Bressler Risk Blog

“Courtroom Hug Gets Miami Judge DQ’d From Trump Library Case” —

• “A Miami-Dade state court judge is disqualified from overseeing further proceedings in the legal battle over a local college’s decision to donate its land for a Trump Presidential Library. An appellate panel found the judge showed bias toward the plaintiff by giving him a hug after a hearing, and seemingly thanking him for filing the suit. But some of the lawyers involved in the litigation say the judge’s removal from the case is unfair to her.”
• “The ruling from Florida’s Third District Court of Appeal takes Miami-Dade Circuit Judge Mavel Ruiz off plaintiff Marvin Dunn’s lawsuit against the Miami-Dade College Board of Trustees.”
• “Dunn sued after the trustees voted last year to donate a 2.6-acre property worth at least $67 million as the site of a planned presidential library for Donald Trump. Dunn, a local historian and one-time Miami mayoral candidate, alleged the board’s vote was not properly advertised under Florida’s public records laws.”
• “Ruiz initially blocked the land transfer, and set a trial date for August 2026. She ultimately dismissed Dunn’s suit with prejudice in January, but not before denying a motion by defense counsel to get her to step down from the case.”
• “According to defense counsel, the judge’s alleged actions at a December hearing showed bias toward Dunn.”
• “According to the transcript of the hearing included in the motion to disqualify Ruiz, the judge compared Dunn’s case to one filed ‘years ago,’ by a ‘gentleman’ who was a ‘pillar of the community’ that had sued a governmental agency that he ‘did not believe … was doing the right thing for the citizens of this community.'”
• “‘He [the plaintiff in that case] put his money where his mouth is. He came in second. He was not successful in that action, but in the order, this court wrote how important a member of this community is when they are willing to put themselves, their money and their home on the line for the better good. And that’s what you [Dunn] did, sir,’ Ruiz said. ‘It’s my understanding that you mortgaged your house to pay for the stiff bond that this court imposed on you and you did it. And I thank you.'”
• “After the hearing, Ruiz allegedly descended from the bench to shake hands and ‘exchange pleasantries’ with attorneys on both sides before she ‘briefly hugged’ Dunn, according to Dunn’s sworn declaration included in court records.”
• “Dunn’s attorneys, Andres Rivero of Rivero Mestre and Richard E. Brodsky of The Brodsky Law Firm, argued in a March filing that Ruiz’s ultimate dismissal with prejudice showed she was not biased toward their client, and claimed the embrace in question followed warm greetings to both parties and came at a point when the judge ‘obviously’ believed the case was over.”
• “But the per curiam panel opinion, signed by Judge Ivan F. Fernandez, Judge Thomas Logue and Judge Monica Gordo, held the evidence of bias was ‘legally sufficient to create in a reasonably prudent person a well-founded fear that they would not receive a fair hearing before the judge.'”
• “The appellate court also found Ruiz should not hear Dunn’s motion for reconsideration of her January dismissal.”
• “Meanwhile, Jesus M. Suarez, partner at Continental and attorney for the college, said ‘the trial court should have recused itself in the first instance.'”
• “Judicial ethics bar Ruiz from commenting on open cases, the court’s spokesperson, Eunice Sigler, noted.”
• “Ruiz is one of only two incumbent state court judges in South Florida who has drawn a challenger this election cycle.”

“Judge Who Laid the Groundwork for Trump’s Supreme Court Battle Used to Work for Him” —

