Bressler Risk Blog

“Law Firm Partner Suspended for Taking Clients on the Side” —

• “The New Jersey Supreme Court has imposed a two-year suspension on an attorney who represented clients on the side and kept the fees to himself while employed as a non-equity partner at a law firm.”
• “While William C. Kelly was employed at Tompkins, McGuire, Wachenfeld & Barry in Roseland, he handled seven client matters under the firm name, but sent invoices stating that payment should be made directly to him, rather than to the firm, the Disciplinary Review Board said. Kelly kept the proceeds from the seven cases, which totaled $11,415, for his personal use, the DRB said.”
• “But the Supreme Court suspended Kelly from practice for two years. The court found he violated RPC 1.15(a) and the principals of In re Siegel, knowingly misappropriating law firm funds; and RPC 8.4(c), engaging in conduct involving dishonesty, fraud, deceit or misrepresentation.”
• “Kelly attributed his engagement in outside work and misappropriation of funds to ‘financial insecurity and the collapse of’ his marriage and home life, ‘exacerbated by his alcoholism,’ according to the DRB.”
• “Kelly allegedly first issued his own invoice to a client in March 2013, then issued more between January 2018 and August 2019. Those invoices were not on firm letterhead but were emails sent to the clients indicating payment should be made to William C. Kelly, Esq.”
• “Kelly admitted to the DRB the impropriety of ‘providing outside legal services under the firm’s name, on matters for which he did not open files at the firm.’ The parties acknowledged, however, that he did not have a partnership or written employment agreement with the firm, and the firm did not have a written policy governing the provision of legal services under the firm’s name without the firm’s authorization, the DRB said. In addition, Kelly said he did not take money owed to a client or money from the firm’s trust account, according to the DRB. The parties also acknoweldged, in mitigation, Kelly’s alcoholism, cuminating in his 2021 hospitalization, and his continuing success in treatment, continuing sobriety, residence in a sober house, and regular attendance at Alcoholics Anonymous meetings, the DRB said. Kelly pointed out, however that he was not relying on an intoxication defense or any other psychiatric defense.'”

“Connell Foley Can’t Refute DQ Bid, NJ Investment Firm Says” —

• “A Black-owned investment firm suing New Jersey for discrimination in federal court said the court must disqualify Connell Foley LLP from representing the state because of a conflict of interest, even though the supposedly conflicted attorney has denied any ethical breach.”
• “Blueprint Capital Advisors LLC said in a brief filed Tuesday that its principal, Jacob Walthour, has provided specific details in multiple affidavits about the interactions he has had with the allegedly conflicted Connell Foley attorney, Elnardo Webster, documenting how Webster began effectively representing Blueprint before he joined Connell Foley.”
• “Walthour pointed to detailed claims that he has provided of a conversation he had with Webster in 2016, a follow-up email with proprietary and confidential company information, and an hours-long long in-person meeting between him and Webster later in 2016, among other things, as evidence to back his disqualification bid.”
• “In contrast, Webster has relied on arguing that he does not remember or only vaguely recalls the conversations Walthour has referred to, Blueprint argued, although that has not stopped him from denying that he offered any legal advice at those meetings.”
• “Webster ‘claims certainty that he did not receive any confidential information or provide any strategic or litigation advice during any of those meetings or discussions that he otherwise does not really recall,’ it said.”
• “The court now faces a ‘binary credibility determination,’ Blueprint wrote, saying it has proven more credible than Connell Foley and deserves to have its disqualification motion granted, or at least get an evidentiary hearing.”
• “‘On this record, this court must credit Mr. Walthour’s effectively unrebutted declarations corroborated by the testimony of others and contemporaneous evidence, and afford no weight to Mr. Webster’s incredible, conclusory, and admittedly speculative declaration,’ the company said.”
• “Blueprint sued New Jersey Attorney General Matthew Platkin, Gov. Phil Murphy’s former chief of staff George Helmy, and other state employees as well as the investment giant BlackRock in 2020.”
• “Blueprint urged the court to remove Connell Foley as the state defendants’ counsel in December, claiming that after Webster joined the firm in 2023, it unethically used the privileged information Walthour had given him to launch a separate action against Blueprint in state chancery court.”
• “Connell Foley fought that motion in January, saying that far from establishing an attorney-client relationship, Webster met Walthour socially no more than a handful of times before joining Connell Foley, and he never discussed the litigation between Blueprint and the state at those meetings.”

“Trump targets law firm connected to ex-special counsel Jack Smith with executive order” —

• “Donald Trump has signed an executive order suspending security clearances held by lawyers at a law firm connected to Jack Smith, the former special counsel who investigated the president.”
• “Trump signed the retaliatory executive order Tuesday in the Oval Office. It directs the attorney general and heads of other agencies to immediately suspend any active security clearances held by members, partners and employees of Covington & Burling who assisted Smith during his time as special counsel. It also directs the government to review all contracts with the law firm.”
• “‘This is a good one,’ Trump told reporters during a press conference before signing the order. ‘Deranged Jack Smith. We’re going to call it the deranged Jack Smith signing or bill.'”
• “After signing the order, Trump said he wanted to ‘savor’ the moment, then threw the marker he used to a person, suggesting they then send it to Smith.”
• “Smith had led two federal investigations into Trump: one concerning the alleged retention of classified documents from his first term, and the other over efforts to overturn the 2020 election.”
• “Despite a lack of evidence, Trump has long claimed that the cases against him were a weaponization of the Justice Department, something he has vowed to end under his administration and to hold those responsible to account.”
• “Asked Tuesday what he would say to those who claim he was targeting a law firm over its association with Smith, Trump said he was the one who was targeted. ‘I was targeted for four years — longer than that — so you don’t tell me about targeting,’ he said. ‘I was the target of corrupt politicians for four years and then four years after that. So don’t talk to me about targeting.'”

