Bressler Risk Blog

For those interested in financial news, Matt Levin’s newsletter is an unparalleled combination of education, insight, and amazing writing. Here’s a relevant portion from last week:

• “We have talked a few times about Optimum’s lawsuit against its lenders. Optimum Communications Inc. would like to restructure its $26 billion of debt, and it would like to do this in the usual modern way, a ‘liability management exercise’ (LME) pitting its lenders against each other to try to extract concessions out of them. The lenders, though, weren’t having it: The holders of most of Optimum’s debt got together and signed a ‘cooperation agreement,’ promising not to cut any deals with Optimum unless holders of two-thirds of the debt agreed to the deal.”
• “That is, if you think about it, a bit weird: If a bunch of competing firms get together and sign an agreement to coordinate their actions and not cut prices, isn’t that an antitrust problem? One person who thought about it was David Nemecek, a lawyer at Kirkland & Ellis who has led a lot of big liability management exercises, and who said at a Bloomberg conference last year that ‘people who enter into cooperation agreements should be careful’ because of ‘the potential for antitrust claims.’ “
• “That was just some public musing about an untested theory, but in December Optimum actually tried it out, suing its lenders and alleging that ‘the cooperative is a classic illegal cartel.’ Kirkland & Ellis represented Optimum in its liability management, but it did not file the lawsuit. Nonetheless, ‘creditors believed Kirkland had been behind the lawsuit,’ because of Nemecek’s public musings and his general aggressive LME work. Many of the creditors in the alleged cartel were big alternative asset managers and important Kirkland clients, and they apparently complained to Kirkland: It is a bad look to accuse many of your big clients of being antitrust criminals, and the clients ‘raised the issue to Kirkland’s executive committee.'”
• “And then (1) Kirkland stopped representing Optimum in January and (2) Nemecek left Kirkland for Simpson Thacher & Bartlett this month. ”
  “Which is, if you think about it, even weirder. When Kirkland dropped Optimum, I wrote: ‘I don’t want to say ‘they all got together and agreed to boycott everyone involved in the lawsuit,’ but,’ and then quoted the Financial Times story about the client pushback. I added: ‘I feel like Optimum’s (remaining) lawyers might want to add this to the lawsuit.’ I don’t think it proves any sort of antitrust conspiracy, but Optimum’s story here is something like ‘our lenders have joined together in a powerful cartel that prevents anyone from trading except on their terms,’ and the lenders getting Optimum’s lawyers to quit does kind of fit with that story.”
• “Optimum’s lawyers did add it to the lawsuit. Bloomberg’s Chris Dolmetsch, Reshmi Basu and Irene Garcia Perez report today:”
  • “Optimum Communications Inc. said a top law firm’s withdrawal from representing it under pressure from Apollo Global Management, Ares Management, Oaktree Capital Management and others showed that they were participating in a cartel against it.”
  • “Optimum, previously known as Altice USA, sued the credit arms of those private equity giants and other creditors in November, saying they had formed an ‘illegal cartel’ to freeze it out of the US credit market. In a revised complaint filed Wednesday, the telecommunications firm said ‘the antitrust conspiracy has only intensified’ in the last three months.”
  • “‘When Optimum sued, Defendants began searching for a way to retaliate,’ said Optimum, which is controlled by billionaire Patrick Drahi. ‘They soon found a target: Optimum’s transaction counsel, Kirkland & Ellis LLP.’ …”
    “‘Defendants’ success in bullying Kirkland served the Cooperative’s core aim – obstructing Optimum’s access to the credit markets – while showing the lengths to which Defendants will go to protect their scheme,’ Optimum said in the amended complaint.”
• “Here is the revised complaint, which includes this passage:”
  • “As one leading commentator put it, Defendants were angry that Optimum sued them for their illegal group boycott, so they ‘all got together and agreed to boycott everyone involved in the lawsuit.'”
• “Sort of? That’s me, I’m the leading commentator, but what I actually said was ‘I don’t want to say ‘they all got together and agreed to boycott everyone involved in the lawsuit,’’ which is not quite the same thing as saying ‘they all got together and agreed to boycott everyone involved in the lawsuit.’ In some technical sense it’s the opposite, though in a more colloquial sense I take their point. In any case I did say they should add it to the lawsuit so this serves me right.”
• “Incidentally I remain pretty sympathetic to the creditors here. As I wrote when the case was filed, ‘there is something off-putting about this whole [LME] process, a broad norm of ‘distressed companies should have to treat all of their creditors the same’ seems fine, and if all the creditors want to get together and agree on that then who am I to complain.'”
• “One way to think about it is that, when they make lending or trading decisions, these creditors are competitors with each other, but in their capacity as existing lenders to Optimum, they are something different. Ares and Apollo and Oaktree are not, now, competing with each other to make loans to Optimum; they are already Optimum lenders, already part of the company’s capital structure, already in a loose sense co-owners of Optimum. [2] They can get together to make decisions about Optimum’s debt, in the same way that multiple venture capitalists can be on the board of the same private company and meet to make decisions about the company. [3]”
• “As the lenders put it in their motion to dismiss the lawsuit (citations omitted):”
  • “Antitrust law protects competition — not a borrower’s desire for leverage in renegotiating its liabilities in times of distress. That is why every court that has addressed antitrust challenges to creditor cooperation has held that the antitrust laws do not reach the challenged conduct. ‘[T]hin to the point of invisibility,’ ‘border[ing] on the frivolous,’ ‘the very opposite of price-fixing.’ That is how courts in the past 50 years have characterized such antitrust claims—and they are right. …”
  • “Leveraged financing exists because risk is shared across many sophisticated lenders and bondholders, and the governing agreements hardwire collective action through voting thresholds, class votes, and consent rights. Plaintiffs acknowledge that so-called ‘liability management exercises’ (‘LMEs’) are ‘a creature of contract,’ often pitting creditors against one another to ‘create individual winners and losers.’ The creditor cooperation alleged here is a permissible response to that dynamic. It prevents opportunistic maneuvers that reward certain creditors at the expense of others; it reduces transaction costs and the destructiveness of brinkmanship; and it promotes the very mutual forbearance that can keep a borrower operating while preserving the contractual expectations that made the original financing possible. In short, the cooperation Plaintiffs attack is not merely lawful—it is procompetitive, and it benefits borrowers and consumers alike.”
• “Still weird to make their lawyers quit though.”