• “The appellate judge whose dissent laid the groundwork for a Supreme Court intervention in E. Jean Carroll’s defamation case against President Donald Trump worked in the White House in 2019, when Trump made the defamatory comments. It’s an apparent conflict of interest that’s made even more relevant given the judge’s forceful defense of Trump’s actions at the time.”
• “Judge Steven Menashi, who authored the dissent, didn’t recuse himself from the case — nor does it appear in the court record that he ever revealed his proximity to Trump at the time. But his actions could result in the case being thrown out or even put taxpayers on the hook for the $83 million granted to Carroll following a 2024 civil trial in which Trump was found liable for defamation for denying that he sexually assaulted her.”
• “Carroll scored a temporary victory in her long-running fight against Trump on Wednesday, when a federal appeals court in New York said it would not reconsider one of two defamation cases against Trump. However, a lone Trump-appointed judge penned a dissent that could breathe new life into Trump’s side — without acknowledging his own time in the Trump White House.”
• “Menashi was a special assistant and associate counsel to the president in June 2019, when the administration put out a statement saying that Carroll was merely ‘trying to sell a new book’ and when Trump told a reporter on the White House lawn that ‘it’s a total false accusation and I don’t know anything about her.’ Jurors in Manhattan considered those two statements when they concluded Trump acted with malice and awarded Carroll a massive sum.”
• “The timing means that Menashi — who has been guarded about his interactions with Trump and whatever legal advice he gave the president — was working for the defendant in the case during the exact moment that led to the successful lawsuit.”
• “On Wednesday, the Second Circuit Court of Appeals refused Trump’s request to have the entire bench reconsider a smaller panel’s decision last year to uphold the massive punitive damages against Trump. That smaller panel had accused the president of ‘extraordinary and unprecedented conduct’ in his June 2019 statements against Carroll, supporting the view that he wasn’t shielded by presidential power when he did so.”
• “However, the decision also came with Menashi’s vociferous 54-page dissent, which planted the seeds for the Supreme Court to weigh in.”
• “In it, he criticized what he called ‘unauthorized damages, duplicative compensatory damages, and a grossly excessive monetary figure for a defamation claim.’ He also highlighted what he called ‘several errors’ in the case that made it ‘obvious that the president was acting within the scope of his office when responding to reporters at the White House.'”
• “Menashi also disagreed that Trump should be held personally liable in the case. Menashi wrote that it ‘made no sense’ for judges to block then-Attorney General Pam Bondi’s attempt to remove Trump and name the U.S. government as the defendant under provisions in the Westfall Act, which protects government employees from lawsuits while on the job — though the trial judge considered those arguments at length and even had appellate courts in New York and Washington, D.C. weigh in.”
• “But most importantly, he gave Trump’s lawyers the key phrase they need to get the Supreme Court’s attention, writing that the appellate’s support of Carroll ‘created a circuit split.'”
• “‘The Supreme Court may want to consider whether that is how the Westfall Act applies to the president,’ Menashi wrote.”
• “When Menashi was nominated to the bench in 2019, CNN surfaced editorials from his days as a columnist for the conservative New York Sun, in which he attacked feminists, gay rights groups and diversity efforts. He was lambasted by critics as ‘one of Trump’s most radical picks’ and accused of authoring ‘Trump’s worst policies for immigrants and women.'”
• “But Menashi refused to detail his work for the Trump administration, rebuffing questions from then-Sen. Dianne Feinstein about his interactions with White House aide Stephen Miller and declining to say whether he had anything to do with the administration’s policy that separated migrant families and children at the U.S.-Mexico border.”

David Kluft asks: “Can an IPO underwriter’s counsel be adverse to the stock issuer in a subsequent patent case?” —

• “Company A, a sleep apnea device maker, retained a financial services company (the Underwriter) to launch its initial public offering. The Underwriter was represented by a law firm (the Firm) [Latham], which reviewed Company A’s financial and product information as part of the due diligence.”
• “The Firm withdrew after coming to the conclusion that Company’s A’s product infringed Company B’s patents. The Firm later filed a patent infringement suit on behalf of Company B against Company A. Company A asked the Firm to withdraw, but it refused and instead implemented an ‘ethical screen.'”
• “Company A moved to disqualify the Firm. The Firm argued that it could not find ‘a single case where a court has disqualified underwriter’s counsel for being adverse to the stock issuer in a subsequent case.'”
• “However, the Court agreed that Firm A’s continued involvement in the case ‘would appear deeply improper’ given its ‘repeated and consistent’ access to Company A’s internal documents while representing the accounting firm. The Court further stated that even if the ethical wall worked and the litigation team received no confidential information, the ‘appearance of impropriety extends to the … litigation team here.'”
• “The Court found that although the Firm and Company A ‘never had an attorney-client relationship … this case is one of the likely few where the appearance of impropriety of a continued representation is so striking that disqualification must follow.'”
• Order: here.

