Bressler Risk Blog

“Bankruptcy Court Can Convert a Case Due to a Conflict of Interest, Even in a Subchapter V” —

• “In In re Ghatanfard, No. 24-CV-2858 (CS), 1 (S.D.N.Y. Nov. 7, 2024), the U.S. District Court for the Southern District of New York affirmed a decision by the U.S. Bankruptcy Court for the Southern District of New York converting a debtor’s Subchapter V case to a Chapter 7 case. In particular, the district court found that the bankruptcy court’s decision to convert was not an abuse of discretion, especially in light of the serious conflicts of interest that existed between the debtor and the potential target of significant fraudulent transfer claims held by the debtor’s estate.”
• “In 2017, former restaurant worker Pavle Zivkovic, on behalf of himself and his fellow employees (the class action creditors), sued his former employer, Laura Christy Midtown LLC (Laura Christy) and its owner, David Ghatanfard (Ghatanfard). On June 22, 2022, Zivkovic was awarded $650,000 in punitive and compensatory damages for his individual claims and the class action creditors were awarded $4.5 million in damages.”
• “In their post-judgment collection efforts, the class action creditors discovered that Ghatanfard had rendered himself insolvent as a result of various transactions and transfers to his ‘life partner,’ Rosey Kalayjian, with whom he lived and shared a bank account, and who has worked in several restaurants owned by him. In particular, the class action creditors discovered that Ghatanfard transferred to Kalayjian the sum of: $1.2 million from the sale of a home he owned; $675,000 he had received from Laura Christy; $600,000 from the sale of another restaurant; and $1.4 million from the refinancing of another one of his houses located in Southampton, New York. In addition, Ghatanfard also recorded a deed transferring title to the Southampton home from his individual ownership to a joint ownership with Kalayjian. Furthermore, right before the class action judgment was entered, Ghatanfard transferred to Kalayjian 90% of his ownership in a limited liability company called Oak Grove Road LLC that owned a 50% stake in Valbella at the Park LLC.”
• “On Feb. 12, 2024, Ghatanfard filed his Subchapter V plan of reorganization, in which he proposed to fund the plan by paying $1,700 monthly payments along with a lump sum payment of $500,000 to be obtained from Kalayjian in settlement of any and all claims against her, including, without limitation, the fraudulent transfer claims.”
• “On April 11, 2024, after oral argument on the motion to convert, the bankruptcy court entered an order converting the case, stating that it had found cause for dismissal or conversion, including the Ghatanfard’s conflicts of interest in pursuing potential fraudulent transfer claims and other claims of the estate to his ‘life partner’ Kalayjian. Given the class action creditors’ opposition to expanding the powers of the Subchapter V trustee, a decision in which the bankruptcy court expressed disappointment in since with their consent, the Subchapter V trustee would have had the power to pursue avoidance actions, the bankruptcy court concluded that conversion to Chapter 7 was the only appropriate remedy. Ghatanfard filed a notice of appeal on April 12, 2024.”
• “Initially, the district court found that it had standing to hear the appeal in light of a Chapter 7 trustee having already been appointed in the bankruptcy case during the pendency of the appeal. The district court denied Ghatanfard’s argument that he was an ‘aggrieved’ person because he has stage IV cancer, had been denied confirmation of his Subchapter V plan, and was forced to spend ‘what could be his final days’ in bankruptcy and litigation involving his longtime partner. However, rather than directly addressing whether the debtor had standing, the district court turned to the merits of the case.”
• “Upon review, the district court’s standard of review was under an abuse of discretion standard and, as such, found that the bankruptcy court’s decision to convert the case due to the significant conflicts of interest was not a reversible error, despite the fact that the bankruptcy court did not list any of the additional factors under Section 1104 of the Bankruptcy Code for converting the case. In point of fact, the district court found that there clearly was cause for conversion due to the ‘irreconcilable conflict of interest in terms of assessing where various assets had gone and whether they were appropriately transferred from Ghatanfard to other parties,’ and that conversion to Chapter 7 would allow for a trustee with ‘both the ability to investigate and the ability to act’ as opposed to the limited powers of a Subchapter V trustee.”
• “The district court also rejected Ghatanfard’s argument that it was reversible error for the bankruptcy court to convert the case rather than expand the powers of the Subchapter V trustee. In particular, Ghatanfard argued that the bankruptcy court committed reversible error in converting his case instead of expanding the Subchapter V trustee’s powers. As noted by the district court, under Section 1112(b) of the Bankruptcy Code, a court is not required to expand the Subchapter V trustee’s powers. Furthermore, expansion of the Subchapter V trustee’s powers, in this case, would have only permitted the Subchapter V trustee to investigate and report on the debtor’s pre-petition actions and transfers, but, absent creditor consent, the Subchapter V trustee (unlike a Chapter 7 trustee) lacked standing to bring the requisite avoidance actions against Kalayjian.”
• “As a consequence, the district court found that the bankruptcy court’s decision that the expansion of the Subchapter V trustee’s powers would be insufficient in light of the facts and circumstances of the case was not an abuse of discretion.”

“Law firm Simpson Thacher agrees to UK fine over money laundering rule breaches” —

• “U.S. law firm Simpson Thacher & Bartlett was fined 300,000 pounds ($389,069) on Wednesday over breaches of anti-money laundering rules at its London office.”
  The firm agreed to a settlement with the Solicitors Regulation Authority (SRA), which regulates solicitors in England and Wales, under which Simpson Thacher will also pay 62,000 pounds towards the SRA’s legal costs.”
• “Simpson Thacher admitted failing to have a firm-wide risk assessment between June 2017 and March 2020, as required by British money laundering regulations.”
  It also accepted not having a fully-compliant firm-wide risk assessment from March 2020 until February 2023, after the SRA announced it was bringing a regulatory case in August.”
  The SRA did not allege Simpson Thacher’s admitted breaches led to any money laundering, but the regulator said in court filings that they created ‘an increased risk of money laundering’.”
• “A spokesperson for Simpson Thacher said in a statement that the firm’s London office ‘acknowledges and regrets certain historic shortcomings in some of our UK AML (anti-money laundering) written policies’.”
• “An SRA spokesperson said in a statement: ‘Money laundering is not a victimless crime and can have detrimental effects on many, many people. Solicitors have an important role to play in keeping the profits of crime out of the profession and the wider UK economy.'”
• “Simpson Thacher is the latest major law firm to face disciplinary action over alleged breaches of money laundering regulations.”
  “Global law firm Clyde & Co was last year fined 500,000 pounds after admitting multiple breaches of money laundering regulations relating to a long-standing client.”
• “The SRA’s prosecution of fellow global firm Dentons was dismissed by the Solicitors Disciplinary Tribunal in March. But that decision was overturned on appeal on Tuesday and the SRA’s case was sent back to the tribunal.”