“Judge rules howitzer applicant’s attorney can stay on case” —

• “The administrative law judge overseeing the Adirondack Park Agency’s upcoming adjudicatory hearing for a proposed howitzer testing range in the town of Lewis ruled on Friday that the applicant’s attorney and law firm will be allowed to remain on the case.”
• “The decision denied a challenge from Adirondack Council, an environmental conservation advocacy group — a party to the hearing — which is opposed to the proposed howitzer range. Adirondack Council asked that attorney Matthew Norfolk, who represents project sponsor Michael Hopmeier, through his company, Unconventional Concepts, Inc., be removed from the hearing process.”
• “Adirondack Council contended that Norfolk and his firm, Norfolk Beier, should have been disqualified because of a conflict of interest stemming from the firm’s hiring of attorney Sarah Reynolds in May 2025. Reynolds previously worked as an associate counsel for the APA, and had been involved in the agency’s handling of the howitzer matter. Norfolk submitted a seven-point rebuttal for Administrative Law Judge David Greenwood to consider. More on Adirondack Council’s motion, along with Norfolk’s objection, can be found at [here].”
• “No other parties, including the APA, submitted material on the matter. Greenwood originally wrote that he would rule on this by Feb. 10. It was unclear what caused the delay, though the hearing’s start had since been pushed back until April 22.”
• “Greenwood’s 10-page ruling framed the decision as a balancing test, with the reasons against disqualifying Norfolk outweighing the reasons for doing so. He listed factors in favor of Adirondack Council’s motion as being the nature, duration and severity of the alleged conflict of interest, its potential to harm Adirondack Council’s interest as a hearing party, the hearing’s integrity and the avoidance of the appearance of impropriety going forward.”
• “Greenwood’s reasons against the motion include what he found was a lack of standing from the Adirondack Council to make the motion. This was something Greenwood said the APA would have if it had chosen to file this type of challenge. Similarly, another reason against the motion was the APA’s lack of action on this matter, which Greenwood wrote, ‘one could infer that the Agency does not feel that the conflict requires
• disqualification.'”
  “The administrative law judge also found that Norfolk Beier had implemented screening measures to prevent Reynolds from discussing or being involved in the howitzer matter in any way once she was employed by the firm. Even though he wrote that these measures were ‘imperfect,’ Greenwood said they constituted a reason against Adirondack Council’s motion to disqualify Norfolk. Another reason Greenwood listed was Reynolds’ subsequent departure from Norfolk Beier in December, stating that ‘the term of conflict has ended.'”
• “Greenwood’s final reason against disqualifying Norfolk was that removing Hopmeier’s chosen counsel would create a ‘substantial burden’ for him, given that Norfolk has represented him in the howitzer matter since the early days when it was before the APA in 2022.”
• “‘Requiring the Project Sponsor to obtain new counsel after so much time and on the eve of the public hearing commencement would be a substantial burden,’ he wrote.”
• “Greenwood cited case law that stated disqualification motions carry a ‘heavy burden and must satisfy a high standard of proof.'”
• Complete ruling: here.

