Risk Update

Attorney Conflicts Clashes — Called-‘Crook’ CEO Conflicts Cry Called Moot, IP Patent DQ Fight Feels Feisty

Posted Dan Bressler

“Appeals court rules convicted CEO doomed by evidence, not by attorney’s conflict of interest” —

  • “The 7th Circuit Court of Appeals ruled Tuesday that Barnes & Thornburg had a conflict of interest when defending James Burkhart against federal fraud charges, but that the disgraced CEO of American Senior Communities failed to show he suffered as a result.”
  • “Burkhart was charged with 32 counts and accused of participating in a scheme in which the nursing home operator’s vendors inflated their invoices and then kicked back profits to Burkhart and other company officials.”
  • “When federal agents executed a search warrant on Burkhart’s home in Carmel during the investigation, he contacted what is now Faegre Drinker Biddle & Reath. However, the firm declined to provide representation because of a conflict it had with the Health and Hospital Corp. of Marion County, which owned the nursing homes that American Seniors had been operating. HHC was one of the victims of the scheme, incurring financial losses.”
  • “On Faegre’s recommendation, Burkhart contacted Larry Mackey at Barnes & Thornburg and signed an engagement letter with the firm in September 2015. Apparently undisclosed and unknown to Burkhart at the time was that HHC was a client of Barnes & Thornburg as well.”
  • “After his sentencing, Burkhart learned of Barnes & Thornburg’s conflict of interest and filed a lawsuit in December 2018. He challenged his conviction and alleged the law firm’s conflict violated his Sixth Amendment right to effective counsel.”
  • “A Southern Indiana District Court ruled against the appeal. And on Monday, the 7th Circuit affirmed the ruling, agreeing that the conflict of interest did not ‘adversely affect Burkhart’s representation.'”
  • “‘Nobody disputes that Barnes & Thornburg was conflicted in its representation of Burkhart,’ Judge Michael Scudder wrote for the court. ‘The question is not close.'”
  • “However, the panel noted Burkhart had to go a step further by establishing that the conflict impaired his lawyer’s performance. In addition, because he resolved his case by a plea agreement, Burkhart must show that his counsel’s conflict affected both the attorney’s actions and the defendant’s decision to plead guilty.”
  • “The 7th Circuit reviewed Barnes & Thornburg’s actions and did not see any indication the firm acted contrary to Burkhart’s interests. During the 2 1/2 years the firm represented Burkhart, it moved to dismiss the charges, hired multiple experts, expired multiple defenses, developed trial exhibits and issued trial subpoenas. Also, it conducted three mock jury exercises which all ended with unanimous votes to convict and the jurors describing Burkhart as manipulative and greedy as well as being a crook.”

“DraftKings Wants Firm DQ’d From Gaming Patent Row” —

  • “DraftKings wants a New Jersey federal court to disqualify Shore Chan LLP from representing an online betting-related patent owner in an infringement lawsuit, arguing that attorneys at the firm are inventors and that they should not be able to get the betting giant’s confidential information.”
  • “DraftKings said Shore Chan attorneys Michael W. Shore and Alfonso G. Chan are inventors who have issued patents and pending patent bids on the kinds of patents-at-issue in the present case. DraftKings argued that it will have to hand over confidential information on the case, and that ‘there is significant risk of misuse’ of such information.”
  • “If the court doesn’t grant DraftKing’s bid, the company wants other relief, such as blocking Shore Chan from being able to see any of DraftKing’s confidential information.”
  • “Shore said that ‘the motion was filed by DraftKings because they and their outside counsel are scared to death of facing Shore Chan’s team in trial,’ and added that ‘the motion will be denied because it is completely, utterly and totally meritless… Taking the arguments of DraftKings to their illogical conclusion, Baker Botts represents multiple clients in active prosecution of patent portfolios that DraftKings likely infringes, but DraftKings has no issue with Baker Botts’ lawyers seeing their confidential information without first banning Baker Botts from prosecuting patents in the technology areas where DraftKings operates,’ Shore said.”