“Why [Corporate] Compliance & [Corporate] Legal Still Need to Break Up” —

• “The relationship between legal and compliance departments has always been complicated. Now, with fresh evidence that reporting structures significantly impact compliance officer effectiveness and well-being, law professor and compliance officer Joseph Burke explores why it’s time for organizations to finally embrace CCO independence.”
• ‘Ever since the issuance of the US Sentencing Guidelines in the mid-1980s, there has been debate in the legal and compliance communities about how the compliance department should be managed and more specifically, where it should report. Traditional legal leadership has most often preferred that compliance report to the general counsel, or elsewhere within the legal department, while compliance specialists have argued for a more independent structure with the compliance leader reporting directly to the CEO of the company, or failing that, the board of directors.”
• “Peter Driscoll, then the director of the OCIE, shared his perspective on this in a November 2020 speech at the National Investment Adviser/Investment Company Compliance Outreach 2020: ‘Empowerment, seniority and authority. These three words matter,’ Driscoll said. ‘We notice on exams when firms hire someone for the role to check the box but do not support or empower them. … We notice when a firm positions a CCO too low in the organization to make meaningful change and have a substantive impact, such as a mid-level officer or placed under the CFO function.'”
• “More specifically, Driscoll emphasized that ‘[I]n terms of authority, I am often asked who the CCO should report to in an organization. Is it to the CEO, the COO, the general counsel or directly to a board if one exists? There is no easy answer to this. It depends on the size of the organization, the leadership structure, the experience of the CCO and the compliance culture. … I do believe that, at a minimum, a CCO should have a direct line of reporting to senior management, if not be part of senior management.'”
• “According to 2024 research by recruiting firm BarkerGilmore, 53% of public company CCOs reported to the GC/managing counsel and 30% reported to the CEO, with the remaining 7% reporting elsewhere, including 1% to the board. In private companies, there was a more even split, with 43% reporting to the GC, 43% to the CEO.”
• “In a December 2010 essay titled ‘Don’t Divorce the GC and Compliance Officer,’ Heineman presented a vision of a strong, broad-ranging GC who could manage both the legal and compliance functions without creating organizational overlap. In his view, compliance was really only a process management function and not a matter that required judgment or reasoning. His model required a strong GC who operated as a virtual ‘statesman’ for the company, relying on years of experience and a deep and trusted relationship with the CEO to provide all compliance advice, when required, to the board and the CEO with an air of gravitas and a statesman’s influence. This model may have described his own personal experience at GE, but outside a small handful of very large companies, the model simply did not (and does not today) reflect the practical reality of general counsel leaders.”
• “As Boehme and others have pointed out, the role of the CCO is not a purely legal role. The CCO is charged with building and developing non-legal compliance tools and programs, such as the anti-corruption program, the trade compliance program and the anti-money laundering program, all of which rely on business controls, auditing, periodic and regular training and periodic risk assessment. The CCO must develop tracking tools to report on compliance risk and trends, internal company audit trends and results and internal compliance with company controls. CCOs must also focus on building relationships with the regulators who are most important to the success of the business. Traditionally, legal departments do not build the compliance tools, processes and relationships that have today become commonplace elements of an effective compliance program but rather provide the legal analysis and advice germane to the legal function generally.”

“Developer seeks to end suit as city’s law firm leaves case” —

• “Developer Dominic Marchionda and two of his companies named in Youngstown’s $834,608 civil lawsuit against them asked the judge to dismiss the case while ex-city Finance Director David Bozanich, the other defendant, called the claims ‘frivolous and time-barred.'”
• “Meanwhile, the city’s legal counsel didn’t oppose a request from the attorney for Marchionda and his two companies to withdraw from the case because of an alleged conflict of interest and asked for the city to have more time to file motions while it looks for new representation.”
• “The city’s lawsuit contends Bozanich, Marchionda, U.S. Campus Suites LLC and Erie Terminal Place LLC participated in a ‘calculated scheme’ to defraud Youngstown of $834,608.”
• “Attorneys for Marchionda and his two companies as well as for Bozanich responded that the lawsuit should be dismissed because it’s past the statute of limitations and barred by a previous plea bargain agreement, among other issues.”
• “Rossi filed a Jan. 2 motion asking McKay to disqualify attorneys with the Roetzel & Andress law firm, which were representing the city in this lawsuit. Roetzel & Andress acquired the law firm of Brouse McDonald with two partners from the latter firm — Timothy Reardon and Ed Smith — employed in 2022 as Marchionda’s personal attorneys and corporate attorneys for the two companies.”
• “The attorneys, Rossi wrote in that motion, obtained confidential information regarding the finances of Marchionda and the companies.”
• “In a Tuesday filing, Benjamin Chojnacki of Roetzel & Andress didn’t oppose the motion and the law firm is helping the city to hire other attorneys in its place.”
• “‘Given the complicated nature of this case, substitute counsel will need time to be engaged, familiarize him / herself with the case, and file the requisite pleadings, motions and brief in response to defendants’ pending counterclaim and motion for summary judgment. These activities take time,’ Chojnacki wrote.”
• “Chojnacki asked McKay to give the city a second extension until March 31 to respond to the counterclaim and until April 28 to respond to the summary judgment request.”

“No Conflict In Judge’s Friendship, John Deere, Farmers Say” —

• “John Deere and the farmers suing it in a right-to-repair suit said they have no concerns about the potential conflict of interest an Illinois federal judge flagged, saying there was ‘no reason’ for the jurist to recuse himself, according to a joint letter filed by the parties.”
• “Both sides thanked U.S. District Judge Iain D. Johnston for telling them that he is friends with a person mentioned in ‘allegedly privileged documents’ submitted to the court, but, ultimately, neither the plaintiffs nor John Deere thought this was serious enough to necessitate bringing in a new judge, according to the joint notice.”
• “‘The parties have conferred regarding the potential conflict and agree that Your Honor’s relationship with [the individual named in court documents] does not present a conflict in this case,’ the letter said. ‘To that end, the parties agree that there is no reason for the court to make any changes to the court’s role in this litigation.'”
• “Judge Johnston, who is overseeing a proposed right-to-repair class action against John Deere, informed the parties in a letter issued Jan. 13 that he recognized the name of an individual, Thomas P. Walters, identified in the company’s filings. “
• “‘To quote Buddy the Elf, I know him,’ Judge Johnston said.”
• “While he said he had ‘no idea what, if any, role Tommy plays in this litigation,’ Judge Johnston said that he and Walters were ‘extremely close’ friends and teammates during their college days. While the judge, based in the Northern District of Illinois, knocked Walters for being a fan of the St. Louis Cardinals, he said that he still likes ‘Tommy a lot,’ and that they remain close, the letter said.”
• “Judge Johnston has had the case since 2022, when the Joint Panel on Multidistrict Litigation transferred six consolidated complaints to his court.”
• “Plaintiff farmers say John Deere, the Illinois-based agricultural equipment manufacturer, has monopolized the repair market for its equipment by forcing consumers to use Deere’s authorized dealership mechanics for many repairs. According to the farmers, the bulk of the repairs could easily be completed with tools and software to which the company has withheld access.”
• “In 2023, Judge Johnston denied John Deere’s motion for judgment on the pleadings, holding that the plaintiffs had enough evidence of the company’s market power.”