“Beasley Allen Ethics Showdown Rattles J&J Talc Litigation” —

• “Lawyers nationwide are gearing up for bellwether ovarian cancer trials against Johnson & Johnson this year, but a plaintiff firm’s ethics quagmire is testing litigation management for roughly 70,000 cases in novel ways.”
• “Beasley Allen, co-lead counsel for the sprawling federal multidistrict litigation over allegedly tainted talc products, was on a hot streak. It’s won two trials in recent months against J&J after the pharma giant’s third failed effort to force a mass settlement in bankruptcy, setting the stage for further trial verdicts where the New Jersey-based health company has already lost billions.”
• “Then last month, the Alabama-based firm’s preparation for three of the six bellwether federal litigants nearing trial was undercut by a novel ruling disqualifying the firm from 435 of the roughly 2,700 cases in New Jersey state court—called multicounty litigation—raising questions about past verdicts, key experts, and who could represent the firm’s thousands of clients in the federal cases if courts apply that disqualification nationwide.”
• “Key players and experts wonder whether the fallout could delay initial trials, or potentially edge the overall litigation closer to universal settlement due to the jettisoning of one of the loudest voices against resolution through bankruptcy.”
• “‘Clearly J&J thinks this is a worthwhile thing to scream and jump around about, which tells you something about whether they are more willing to play with the remaining firms,’ said complex litigation researcher and University of Georgia Law School Professor Elizabeth Chamblee. ‘They clearly see Beasley as a hindrance.'”
• “The US District Court for the District of New Jersey has scheduled a Tuesday conference to discuss J&J’s call to toss Beasley Allen from thousands of cases due to ‘association’ with former J&J lawyer James Conlan in mediation.”
• “The firm’s attorney in this ethics dispute, Jeffrey Pollock of Pollock Law, said in a federal brief that disqualifying it ‘based on a single state appellate court’s unprecedented expansion of an ethics rule would disrupt coordinated leadership, impair settlement negotiations, and prejudice litigants who have relied on their chosen counsel for the better part of a decade.'”
• “J&J argues Conlan, a former restructuring counselor who spent hundreds of hours representing the company before leaving to start a mass torts settlement consultancy, ‘switched sides.’ A New Jersey appeals court found that collaboration in a mediation between Beasley Allen and Conlan violated a rule—one that all states have adopted in some form—limiting ‘assistance’ from nonlawyers with conflicts in a case.”
• “‘Conlan’s prolonged access to J&J’s privileged information, followed by collaborative efforts with its most prominent adversary, leaves us with clear concern for the preservation of trust intrinsic to the attorney-client relationship,’ the court said.”
• “In a February hearing urging a disqualification pause while Beasley Allen seeks reversal from the New Jersey Supreme Court, Pollock said a decision like this hasn’t been reached anywhere else.”
• “J&J’s lawyer Peter G. Verniero, a former New Jersey Supreme Court justice now with Sills Cummis & Gross PC, said demanding proof of a shared secret would eviscerate ethics protections against collusion. The company is leaning into its win, saying a Beasley Allen exit could get the litigation closer to a deal—something Beasley Allen fought when it meant going through bankruptcy.”
• “‘Beasley Allen’s disqualification for its egregious ethical violations should facilitate—not impede—the progress of this proceeding,’ Erik Haas, J&J’s worldwide vice president of litigation, said in a statement.”
• “If Beasley Allen is disqualified from the MDL, the fallout could be tough on other plaintiff firms, some attorneys involved in the litigation said.”
• “For 10 years Beasley Allen has taken the lead on developing trial testimony experts, taking depositions, and gathering evidence for use by all plaintiffs to litigate talc personal injury cases, said attorney David Selby of Bailey & Glasser LLP.”
• “‘The impact is just enormous,’ Selby said. ‘All of that has been organized and run by Beasley Allen.'”
• “One of Beasley Allen’s co-counsel is fine with ditching the firm: Allen Smith, a lawyer who has been jointly representing clients with the firm. He informed the court that he’s capable of moving forward with their thousands of cases on his own.”
• “Mississippi-based Smith Law Firm and Beasley Allen had a public falling out over Smith’s support to settle their more than 11,000 joint cases when J&J launched its third bankruptcy gambit in 2024, as both firms accused the other of betraying their clients’ interests. Beasley Allen has sued Smith, accusing the joint venture partner of failing to pay its share of litigation expenses as it racked up more than $240 million in litigation funding debt.”
• “The potential loss of Beasley Allen will only be felt acutely by firms that ‘don’t know how to work up their own experts,’ said plaintiffs’ attorney Majed Nachawati of Nachawati Law Group.”
• “‘We’re going to go forward with our cases,’ said Nachawati, who represents more than 4,000 talc plaintiffs and is gearing up for two trials. ‘We don’t need MDL leadership to try our cases for us.'”