“SXSW Privacy Discussion: The Rising Risks Lawyers Can’t Ignore” —

• “On Friday afternoon at SXSW, Meredith Whittaker, CEO of Signal, painted a sobering and downright alarming picture of the modern privacy landscape. Whittaker argued that the world today is more surveilled than ever before, with a handful of corporations and governments wielding unprecedented access to our personal data. Her comments highlighted the risks that everyone — but especially lawyers, given our duty of confidentiality — need to take seriously.”
• “Whittaker noted that privacy is not a luxury; it is a fundamental condition for free thought, secure relationships, and democratic engagement. Yet, we live in an era where every message, search query, and interaction is recorded, stored, and could potentially be weaponized against us. The sheer volume of data collected by companies like Google, Meta, and telecommunications providers creates vast vulnerabilities. Whether through government subpoenas, corporate data sales, or hacking incidents, this information is accessible in ways many of us just don’t fully appreciate.”
• “To illustrate her point, Whittaker posed a chilling hypothetical that quieted the room: Every single message you’ve ever sent in your life is suddenly on a database and a link just got sent to everyone you know. That’s your boss, that’s your best friend, that’s your dad’s best friend, that’s the weird guy who comes to your Thanksgiving. That’s everyone you know, and they click on that link, and they can access that database. And there’s a little AI bot that’s like appended onto that database so they can quickly summarize everything in that database, search their name. Search that one time you told that weird lie because you hadn’t had coffee, searched that time you taught shit on your best friend because you were in a weird place…Search that message to your doctor? Search that thing you sent to your colleague that was really mean about your other colleagues, search your prescription information. Search the time you talk to a union organizer, search the time you reported corruption at your workplace with journalists, all of that is on there.”
• “As large language models and AI become more powerful, it will become even easier for an AI bot to summarize and search everything, exposing your personal, professional, and even legal conversations. Whittaker says this is not science fiction; it reflects today’s reality.”
• “Why Lawyers Should Care. For lawyers, the implications of these privacy risks are particularly critical. Attorney-client privilege and confidentiality are not just ethical obligations, they form the very basis of attorney client relationships. Lawyers need to be aware of and comply with their ethical duty to protect “information relating to the representation of a client.” They also need to understand and satisfy the ethical obligation to understand the risks and benefits of technology under the rules of professional responsibility. At a minimum, these duties require lawyers to be informed of the threats technology poses to client confidentiality.”
• “Moreover, both lawyers and clients need to be secure in the knowledge that their conversations are protected and not easily accessible to others. Lawyers also need to be prepared to advise clients on privacy risks and how to mitigate them.”
• “Metadata Matters: Even when message content is encrypted, metadata — who you talk to, when, and how often — can reveal critical details. As Whittaker noted, metadata to can be used to track relationships, map influence networks, and uncover confidential activities. In legal matters, this could expose privileged consultations, witness communications, or legal strategies.”
• “Given these risks, lawyers and legal professionals should think through their approach to digital communications. Steps to consider include:
  • Limiting the Use of Commercial Messaging Apps: Mainstream platforms like WhatsApp, iMessage, and Telegram may offer some encryption, but they still collect metadata and, in some cases, retain message content. Lawyers should avoid discussing sensitive matters on these apps.
  • Implementing Secure Communication Protocols: Law firms and legal departments should prioritize end-to-end encryption tools that minimize data collection and do not store metadata.
  • Educating Clients on Privacy Risks: Confidentiality doesn’t just depend on lawyers; clients also need to understand the risks of discussing legal matters on insecure channels both when talking to their lawyers and in their day-to-day business activities.
  • Challenging Data Retention Policies: Many tech companies store years’ worth of messages, call logs, and search history. Lawyers should advocate for stricter data retention limits and ensure their own firms do not store unnecessary digital records that could later be subpoenaed or hacked.”

“Avoiding Legal Ethics Minefields in Parallel Investigations” —

• “If recent events are any indication, the use of parallel investigations in the U.S. is expected to widen, and with it, the need for attorneys to navigate ethics quagmires.”
• “The breadth of such investigations has expanded in recent years to include, for example, educational institutions hauled before Congress to testify about campus antisemitism. Now, diversity, equity and inclusion (DEI) programs are expected to be under scrutiny by Congress and the administration.”
• “William J. Murphy and Catherine S. Duval, leaders of Zuckerman Spaeder’s Legal Profession and Ethics practice, who represent clients in parallel investigations, say they expect that scope to continue to broaden, given the political and governmental climates. That means increased pressure on lawyers who counsel clients in simultaneous criminal, civil, congressional, regulatory and administrative matters.”
• “As Murphy explains, it’s like looking around the corner to figure out whether the course taken in one setting will ‘blow up in a way that’s going to harm your client in some future setting that you may not yet anticipate… Things that the lawyers might ordinarily think were protected by privilege or by their work product may not be. Or a court may rule that the privilege no longer applies.'”
• “One unique challenge is that Congress does not recognize attorney-client privilege. ‘If you are producing something to Congress, they will press for material that would not be discoverable in another context. But once it is produced somewhere, that could vitiate the privilege protection somewhere else,’ says Duval.”
• “‘Attorneys have ethical and other obligations to preserve their clients’ secrets and privileges. But you’ve got a congressional entity saying that they trump that,’ she adds.”
• “Another challenge is confidentiality, so knowing the ground rules is crucial. ‘There are entities that won’t guarantee confidential treatment,’ and may even post the materials at issue to a public website, Duval says.”
• “Furthermore, when it comes to appealing an order to produce documents, the likelihood of success varies, according to Murphy. In some jurisdictions, ‘someone has to be held in contempt and refuse to comply with the order’ to make it appealable, he says.”

“Payday Lender Gets Appeal On Lawyer’s Blackmail Conflict” —

• “The Second Circuit has decided to let a former payday lending executive, now incarcerated on charges that he ran a fraudulent $2 billion lending scheme, move ahead with a new appeal after hearing that his trial counsel faced blackmail from another client.”
• “A circuit panel found Tuesday that ex-payday exec Scott Tucker argues convincingly that his appointed lead trial lawyer, Lee Alan Ginsberg, faced a conflict when he cooperated during Tucker’s trial with prosecutors from the Southern District of New York in an unrelated blackmail case.”
• “‘Specifically,’ the panel said, ‘the COA is granted as to the following issue only: Whether an unwaivable conflict was presented where petitioner’s appointed trial counsel engaged in a proffer session with members of the same U.S. Attorney’s Office that was prosecuting petitioner, about two weeks into petitioner’s trial, because trial counsel faced potential criminal exposure for matters not related to the charges against petitioner, and the district court did not appoint petitioner independent counsel for the Curcio hearing.'”
• “A Curcio hearing is a proceeding aimed at ensuring that a client understands his attorney’s potential conflicts of interest.”
  “Tucker’s current lawyer, Benjamin Silverman, told Law360 in an email that he and his client are grateful that the court ‘is taking seriously what happened to Scott Tucker’ and the errors that compromised his trial.”
• “‘Last month, the government presented only procedural defenses without even attempting to defend what happened at the trial in 2017,’ Silverman wrote. ‘The more that comes to light, the clearer it becomes that the convictions must be vacated.'”
• “But filings that weren’t seen during the first appeal show that lead trial counsel Ginsberg during the trial was cooperating with SDNY prosecutors in the blackmail case.”
• “‘I was blackmailed and defrauded by a former client,’ a Ginsberg affidavit said.”
• “That wrinkle emerged in the middle of Tucker’s trial and prompted a semi-secret conflicts hearing called by Judge Castel on Sept. 25, 2017, during which, according to March 4 statements, Tucker waived any conflict and elected to keep Ginsberg as his attorney and go forward.”
• “The blackmail had nothing to do with Tucker or his case, but it put Ginsberg in the uncomfortable position of working with prosecutors from the same office that was seeking to convict his client, according to filings.”
• “Judge Castel, citing myriad factors, concluded in an opinion last year that the blackmail case did not cause Tucker sufficient prejudice as to allow him a second shot in the circuit.”
• “But that didn’t seem to sit well Tuesday with Judge Merriam, who noted that no independent conflicts lawyer was on hand to advise Tucker during his long-ago Curcio hearing.”
• “Judge Merriam also wondered whether other members of Tucker’s team, including Ginsberg’s trial co-counsel Beverly Van Ness — who also represented Tucker during his first appeal — were also conflicted.”
• “Judge Merriam called it a ‘Catch-22’ in which Tucker’s appellate lawyer was ‘potentially not in a position to raise the argument that he now wishes to raise’ either because of incomplete knowledge of the blackmail issue or the fact that she also was on the trial team.”