David Kluft, Assistant Bar Counsel at Massachusetts Office of Bar Counsel, notes this recent Ohio opinion: “Tidbit: Must a judge recuse herself from a case in which her opponent for elected judicial office is representing a party?” —

• “Not in Ohio. The OH Board of Professional Conduct opines that, when a judge’s political opponent appears before the judge, recusal is not necessary unless the judge’s impartiality could reasonably be questioned. When can impartiality reasonably be questioned?”
• “The opinion doesn’t go into much more detail except to suggest the judge ‘search her feelings’ for the right answer. [Editor’s Note: this opinion seems pretty on the edge to me – Ohio tends to presume a lack of partiality where other states may presume partiality or at least the appearance of bias in the same circumstances].”
• Read the opinion: here.

“Federal Judge’s Recusal Sought in Transgender Sports Case” —

• “A Colorado federal judge is being asked to recuse himself from a case regarding a collegiate athletic conference’s policy for transgender athletes over procedures that he adopted for the use of preferred pronouns in his courtroom.”
• “US District Judge Kato Crews adopted practice standards in December that say attorneys are ‘invited and encouraged to identify the applicable pronouns of counsel, litigants, and witnesses at the earliest juncture possible.'”
• “Outlined in the ‘Uniform Civil Practice Standards,’ if someone uses the wrong pronoun, lawyers are encouraged to ‘bring that to the Court’s attention at the time, or through a subsequent email to Chambers.'”
• “Lawyers leading the challenge against the Mountain West Conference’s transgender participation policy argue that the civil practice standards restrict the speech of plaintiffs and their lawyers, and also demonstrates potential bias on the topics at issue in the case.”
• “‘An impartial forum cannot exist where the Court has so forcefully signaled the Courts’ personal views on sex and gender identity that the Court is willing to use its contempt power to enforce those views,’ the lawyers say in the motion.”
• “Crews, an appointee of President Joe Biden who began service in 2024, is one of six judges on the Denver-based federal trial court who’ve adopted similar practice standards. The motion calls for Crews to both step back from the case and for the standards to be scrapped.”

“NAFTA Case Useful In Bid To DQ Quinn Emanuel, Judge Says” —

• “A Florida federal judge has ruled that a Mexican oil company can use information on dismissed NAFTA arbitration and other documents in a bid to disqualify former counsel Quinn Emanuel, saying the evidence is relevant to underlying litigation over alleged funds transfers.”
• “In an order filed Thursday in the Southern District of Florida, U.S. Magistrate Judge Enjoliqué Lett granted a motion allowing Oro Negro Drilling Pte. Ltd. and various Singapore-based subsidiaries to supplement the record with three pieces of evidence. The companies are seeking to disqualify Quinn Emanuel Urquhart & Sullivan LLP from representing itself as they try to get the firm to hand over information in Mexican proceedings over the alleged improper diversion of at least $27 million.”
• “Judge Lett allowed Oro Negro to supplement the record with documents relating to a New York state court disqualification order, bank statements and a final award in North American Free Trade Agreement arbitration. The oil company brought a Section 1782 application in Florida federal court in May seeking discovery to use in separate but related bankruptcy and criminal cases in Mexico.”
• “Oro Negro’s Section 1782 application stems from 2021, when Quinn Emanuel represented the oil company in New York federal bankruptcy court. The law firm brought an adversary proceeding on behalf of Oro Negro and its subsidiaries, alleging unjust enrichment by the bondholders of one of the oil company’s projects.”
• “The application is an effort by Oro Negro to gather evidence of an alleged improper diversion of at least $27 million that should have remained in its accounts or in a bankruptcy estate in Mexico to benefit creditors. Gonzalo Gil White, the former CEO of Oro Negro’s parent company, is accused of improperly placing it into bankruptcy and also paying Quinn Emanuel $8.4 million to fund litigation against the bondholders.”
• “In December, Oro Negro filed a motion seeking permission to introduce the three categories of documents, arguing that Quinn Emanuel faces a conflict of interest in the Florida case.”
• “In a July 2024 motion to expedite discovery and disqualify Quinn Emanuel brought by Oro Negro, the company argued that the law firm is the sole possessor of records relating to its prior representation following a change in leadership at the oil drilling company.”
• “Quinn Emanuel responded to Oro Negro’s December motion in January, saying the records that the oil company wanted to introduce are irrelevant, duplicative and unrelated.”
• “The firm argued that a New York state court disqualification order due to its client relationship with a financial adviser to Oro Negro’s bondholders is irrelevant because the oil company wasn’t a party to that action. The bank statements showing an alleged $19 million improper transfer from a Mexican bank account are duplicative because Oro Negro already submitted them with its 1782 application, according to Quinn Emanuel. The firm also said a 134-page decision in the NAFTA arbitration decision is unrelated because the decision was based on jurisdictional grounds that have nothing to do with the application.”
• “But Judge Lett rejected Quinn Emanuel’s arguments, saying in her order that ‘a complete and comprehensive record should be before the court.'”
• “Judge Lett said the New York disqualification order ‘evinces a similar conflict of interest issue’ at the heart of Oro Negro’s request to take expedited discovery and its own disqualification motion, while the bank statements ‘provide evidence of petitioners’ contention’ that Quinn Emanuel improperly received $19 million and that the NAFTA arbitration dismissal decision ‘support[s] petitioners’ averments’ that the alleged improperly transferred money funded meritless litigation.”

“Hamilton lawmaker files suit against ‘Big Tobacco’ for flouting law” —

• “A Montana lawmaker who is also a vape store owner has filed a lawsuit in federal court against large tobacco companies for what he believes are illegal lobbying activities that violate a settlement agreement while forcing their vaping products onto shelves.”
• “Rep. Ron Marshall, R-Hamilton, in a lawsuit filed Wednesday, said that big tobacco lobbyists from some of the largest American companies like Altria Group and R.J. Reynolds Tobacco Company, are working against laws that would restrict vaping products for youth, while simultaneously using a Food and Drug Administration process to make only their products available to vape shop retailers.”
• “The lawsuit also accuses Montana Attorney General Austin Knudsen of failing to enforce Montana laws against the same tobacco companies because of donations those companies made to him during the 2024 election cycle and after. Marshall is suing under the ‘private attorney general doctrine,’ which, if the lawsuit is successful, allow him to collect attorney fees for the lawsuit.”
• “Marshall’s lawsuit says that, as part of the 1998 Tobacco Master Settlement Agreement in which Montana participated, the tobacco companies being sued are prohibited from certain lobbying and marketing activities, especially those which target youth.”
• “Marshall claims that lobbyist Mark Baker, acting on behalf of Altria and NJOY, as well as Edward Redding, lobbying for Reynolds and Reynolds Vapor, have lobbied members of the Legislature against his bill, which survived committee on a 11-9 vote along party lines, only to see it stall on the floor of the Montana House of Representatives. The bill has been on the floor since Jan. 28.”
• “Marshall said in his lawsuit that two ‘big tobacco’ lobbyists are instead trying to stall his legislation while advocating for an FDA registry law in Montana that would make it so that only vaping products endorsed by the Food and Drug Administration could be sold in Montana.”
• “‘Knudsen has an inextricable conflict of interest by virtue of the fact that both Altria and Reynolds were ‘platinum’ sponsors of his Jan. 11, 2025 inauguration party,’ the lawsuit stated. ‘Further, Attorney General Knudsen provided a Jan. 28, 2025 op-ed in the Montana Newsroom media publication, similar to those authored by other state attorneys general after lobbying from Altria and Reynolds, which evidences an abdication of his duties to enforce the portions of the Master Settlement Agreement.'”

