David Kluft asks: “Am I disqualified if my firm is merging with a firm that represents the opposing party’s corporate affiliate?” —

• “An AL plaintiff sued a corporation for discriminatory termination. After the litigation commenced, the plaintiff’s counsel’s firm merged with another firm that had been hired by a corporate affiliate of the defendant in an unrelated litigation.”
• ” The defendant moved to disqualify plaintiff’s counsel, but the Court denied the motion. The Court held there was no conflict because the corporate affiliates were distinct corporate entities and, under an old Alabama bar ethics opinion, a lawyer may sue a parent company while representing a wholly owned subsidiary in an unrelated litigation, provided the separate identity of the companies prevents the risk that confidential information will be misused.”
• ” The Court also explained that the cases were being handled by geographically distinct offices of the newly merged firm, and the attorneys on the respective matters would have no communication with each other.”
• Decision: here.

“Iowa Supreme Court rules for Democratic auditor in dispute with GOP AG” —

• “What began as controversy over settlement agreements for three Davenport city officials who alleged they had been harassed has resulted in a win for Iowa State Auditor Rob Sand over Iowa Attorney General Brenna Bird after the state Supreme Court sided with Sand’s office.”
• “Bird, a Republican who’s often been at odds with Sand, the sole statewide elected Democrat, argued in the case leading to the Friday, Dec. 5, ruling that her office, as the state’s legal counsel, should represent the auditor’s office in an ongoing court case regarding the legality of the settlement agreements for the Davenport employees. Sand, a lawyer and former state assistant attorney general, contended that his office should be able to represent itself.”
• “At issue was Sand’s allegation that Davenport may have violated open-meetings laws when its City Council approved the settlements, totaling $1.8 million, in December 2023, weeks after they were announced and months after they were signed.”
• “Sand noted the council had held closed sessions to discuss litigation around the period when the settlements were made and again before its vote. His office called Davenport’s city attorney, who allegedly approved the settlements without council authorization, a ‘walking audit risk’ and suggested the city lacks effective internal legal controls over expenditures.”
• “Iowa District Judge Jeffrey Bert did not rule that Sand could see the closed meeting records. But in a May 2024 order, Bert found that Sand’s office could access attorney-client protected information, as opposed to the separate category of ‘attorney work product,’ and he ordered the city to provide the records to him for his private review to determine which category applies in this case.”
• “Davenport appealed, arguing that both attorney-client communications and attorney work products should be protected from the auditor’s subpoena under Iowa law.”
• “According to the Supreme Court’s 6-0 ruling, written by Justice Edward Mansfield, Bird’s office in an initial brief backed Sand’s position that state law entitles his office to request attorney-client communications. But the day before that brief was due, she advised him she was removing that part of the brief and would refuse to argue for that position. The ruling said she explained that she disagreed and that the position was unlikely to succeed.”
• “Sand then filed his own brief through the general counsel for his office and Asked the court to block the brief from Bird’s office, the ruling said.”
• “Sand and Bird’s clash reflects a broader disagreement stemming from the Republican-dominated Iowa Legislature’s 2023 passage of a law that limited Sand’s ability to force state agencies to provide documents. Sand in a statement suggested Bird ‘doesn’t want the Auditor’s Office to argue we should get this evidence of waste, fraud and abuse, because that could lead to us getting evidence about other waste, fraud and abuse in other cases.'”
• “Bird’s office described her dispute with Sand as a disagreement not over the scope of the auditor’s power but about legal strategy.”
• “‘Iowa law makes clear that it is the job of the Attorney General’s Office to represent the state in court, not the auditor’s. We have checks and balances for a reason,’ Bird said in a statement. ‘As we have thoroughly discussed with the auditor’s team, our brief makes the most sound and strategic arguments to help the state win its case in court.'”
• “The Supreme Court in its ruling found that the Attorney General’s Office has a conflict of interest in representing Sand’s office because the ‘she believes it would be disadvantageous to the state as a whole’ to allow the auditor’s office to view the attorney-client records.”
• “‘The auditor wants to argue for affirmance of the district court’s view of the auditor’s legal authority, and the attorney general does not want to do so in part because of legitimate concerns about the impact such a decision would have on other state officers and agencies,’ Mansfield wrote. ‘That’s a conflict.'”
• “Also at issue was whether the auditor’s office needed the approval of the Executive Council of Iowa — a state board comprised of Sand, Gov. Kim Reynolds, Secretary of State Paul Pate, State Treasurer Roby Smith and Agriculture Secretary Mike Naig — to use alternative counsel if the Supreme Court disqualified Bird’s office.”
• “The court found that state law requires executive council approval to use paid attorneys outside of state government, not attorneys already working for the state, as was the case with Sand’s office. Mansfield noted in his opinion that Sand’s office previously represented itself in a 2021 case before the Supreme Court.”