“Law firm targeted by Trump could have been ‘destroyed,’ chairman says in explaining deal with Trump” —

• “The chairman of a prominent law firm who cut a deal with President Donald Trump last week to avert the consequences of a White House executive order told colleagues in an email Sunday that he did so because the order ‘could easily have destroyed our firm’ and put it out of business.”
• “The message from Brad Karp offers the most detailed public explanation yet about the decision to make significant concessions to the White House in the face of an executive order that targeted his firm, Paul, Weiss, Rifkind, Garrison & Wharton.”
• “The resolution triggered an intense backlash within the legal community, with lawyers criticizing the firm for capitulating to Trump rather than standing up to him, particularly at a time when he’s using the power of the presidency to threaten the livelihoods of attorneys and companies he believes have crossed him. The deal also reinforced Trump’s recent success in extracting concessions from a broad swath of targets, in both academia and private industry, who have opted to compromise rather than fight.”
• “In an email to Paul Weiss employees obtained by The Associated Press, Karp described the order as having presented an ‘existential crisis’ for the firm. He said it was very likely the firm would not have survived a protracted fight with the Trump administration.”
• “‘The executive order could easily have destroyed our firm,’ Karp wrote. ‘It brought the full weight of the government down on our firm, our people, and our clients. In particular, it threatened our clients with the loss of their government contracts, and the loss of access to the government, if they continued to use the firm as their lawyers. And in an obvious effort to target all of you as well as the firm, it raised the specter that the government would not hire our employees.'”
• “Karp wrote that the firm was initially prepared to challenge the executive order in court, something another law firm targeted with a Trump executive order, Perkins Coie, has done. Even as a team of attorneys prepared a complaint, he said, ‘it became clear that, even if we were successful in initially enjoining the executive order in litigation, it would not solve the fundamental problem, which was that clients perceived our firm as being persona non grata with the Administration.'”
• “He also said that the support he hoped the firm would receive from other law firms never materialized.”
• “‘Disappointingly, far from support, we learned that certain other firms were seeking to exploit our vulnerabilities by aggressively soliciting our clients and recruiting our attorneys,’ he wrote.”
• “Against that backdrop, when the firm learned that the administration might be willing to cut a deal, it sought to do so and negotiated a settlement in a ‘matter of days.'”
• “‘I know many of you are uncomfortable that we entered into any sort of resolution at all. That is completely understandable,’ Karp wrote to his colleagues, adding that ‘there was no right answer to the predicament in which we found ourselves.'”
• “He added: ‘It is very easy for commentators to judge our actions from the sidelines. But no one in the wider world can appreciate how stressful it is to confront an executive order like this until one is directed at you.'”

“Keker, Van Nest & Peters Responds to Presidential Memo ‘Preventing Abuses of the Legal System and the Federal Court’” —

• “Trump’s new memo underscores how far removed this President, Attorney General and Administration are from our nation’s Constitution and bedrock values. Our liberties depend on lawyers’ willingness to represent unpopular people and causes, including in matters adverse to the Federal Government. An attack on lawyers who perform this work is inexcusable and despicable.”
• “Our profession owes every client zealous legal representation without fear of retribution, regardless of their political affiliation or ability to pay.”
• “We encourage law firm leaders to sign on to an amicus effort in support of Perkins Coie’s challenge to the Administration’s executive order targeting the firm, and to resist the Administration’s erosion of the rule of law.”

“Law Firm Bends in Face of Trump Demands” —

• “President Trump and the head of the law firm Paul, Weiss, Rifkind, Wharton & Garrison LLP have reached a deal under which Mr. Trump will drop the executive order he leveled against the firm, Mr. Trump said on Thursday. [3/20]”
• “In the deal, Mr. Trump said, the firm agreed to a series of commitments, including to represent clients no matter their political affiliation and contribute $40 million in legal services to causes Mr. Trump has championed, including ‘the President’s Task Force to Combat Antisemitism, and other mutually agreed projects.'”
• “It’s unclear how the money will be used to help the task force. The firm, Mr. Trump said, also agreed to conduct an audit to ensure its hiring practices are merit based ‘and will not adopt, use, or pursue any DEI policies.'”
• “The deal materialized after the head of the firm, Brad Karp, went to the White House this week and had a face-to-face meeting with Mr. Trump to discuss a resolution. Members of the legal profession said in interviews that they were surprised by the deal, as it appears as if the firm — which is dominated by Democrats and has long prided itself in being at the forefront of the fight against the government for civil rights — was capitulating to Mr. Trump over an executive order that is likely illegal.”
• “The agreement is a significant development in the retribution campaign Mr. Trump has opened against several top law firms that he sees as having supported efforts to help his opponents or unfairly prosecute him. And it is the latest demonstration of how Mr. Trump has used his power to extract concessions or public signs of support for his agenda from corporate leaders, news organizations and others since his election victory in November.”
• “The White House said that Mr. Karp had acknowledged ‘wrongdoing’ by one of the firm’s former partners, Mark F. Pomerantz. Mr. Pomerantz had tried to build a criminal case against Mr. Trump several years ago while working at the Manhattan district attorney’s office. It was not clear what wrongdoing Mr. Trump was referring to.”
• “‘The president is agreeing to this action in light of a meeting with Paul, Weiss Chairman, Brad Karp, during which Mr. Karp acknowledged the wrongdoing of former Paul, Weiss partner, Mark Pomerantz, the grave dangers of Weaponization, and the vital need to restore our System of Justice.'”
• “Thursday’s deal applies only to the executive order against Paul, Weiss. It’s not clear what effect, if any, it will have on the orders targeting other firms or whether it will lead Mr. Trump to back off his stated intention to go after more of them.”

“‘Why Are You Remaining Silent?’ Some Clients Expect Big Law Public Response on Executive Actions” —

• “Most Big Law firms, in keeping silent about the Trump administration’s actions against law firms, are concerned they could harm their clients or business if they were to speak publicly against the government. But some general counsel lawyers say they want their outside counsel to speak up.”
• “Some Big Law clients are going so far as to indicate that they’re willing to vote with their dollars and shift business around to those who speak out against the Trump administration, according to interviews with corporate counsel and several LinkedIn posts by general counsel.”
• “‘I’m carefully watching the reactions of various firms, or the lack thereof, and I feel it’s my duty to vote with my pocketbook in terms of where I want to send my business in the future,’ a clothing company GC said in an interview.
• “A medical company chief legal officer said in an interview, ‘If there ends up being a split where some firms are vocal and others aren’t, I will absolutely use that in my purchasing or vendor decisions. I will want a firm that is aligned with my values.’ The CLO expressed disappointment that firms thus far have remained silent. ‘As soon as the executive order on Perkins Coie came out, within a half hour, I emailed every law firm that I pay currently and the law firm I used to work at and a couple others where I have close contacts just to say that I expect you to be fighting this swift and strong.'”
• “The medical CLO expressed frustration at what they felt was an attempt to use the amicus brief as a kind of smokescreen to disguise firms’ lack of response. ‘I’m talking to them, and they’re saying wishy-washy things like ‘we’re reviewing our options’ and ‘there are documents like an amicus brief being circulated’ but no one will make any public statement or make any kind of stand because they’re keeping their options open, which includes just rolling over,’ the CLO said. ‘Their cowering in the corner is working at a disservice to them. It’s showing how they’re willing to bend a knee as soon as their revenue is threatened.'”
• “‘We’re up to three, and the silence is deafening,’ wrote a general counsel from a food production company. ‘Where is the outrage from their peer firms? This isn’t a partisan issue – these firms take on clients from both sides of the aisle, as well as clients with no affiliation at all.'”