Daniel J. Siegel wries: “Confidentiality Isn’t Just for Lawyers: Why Law Firm Staff Ethics Matter as Much as Lawyer Ethics” —

• “Recently, a trial court entered an order allowing limited discovery of a law firm’s IOLTA account in a divorce proceeding. Of course, IOLTA accounts contain confidential information, including the names of parties, settlement amounts and much more. While the order was, for the most part, reasonably tailored to preserve confidentiality—almost every identifying factor about the account was to be redacted—there were a couple of lines in the order that stopped me dead in my tracks.”
• “The judge wrote that the clients’ ‘identities were not confidential as to the staff if they were privy to them at the time they worked for the firm.’ I was shocked at the comment.”
• “Everyone knows, I thought, that confidentiality applies not only to lawyers but also to everyone who works for them, and even applies to legal assistants outside the firm. This point was made even clearer when Model Rule of Professional Conduct 5.3 was amended, as was its counterpart under the Pennsylvania Rules of Professional Conduct. Comment [3] to the Pennsylvania Rule to emphasize this point.”
• “Yet this judge misapprehended the rule and, in fact, stated that the information was confidential only to the lawyers, not to the staff. Respectfully, the court erred.”
• “Against this backdrop, I am writing to clarify the Rules of Professional Conduct regarding confidentiality and to emphasize a few points related to that concept.”
• “Lawyers consider confidentiality their professional birthright. It is one of the ingredients baked into their licenses, enforced by disciplinary boards, and hammered home every day of law school. But in the modern law firm, which often relies on so many components—in and out of the office—confidentiality is a shared ethical ecosystem.”
• “One commentator called today’s legal practice a team sport. There are so many components. Paralegals, assistants, intake specialists, billing staff, IT professionals, marketing teams, and outside vendors routinely have access to information that they would never have only a few years ago. At the same time, technology has made the transmission of information effortless, I would say too effortless in many ways. A chat message, an email, or an AI query can expose confidential information in seconds. That is why Rule 5.3 was amended, years before generative AI made information disclosure even easier.”
• “The truth is this: Most confidentiality breaches aren’t the result of bad actors or intentional misconduct. They come from a fundamental misunderstanding of the rules. Look at Pennsylvania’s Public Access Policy. It was meant—again, before generative AI—to protect confidential information. Yet lawyers often pay lip service; they check the box but don’t verify for confidential data. God knows, lawyers are still emailing medical records, still not recognizing that email is as confidential as a postcard. And they never think twice.”
• “That is why, now more than ever, it is important to consider who is bound by the rules of ethics, what ‘confidential’ really means, and where the invisible lines lie when using ever-changing modern tools. Three misconceptions, in particular, continue to create risk for firms of all sizes.”
• “Many firms train their lawyers on confidentiality. Far fewer invest the same energy in training their nonlawyer staff. This gap persists despite the fact that, ethically and practically, nonlawyer employees are extensions of the lawyer.”
• “Under the Rules of Professional Conduct, lawyers are responsible for ensuring that their staff’s conduct is compatible with the lawyer’s own ethical obligations. That means when a staff member mishandles confidential information, the lawyer—and by extension everyone in the firm—must bear responsibility.”
• “Still, many staff members view confidentiality as an abstract concept. They probably know they should not gossip. They probably know not to post client names on social media. But do they really understand that confidentiality also extends to intake calls, internal conversations, drafts, metadata, billing narratives or scheduling details? And do they realize that confidentiality extends to the fact that a particular person is a client?”
• “The risk is compounded by the reality that staff often operate at the crossroads of information. An intake specialist hears unfiltered facts before a conflict check is complete. A legal assistant may see drafts that never make it into a final pleading. A billing professional reads time entries that describe strategy, vulnerabilities or settlement posture. IT personnel may have broad system access without any substantive legal context for what they are seeing.”
• “When staff members are not taught that confidentiality is their obligation—not just the lawyer’s—they may default to their everyday norms and not their professional ones. What may be harmless in another industry becomes a time bomb in a law firm.”
  Policies do not create a culture of confidentiality. They are created by clear explanations of why these rules exist. Staff who understand that confidentiality protects clients, the firm, and their own professional standing are far more likely to treat it with the seriousness it deserves.”
• “No discussion of modern confidentiality is complete without addressing artificial intelligence. AI tools are rapidly becoming part of everyday workflows, from drafting emails to summarizing documents to brainstorming arguments. Used carefully, they can be powerful. Used casually, they can be dangerous.”
• “The core problem is not that AI is inherently unethical. It is that many users do not understand how these tools process, store or reuse information. When someone types in client details into a generative AI prompt, they may be disclosing that information to a system outside the firm’s control, subject to terms of service they have never read.”
• “The ‘elevator test’ is a useful metaphor. Doctors have long been warned not to discuss patient matters in elevators where conversations can be overheard. It is obvious why. AI warrants the same level of caution from lawyers and law firm staff. If you could not comfortably speak a sentence aloud in a crowded elevator, don’t paste it into an AI prompt, especially the more public forms of AI that make it clear there are no privacy protections.”
• “What ties these three issues together is not technology or rules. It is culture. Confidentiality failures rarely occur because someone wants to violate their ethical duty. They happen because the firm failed to train its staff or adapt its old principles to new tools.”
• “There is a solution. First, treat all staff as professionals with ethical responsibilities, not as passive support. Second, give on-point guidance. Third, acknowledge that technology changes how confidentiality is threatened, but not why it matters.”
• “Confidentiality remains one of the legal profession’s defining principles. Preserving it requires more than rules. It requires every person in the firm—lawyers and nonlawyers—to recognize and understand that ethics is not someone else’s job. It is everyone’s responsibility.”