“Private Equity in Law Firms: Trend, Impact, and Legality” —

• “Private equity (PE) has been circling the legal sector for years—but in the last 24 months, the pace has quickened, powered by regulatory openings in the United States (notably Arizona and Utah), a decade-plus of experience in the U.K. and Australia, and mounting investor interest in professional services cash flows. Yet, the U.S. landscape remains a patchwork. Let’s look at the trend lines, how PE is getting access, and the legality in key jurisdictions.”
• “PE’s interest in law firms mirrors its push into other professional services (accounting, physician practice management, engineering): predictable cash flows, high margins, low capex, and a highly fragmented market ripe for rollups and platform plays. After years of structural barriers, dealmaking efforts accelerated over the last 12 months, aided by creative structures and a slowly improving regulatory environment.”
• “Model Rule 5.4, widely adopted by states, restricts fee-sharing and nonlawyer ownership. The American Bar Association reaffirmed that the ban reflects the profession’s core values in Resolution 402 (Aug. 2022), even while it encourages evidence-based regulatory innovation in separate policy statements. That said, the door has opened in a few places: Arizona abolished its version of Rule 5.4 in 2021 and created a licensing regime for alternative business structures (ABS) entities, and Utah launched a supreme-court–supervised ‘regulatory sandbox’ in 2020, extended through 2027.”
• “Managed services organizations (MSOs) and contractual workarounds. In non-ABS states, PE gravitates to MSO structures: Investors own the business services affiliate—marketing, HR, tech, intake—while the professional entity remains lawyer-owned. Properly constructed, MSOs avoid impermissible fee-sharing and preserve lawyers’ independent judgment, but they must be engineered carefully to withstand scrutiny under Rule 5.4 and UPL statutes.”
• “Adjacent bets—litigation finance and alternative legal service providers (ALSPs). Some PE funds back litigation financiers or ALSPs that contract with firms, creating capital adjacency without owning the law firm itself. As a policy matter, critics argue this still raises independence and conflict concerns if investors push for early settlement or aggressive portfolio economics; proponents counter that funding increases access to justice. The ethics literature has long flagged investments that intertwine with client matters as conflict-prone.”
• “The ABA House’s 2022 Resolution 402 distilled a long-standing concern: Outside owners may pressure firms to prioritize returns over professional duties, risking client confidentiality, conflicts, and independence. That resolution reaffirmed feesharing limits as core to the profession, even while keeping the door open to measured experimentation.”
• “ABS regimes commonly require designated compliance officers, suitability checks on nonlawyer owners, and firmwide undertakings to abide by professional rules. Arizona’s ABS framework mandates a compliance lawyer and disclosures for ‘authorized persons,’ while D.C.’s long-standing Rule 5.4 variant allows limited nonlawyer partners who provide professional services and agree to be bound by ethics rules—a narrow exception that has functioned without headlines for years.”
• “Whether PE invests directly or via MSOs, firms must enhance conflicts-checking to capture investor-level affiliations, portfolio company ties, and data-sharing risks. Ethics authorities have long warned that lawyers’ financial entanglements with clients or third parties heighten malpractice and fiduciary risks—lessons that carry over to investor relationships.”
• “Model Rule 5.4 baseline (most states). No nonlawyer ownership, no fee-sharing with nonlawyers (with narrow exceptions such as employee profit-sharing and payments to a deceased lawyer’s estate). Outside investors cannot own law firms or control legal practice.”
• “Critics argue that opening equity to nonlawyers risks subordinating the lawyer’s role as officer of the court to investor imperatives. The ABA’s 2022 resolution reanchors this value proposition, warning that incremental erosion of Rule 5.4 could ‘destroy our profession’ to the detriment of clients if not carefully checked.”
• “Advocates of targeted reform, including academics and APRL, contend that ethical independence can be preserved through governance, while capital is essential to scale consumer-facing innovation and improve access to justice—especially given the U.S.’s poor rankings on affordability of civil legal services. Their proposals seek informed consent-based fee-sharing and regulated ownership with enforceable independence safeguards.”