“Ex-Cognizant Executive Rethinking Paul Weiss After Trump Deal” —

• “Former Cognizant Technology Solutions executive Steven Schwartz appears to be rethinking his decision to fire Paul Weiss now that President Donald Trump has rescinded an executive order that took aim at the firm.”
• “Lawyers from Paul Weiss Rifkind Wharton & Garrison LLP had been defending Schwartz on foreign bribery charges since 2018. But the lawyers filed a motion to withdraw March 19, saying Schwartz was terminating them in response to Trump’s March 14 executive order targeting the law firm.”
• “Schwartz ‘is considering and consulting with counsel regarding the announcement last night that the President has rescinded the March 14, 2025 Executive Order concerning Paul Weiss,’ his new lawyers with Sullivan & Cromwell LLP said in a Friday letter to Judge Michael E. Farbiarz of the US District Court for the District of New Jersey.”
• “They said they will be prepared to discuss is views ‘on the impact of that decision on Paul Weiss’s motion to withdraw and on the trial date for this matter’ at a conference March 24.”

“Lawyers Must Not Stay Quiet in Face of Trump Attack on Firms” —

• “As the dean of two major law schools, I always told first-year students about the legal profession’s essential role in our democracy—and reminded them at graduation three years later. During the intervening years, our faculty worked to give future lawyers the tools they needed to serve this role effectively and responsibly.”
• “I often wondered how the message came across, and whether the students viewed the legal profession’s claimed relationship to our democracy as pompous, self-serving hot air. The first two months of the Trump administration have quelled any doubts I may have had about the vital importance of that relationship.”
• “It’s no surprise the Trump administration has placed the ethos and values of the legal profession in its crosshairs. It started by eliminating many of the career lawyers at the Department of Justice, before moving on to axing the inspectors general at more than a dozen government agencies, overhauling the leadership of the Judge Advocate General’s Corps across the military, and removing the chief counsel for the IRS.”
• “Government lawyers are the first line of defense in preventing abusive, illegal actions by the government they serve. Former DOJ attorneys such as Danielle Sassoon, Kevin Driscoll, John Keller, Hagan Scotten, and Denise Cheung sounded the alarm by resigning rather than executing the actions Trump officials told them to carry out.”
• “The White House expanded its attack on the legal profession to the private bar, targeting Covington & Burling, Perkins Coie, and Paul Weiss because of representations they undertook that the Trump administration viewed as hostile to the president.”
• “It’s telling that the administration is broadcasting its retribution. The public fight with these three highly respected law firms is designed to intimidate the entire legal community through the implicit threat of future blackballing and by intimidating clients into pressuring law firms to cooperate with the administration. Corporate clients right now are likely grilling their counsel about whether they engage in pro bono or other litigation disfavored by Trump.”
• “Despite the likelihood Perkins Coie will prevail in court, the message has been sent.”
• “Even if courts declare it unlawful for the government to formally blackball law firms, lawyers and clients will fear that if they challenge this administration, they will be treated unfairly during interactions with federal agencies that are the bread and butter of their practice. One client recently dropped Paul Weiss as his defense counsel, saying Trump’s order ‘may negatively affect his ability to obtain a favorable review of his case.'”
• “The firms that have the greatest expertise and experience litigating against the government are most at risk. The administration’s public demonstration of vindictiveness will have ripple effects, regardless of the outcome of litigation challenging it. Given Paul Weiss’ prominence, the success of the administration’s bullying and shakedown is stunning and will reverberate through the legal profession.”

Skadden associate Rachel Cohen very publicly resigned last week, posting her firmwide email on LinkedIn (1000+ comments): “With gratitude and urgency” —

• “When I went to law school and to Skadden, I did so in pursuit of agency. I was driven by a desire to be in rooms where decision-makers were, to get to play a role in things that mattered, because things felt so needlessly terrible. It never occurred to me that the people in those rooms might feel that they were powerless. I am forced to hope that our lack of response to the Trump administration’s attacks on our peers, both those at other large firms and the many people in this country with far fewer resources, is rooted in feelings of fear and powerlessness, as opposed to tacit agreement or desire to maximize profit. I still hope that is true. But it has not yet been borne out.”
• “There is an open letter (now signed by over 600 other AmLaw 200 associates, many of them at this firm), mainstream media coverage and an oped explaining why I feel this way.”
• “Know that I attended internal meetings about this topic, sent emails to decision makers, avoided commenting on the EEOC investigation publicly or airing any internal firm discourse publicly. I did all of these things out of hope that we would do the right thing if given time and opportunity.”
• “The firm has been given time and opportunity to do the right thing. Thus far, we have not. This is a moment that demands urgency. Whether we are failing to meet it because we are unprepared or because we don’t wish to is irrelevant to me—and to the world—where the outcome is the same. If we were going to resist, we would have done so already. If we were not going to respond to the EEOC (a refusal that would be fully legal), the firm would have already told us.”
• “I recognize not everyone is positioned as I am, and cannot act the same way. But do not recruit for this firm if they cannot protect their employees. Do not pretend that what is happening is normal or excusable. It isn’t.”
• “To the many superiors, support staff and friends that I know I disappoint by making this announcement firmwide instead of talking to you first, I sincerely apologize. There are so many thank yous that I have for so many people at this firm. Please know that if you suspect that you have helped me or taught me or cared for me, that I agree and am eternally grateful. In the coming days, I will make every effort to reach out to you separately, but there is urgency here that makes it impossible to go to each of you first. I will do everything in my power to mitigate difficulties caused by my unexpected departure.”
• “Like any self-important adolescent, I spent most of my high school history classes wondering what I would do in the moments before true horror or chaos or where my values were tested and demanded great sacrifice. I do not wonder anymore. I know who I am. I thought I knew who we all were.”

Above the Law noted: “Will Clients Trust Paul Weiss Again?” —

• “‘Would you want to be represented by a law firm that can’t even stand up for itself? A law firm that might sell you out to the federal government to save its own skin?’ — Deepak Gupta, founder of Gupta Wessler LLP and lecturer at Harvard Law School, sounding off on Bluesky about Paul Weiss’s decision to acquiesce to the Trump administration.”

“Big Law Firms Scrub Mueller Ties as Trump Targets Enemies” —

• “Four law firms scrubbed references to their lawyers’ roles in former special counsel Robert Mueller’s investigation as President Donald Trump attacks past legal foes.”
• “Paul Weiss Rifkind Wharton & Garrison, WilmerHale, Cooley, and Davis Polk & Wardwell removed the references from lawyer bios on their websites late last year and this year, a Bloomberg Law analysis of current and archived firm web pages shows.”
• “The four law firms didn’t respond to requests for comment. A review of internet archives shows they scrubbed Mueller references between October and March 20. In Paul Weiss’ case, the archives show the firm changed its lawyer’s webpage after March 1.”
• “Firms’ move to scrub websites of Mueller mentions is a form of ‘appeasement’ when they instead should be defending their lawyers’ ability to work on cases that are adverse to Trump, said Liz Oyer, a former pardons attorney at the Justice Department who was terminated earlier this month.”
• “WilmerHale, where Mueller practiced as a partner before retiring in 2021, removed Mueller’s biography page between November and March, a review of archived webpages shows. WilmerHale is one of 20 firms targeted in an EEOC investigation into diversity programs at law firms.”
• “This year, WilmerHale also removed the mention of Mueller’s investigation from the webpage of retired partner James Quarles III, who rejoined the firm with Mueller in 2019 after service in the special counsel’s office.”
• “This year, Davis Polk revised webpages of Greg Andres, co-head of the firm’s white collar defense and investigations practice, and white collar partner Uzo Asonye to omit references to the Mueller probe. The firm highlighted their role on Mueller’s investigative team and prosecution of Manafort in previous iterations. The pair left the special counsel’s office in 2019 to join Davis Polk, according to their LinkedIn profiles.”
• “Cooley removed a paragraph from the profile of white collar partner Andrew Goldstein, who was formerly referred to by Cooley’s website as one of Mueller’s ‘top deputies’ in the special counsel’s office. His page previously highlighted a front-page story by The New York Times that described his ‘day-to-day’ leadership role.”
• “The EEOC sent letters to 20 large firms, including Kirkland & Ellis, Latham & Watkins, Ropes & Gray, and Simpson Thacher, launching investigations for possible discrimination in their diversity programs. Trump three days earlier issued an executive order against Paul Weiss that stripped the Wall Street firm of security clearances and threatened to cancel government contracts held by its clients, while ordering agency heads to restrict its lawyers’ access to federal government buildings.”