“‘A masterful coup’: law firm behind Musk pay lawsuit faces internal revolt” —

• “In early 2024, two hard-nosed lawyers who had just helped defeat a $55bn pay package for Tesla chief executive Elon Musk gave an exultant talk at Columbia Law School detailing their stunning triumph over the world’s richest man. Now those two star partners, Greg Varallo and Jeroen van Kwawegen, are at the centre of an ugly rupture at the powerhouse shareholder law firm Bernstein, Litowitz, Berger & Grossmann.”
• “On Thursday, van Kwawegen announced he had departed BLB&G to form his own firm, JVK Law, and that about a dozen lawyers representing virtually the entire BLB&G corporate governance practice, as well as additional support staff, would soon join him.”
• “Coincidentally or not, a decision from the Delaware Supreme Court on Musk’s pay package is expected any day and will give final word on both the cancellation of the $55bn arrangement and a $345mn attorney’s fee award which mostly accrues to BLB&G.”
• “In an interview with Bloomberg Law on Thursday announcing his new firm, van Kwawegen said he ‘had a fundamentally different vision about what the law firm should look like, what the culture is that you should have and whose interests you should be serving first’, an apparent criticism of his previous firm’s management.”
• “BLB&G later fired back in a statement, saying it was ‘disappointed that Mr van Kwawegen has made misleading statements about his departure from the firm’.”
• “BLB&G added that van Kwawegen had not left voluntarily but had been terminated after the firm’s leadership determined that he ‘engaged in misconduct that was inimical to the best interests of the firm’. The firm declined to specify the nature of the alleged misconduct.”
  “In any instance, the public fracas has rocked an important corner of corporate law just as regulators and politicians are seeking to shift the legal balance between companies and investors. ‘Jeroen has pulled off a masterful coup. My hat is tipped,’ said one rival shareholder lawyer.”
• “BLB&G was founded in 1983 and has more than 100 lawyers across the US. It made its name in federal securities law litigation, typically bringing class action lawsuits on behalf of shareholders against listed companies, alleging that sharp drops in stock price were the result of disclosure failures.”
• “Varallo and van Kwawegen, on behalf of BLB&G, had petitioned the court for a $7bn fee in the form of Tesla shares for the victory in the pay package case, a figure that shocked even some plaintiff law firms who were otherwise sympathetic to BLB&G. The trial court knocked down that number to $345mn, still the largest single award in Delaware history, should the state’s supreme court confirm it.”
• “At the same time, the future of Delaware corporation litigation remains uncertain as the state has recently enacted sweeping changes to protect boards of directors from shareholder lawsuits. The legislature is also considering a new law to potentially reduce fees paid to lawyers who win big settlements or judgments.”
• “For now, the legal community is looking to see which clients stay with the reconstituted BLB&G governance group and which land at JVK Law, which will have to determine how to underwrite the considerable investment in contingency cases.”
• “The drama at the firm that took down Musk has not escaped the entrepreneur’s fans on X. ‘When 8+ partners walk out [of BLB&G] citing concerns about whose interests the firm serves, that’s not just a personality conflict — that’s a crisis of purpose,’ read one X post on Thursday.”