“States Consider Bans on Private Equity Law-Firm Acquisitions” —

• “Private equity has barely begun investing in law firms, but the backlash has already started. Lawmakers in three states are considering bills to make it harder for buyout firms and other corporate investors to buy law practices, a burgeoning investment strategy that was long off limits for private equity.”
• “In California and Illinois, legislators in April advanced bills that would cement prohibitions on nonlawyers’ owning or controlling legal practices. In Colorado, a bipartisan group of lawmakers introduced a similar bill last week, which on Wednesday passed the House Judiciary Committee.””California Assembly Bill 2305, which the state’s lower chamber approved on April 6, will ‘close the loopholes’ corporate investors use to influence legal practices, said Assemblymember Ash Kalra, who introduced the bill.”
• “Kalra, a Democrat who represents San Jose and neighboring areas, fears that private-equity money may reshape the legal profession like it has the medical sector and other industries. He thinks the bill has the support it needs to pass California’s state Senate by the Aug. 31 end of the legislative session. ‘We have seen how private equity has operated in many different industries to extract profit and not reinvest in the long-term health of the industry,’ Kalra said. “
• “His bill will ‘ensure that lawyers make decisions based on their clients’ best interests, not the best interests of their investors,’ he said”
• “But while it remains forbidden for private equity to directly own law firms in almost all states, firms have developed workarounds to control practices without violating the rules. Private-equity investors have realized that the same structure that allows them to invest in medical practices—the management-services organization, or MSO—can be repurposed to invest in legal practices.”
• “The interest is on both sides, as more lawyers reconsider their commitment to professional autonomy. The prospect of artificial-intelligence tools’ reshaping the profession has convinced some firms to seek outside capital to invest in technology and operations.”
  Private-equity deal activity is increasing, though mostly for smaller consumer-facing law firms or AI-focused startups rather than brand-name corporate firms. Blackstone, for instance, invested in AI law firm Norm Ai. In January, fledgling private-equity firm Uplift Investors acquired Louisiana personal-injury firm Dudley DeBosier Injury Lawyers.”
• “Activity is continually increasing, though few deals are made public, said Trisha Rich, a partner at law firm Holland & Knight who helps structure MSO investments. Rich says she has completed 15 MSO transactions in the past six months and is working on about a hundred more.”
• “But just as private-equity investment is coming under scrutiny in the healthcare sector, more critics are asking whether this wave of private equity money will improve the legal profession.”
• “‘I don’t want private-equity investment in law to have the same consequences we’re seeing in the healthcare industry,’ said Colorado State Sen. Lindsey Daugherty, a Democrat who co-sponsored the bill in the Senate. Daugherty, who represents suburbs northwest of Denver, says she is already seeing evidence of more out-of-state corporate investment in Colorado’s legal field.”
• “The California bill, for instance, has the backing of the Consumer Attorneys of California, a lobby group. Saveena Takhar, senior legislative counsel for the Consumer Attorneys of California and a lobbyist for the bill, said she is not certain how much private-equity money is flowing into California’s legal field, but there are some indications—an increase in attorney advertising, for instance—that it is significant.”
• “This raises the possibility that undisclosed financial interests could be compromising the attorney-client relationship, she said. ‘Part of the problem is how opaque this all is,’ Takhar said.”
• “In Colorado, a bipartisan group of legislators on April 21 introduced their own bill, which among other changes would prohibit law firms from sharing revenue with nonlawyers. The bill has until May 13 to be approved by both chambers.”
• “The Illinois General Assembly in April passed a similar bill to bar private-equity interference in legal practices, and the measure is now under consideration in the Senate. “

David Kluft asks: “Did Microsoft Teams AI just secretly record my meet and confer with opposing counsel?” —

• “After the Court ordered the parties in a California federal litigation to meet and confer over an issue, Plaintiff’s counsel filed a report with the Court in which they accused Defendant’s counsel of making certain admissions during the call. As proof of these admissions, Plaintiff presented ‘transcripts that appear to have been automatically generated by an Artificial Intelligence tool associated with the video conference software (Microsoft Teams) utilized by the parties,’ which turned out to be Otter.ai.”
• “Defendant objected on the grounds they were ‘completely unaware that it was being recorded until after the meeting ended and an email permitting a download of the transcript was provided.’ It turns out that Plaintiff was also unaware of the recording and received the same email, and thought Defendant had somehow triggered the AI.”
• “The Court, careful to put the word ‘transcript’ in quotes, saw ‘no reason to engage in greater depth in the resulting disputes over the ‘transcript’ because: (1) neither party appears to have known enough about Otter.ai to have used it deliberately in an unlawful or improper way; and (2) the Court will not consider … any arguments based upon those ‘transcripts’ for the simple reason that no party has made any effort to demonstrate its accuracy or trustworthiness.'”
• Order: here.