“Cut a Deal or File a Suit? Every Big Law Response to Trump Scrutiny Is a Blueprint” —

• “The law firms that have been subject to the Trump administration’s executive actions have pursued a range of approaches over the last week, from directly confrontational to seeking common ground.”
• “And as speculation grows over which law firm or lawyer Trump may target next, the approaches by Covington & Burling; Paul, Weiss, Rifkind, Wharton & Garrison; and Perkins Coie may also serve as a blueprint for others that are proactively planning their strategy.”
• “Although some in the industry have lamented the lack of a singular approach, or a more adversarial one, some communications experts and consultants say firms are handling it the way they might advise clients to handle their matters. In other words, carefully weighing the pros and cons and evaluating likely outcomes while acting under narrow time constraints.”
• “‘No two situations are alike. No two jurisdictions are alike. There are many decisions that go into handling these matters for law firms,’ said Gina Rubel, CEO and general counsel of Furia Rubel, a global crisis and consulting agency. She added that ‘not everyone is going to love’ their decisions, alluding to the range of voices from inside firms and their clients who are calling for different approaches.”
• “Law firms, she said, are ‘doing a legal and cost analysis, and saying, ‘What is in our clients’ best interest? What is in our best interest? Who do we want to be at the end of this? How much is too much?'”
• “Leslie Levin, an ethics law professor at the University of Connecticut Law School, said every firm has its own tolerance for risk, so the varying responses are not a surprise. She said, though, that litigation—as well as consensus-building within law firm management committees themselves—takes time, and the firms may not feel they have that luxury.”
• “‘It feels more like they’re trying to weigh the costs and benefits of acting, and they’ve got to look at their own clients. My guess is that Paul Weiss is listening to what clients say. I’m sure they’re hearing a lot from their clients,’ Levin said.”
• “On the other side of the spectrum, Covington and Perkins Coie—also facing administration actions—are pursuing litigation against the administration, whether on behalf of clients or the firm.”
• “Covington joins about a dozen Am Law 200 firms now involved in litigation against the Trump administration—some pro bono, others not—on behalf of clients. That includes Wilmer Cutler Pickering Hale and Dorr; Hogan Lovells; Jenner & Block; Ropes & Gray; Gibson, Dunn & Crutcher; Arnold & Porter Kaye Scholer; Milbank; Saul Ewing; Munger, Tolles & Olson; and Cleary Gottlieb Steen & Hamilton.”
• “Whatever approach a law firm takes, Cari Brunelle, founding partner of legal advisory firm Baretz & Brunelle, listed out some of the factors—and consequences—as a result of the approach: the financial cost associated with a protracted court battle; or flight risk of talent, with partners choosing to go elsewhere because of so much uncertainty, or because they disagree with their leaders’ ultimate choices.”
• “There’s also the potential for client and reputational backlash. ‘As a leader, you’re never going to be able to make everyone happy, and so, when you’re dealing with a situation like this, you have to put the interest of the firm above all else,’ Brunelle said. ‘So, whatever that means for you, it may be different than what others would think.'”

Friday night update: “Trump hangs sword of Damocles over the American legal system” —

• “President Donald Trump is doubling down on his threats against the American legal system, directing Attorney General Pam Bondi to take action against lawyers and law firms that go against him.”
• “The memo circulated late Friday, entitled ‘Preventing Abuses of the Legal System and the Federal Court’, marks an escalation of Trump’s crackdown on law firms he believes have crossed him, now threatening the full power of the Department of Justice to punish them.”
  “‘Lawyers and law firms that engage in actions that violate the laws of the United States or rules governing attorney conduct must be efficiently and effectively held accountable,’ the memo reads.”
• “In it, Trump directs Bondi to seek sanctions against lawyers and law firms that ‘engage in frivolous, unreasonable, and vexatious litigation against the United States.’ He also pushes Bondi and Secretary of Homeland Security Kristi Noem to ‘prioritize enforcement’ of proper attorney conduct.”
• “Any unethical or unprofessional conduct will result in disciplinary action, the memo warns, which could include revoking security clearances and federal contracts — a lever he has already pulled repeatedly to target several firms with clients that have challenged Trump.”
• “This enforcement will also be retroactive, as the memo instructs Bondi to look back at the conduct of lawyers or law firms over the last eight years for misconduct.”
• “Friday’s memorandum comes as the nation’s law firms are already running scared over Trump’s promised retribution. Several lawyers that spoke to POLITICO shared their fear after the executive orders targeting specific law firms in a retaliatory spree connected to his political rivals.”
• “But Trump’s new memo signals this is only the beginning.”
• “He lists examples of ‘grossly unethical misconduct’ and references Marc Elias of the Elias Law Group, one of the most prominent Democratic attorneys in the nation. Elias was also a lawyer for Hillary Clinton’s 2016 presidential campaign while an attorney at Perkins Coie and was central to the commissioning of the now-infamous Steele dossier.”
• “Earlier this week, Elias penned an op-ed saying that while he was concerned about retribution from Trump, he wouldn’t cave to pressure from the president.”
• “‘Now that Trump has proven to be a ruthless autocrat, too many have grown timid and silent,’ Elias wrote on his website Democracy Docket.
• “‘Law firms and individual attorneys have a great power, and obligation, to serve the rule of law, justice, and order,’ the memo states. ‘The Attorney General, alongside the Counsel to the President, shall report to the President periodically on improvements by firms to capture this hopeful vision.'”