“Conflicts of Interest in Family Law Matters” —

• “Conflicts of interest can arise in any practice area, but the personal nature of family law litigation makes it all the more important for lawyers to be careful to avoid taking on representation where a conflict of interest claim could trigger a motion for disqualification or breach of fiduciary duty claim.”
• “The rules that govern lawyer conduct with respect to conflicts of interest arise out of a fundamental attorney obligation: the duty of loyalty. For practitioners in family law, as for all lawyers, that duty dictates that the lawyer’s primary concern in any representation is to protect and further the best interests of the client. If there are other interests at play that pose a risk of adversely affecting the lawyer’s ability to advocate for the client’s best interest and/or give advice untainted by other considerations, there is a conflict of interest. And in the absence of consent or where the conflict is not consentable, a conflict of interest means that the lawyer may not take on the representation.”
• “The most basic conflict of interest rule is that a lawyer may not represent a client who is directly adverse to another client, per the American Bar Association (ABA) Model Rules of Professional Conduct Rule 1.7(a)(1). To take the most obvious example of how the prohibition applies in family law: a lawyer may not represent both spouses in a marital dissolution action. That will be true even if the parties come to the lawyer together, saying that they have already worked out financial and custody issues between them and just need assistance formalizing the agreement and putting everything into writing. In such a situation a lawyer is likely to be unable to competently and diligently advise both parties.”
• “Imagine, for example, that the lawyer sees that one or more terms of the parties’ proposed agreement is unfairly detrimental to the interests of one spouse or that the agreement somehow takes advantage of one spouse’s misunderstanding of the parties’ respective rights. In that situation, the lawyer could not properly provide clarifying advice to the potentially disadvantaged spouse because such advice would likely be contrary to the interests of the other spouse (the one who would gain an advantage). But if the lawyer were to fail to give such advice, she would be exposed to a claim by the disadvantaged spouse that the inherent conflict of interest resulted not just in legal malpractice, but a breach of fiduciary duty, a much thornier claim to defend.”
• “Rule 1.7’s prohibition of direct adversity also means that a lawyer may not represent one spouse if the other spouse is a client of the lawyer in another matter, even if the other matter is unrelated to the dissolution action. And the same is true even if it is another firm lawyer who represents the adverse spouse in the unrelated matter. That is because under Rule 1.10 (Imputation of Conflicts of Interest: General Rule), the conflict of one lawyer at a firm will be imputed to all other lawyers at the same firm.”
• “Where a conflict arises out of a law firm’s representation of adverse parties in unrelated matters, such representation may be undertaken where both affected clients provide informed consent, confirmed in writing. But it may be wiser to forgo such representation. In the emotionally fraught circumstances common to so many family law matters, even to ask for consent may cause either or both of the affected clients to doubt the lawyer and the law firm’s loyalty. As explained in the Comment on Rule 1.7: ‘the client on whose behalf the adverse representation is undertaken reasonably may fear that the lawyer will pursue the client’s case less effectively out of deference to the other client, i.e., that the representation may be materially limited by the lawyer’s interest in retaining the current client.'”
• “In addition to ensuring that a prospective representation raises no conflicts with respect to a current client of the lawyer or her firm, lawyers must also consider whether there is a conflict under Rule 1.9 (Duties to Former Clients). Rule 1.9 does not create a blanket prohibition on representation adverse to a former client. Rather, under Rule 1.9, a lawyer is prohibited from undertaking representation adverse to a former client only if the new matter is ‘the same’ as, or ‘substantially related’ to, the matter in the prior representation. Where there is a claim of a former client conflict of interest—typically raised in the former client’s motion to disqualify a former attorney from representing an opposing spouse—the dispute will usually turn on whether the former matter is ‘substantially related’ to the current divorce proceedings. The Commentary to Rule 1.9 provides this gloss: ‘Matters are ‘substantially related’ for purposes of this Rule if they involve the same transaction or legal dispute or if there otherwise is a substantial risk that confidential factual information as would normally have been obtained in the prior representation would materially advance the client’s position in the subsequent matter.’ A leading resource for interpreting the Model Rules summarizes the development of the ‘substantial relationship’ analysis as follows: ‘Today, most courts and other authorities hold that the substantial relationship test is not a formalistic inquiry into degrees of closeness, but is in large measure a judgment as to whether former clients are at risk that their confidences will be turned against them.’ Geoffrey C. Hazard, Jr., W. William Hodes, Peter R. Jarvis, The Law of Lawyering, (4th Ed. 2018-2 Supp.) § 14.07.”
• “In marital dissolution matters, the question of whether there is a former client conflict commonly arises in the situation where a lawyer has previously jointly represented a married couple in their estate planning or in one or more real estate transactions, and later one of the spouses seeks the lawyer’s representation in the couple’s marital dissolution action. There are conflicting views about whether such ‘family lawyer’ representation is ‘substantially related’ when the couple subsequently divorces. In a 2005 opinion, the Oregon State Bar took the position that in most circumstances the joint estate planning representation does not present a conflict of interest with respect to subsequent representation of one of the spouses in a dissolution action. Oregon State Bar, No. 2005-148, Conflicts of Interest, Former Clients: Representing One Spouse in Dissolution after Joint Estate Planning (revised as of 2016). In that situation ‘it does not appear that Lawyer would be in possession of information relating to the representation of Husband that would not already be known to Wife or to which Wife would not otherwise have access,’ as is generally the case where there is a joint representation. By contrast, in a 2001 opinion, the New Hampshire Bar Association Ethics Committee, while not answering the question directly, offered a more cautious view: ‘It is likely that the potential to utilize information obtained during the prior matter will arise and place the lawyer in a position in which his or her obligation to protect a former client’s confidences conflicts with the obligation to represent the current client.’ New Hampshire Bar Association Ethics Committee, Practical Ethics Article, Conflict of Interest in Family Law Matters (2001).”