“Willkie Removal in Bankruptcy Case Is Lesson in Ethics’ Limits” —

• “Willkie Farr & Gallagher LLP’s disqualification as bankruptcy counsel for brand manager Franchise Group Inc. is a lesson for Big Law firms that ethical walls and conflicts counsel won’t always solve larger issues over impartiality.”
• “The ruling from Judge Laurie Selber Silverstein of the US Bankruptcy Court for the District of Delaware severing a large company from its preferred Chapter 11 counsel is rare, but it signals to other law firms that building in ethical walls much earlier is key to keeping their lucrative debtor counsel positions.”
• “Willkie’s prior work with Franchise Group’s ex-CEO Brian Kahn and investment adviser B. Riley Financial Inc. on various matters that have become central to the bankruptcy raised conflict concerns that ultimately doomed its role in the case. The heart of the bankruptcy surrounds claims related to a soured 2023 take-private transaction involving all three parties.”
• “Silverstein’s ruling shows that ethical walls are fine if they’re put in place before there’s a problem, said Nancy Rapoport, a University of Nevada, Las Vegas law professor. But not afterward.”
• “‘Law firms have to think proactively every time they take on a new matter whether there is a risk that representing one client will cause the firm to want to pull its punches on behalf of a different client,’ Rapoport said.”
• “Franchise Group, which operates companies like Pet Supplies Plus, Vitamin Shoppe, and Buddy’s Home Furnishings, filed for bankruptcy in November 2024. It siloed four separate groups of Willkie attorneys from one another as they handled interactions involving the company, Kahn, and B. Riley, but there were staffing overlaps, Silverstein noted.”
• “‘What I hope is that this case sends up a flare that warns large law firms that ethical walls need to be put up sooner rather than later,’ London said.”
• “The Justice Department’s bankruptcy watchdog and a lender group argued that Willkie’s prior work for Kahn and B. Riley rendered the firm too conflicted to represent the company in bankruptcy. Kahn led Franchise Group in the controversial take-private deal worth about $2.6 billion that also involved B. Riley, which acquired a stake of about 31%.”
• “Wood pellet maker Enviva Inc. faced a similar conflict situation last year. Vinson & Elkins LLP was prevented from becoming bankruptcy counsel by a judge in the US Bankruptcy Court for the Eastern District of Virginia despite saying it had built ethical walls for its attorneys.”
• “The ruling also highlights that even with conflicts counsel in place, big issues like negotiating a bankruptcy plan is a core function of main counsel, Rapoport said. Conflicts counsel—lawyers brought in to handle smaller matters that lead counsel is conflicted out of—is intended to deal with a need for the ‘person-power’ of Big Law in major bankruptcies, she said.”
• “Large law firms represent so many clients that it’s impossible to find one that doesn’t have any conflicts, she said.”
• “‘What I’ve been seeing, starting with really broad advance conflicts waivers and continuing in cases like this one, is a Big Law philosophy that ethics rules can be finessed by client agreement alone,’ Rapoport said. ‘I’m seeing a trend toward pretending that conflicts aren’t a ‘thing’ for lawyers to worry about any more, and that troubles me.'”
• “Lawyers are subject to both the statutory rules in the bankruptcy code, the ethical rules governing lawyer conduct from the American Bar Association, and Delaware’s rules of professional conduct, she said.”
• “‘Interpreting these rules is like unpacking a colorful set of Russian nesting dolls, only to find that the center isn’t there,’ London said. ‘It’s empty.'”

“Proskauer Fights Another DQ Bid In NJ Hospital Antitrust Suit” —

• “A New Jersey federal magistrate judge was right to allow Proskauer Rose LLP to continue as counsel for RWJBarnabas Health Inc. since the firm’s prior advice to CarePoint Health on its use of COVID-19 relief funds is unrelated to the antitrust lawsuit currently playing out between the two companies, according to the firm.”
• “Proskauer Rose’s 2020 advice to CarePoint regarded only CarePoint’s use of Coronavirus Aid, Relief, and Economic Security Act funds. But the current dispute between CarePoint and RWJBarnabas has nothing to do with the CARES Act, the firm told a New Jersey federal court Tuesday.”
• “CarePoint also waived any conflict, first when it retained Proskauer Rose to advise it on its use of CARES Act funds and then again when it gave its consent to the firm’s representation of RWJBarnabas at the beginning of the antitrust litigation. Its two-year delay in raising the issue since also waives the conflict, according to the firm.”
• “So U.S. Magistrate Judge Cathy L. Waldor was right when she denied CarePoint’s effort to disqualify the firm and her ruling should stand, Proskauer Rose said in a brief in opposition to CarePoint’s appeal of Judge Waldor’s ruling.”
• “‘[N]ot only did CarePoint waive the conflict at the outset, this case has nothing to do with the CARES Act. Judge Waldor got it right. CarePoint’s motion is a litigation tactic, pure and simple,’ Proskauer Rose said.”
• “CarePoint sought to disqualify Proskauer Rose as counsel to RWJBarnabas in August, saying the firm’s prior representation of CarePoint related to CARES Act funds necessitates the firm’s ouster from the case.”
• “During the course of the antitrust litigation, more information has been revealed demonstrating further levels of involvement on the part of Proskauer Rose in CarePoint’s finances than the company was previously aware of, CarePoint argued in calling for the firm’s disqualification.”
• “And RWJBarnabas’ defense strategy of arguing that CarePoint’s financial difficulties stem from its founders’ extraction of cash from their hospitals rather than Barnabas’ alleged anticompetitive conduct has increased the relevance of the firm’s prior representation, according to CarePoint.”
• “Judge Waldor rejected those concerns and refused to disqualify the firm in December, when she said the present case wasn’t substantially related to work the law firm previously did for CarePoint.”
• “CarePoint has said the magistrate judge erred and asked the court to hear its disqualification motion de novo. But that’s the wrong standard, according to Proskauer Rose, which said that findings of fact and mixed questions of fact and law can only be reviewed for clear error.”
  “And disqualification decisions can only be reversed over an abuse of discretion, the firm added.”
• “CarePoint also argued in its appeal of Judge Waldor’s ruling that the magistrate judge used the ‘wrong standard’ in reaching her decision. The judge should have used New Jersey Supreme Court jurisprudence that found a waiver of conflict is appropriate only in ‘extraordinary circumstances,’ according to CarePoint.”
• “But Judge Waldor isn’t bound by those state Supreme Court cases, Proskauer Rose countered Tuesday. And even if extraordinary circumstances were required in order to find that CarePoint waived the conflict, Judge Waldor found that CarePoint’s two-year delay in raising the issue qualifies as extraordinary, the firm pointed out.”