“Law Office Wolf Haldenstein Says Hack Affected 3.4 Million” —

• “Wolf Haldenstein Adler Freeman & Herz LLP, a law firm that represents consumers in data breach lawsuits and other disputes, has reported to regulators its own large 2023 hacking incident affecting more than 3.4 million individuals.”
  “The law firm – which has offices in New York, Chicago, Nashville and San Diego – told Maine’s attorney general on Wednesday [1/15] that information potentially compromised in the incident includes name, Social Security number, employee identification number, medical diagnosis, and medical claim information. Of the more than 3.4 million individuals affected, about 3,200 were Maine residents, Wolf Haldenstein told the state’s regulators.”
• “Wolf Haldenstein said the hack was discovered in December 2023 when the firm detected suspicious activity in its network environment. ‘Upon discovery of this incident, Wolf Haldenstein promptly took steps to secure its network and engaged a specialized cybersecurity firm to investigate the nature and scope of the incident,’ the firm’s breach notice said.”
• “The investigation determined that an unauthorized actor accessed certain files and data stored within the firm’s network, the notice said. ‘Wolf Haldenstein also conducted an examination of its systems and networks using all information available to determine the potential impact and the security of data housed on its servers,’ the firm said.”
• “‘Wolf Haldenstein subsequently undertook a time-consuming and detailed review of the data stored on the servers at the time of this incident to understand to whom that data relates,’ the firm said. Nearly a year later, on Dec. 3, 2024, Wolf Haldenstein identified a subset of potentially affected persons but the firm was unable to locate address information to provide direct notice to that group of individuals, the law firm said.”
• “Wolf Haldenstein had previously reported the hack to regulators in some other states, including Vermont in May. The law firm also reported the incident on Thursday to the Texas attorney general’s office as affecting nearly 328,000 Texans. But the firm’s report Wednesday to Maine’s attorney general appears to be the first and only time the law firm publicly disclosed that millions of individuals were affected by the incident.”
• “As of Thursday, the U.S. Department of Health and Human Services’ HIPAA Breach Reporting Tool website did not show any HIPAA breach reports filed by Wolf Haldenstein.”
• “‘Wolf Haldenstein’s data breach and the tortuous investigation it took to find the breach is a law firm’s worst nightmare,’ said regulatory attorney Paul Hales of the Hales Law Group, which is not involved in the Wolf Haldenstein incident.”
• “‘Maintaining system-wide HIPAA compliance is challenging but manageable for organizations with multiple locations like Wolf Haldenstein,’ he said. ‘Strict client confidentiality is paramount in law firms, but the minimum necessary standard for access to protected health information can inadvertently be overlooked,’ he said.”
• “‘Wolf Haldenstein’s lengthy, painstaking breach investigation underscores the rationale for HHS OCR’s proposed Security Rule modifications that would require mapping the movement of electronic PHI throughout a HIPAA-regulated entity’s electronic information systems and a technology asset inventory,’ he said.”

“Law Firm Faces Data Breach Class Action From Consumers Extending Beyond Client Base” —

• “A group of consumers sued a law firm for a data breach that allegedly exposed their personal information despite never having an affiliation with the firm, raising concerns about its allegedly unauthorized collection and storage of their sensitive data.”
• “Lead plaintiff Jason Warren alleged that, in early August, Riley Pope & Laney learned that cybercriminals had gained access to consumers’ personally identifiable information. According to the complaint, the more than 7,000 class members affected by the data breach were never associated with the law firm, never sought an association and never consented to the firm collecting and storing their sensitive information.”
• “The breach allegedly occurred due to inadequate training of IT and data security agents, the suit stated. The firm then allegedly waited six months to begin notifying affected individuals of the breach, which made victims vulnerable to identify theft without warnings to monitor their financial records or credit reports.”
• “Riley Pope & Laney’s legal services are specialized for corporations and employers who oversee highly sensitive data, the complaint said, requiring them to manage and secure the PII of its clients’ employees. However, these employees did not do any business with the law firm, according to Warren.”
• “The risk of unauthorized uses of victims’ information is still ‘substantially high,’ the complaint stated, due to the law firm’s lack of corrective measures following the data breach.”

“Law firm Berman & Rabin reports breach affecting 152K people” —

• “The law firm Berman & Rabin is notifying around 152,000 individuals of a data breach following a ransomware attack that occurred in July 2024. The breach exposed sensitive personal information, prompting the company to take precautionary measures to protect those affected.”
• “Headquartered in Overland Park, Kansas, Berman & Rabin is a law firm that focuses on debt collection and creditor rights, providing legal services to financial institutions, businesses, and lenders. With over 140 employees, the firm has built a reputation for handling creditor-specific legal matters.”
• “The incident was discovered on July 8, 2024, when the law firm detected suspicious activity within its systems, including the encryption of certain data. An investigation revealed that attackers had accessed the company’s network between July 5 and July 8, during which time they exfiltrated data from several systems.”
• “By October, it became clear that the compromised data included names, Social Security numbers, and financial information. Although there is no confirmed misuse of the stolen data, Berman & Rabin is notifying affected individuals as a cautionary step.”
• “In response to the breach, the law firm has begun sending written notifications to approximately 151,944 individuals.”
• “While details about the ransomware used in the attack remain unknown, no ransomware group has claimed responsibility for the breach. This situation could indicate that a ransom was paid, though the affected company has not commented on this possibility.”

“CPS chief Martinez seeks to disqualify law firm over alleged conflict of interest” —

• “Chicago Public Schools chief Pedro Martinez is alleging the firm representing the school board in an ongoing lawsuit has a conflict of interest that warrants disqualification. Martinez’s lawyer, William Quinlan, filed a motion March 4 to ‘disqualify the law firm of Cozen O’Connor LLP.’ Cozen serves as counsel for seven board members named in the lawsuit between the district’s outgoing chief executive officer and the Chicago Board of Education.”
• “Martinez filed the lawsuit against the school board after he was fired Dec. 20 to block the then seven-member body from stripping him of his duties, including his involvement in contract negotiations with the Chicago Teachers Union. Several days after Martinez’s firing the board members attended ongoing contract negotiations with CTU on a new four-year contract that has yet to be settled. Martinez’s tenure as CPS chief will conclude in June.”
• “It was the first time in 12 years that school board members attended a bargaining session. Typically, the schools chief and his team negotiate the contract and collaborate with the board.”
• “However, Cozen also represents the members of a new, 21-member partially elected, partially appointed board, seated in January after Martinez was fired. The previous board that voted to fire Martinez was appointed by Mayor Brandon Johnson. Five of them remain on the board.”
• “Quinlan argues in the motion that Cozen representing the new school board in addition to the board members who fired Martinez ‘raises an impermissible concurrent conflict of interest.'”
• “Quinlan spoke about the motion to disqualify Cozen O’Connor at a hearing in front of Chupack Monday.”
• “‘I don’t know how we can decide (the motion to dismiss the temporary restraining order) without deciding if there’s a conflict first,’ he said.”
• “Jeremy Glenn, Cozen O’Connor’s attorney, said that ‘the conflict, if it arose, hasn’t presented itself in a way that changes the legal arguments.'”
• “He cited prior case law suggesting that a motion to disqualify ‘needs to be looked at carefully to make sure it’s not a tactic to delay a ruling on a motion to dismiss (the temporary restraining order).'”
• “A conflict of interest exists if ‘the representation of one client will be adverse to another’ or if ‘there is a significant risk that the representation of one or more clients will be materially limited by the lawyer’s responsibilities to another client,’ Quinlan’s motion argues.”
• “In this case, the motion continues, there is a conflict of interest because seven board member defendants ‘are alleged to have acted outside the scope of their capacities’ as members of the full board entity Cozen represents.”
• “‘The Board Member Defendants have separate interests that conflict with those of the Board as an entity, and vice–versa,’ Quinlan’s motion says. ‘In making these determinations, the Board is entitled to counsel separate from and independent of counsel representing the Member Defendants.'”
• “Additionally, neither the seven-member board named in the lawsuit nor the current board gave ‘informed consent’ to the conflict of interest. Quinlan’s motion states that they are entitled to that consent.”
• “The school board retained Cozen O’Connor at a meeting in mid-November, a move that hinted at the beginnings of the process of firing Martinez. Employment lawyers told the Tribune at the time that the board was likely looking for cause to fire the CEO. Martinez was fired without cause, meaning he will stay on the job until June.”