• “The analysis of whether matters are ‘substantially related’ for purposes of Rule 1.9 will necessarily turn on how the judge in any particular case views the underlying facts and particular circumstances of the case at issue. This can lead to considerable variation. For example, the Oregon State Bar’s conclusion that joint estate planning generally did not preclude subsequent representation rested in part on the premise that, in a joint representation, information is generally presumed to be shared and where that is the case, ‘no information-specific former-client conflict would exist.'”
• “Moreover, in a marital dissolution action, it is generally the case that the parties are required to make full disclosure of their income, assets, and other financial matters. The fact that financial information is discoverable in matrimonial cases should dictate against disqualification. This was the position a Connecticut trial court took in denying a disqualification motion in a dissolution action: ‘any disclosures to the attorney in the previous [real estate] matters were about the real estate itself or the parties’ respective sources of income-both topics subject to full disclosure in the present matrimonial action.’ Jensen v. Jensen, 2001 WL 1028897, at *2 (Conn. Super. Ct. 2001). But in a more recent decision, another Connecticut judge went in the opposite direction, granting a motion to disqualify the ‘family attorney’ from representing the husband in a divorce action, apparently concluding that disqualification was necessary to protect the wife’s confidential financial information. Lavey v. Lavey, 2020 WL 13907706, at *6 (Conn. Super. Ct. 2020).”
• “Once a lawyer has served as an arbitrator, mediator, or third party neutral in the course of a divorce proceeding, Rule 1.12(a) prohibits the lawyer from afterwards representing a party to the same proceeding. The concern with such representation is not one of client loyalty or protection of client confidences. As explained in the Rule 1.12 Comment, the prohibition follows from the fact that even though lawyers serving as third party neutrals do not have an obligation to protect client confidences, as Rule 1.6 requires, ‘they typically owe the parties an obligation under law or codes of ethics governing third-party neutrals.'”
• “The conflict of interest rules in the Model Rules do not expressly apply to an attorney who serves as guardian ad litem (GAL). But in many states, the code of conduct applicable to GALs dictates that a lawyer should decline an appointment as GAL in a matter if the lawyer, or someone at her firm, acted as counsel to, or has a prior relationship with, any of the parties, witnesses, or others connected with the family. See e.g. Commonwealth of Massachusetts, Standards for Category F Guardian ad Litem Investigators (in effect as of January 24, 2005), § 1.3.A (‘If the GAL has any prior or existing direct or indirect relationships with parties, their families, their attorneys, material witnesses, or someone else connected with the family, the GAL must consider whether the GAL’s impartiality is compromised as a result of these relationships’; situations in which a ‘GAL shall decline the appointment,’ include where ‘[t]he GAL or the GAL’s law firm previously advised or acted as counsel for a party, child, or other person closely aligned to a party, including but not limited to a party’s spouse, non-marital partner, or a material witness.’ (emphasis added)). Some states may permit service as a GAL under such circumstances, provided all parties are fully informed and waive any conflict. See e.g., Indiana State Office of GAL/CASA, Code of Ethics for GAL in Civil Family Law Cases (updated as of March 28, 2025), ¶ 11 (‘to avoid any actual or apparent conflicts of interest . . . GAL shall not serve on a case when GAL has been personally involved with a family or with the circumstances surrounding the case unless there is full disclosure of the potential conflict to all parties and any perceived or actual conflict is waived.’).”
• “Yet another situation that may give rise to a conflict is where a lawyer meets a prospective client and obtains information about the prospective client’s divorce matter, but the prospective client does not go on to become a client of the lawyer’s firm. The risk for the intake lawyer is that communications with the prospective client may disqualify the intake lawyer or her firm from representing a different client who, as it later turns out, is the other spouse, adverse to the prospective client who never became a client. Under Rule 1.18, ‘Duties to Prospective Clients,’ the extent of the risk will depend on the extent to which the intake lawyer received ‘disqualifying information’ from the prospective client, that is ‘information . . . that could be significantly harmful to’ the prospective client.”
• “But where Rule 1.10 would impute disqualification to all attorneys at a firm where one is disqualified due to a current or former client representation, under Rule 1.18(d)(2), imputation of the intake lawyer’s personal disqualification to other lawyers in the same firm may be avoided if: (1) the intake lawyer took ‘reasonable measures to avoid exposure to more disqualifying information than was reasonably necessary to determine whether to represent the prospective client’; (2) the disqualified lawyer is timely screened from any participation in the matter; and (3) the prospective client receives written notice.”
• “The prospective client dilemma is a commonplace occurrence in the area of family law, and the fact that many spouses facing a dissolution action will consult with multiple attorneys before choosing one increases the pool of potential conflicts. The Rule 1.18 Comment provides that ‘a person who communicates with a lawyer for the purpose of disqualifying the lawyer is not a ‘prospective client.’’ While this mean that a person who engages in that kind conduct would not be entitled to the protections of the Rule, difficulties of proof may limit the lawyer’s ability to rely on that provision in opposing a motion for disqualification.”