“Chancery Imposes Attorneys’ Fees for Breach of Confidentiality Order” —

• “The Delaware Court of Chancery recently imposed attorneys’ fees in connection with a request for sanctions for violation of a Confidentiality Order in the matter styled Accelerant Twister, LLC v. Marjo, LLC, C.A. No. 2023-0887-LWW (Del. Ch. April 10, 2026).”
• “This short letter ruling followed a prior decision in this case to disqualify a putative expert, based on the court’s finding that there was a ‘meaningful failure to obey the clear terms’ of the governing Confidentiality Order. Slip op. at 2, n.2 (citing transcript of rulings from the bench after a hearing on January 23, 2026).”
• “During that hearing, after briefing, the court found that over 300-pages of confidential material were submitted to a designated expert nearly six months before the expert executed the required undertaking. Id.”
• “The court awarded reasonable attorneys’ fees incurred in ‘bringing and briefing’ the motion for sanctions as a remedy. Id.”
• “In the prior Bench Ruling, the court found that a conflict of interest provided grounds for disqualification based on the prior representation of one of the parties. The court also found that the Confidentiality Order was flouted by disseminating sensitive material to the putative expert months before he agreed to be bound by it. The award of attorneys’ fees was necessary to cover the time spent to investigate the violation and to litigate the contumacious behavior. Slip op. at 3.”
• “After a discussion about the reasonableness of hourly rates, the court concluded that a blended rate of just over $1,000 was reasonable under the circumstances, referring to Rule 1.5 of the Delaware Lawyers’ Rules of Professional Conduct and the economic survey for hourly rates conducted by the American Intellectual Property Law Association. Patent-related issues in this case were integral, and the attorneys who performed the work had specialized skills in various other areas of the law. The partners involved ranged in experience from 12 through 40 years of practice.”

“AI Is Taking Over Audit Functions. Accounting Needs to Get Ready” —

• “KPMG’s rollout of advanced artificial intelligence agents is the start of something structurally significant: a ‘K-shaped’ remodeling of professional services, in which the top accelerates, the bottom collapses, and the distance between them becomes the competitive question.”
• “Last week’s news that KPMG is cutting roughly 10% of its US audit partners is the K-shape made literal. The average partner whose economics rested on leverage rather than origination is being removed. The pyramid is being compressed from both ends at once. Graduate hiring is being switched off at the bottom, and the average partner is being asked to leave at the top.”
• “Thomas Mackenzie, KPMG’s audit chief technology officer, recently said that within two to three years there will be ‘next to no human beings’ performing routine audit testing at KPMG. This is the most honest thing any Big Four leader has said about the direction of the profession this year. Vouching, transaction testing, and other tasks that for decades defined early-career life in public accounting are being absorbed by AI agents.”
• “But what does this do to the pipeline that produced every audit partner currently signing opinions? Audit has always developed judgment through repetition—exposure to hundreds of small misstatements before forming a view on a material one. Remove this type of apprenticeship and you have removed the mechanism by which the profession reproduces itself.”
• “Mackenzie’s own framing was telling. He said he will no longer hire a college graduate to create workpapers. That is a reasonable shift in job design and a complete rewrite of the conditions under which professional judgment has historically been developed.”
  K-shaped Remodeling”
• “The upper arm accelerates. Exceptional partners do more because clients buy them rather than the firm behind them, and AI amplifies their output rather than substituting for it. The lower arm collapses due to commoditized delivery work, time-and-materials billing, standardized compliance output, and the average partner whose economics rested on leverage rather than origination. AI actively widens the gap between the two because the tools that amplify the top are the same tools that substitute for the bottom”
• “This plays out at a firmwide level, and we are seeing it in real time. Looking at the first-quarter 2026 data, firms that have already made the shift to their operating models are clearly outgrowing those that haven’t.”
• “This is a pricing reset. The bottom half of the market becomes cheaper, faster, and harder to differentiate. The top becomes more expensive, more concentrated, and more dependent on individuals rather than institutions.”
• “In audit, the partner is amplified, the senior manager is divergent, and the associate is substituted. Each category carries a different economic, organizational, and talent implication. The firms that are planning workforces at firm-average level rather than role-by-role are going to find themselves with the wrong people in the wrong places by 2028.”
• “The KPMG news signals a deeper shift: that the old assumption about professional services growing as a tide that lifts every firm equally is over. The firms pulling ahead share a recognizable profile.”
• “They are private equity-backed or well-capitalized; their leadership that has translated conviction into decisions rather than working groups. They are already rebuilding workflows around AI, creating proprietary intellectual property on top of foundational models and restructuring compensation to attract the partners the emerging model requires.”
• “The private equity community has moved past the question of whether AI disrupts professional services. It is underwriting assets on how seriously and how early management acted. If a firm is still in the monitoring phase, it has already answered the question—just not in the way leadership thinks it has.”