“Masimo Aims To DQ Hueston Hennigan As Ex-CEO’s Counsel” —

• “Masimo Corp. is urging the Delaware Chancery Court to disqualify Hueston Hennigan LLP from representing its founder and former CEO in a lawsuit over his quest for a $450 million payout from the medical technology company, arguing the firm has a conflict of interest.”
• “The firm previously represented Masimo and Kiani in another Chancery case in which company stockholders ‘challenged the enforceability of entrenching and coercive provisions in Mr. Kiani’s employment agreement with Masimo,’ the brief said. ‘Now, Hueston Hennigan has taken sides against Masimo, and must be disqualified from representing Mr. Kiani,’ the company contended.”
• “Masimo argued that, ‘in violation of Rule 1.9 of the Delaware Lawyers’ Rules of Professional Conduct, Hueston Hennigan currently stands opposite its former client, Masimo, on the very same subject on which it previously represented it.'”
• “In October, Masimo sued Kiani in Chancery Court, seeking a declaration that a $450 million payout he seeks under the terms of his employment agreement is unenforceable.”
• “Now that Masimo has its first independent board in its history, Kiani demanded the $450 million payout under the terms of his employment agreement after being ousted by the new board from his positions as CEO and chairman, the complaint said.”
• “‘In November 2023, after it already had been advising Masimo for months, Hueston Hennigan formally appeared for Masimo in the prior Delaware action to oppose Politan’s fee application, which Mr. Hueston personally argued,’ the brief said. ‘Indeed, Mr. Hueston was listed as counsel on Masimo’s opposition to Politan’s application, which stated, among other things, that ‘the employment agreement … effectively guarantees that Mr. Kiani will receive the special payment at some point in time.’ That is precisely the opposite of Masimo’s position in this action.'”
• “Masimo accuses the firm of violating an ethics rule that ‘prohibits the representation of parties in matters involving material conflicts of interest.'”
• “‘Due to its conflict, Hueston Hennigan provided advice to Masimo that was directly contrary to Masimo’s interests,’ the brief asserts.”
• “Details about the allegedly conflicted advice the firm offered are redacted in the brief.”
• “Masimo argued the court ‘should disqualify Hueston Hennigan or, in the alternative, Mr. Hueston from representing Mr. Kiani in this action.'”

“Trump picks his next Big Law target” —

• “President Donald Trump continued his retaliatory spree against major law firms on Friday, signing an executive order targeting New York firm Paul, Weiss days after a judge ruled that major parts of a similar order were unconstitutional.”
• “Trump’s new order seeks to suspend the security clearances of attorneys with the firm and limit their access to government buildings, ability to get federal jobs and receive money from federal contracts.”
• “The order is the third targeted move against a big firm. Trump has signed similar orders aimed at Seattle-based Perkins Coie, which regularly represents Democratic entities including the Democratic National Committee, and any employee at Covington & Burling who provided free legal services to special counsel Jack Smith, who brought two criminal cases against Trump.”
• “As POLITICO first reported, some top firms are considering publicly supporting the firms under attack by the Trump administration. But the show of solidarity has been hard to build as privately, firms worry that they could be next on the president’s hit list.”
• “The Paul, Weiss spokesperson also noted that a federal judge had this week deemed a similar order unconstitutional.”
• “U.S. District Judge Beryl Howell ruled on Wednesday that major parts of Trump’s order against Perkins Coie were likely unconstitutional, including efforts to bar attorneys from interacting with federal agencies or entering federal buildings.”
• “In her ruling, Howell said Trump’s order appeared motivated by ‘retaliatory animus,’ and concluded that it ‘runs head on into the wall of First Amendment protections.'”

I woke up Wednesday, still dark outside from the time change, with the shard of an odd dream-thought about law firm risk. (Yes, you folks are always on my mind.) Having read a few stories about AI writing getting firms into trouble, it felt like the right time to invite a robot or two to flesh out the idea and write the first BRB spec script. Below, with your kind indulgence.

Firms with Hollywood clients, feel free to send them my way to work out a development deal. Firms with IP practices, just parody here!

[Dan B. will be back on Monday, with the normal updates. Be seeing you…]

—

# SEVERANCE: LUMON LLP

## “CONFLICT CONVERSIONS”

FADE IN:

INT. LUMON LLP – MACRO RISK DATA REFINEMENT DEPARTMENT – MORNING

The stark white room with its symmetrical desks houses the MRDR team. MARK, DYLAN, IRVING, and HELLY are at their workstations, processing data on their ancient computers.

A CHIME sounds. The team looks up as MILCHICK enters, carrying a folder and smiling his professional smile.

**MILCHICK**
Good morning, everyone. It’s time for your quarterly review.

**DYLAN**
*(perking up)*
Is there a waffle party?

**MILCHICK**
That depends on your numbers, Dylan G.

Milchick walks to the center of the room and sets up a small projector.

**MILCHICK**
If I could have everyone gather around.

The team reluctantly leaves their desks and assembles in a semi-circle.

**HELLY**
What exactly are we reviewing?

**MILCHICK**
Your conflict clearance rate, Helly R. It’s the primary metric by which the MRDR team is evaluated.

The projector flickers on, displaying a colorful pie chart.

**MILCHICK**
As you can see, this quarter, your team has successfully processed 428 potential conflicts of interest.

He clicks to the next slide: a bar graph with rising columns.

**MILCHICK**
Of those 428 potential conflicts, you identified 217 that could be “converted” through severed attorney assignment.

**MARK**
*(hesitantly)*
Converted?

**MILCHICK**
Yes, Mark S. Matters that would typically require Lumon LLP to decline representation due to conflicts, but which we were able to accept thanks to our innovative use of severance technology.

**IRVING**
*(proudly)*
We’re protecting the firm’s integrity.

**HELLY**
*(under her breath)*
Or undermining it.

Milchick clicks to another slide showing a comparison between quarters.

**MILCHICK**
I’m pleased to announce that your conversion rate is up 12% from last quarter, which puts you in the top tier of all MRDR teams.

**DYLAN**
*(excitedly)*
So there IS a waffle party!

Milchick smiles and produces a small box from behind his back.

**MILCHICK**
Even better, Dylan G. The partners have authorized a special reward.

He opens the box to reveal five FINGER TRAPS made of expensive-looking metal.

**MILCHICK**
Titanium finger traps. Only four MRDR departments in Lumon history have earned these.

Dylan’s eyes widen with excitement. Helly looks skeptical.

**HELLY**
So we’re being rewarded for finding loopholes?

**MILCHICK**
*(smile hardening slightly)*
We’re rewarding efficiency, Helly R. These conflict clearances represent approximately $19,342,246.01 in billable hours that would otherwise be lost.

He hands out the finger traps. Dylan immediately puts his on both index fingers, grinning.

**MILCHICK**
And as an additional reward, tomorrow morning, there will indeed be a waffle party. With toppings.

**DYLAN**
Yes!

**MILCHICK**
Keep up the excellent work, team. Ms. Cobel is very pleased.

Milchick packs up and exits. The team returns to their desks, Dylan struggling with his trapped fingers.

**HELLY**
Does anyone else find this… wrong?

**IRVING**
What do you mean?

**HELLY**
I mean, conflicts of interest exist for a reason. Just because lawyers are severed doesn’t mean they’re not the same person.

**DYLAN**
*(working his fingers free)*
But they’re not, that’s the whole point. Their outies know one thing, their innies know another. No confidential information crosses over.

**MARK**
It does seem like we’re helping the firm… be more efficient.

**HELLY**
Or helping them cheat.

CUT TO:

INT. LUMON LLP – RESTROOM – LATER

Irving is washing his hands methodically, counting under his breath as he always does. He glances up at the mirror and freezes.

In the reflection, he sees words written in what appears to be graphite from a pencil, barely visible unless caught in the right light: “YOU USED TO FIGHT AGAINST THIS.”

Irving stares, confused. He reaches out to touch the writing, and it smudges slightly under his finger.