And the latest from Bill Freivogel:

• In re Elna Medical Group Inc., 2025 QCCS 370 (CanLII) (Que. Super. Ct. Feb. 12, 2025).
  • This is a proceeding under the Canadian federal Companies’ Creditors Arrangement Act (“CCAA”). Elna is the primary debtor. The court has raised the issue of Law Firm’s representation of the monitor (“Monitor”) while representing other parties interested in the proceeding, including bidders in the Sale and Investment Solicitation Process (“SISP”).
  • Monitor has described various steps Law Firm has taken to guard the loyalty and confidentiality of various, some adverse, parties. However, the court expressed concern Law Firm is advising Monitor on the efficacy of these steps. The court requested Monitor to obtain from a law firm other than Law Firm to ensure Law Firm’s measures do not “compromise the integrity of the SISP and the judicial system.”
• Perry v. Monaco, 2025 WL 460804 (S.D.N.Y. Feb. 10, 2025).
  • In denying class certification, the court held a lawyer could not be both class representative and class counsel, citing Second Circuit authorities.
• Sniper Pressure Servs. Ltd v. Northbridge Gen. Ins. Co., 2025 ABKB 77 (CanLII) (Ct. K.B. Alb. Feb. 11, 2025).
  • Insured’s roof collapsed. InsCo paid Insured for the loss and has commenced a subrogation action against the tortfeasors. Insured brought this action against InsCo for additional amounts Insured says InsCo owes Insured.
  • The problem is Lawyer is representing InsCo in this case and is acting on InsCo’s behalf in the subrogation case. Insured claims Lawyer is acting as Insured’s lawyer in the subrogation case. Thus, Lawyer “represents” Insured in the subrogation case and opposes Insured in this case. In this very brief opinion the applications judge said the law was not “black and white.” Given the “circumstances” of these representations, the judge denied Insured’s application to remove Lawyer from this case.
• Brown v. Sprague, 2025 ABCA 41 (CanLII) (Ct. App. Alb. Feb. 7, 2025).
  • “[31] A lawyer who does business with a client has onerous fiduciary duties.” Lawyer, while in a law firm, represented a business client. At some point, the client entered into an agreement for Lawyer to become in-house general counsel of the client. That did not work out, and Lawyer brought this action against the client for breach of contract. The trial court dismissed the action. In this opinion the appellate court affirmed.
  • From our point of view, the concurring opinion is significant in two respects. First, it is a review of the ethics implications of lawyers doing business with clients across Canada and across other common law jurisdictions, including the U.S. (particularly application of Rule 1.8(a) of the ABA Model Rules). Second, the concurring opinion lays out a number of hypotheticals (which the majority did not endorse) illustrating what sorts of transactions might, or might not, implicate the fiduciary duties of lawyers. Common principles across common law jurisdictions is the transaction must be fair and reasonable to the client, and the client must be given an opportunity to get advice from another lawyer.

“Morgan Stanley Launches Conflict-of-Interest Probe” —

• “Morgan Stanley has announced it is conducting an in-house conflict-of-interest probe. The firm’s chief executive officer Philip Purcell, speaking at the Securities Industry Association’s national conference in Florida this past week, said Eric Dinallo, a former aide to Eliot Spitzer, would be leading the ‘conflicts examination effort…with the support of every business leader in our firm.'”
• “Separately, Merrill Lynch engaged in some house cleaning of its own, fining two senior executives responsible for supervising a trio of brokers fired for allowing hedge funds to engage in late trading.”
• “Dinallo, who joined Morgan Stanley in September, was instrumental in Spitzer’s investigations into the research and investment banking malpractices at brokerage firms.”
• “Spitzer’s investigation accused firms, including Morgan Stanley, Merrill Lynch and Citigroup, of allowing investment-banking concerns to corrupt the research of their analysts. The firms settled in April for $1.4 billion and a package of reforms intended to prevent these abuses in the future. Morgan Stanley agreed to pay $125 million for its part.”
• “Separately (and more recently), the NASD fined the firm $2 million for encouraging managers and brokers to compete over the sale of in-house mutual funds. When it announced the fines in September the NASD said Morgan Stanley ‘failed to have any supervisory systems or procedures in place to detect and prevent this widespread misconduct.'”
• “In his speech to the SIA, Purcell referred to a ‘conflicts crisis’ on Wall Street and said there is no easy way to fix the problem. ‘The conflicts are not always readily apparent,’ said Purcell. ‘So the first step in disclosure is disclosure to ourselves.'”
• “Morgan Stanley did not wish to comment further on the probe. Brokers at the firm were either unaware of the probe or tightlipped about its progress.”

“Family Ties Could DQ Judge From Hawaii Wildfire Litigation” —

• “The federal judge overseeing a proposed class action brought against Maui County, Hawaii, departments by Lahaina residents whose homes were destroyed in a devastating August 2023 wildfire has indicated she is ‘inclined’ to grant a recusal bid.”
• “U.S. District Judge Jill A. Otake indicated in a docket entry on Wednesday that she would be willing to step back from the case, one day after the plaintiffs filed a motion to disqualify her. Her brother Thomas M. Otake is an attorney representing individual plaintiffs in a separate suit that could soon be subject to a global settlement.”
• “Named plaintiffs Sean Stover, Cassandra Fairall, Mark Prevot, Eva Marie Adam and Randy Brock said in their Tuesday motion that Judge Otake must be disqualified from the case under the U.S. Code, which states the judge must step away because Thomas Otake ‘is known by the judge to have an interest that could be substantially affected by the outcome of the proceeding.'”
• “The named plaintiffs said that if the proposed global settlement pending before the state Supreme Court is approved, they intend to challenge it in their federal suit, which could affect attorney fees paid to Otake’s brother in his clients’ individual suit against the defendants. Whether such a challenge would be permitted is not clear.”
• “In her brief docket entry, Judge Otake asked the defendants to bring forward any objections to her recusal by Feb. 18, noting that ‘because the question of whether Judge Otake has the power to review the state court settlement would also warrant her recusal, any objections should not address that question.'”
• “The proposed class of Lahaina residents sued Maui County officials and several entities in July 2024, alleging the defendants variously failed to deenergize power lines, did not post fire watches and committed other negligence that led to wrongful forcible displacement of up to 12,000 local residents. Those named include the county itself, its emergency management agency and fire and public safety department, trustees of a massive land trust called the Estate of Bernice Pauahi Bishop, and local telecommunications and electric companies.”
• “The plaintiffs told Judge Otake in their motion that her brother’s clients could soon be implicated, if the federal suit causes the global settlement to be nullified.”
• “‘It is obvious that, if the [global settlement agreement] is approved in state court, there will be a challenge by us in federal court to the GSA on the procedures involved in state court in adopting the GSA and the adequacy of representation of absent class members by the [class plaintiffs’] attorneys in state court,’ the proposed class told Judge Otake in the motion.”
• “‘If our challenge to the GSA succeeds, under the terms of the GSA, defendants will probably declare the GSA to be null and void because of the substantial monetary claims of the Stover class plaintiffs,’ they added. ‘If the GSA is declared null and void, attorney Otake stands to lose his attorney’s fees in the state court proceeding as part of the GSA. On the other hand, attorney Otake’s fee is protected if our attack on the GSA in federal district court fails (although the GSA may fail if we prevail on appeal).'”