We always appreciate the diligent work, research, and commentary from Bill Freivogel:

Kudlacek v. Olson (Law Firm), 34 Neb. App. 83 (Neb. App. Feb. 17, 2026).

• Beneficiary of Trust sued Law Firm that represented Settlors of Trust. Beneficiary was unhappy about his rights under Trust and sued Law Firm for negligence. The primary issue is whether Beneficiary, a non-client, can sue Law Firm.
• The trial court granted Law Firm summary judgment. In this opinion the appellate court affirmed. The court ruled a non-client can sue a lawyer if the non-client was an intended third-party beneficiary of the lawyer’s work, but not if a conflict of interest for the lawyer results.
• Here, the Settlors’ expectation differed from what Beneficiary wanted. Thus, the conflict prevented non-client Beneficiary from suing Law Firm. Heavy reliance on Nebraska precedent.

Paciorkowski v. Jetson Elec. Bikes LLC, 2026 WL 438086 (N.J. App. Div. Feb. 17, 2026).

• Plaintiff attempted to be both a class representative and class counsel in a case involving allegedly defective electric bikes. The trial court denied class certification.
• In this opinion the appellate court affirmed, holding that Plaintiff could not be both, except “in certain public interest litigations.” No such “public interest,” here.

Lake v. Brennan, 2026 WL 401197 (M.D. Pa. Feb. 12, 2026).

• Plaintiff is suing City and a number of city-related individuals involving an allegedly improper petition for conservatorship for Plaintiff’s property. Law Firm appeared for City and the individuals.
• Plaintiff moved to disqualify Law Firm claiming that multiple representation was a conflict. Defendants raised Plaintiff’s lack of standing to make the motion. The court discussed standing in the Third Circuit at length.
• The court said because the law on standing is “not clear,” it would assume “arguendo” that Plaintiff had standing. Then, in a routine analysis, not worth pursuing here, the court found no conflict.