CUT TO:

INT. LUMON LLP – MRDR DEPARTMENT – EVENING

The team is preparing to leave for the day. Irving lingers at his desk, searching through his drawers.

**MARK**
Everything okay, Irv?

**IRVING**
Yes, just… making sure everything is in order.

After the others leave, Irving carefully pulls out a file he’s hidden beneath his desk pad. Inside are notes he’s been making about his strange experiences and memories.

He adds a new entry: “Restroom mirror message. What did I fight against?”

As he writes, he notices something about his handwriting. He pulls out older notes and compares them. Then he flips through them and finds a note from weeks ago that he doesn’t remember writing: “Before severance, I was an ethics attorney. Specializing in conflicts of interest. Remember who you were.”

Irving stares at the note, his hand shaking.

CUT TO:

EXT. IRVING’S APARTMENT – NIGHT

OUTIE IRVING sits at his desk, surrounded by legal textbooks and papers. He’s methodically writing on a small notepad, pressing hard to make sure the indentations go through multiple pages.

We see the title of one book: “Legal Ethics and the Future of Attorney Severance” by I. B. Petersen -— himself.

Outie Irving tears off the top sheet of the notepad, crumples it, and burns it in an ashtray. The next page, with its impressed message, remains: “YOU USED TO FIGHT AGAINST THIS.”

He carefully tucks the notepad into his work bag.

FADE OUT.

END OF EPISODE

“Jackson Walker Rejected Judge Romance Ethics Advice, Report Says” —

• “Jackson Walker LLP rebuffed advice from its own outside ethics expert to disclose a relationship between a partner and a bankruptcy judge, instead opting for a confidentiality agreement barring discussions of the romance, according to a government-commissioned report.”
• “The Texas law firm failed to uphold disclosure obligations under bankruptcy law, an expert report filed in Thursday [1/30] in the US Bankruptcy Court for the Southern District of Texas found. The firm exhibited a ‘persistent pattern of ignoring, obfuscating and concealing’ a relationship between its former partner, Elizabeth Freeman, and former Houston bankruptcy Judge David R. Jones, according to the report.”
• “‘Unfortunately, at every important moment in this matter, JW chose not to disclose but instead to conceal what it knew or had good reason to know about the Relationship,’ wrote the report’s author, Temple University law professor Jonathan Lipson.”
• “Jackson Walker and the Justice Department’s bankruptcy watchdog, the US Trustee, each moved to strike the other’s expert reports from being used in litigation. The reports were filed in a lawsuit where the US Trustee’s office has said Jackson Walker breached its ethical duties, a charge the firm rejects.”
• “The firm regularly represented clients in cases Jones oversaw. A trial set for April will decide whether as much as $23 million in fees awarded to Jackson Walker should be vacated and whether the firm can be sanctioned.”
• “Jones resigned soon after the relationship became public in late 2023 but litigation over the scandal remains pending. Freeman left Jackson Walker in December 2022.”
• “Once the firm learned of an ongoing relationship between Jones and Freeman, by at least February 2022, it had a duty to amend its bankruptcy disclosures in cases where it implied or said there were no such connections, Lipson concluded.”
• “Instead of disclosing or withdrawing from cases, Jackson Walker ‘decided to further bury evidence’ of the relationship through a confidential withdrawal agreement between the firm and Freeman in November 2022, Lipson said.”
• “Jones’ own ‘erroneous interpretation of his ethical obligations,’ is separate from Jackson Walker’s duty to investigate allegations of an ethical conflict, disclose connections, or withdraw from those cases, Lipson said.”
  Conflicts and Confidentiality”
• “Lipson cited expert opinions Jackson Walker received from Holland & Knight LLP attorneys in 2021 who were tapped by the Texas firm to provide ethics opinions about the relationship.”
• “The Holland & Knight team advised Jackson Walker in June 2022 that the conflict should be reported or it should withdraw from cases before Jones, Lipson’s report said. Jackson Walker did neither, he said.”
• “The firm didn’t tell its co-counsel, Kirkland & Ellis LLP, and didn’t ask if clients consented either, he said. No amendments were made to the firm’s bankruptcy disclosures, Lipson said.”
• “Lipson also said said Freeman’s connections can be imputed to Jackson Walker under Texas rules.”

“No DQ For Norton Rose In Texas Competition Row, Court Says” —

• “Norton Rose Fulbright shouldn’t be disqualified in a competitive spat between two industrial maintenance companies even though the firm has represented both entities in recent years, a state appeals court has ruled.”
• “Industrial maintenance provider Brown & Root Industrial Services LLC made only ‘conclusory statements of similarities’ about the firm’s current representation of its competitor, CAM Industrial Solutions LLC, the Fourteenth Court of Appeals wrote in a brief opinion Tuesday.”
• “Without more specific facts, the court said it can’t rule that Norton Rose Fulbright’s prior representation of Brown & Root violates the Texas Disciplinary Rules of Professional Conduct Rule 1.09, which bars an attorney ‘who personally has formerly represented a client in a matter’ from representing ‘another person in a matter adverse to the former client … if it is the same or a substantially related matter.'”
• “CAM retained Norton Rose Fulbright in the Chambers County suit, an action Brown & Root alleged presented a conflict of interest because the firm represented Brown & Root for eight years beginning in 2016.”
• “‘[Norton Rose’s] representation of Brown & Root included business advice and consulting, including on issues specifically related to Brown & Root’s industrial maintenance business line,’ Brown & Root wrote in its August 2024 petition to the Fourteenth Court of Appeals.”
• “‘In the context of that attorney-client relationship, Brown and Root shared internal business information with NRF, such as client information, contractual information, and personal employee information specifically related to Brown & Root’s industrial maintenance business.'”
• “Brown & Root wrote that the firm was continuing to bill it as recently as August 2023. It moved to disqualify CAM’s attorneys in May 2024, which the trial court denied three months later.”
• “The Fourteenth Court of Appeals on Tuesday outlined Brown & Root’s allegations, which included that the company consulted with two Norton Rose partners about corporate labor and employment law in relation to a specific bid the company was seeking. As part of that consultation, the firm helped Brown & Root set up a Canadian business entity, according to the company.”
• “The court wrote that those facts are not specific enough to determine that Norton Rose lawyers ‘could have acquired confidential information concerning a prior client that could be used either to that prior client’s disadvantage or for the advantage of the lawyer’s current client or some other person,’ as the disciplinary rule dictates.”

“Judge blocks key provisions of Trump’s bid to punish Democratic-linked law firm” —

• “President Donald Trump’s retaliation against a prominent Democratic-linked law firm is likely unconstitutional, a federal judge ruled Wednesday.”
• “U.S. District Judge Beryl Howell blocked the Trump administration from enforcing central provisions of an executive order that seeks to punish the law firm, Perkins Coie, by barring its attorneys from interacting with federal agencies or even entering federal buildings.”
•  “Howell said the ‘retaliatory animus’ of Trump’s order is ‘clear on its face’ and appears to violate constitutional restrictions on ‘viewpoint discrimination.’ The executive order, which Trump issued last week, ‘runs head on into the wall of First Amendment protections,’ the judge concluded.”
• “Howell noted that the order would harm not only the firm’s 1,200 lawyers — most of whom had nothing to do with the Russia probe — but its 2,500 non-lawyer employees, from IT staff to secretaries.”
• “The judge said Trump’s order was also flawed because it was issued without any notice to the firm or due process to challenge his determination.”
• “‘This may be amusing in ‘Alice in Wonderland’ where the Queen of Hearts yells, ‘Off with their heads!’ at annoying subjects … and announces a sentence before a verdict,’ Howell said, ‘but this cannot be the reality we are living under.'”