“Dentons’ UK Case Could Have ‘Chilling’ Effect on Anti-Money Laundering Enforcement” —

• “Dentons, the world’s largest law firm, is at the centre of a pivotal battle between England’s legal regulators over a ruling that it is claimed could allow law firms to bypass anti-money laundering laws with impunity.”
• “The extraordinary High Court case in London—involving the Solicitors Regulation Authority (SRA) and Solicitors Disciplinary Tribunal—revolves around Dentons U.K. and Middle East and a banker known only as ‘Client A’ who was eventually sentenced to 15 years imprisonment and ordered to pay $39 million to the bank he’d chaired.”
• “In 2024, the Tribunal found that Dentons, which maintains its innocence, breached money laundering regulations by failing to properly investigate the source of the banker’s wealth. The tribunal decided there was no breach of SRA principles or code of conduct, however. No sanction was given and the case was dismissed. The SRA then appealed to the High Court with a hearing held in late January.”
• “‘If the (Dentons) judgment is permitted to stand, it might send a very unhelpful message to the profession—that law firms can fail in their obligations under the Money Laundering Regulations 2007 (MLR 2007) and get away without any regulatory sanction,’ the SRA argued in its written court submission distributed at a January 29 hearing. ‘That is particularly unhelpful given the financial incentives for law firms to act in high-value transactions or for high net worth politically exposed persons.'”
• “The SRA furthermore argues that the Tribunal’s decision creates uncertainty as to whether or when the legal regulator should take regulatory action against law firms for breaches of anti-money laundering legislation. ‘If the judgment were permitted to stand, it might create a chilling effect on the SRA’s willingness to take regulatory action for breaches of anti-money laundering legislation,’ it warned.”
• “Dentons has argued that it adhered to MLR 2007 (eventually replaced by the Money Laundering Regulations 2017) to establish the source of the client’s funds and wealth, and that any breach was inadvertent.”
• “The Dentons case is the latest flashpoint in an ongoing battle between England’s legal regulators over disciplinary powers, with many of London’s top firms keen to avoid getting caught in the crossfire.”
• “Dentons isn’t the only law firm under scrutiny. The SRA crackdown on law firm money laundering has led to 23 cases involving £75 million being referred to the National Crime Agency, while the U.K. Treasury investigated two additional cases of suspected Russian sanctions breaches totaling over £300,000, according to SRA figures provided to Law.com in October. Another 410 matters have been flagged as potential risks.”

“Franchise Group’s Bankruptcy Law Firm Disqualified Over Conflicts of Interest” —

• “The owner of the Vitamin Shoppe and Pet Supplies Plus chains must find new lawyers for its chapter 11 bankruptcy after its law firm Willkie Farr & Gallagher was found to have disqualifying conflicts of interest.”
• “Willkie can’t be retained as counsel by Franchise Group because of the firm’s past work for Brian Kahn, the company’s founder and former CEO, Judge Laurie Selber Silverstein ruled on Wednesday. The ruling marks a rare disqualification of a major law firm in bankruptcy court, where lawyers often have a wide berth to manage potential conflicts.”
• “Willkie had argued that it could serve as bankruptcy adviser and manage any conflicts through the use of separate counsel. The firm also said that its disqualification could be disastrous for Franchise Group, which has been pushing to preserve retail operations through the bankruptcy case.”
• “A group of junior lenders and government lawyers challenged Willkie’s application to serve as bankruptcy counsel, arguing the firm couldn’t be an unbiased adviser because of its ties to Kahn, who stepped down as Franchise Group’s CEO last year amid federal investigations into his role in the collapse of hedge fund Prophecy Asset Management. “
• “Silverstein noted in her ruling that Willkie had advised Kahn on his 2023 buyout of Franchise Group, then represented by separate counsel. “
• “Franchise Group has been seeking outside buyers in bankruptcy while also preparing to hand over ownership to senior lenders owed over $1 billion. Junior lenders holding over $500 million in loans at Franchise Group’s parent entity have argued recoveries require litigation against Kahn and investment bank B. Riley Financial, which financed the 2023 buyout. “
• “Franchise Group and its lawyers at Willkie have argued any conflicts posed by the firm’s prior work for Kahn and his other businesses aren’t central to the bankruptcy case, which has focused on transferring the business to a buyer or its creditors.”
• ‘In her ruling, however, Selber Silverstein disagreed and said the bankruptcy isn’t only about the sale of assets. ‘Willkie cannot draft parts of the [restructuring] plan that touch upon claims against Kahn,’ she said. “
• “Willkie advised Kahn on civil and criminal cases against him in connection with the demise of Prophecy, court papers show. The law firm also previously advised B. Riley Financial, which is being investigated by the Securities and Exchange Commission over ties to Kahn.”
• “When allegations about Kahn’s role in Prophecy’s demise arose in 2023, Willkie erected a wall within the firm between teams working for Kahn and his affiliates and for Franchise Group. However, Willkie didn’t put the separation in place until after Kahn’s buyout was completed, creating conflicts for the firm in designing Franchise Group’s restructuring plan, Silverstein said. “
• “The junior lenders that advocated against Willkie’s retention have argued that while they thought Kahn held equity in Franchise Group’s parent entity, he had taken out a secret $200 million loan from B. Riley and pledged his stake as collateral.”

