorney, David Oscar Markus. But the details of the interview have not been released, and Democrats said they feared it was the kind of conflict they had been concerned about when Blanche was nominated.”
• “Senate Minority Leader Charles E. Schumer (D-New York) said last week in a floor speech that ‘Trump is sending his personal lawyer, Todd Blanche, to try and execute a corrupt cover-up, potentially offering leniency to a woman who also abused the victims.’ Schumer said this and other actions by Justice officials represent a conflict, but he did not provide evidence of an alleged cover-up.”
• “The relationship between Trump and Blanche has been a financially significant one. Blanche’s law firm was paid $9.2 million by Save America, a pro-Trump political action committee, between April 2023 and December 2024, for work on cases that included the trial about payment of alleged hush money to adult-film star Stormy Daniels, according to federal election records. Trump was found guilty in the hush money case, which has been appealed and is being handled by other attorneys.”
• “The Justice Department did not respond directly to questions from The Washington Post about whether Blanche consulted a government ethics official regarding an interview with Maxwell. Instead, the department sent a written statement from spokesman Gates McGavick that said, in full: ‘Any suggestion that Todd Blanche has acted unethically while serving as Deputy Attorney General is baseless and defamatory. This gossip column relies on innuendo and the word of an agenda-driven political hack to push a false narrative. This is not a serious article.'”
• “Some of Blanche’s ex-colleagues are surprised by what they see as his transformation from the independent litigator they knew to one they say seems willing to prioritize his loyalty to Trump.”
• “Mimi Rocah, who previously co-led the White Plains division in the U.S. attorney’s office for the Southern District of New York with Blanche, said that it is ‘completely inappropriate and wrong’ for him to interview Maxwell — both because of his relationship to Trump and because it is a job that should be reserved for prosecutors on the case, not a Justice official at the highest level.”
• “If a top Washington official had injected himself into a case Blanche handled as a prosecutor, he would have gone ‘running to Main Justice,’ Rocah said, referring to the department’s headquarters in Washington that oversees U.S. attorneys offices and other units.”
• “‘That just shows how completely far gone he is as an actual prosecutor,’ Rocah said. ‘He’s really more akin to a political player at this point.'”

“Law Firms Are Eyeing Lateral Hires’ Social Media—But Vetting Isn’t Without Risks” —

• “Seven or eight years ago, legal investigative intelligence firm Decipher received ‘very few’ inquiries from Big Law firms about backgrounding the social media profiles of potential laterals, according to chief data officer Greg Hamman. Since then, law firms’ interest in learning what potential hires have posted online has gone up substantially, such that Decipher has now worked with roughly half of the Am Law 200, Hamman estimates.”
• “The issue of lawyers’ social media activities became relevant again this summer when Mayer Brown fired partner David Kreisler this month after hiring him in May and then discovering lewd social media posts on his personal X account. Kreisler’s most recent post occurred in February. It’s unclear when the account was deleted, but a Mayer Brown spokesperson said the firm learned about the posts in early July from a June 25 Medium post that included screenshots of Kreisler’s X account.”
• “Hamman estimates that roughly one-third of Big Law firms are conducting a thorough review of social media profiles for potential hires, with another third conducting minimal reviews and a final third doing nothing.”
• “For the firms that conduct searches, requests that Decipher review social media profiles for associates are a new development.”
• “‘A trend that we’ve been seeing in the last year, given the political climate, is that firms are also looking to vet associates more than they ever have before,’ said Julie Henson, Decipher’s chief growth officer. ‘Firms just kind of assumed that the law schools were doing a little bit of vetting on their students, but they really don’t. So, firms are wanting to make sure something wasn’t said on campus.'”
• “However, social media background checks also come with risks, employment lawyers said. A hiring manager’s discovery of a protected characteristic or stigmatized fact that could influence the hiring decision may open a firm up to litigation, said Jackson Lewis employment principal Susan Corcoran. ‘An employer is generally supposed to put the blinders on and not consider non-job-related information or other factors that may be prohibited by law,’ Corcoran said.”
• “The targets of a social media background check vary by the firm, Hamman said. ‘Some are sensitive to political material, some don’t care,’ he said. ‘We are essentially giving the firm information with which they can make a decision.'”
• “Some firms don’t police political speech but also don’t want to see anything vulgar or threatening on a candidate’s public socials, Hamman said, while other firms consider it bad judgment to wade into polarizing political issues online.”
• “Employers also open themselves up to the risk of taking factors into account that don’t directly pertain to whether a candidate is suitable for a role. ‘Some of these state laws also protect activity that may appear in candidates’ public or private social media postings, like lawful possession of firearms, certain political activities, use of marijuana, and participation of other recreational activities during non-work time,’ Drenosky added.”
• “A candidate who gets turned down for a role also could argue that a firm’s review of their social media uncovered a trait against which a hiring manager is biased. ‘The drawbacks of conducting a social media search include the potential disclosure of a protected characteristic that may make a hiring manager uncomfortable with hiring the person,’ Corcoran said.”
• “To minimize risk, firms should conduct the social media check through a third-party or human resources, keeping the hiring manager removed from the process, Drenosky said. The check also should occur at the end of the hiring process, when the candidate’s membership in a protected group is already known, and it should be systematized so it can be performed consistently. Drenosky also recommended that firms reach out to their employment counsel before taking any action based on a review of a candidate’s social media profiles.”