Bova v. Twp. of Jackson Planning Bd., 2026 WL 294936 (N.J. App. Div. Feb. 4, 2026).

• Planning Board approved construction of a private school. Plaintiffs (adjoining land owners) sued to overturn the approval.
• One objection was the lawyer (“Lawyer”) for the school/applicant had a relationship with the chair of the planning board (“Chair”).
• The relationship was this: Chair belonged to a synagogue (not a party here). Lawyer represented the synagogue before the township zoning board (different board from Planning Board).
• The trial court upheld the Planning Board’s approval of the private school project, finding the conflict argument “far too remote” to find a conflict. In this Opinion the appellate court affirmed. [Our note: The appellate court did discuss snippets of evidence suggesting Lawyer and Chair were pals of sorts, but said the trial court did not abuse its discretion in rejecting the conflict argument.]

Deel, Inc. v. People Center, Inc., 2026 WL 313505 (Del. Super. Ct. Unpub. Feb. 5, 2026).

• Plaintiff moved to disqualify law firm for Defendant (“Law Firm”) because Law Firm and Plaintiff had earlier contacts about Law Firm representing Plaintiff in a matter arguably related to this case.
• In this unpublished opinion the trial court denied the motion, primarily because Law Firm had erected a screen between the lawyer who contacted Plaintiff and the rest of the firm, in compliance with Delaware Rule 1.18.

“Beasley Allen Fights DQ Order: ‘You Need to Hit Pause for Now’” —

• “A federal judge in New Jersey plans to hear arguments next week on whether to disqualify Beasley Allen, one of the lead plaintiffs’ firms, from the talcum powder multidistrict litigation against Johnson & Johnson.”
• “In a Feb. 9 order, U.S. Magistrate Judge Rukhsanah Singh, of the District of New Jersey, ordered supplemental briefing after a New Jersey appeals court found that Beasley Allen should be disqualified from talc lawsuits because principal Andy Birchfield had partnered with a former Johnson & Johnson attorney to negotiate a proposed $19 billion settlement. Beasley Allen, which claims to represent 435 women in New Jersey state courts, and 5,500 in the multidistrict litigation, has argued to hold off the disqualification to give time to appeal the New Jersey Appellate Division’s Feb. 6 order to the New Jersey Supreme Court.”
• “‘My view is, judge, you need to hit pause for now—just briefly,’ Jeffrey Pollock, of Pollock Law in Trenton, New Jersey, told Law.com for Birchfield and Beasley Allen. ‘The reason being is let’s assume that the appellate division agrees with me, and the Supreme Court agrees with me that Beasley Allen is not out. You rearrange all the deck chairs in the MDL because we’re out, then have to do it all over again.'”
• “Johnson & Johnson, however, has suggested replacing Beasley Allen, whose principal Leigh O’Dell serves as co-lead counsel in the multidistrict litigation, with R. Allen Smith, of The Smith Law Firm, who obtained the first-ever talc verdict in 2013.”
• “‘In fact, in the majority of the Beasley Allen cases that have proceeded to trial since the inception of the litigation, Allen Smith served as lead trial counsel, devising the trial strategy, taking the examinations of nearly all experts, and handling nearly all openings and closings,’ Johnson & Johnson attorney Kristen Fournier, of Kirkland & Ellis in New York, wrote in a Thursday letter to Singh. ‘As such, the disqualification of Beasley Allen should not cause significant disruption to Beasley Allen’s clients (or this MDL) as one of their current attorneys, with significant trial experience and access to expert resources, can continue to represent them.'”
• “‘There is no need to ‘secure substitute counsel’ to replace Beasley Allen, nor is there any risk that denial of a stay of Beasley Allen’s disqualification will ‘irreparably prejudice’ the talc clients,’ he wrote. ‘I, through SLF [Smith Law Firm] will continue to represent the talc clients without disruption or prejudice.'”
• “The potential disruption to the existing talc cases would be ‘real and potentially irreversible,’ Pollock wrote in a Thursday motion, noting that Beasley Allen represents three of the six bellwether plaintiffs teed up for trials in the multidistrict litigation, which involves 67,000 talc cases.”
• “‘Disqualifying nationally selected MDL co-lead counsel based on a single state appellate court’s unprecedented expansion of an ethics rule would disrupt coordinated leadership, impair settlement negotiations, and prejudice litigants who have relied on their chosen counsel for the better part of a decade,’ Pollock wrote in a Thursday motion.”
• “As to the multidistrict litigation, Johnson & Johnson, pushing for disqualification, cited a joint venture agreement between Montgomery, Alabama’s Beasley Allen and the Smith Law Firm, based in Ridgeland, Mississippi, that would alleviate much of the disruption caused by the disqualification order. The firms share 11,000 talc clients.”