“Tesla Says Judge DQ Bid In Crash Suit Arrived On Time” —

• “Tesla Inc. has doubled down on its bid to disqualify a California federal judge from an accident case over his prior law firm’s work, rejecting the plaintiff’s argument that the automaker filed the motion too late.”
• “The electric car company is attempting to get U.S. District Judge P. Casey Pitts disqualified from a case because his previous law firm, San Francisco-based Altshuler Berzon LLP, worked on lawsuits against Tesla, while he was still with the firm. Judge Pitts was first assigned to this case in August 2023, but the plaintiff is questioning why Tesla waited until four months before the trial was due to start to push for the disqualification.”
• “‘There is no per se requirement that a recusal motion be filed by any specific time. Instead, the purpose of the timeliness requirement, is to ensure that litigants do not use recusal motions for strategic purposes — such as by seeking recusal after receiving adverse rulings,’ Tesla wrote in a brief filed Friday in U.S. District Court for the Northern District of California. ‘Tesla did not file this motion in response to any adverse rulings or for any other improper strategic reasons, but rather because a reasonable observer would question Judge Pitts’ ability to remain impartial.'”
• “With a trial date of May 12 looming, Tesla added, ‘Judge Pitts has not presided over any substantive issues in this case and has not issued any rulings against Tesla. Therefore, no purpose would be served by denying this motion on timeliness grounds, and the Court should consider it on the merits.'”
• “Judge Pitts was sworn into the bench in August 2023, but he had been connected with Altshuler Berzon since 2003, when he worked two years as a paralegal with the firm. After he completed law school, he rejoined the firm as an associate in 2009 and became a partner in 2017.”
• “During his time at Altschuler Berzon, the firm represented several high-profile cases against the carmaker, including defending a jury’s $136 million verdict against Tesla, a case that was still pending when Judge Pitts took the bench. That amount was later reduced to $3.2 million.”
• “In mid-January, Tesla first filed the motion to have Judge Pitts disqualified. A week later, Jackson responded saying Tesla’s motion was flimsy and would set a bad precedent.”
• “‘To adopt Tesla’s logic would result in an absurd precedent: any lawyer who was ever a partner in a firm that litigates cases and then is elevated to the bench would have to recuse herself or himself simply because other partners in the firm tried cases against a party having business before the judge,’ Jackson said in her response. ‘Not only would such a rule have a chilling effect on the practice of law, it would unduly burden the judiciary by requiring disqualification of untold numbers of judges.'”

“Trump’s ex-lawyer won’t pledge to recuse if confirmed for Justice Dept. post” —

• “Donald Trump’s former personal attorney and pick for deputy attorney general refused to commit on Wednesday to recuse from any Justice Department investigations involving the criminal cases in which he formerly represented the president.”
• “Todd Blanche — who defended Trump in the two cases brought by special counsel Jack Smith as well as the New York state case that led to Trump’s conviction on 34 felony counts last year — bristled at suggestions from Democrats during his Senate confirmation hearing that his past representation of the president would pose a ‘blatant conflict of interest’ in his new role.”
• “‘There will be conflicts, and I will not violate my ethical obligations,’ Blanche told members of the Senate Judiciary Committee. But he resisted their calls for a firm pledge to step aside should matters arise connected to those cases.”
• “That hypothetical scenario became a realistic prospect last week as Attorney General Pam Bondi announced the formation of a ‘Weaponization Working Group’ tasked with investigating, among other things, any federal cooperation with the New York case and Smith’s prosecution of Trump’s alleged mishandling of classified documents and efforts to overturn the results of the 2020 presidential election.”
• “The task force will operate with support from the deputy attorney general’s office, Bondi said in a memo.”
• “‘I find it remarkable that you feel you could participate in an investigation of people when you represented the president in those same matters,’ Sen. Adam Schiff (D-California) told Blanche in a particularly heated exchange.”
• “But despite those brief flashes of tension, Blanche emerged from the hearing widely expected to sail through the confirmation process. So, too, was Trump’s nominee to lead the Justice Department’s antitrust division, Gail Slater, who also appeared before the Judiciary Committee on Wednesday.”
• “Blanche’s law partner, Emil Bove, is serving as acting deputy attorney general and is slated to move into the role of principal associate deputy attorney general should Blanche be confirmed. Trump has also nominated D. John Sauer — who argued his presidential immunity case before the Supreme Court last year — for the role of solicitor general.”
• “‘Just how far down the line do we have to go at the Department of Justice to find someone who isn’t conflicted?’ Sen. Peter Welch (D-Vermont) asked Blanche on Wednesday, pressing him on his own connections to the president.”
• “Blanche rejected the premise of the question. He said he’d rely on the advice of career ethics officials at the Justice Department to determine when he needed to step aside.”
• “He hedged when asked directly whether he would refuse any order from Trump to do something unethical or illegal.”
• “‘I don’t think President Trump is going to ask me to do anything illegal or immoral,’ Blanche said. ‘I’ve spent thousands of hours with him over the past few years, so I don’t just say that flippantly. I will follow the law. Period.'”

“State Bar Ethics Opinion Determines Texas Lawyers Can’t Join a Firm With Non-Lawyer Partners” —

• “Texas-licensed lawyers practicing in Texas cannot join a firm with a non-lawyer partner or owner, even if that arrangement is allowed in that jurisdiction, a State Bar of Texas ethics committee found in a new opinion.”
• “The opinion dealt with the question of whether a Texas lawyer practicing in Texas could join a Washington, D.C., firm partnership that lawfully in that jurisdiction includes a non-lawyer partner. As outlined in the statement of facts in the opinion, the firm would have offices in Texas and Washington, D.C., the Texas lawyer would office in Texas and provide legal services to clients in Texas, and revenue generated by the Texas lawyer would be shared with the firm’s partners.”
• “The opinion from the Professional Ethics Committee for the State Bar of Texas found that Texas’ prohibition against non-lawyer-owned firms applies in that situation.”
• “In Texas, the applicable rule is Texas Disciplinary Rule of Professional Conduct Rule 5.04(b), which provides that ‘[a] lawyer shall not form a partnership with a non-lawyer if any of the activities of the partnership consist of the practice of law.’ According to the ethics opinion, Rule 5.04(d) extends the prohibition against non-lawyer law firm ownership to professional corporations or associations.”
• “In Washington, D.C., it is allowed under District of Columbia Rule of Professional Conduct 5.4(b).”

