Risk Update

Ethics and Conflicts News — Ethics of Joint Representation of Guardian and Care Facility, Firm Accused of Conflict and Fraud Conspiracy, Former GC Faces Self-dealing Lawsuit, Spotlight on DOJ and Attorney Recusals

Posted Dan Bressler

David Kluft asks: “Can I represent a long-term care facility at the same time I represent a resident’s guardian?” —

  • “WA Bar Opinion 2025-01 addresses lawyers for long-term care facilities who are asked by their clients to petition a court to have a guardian or conservator appointed for a resident, for example when the resident no longer has capacity to make informed decisions. Sometimes the lawyers are asked also to represent the guardian or conservator once they are appointed.”
  • “The WA Bar opines that because a guardian’s fiduciary responsibilities to the resident are broad, there are many instances in which the interests of the resident, as identified by the guardian, will conflict with the interests of the facility. Therefore, there would be few cases in which such conflicting representations would be consentable/waivable.”
  • “The WA Bar felt there was a little more leeway for conservators, who have a narrower focus on money, and therefore if there are no disputes over money the dual representation may be consentable.”
  • Opinion: here.

“Client accuses Willkie of conspiring to commit $735M fraud scheme” —

  • “A Willkie Farr & Gallagher client has accused the law firm of aiding and abetting a $735 million fraud scheme related to a take-private deal for another one of its clients.”
  • “In a complaint filed in New York state court Tuesday, BRC Group Holdings said Willkie allegedly helped former Franchise Group Inc. CEO Brian Kahn hide federal investigations into earlier fraudulent conduct while assisting with a take-private deal that involved both clients.”
  • “According to Law.com, BRC Group Holdings also alleged that Willkie and Kahn worked together to hide crucial information and move the deal forward, which caused BRC Group Holdings to lose $735 million and Franchise Group to go bankrupt in 2024.”
  • “At the time of the deal, Kahn was under active investigation by the U.S. Department of Justice for committing fraud against another now-defunct company, Prophecy Asset Management, and had substantial debts related to a settlement agreement, the complaint says.”
  • “Law.com reports that Kahn pled guilty to conspiring to commit securities fraud against Prophecy Asset Management in federal court in December.”
  • “‘Willkie’s misconduct is particularly egregious,’ according to the complaint. ‘While simultaneously representing BRC as litigation counsel, Willkie prepared transaction documents for Kahn containing representations Willkie knew to be false, failed to disclose material conflicts of interest, and actively assisted Kahn in obtaining consents from the Prophecy settlement trust—all while remaining silent about these facts to its client BRC.'”
  • “In an email to Law.com, a Willkie representative said ‘the facts will make clear that our firm acted appropriately and with integrity at all times, consistent with our values and all ethical obligations.'”

“Manufacturer Files Self-Dealing Lawsuit Against Former Deputy GC” —

  • “The San Jose, California-based arm of Singapore electronics giant Flex Ltd. has accused a former deputy general counsel of self-dealing—alleging that while employed as Flex’s lead IP attorney, he transferred company patents to a startup he co-founded called AutoConnect while keeping his tie to that business secret.”
  • “In a 28-page suit filed last week in federal court in San Francisco, Flex accuses Christopher Ricci of fraud, breach of fiduciary duty, fraudulent inducement and misappropriation of trade secrets.”
  • “After obtaining the patents, AutoConnect filed patent-infringement suits against Flex customers Ford, General Motors and Toyota. Some of these patents involved Ford’s SYNC voice-activated entertainment system—parts of which were supplied by Flex.”
  • “In the suit, Flex said it wasn’t aware that Ricci had ties to Manassas, Virginia-based AutoConnect until last year, when it responded to discovery requests from GM and Toyota as they prepared a defense against AutoConnect’s patent-infringement suits.”
  • “Flex said that process unearthed documentation that Ricci co-founded AutoConnect in 2015 with two partners—an arrangement that put him on both sides of the patent-transfer agreement. ‘Unsurprisingly,’ the suit says, terms of the agreement were ‘unreasonably favorable to AutoConnect.'”
  • “Ricci—whose LinkedIn account makes no mention of working for AutoConnect—today is CEO of Marco Island, Florida-based Impel Advantage, which he describes as an insurtech startup.”
  • “At the heart of the dispute is a portfolio of patents Flex sought to monetize. As Flex’s lead IP attorney in 2015, Ricci divested the portfolio to AutoConnect in exchange for a $500,000 promissory note, the complaint states.”
  • “Last June, Flex sent AutoConnect a written notice of default on the note. It said AutoConnect failed to pay or transfer the patents within 10 days. AutoConnect failed to comply, the suit states.”
  • “The complaint alleges Ricci took a number of actions that constituted self-dealing. For example, the patent-transfer agreements required Flex to pick up costs of patent prosecution and maintenance fees.”
  • “More significantly, the suit alleges Ricci did not include in the promissory note or in subsequent addenda a ‘grant-back’ clause that presumably could return the patents to Flex if AutoConnect defaulted.”
  • “‘No reasonable attorney acting in Flex’s best interests would have proposed, let alone agreed to, the terms of the note and the first addendum.'”
    Flex also alleges Ricci reached a deal with AutoConnect partners to become a one-third owner of the company after he left Flex.”
  • “‘At no point did Ricci inform Flex AP of Ricci’s financial interest in AutoConnect or the fact that Ricci was also providing legal advice to AutoConnect,’ wrote an attorney for Flex, Ashley Hyun-Jeong Kim of Bryan Cave Leighton Paisner.”
  • ‘This conflict of interest was in violation of several ethical rules governing Ricci’s conduct as Flex and Flex AP’s lawyer.'”

“DOJ Moves to Eliminate Attorney Recusals in Sweeping Power Shift” —

  • “The Trump administration is preparing to upend a foundational safeguard of the Department of Justice, according to three senior administration sources, by proposing a rule that would effectively bar DOJ attorneys from recusing themselves from cases due to conflicts of interest.”
  • “The rule, expected to be filed in the Federal Register as early as this week, would grant Attorney General Pam Bondi final authority over all recusals. Under the proposal, career prosecutors and political appointees alike would be required to remain on assigned matters unless personally excused by the attorney general. There will be a period for public comment once the rule appears in the Federal Register.”
  • “Legal experts warn the move would dismantle a century-old norm designed to insulate federal prosecutions from political pressure and personal bias.”
  • “Current DOJ standards require attorneys to step aside from cases that present even the appearance of a conflict of interest, a principle codified in federal statute and reinforced through decades of internal ethics rules. The proposed policy would reverse that presumption entirely, transforming recusal from a duty into a privilege controlled at the top of the department.”
  • “Once published, the no-recusal rule is expected to face immediate legal challenges on multiple fronts.”
  • “Opponents are likely to argue that the change violates the Administrative Procedure Act, which requires a reasoned explanation for abrupt reversals of long-standing policy. Civil liberties groups are also expected to raise due process concerns, arguing that forcing a conflicted prosecutor to remain on a case undermines a defendant’s constitutional right to a fair trial.”
  • “Additionally, critics point to federal law requiring the attorney general to maintain regulations governing disqualification for conflicts of interest, a mandate the new rule may directly contradict.”
  • “If the rule is formally proposed, it will trigger a mandatory public notice-and-comment period. Legal professionals, advocacy groups, and members of the public will have the opportunity to submit objections and analysis through the Federal Register.”
  • “Whether the courts ultimately block the policy or allow it to stand, the proposal signals a dramatic redefinition of prosecutorial ethics, one that shifts power away from professional judgment and firmly into political hands.”