“Insurer Tried To ‘Embarrass’ Cadwalader, NC Court Told” —

• “Cadwalader Wickersham & Taft LLP has accused a Lloyd’s of London syndicate of attempting to ’embarrass’ the firm by publicly revealing the firm’s data breach recoveries amid the insurer’s bid to toss a coverage suit stemming from a 2022 hack.”
• “On Thursday, in response to a motion to dismiss by Lloyd syndicate Beazley, Cadwalader accused the insurer of breaching its confidentiality obligations to its insured by disclosing policy information publicly, including the amount Cadwalader received from other insurance carriers stemming from the hack.”
• “According to Cadwalader, the public disclosure of such financial information, which the response notes was later published in a Law360 article, establishes claims for bad faith denial of insurance coverage and unfair and deceptive trade practices.”
• “‘An insured should not need to anticipate that its insurer will use confidential information to publicly disparage it when the insured seeks to secure the very coverage it bargained and paid for,’ the firm said Thursday. ‘Suffice to say, the law must hold to account the insurer that treats its insured as Beazley has treated Cadwalader here.'”
• “Cadwalader filed suit against Beazley in July in a North Carolina state court, alleging the company failed to reimburse the law firm for expenses related to a November 2022 data breach.”
• “Beazley subsequently urged the North Carolina Business Court to toss the suit, saying the law firm failed to include three other carriers included on the insurance policy at issue.”
• “During the back-and-forth, Cadwalader sought to seal the complaint to shield details regarding its finances and insurance coverages, while Beazley fought to unseal the filings. In its July motion, Beazley included the amount of Cadwalader’s insurance recoveries under other policies for the data risk event at issue.”
• “‘Beazley trumpeted the confidential information in the opening sentences of its first submission to this court — a submission, moreover, that had nothing to do with the confidential information that Beazley gratuitously and improperly disclosed,’ the firm said. ‘Beazley’s disclosure was an obvious and intentional act of bad faith.'”
• “The firm previously contended that unsealing the information would make it more difficult to negotiate insurance rates in the future and act as an incentive to infiltrate its systems. In an amended complaint, the firm added claims for breach of the confidentiality agreement, bad faith and violation of North Carolina’s Unfair and Deceptive Trade Practices.”

“Accountant-Owned Law Firms Could Blur Ethical Lines” —

• “In a novel move, Big Four accounting firm KPMG LLP has taken the first step in seeking to own and operate a law firm in the U.S.”
• “A far cry from regulating attorneys, enforcing and supervising the practice of law by nonattorneys could prove challenging.”
• “Attorney oversight or, more to the point, the supervision of the practice of law, is of paramount concern not only to control and guide the practice of law, but the governing rules also help foster a sense of trust and transparency between practitioners and the public.”
• “Whether it be an accountant, an attorney, or anyone — or anything — in between, we must collectively ensure that the ethical and procedural rules governing the practice of law apply uniformly and fairly, and with an eye toward the client’s best interests.”
• “Rule 5.4, titled ‘Professional Independence of a Lawyer,’ generally prohibits an attorney or firm from sharing fees with a nonlawyer, and it prohibits an attorney from forming ‘a partnership with a nonlawyer if any of the activities of the partnership consist of the practice of law.'[2]”
• “The stated goal of the rule is to ‘protect the lawyer’s professional independence of judgment.'[3]”
• “The regulation of educated and trained attorneys is no easy task, but it may ultimately prove less demanding than enforcing those rules against those without that level of legal training and experience.”
• “On the other hand, proponents of the recent reforms disagree with the traditional restrictions of Rule 5.4. In 2020, amid its efforts to abandon Rule 5.4, the Arizona task force responsible for the amendments said in a statement that it was driven by ‘an ethical obligation to assure that legal services are available to the public and that if the rules stand in the way of making those services available, the rules should change.'[6]”
• “According to recent studies, a disproportionate number of Americans cannot effectively engage the legal profession. Reportedly, nearly 80% of the 20 million civil cases filed in state courts each year involve at least one unrepresented party,[7] and more than half of small businesses facing a legal issue cannot engage counsel.[8]”
• “Reportedly, KPMG Law US’ recent application to the Arizona Supreme Court comprised the first overture by an accounting firm to take advantage of these laws. A court committee is considering the application and whether to provide the required licensure.”
• “According to a Reuters article, KPMG said it would lean ‘on [its] network and technology to provide compliance and contract-related services and other outsourced legal work in the United States.'”
• “We can expect considerable debate and potential pushback. Notably, the ABA House of Delegates reaffirmed its commitment to Rule 5.4 and overwhelmingly passed a resolution stating that any modification to the rule, as drafted, is ‘inconsistent with the core values of the legal profession.'”
• “There is room for cooperation and competition among the practice of law and accounting. This overlap is perhaps inevitable, as most business and financial activity triggers legal implications, and vice versa.”
• “The traditional model of tax, audit and advisory services has expanded in most accounting firms to include litigation support services and nearly every aspect of consulting, which historically may have been handled by an attorney. Likewise, attorneys often provide counsel on tax and other accounting issues.”
• “Outside of the U.S., where Rule 5.4 had been a nonissue, accounting firms have greatly expanded their staff to include attorneys poised to address the growing list of available services.”
• “Critically, however, while there is some overlap, the practice of law and accounting are different, particularly with regard to the distinct ideologies that come into play.”
• “Client confidentiality and the attorney-client privilege serve as cornerstones of an attorney’s ethical and professional obligations, as set forth in the model rules.”
• “In contrast, accounting is based on independence and objectivity. When it comes to an audit, for example, the responsibility to the public is the auditor’s primary concern, with an emphasis on supervision and peer review.”
• “Against this backdrop, when considering the potential differences in professional ethics between the two professions, the CPA Journal once pondered the difficulty for an attorney ‘to envision practicing in the diverse environment of the CPA firm while retaining their client-based ethical system.'[12]”
• “If change is imminent, the distinction between the practice of law and accounting may continue to blur. It follows that professionals in either field may find it more difficult to maintain and set client expectations.”

“2 Law Firms Disqualified Over Litigation Funding” —

• “Two law firms have been disqualified from representing the defendants in a New Jersey patent dispute because they were getting funding from a nonparty. The ruling serves as a reminder of the ethical questions that can arise when litigants accept funds from nonparties who are willing to pay the bills.”
• “U.S. Magistrate Judge Andre M. Espinosa of the District of New Jersey, in Harish v, Arbit, ruled that Saiber of Florham Park, New Jersey, and Banner Witcoff of Chicago could not continue representing two inventors, because the lawyers were being funded by a nonparty producer of medical test equipment—Lincoln Diagnostics of Decatur, Illinois—which had an interest in the outcome.”
• “The case involves three people who were listed on the patent in 2018 as inventors of a device for conducting allergy skin tests without the discomfort from traditional methods using multiple injections.”
• “In 2021, Harish sued Arbit and Rubenstein, claiming he is the only inventor of the device and seeking to remove the others’ names from the patent, according to the complaint. Later, Harish moved to disqualify Saiber and Banner Witcoff from representing Arbit and Rubinstein, alleging that their bills are being paid by Lincoln. Espinosa granted the motion on Jan. 31.”
• “‘New Jersey RPC 1.8(f) outlines the circumstances where a lawyer can accept money on behalf of a client from a third party,’ said Noam J. Kritzer of Kritzer McPhee in Florham Park, New Jersey, who represents Harish. ‘If litigation is like driving a car, third-party funders are allowed to pay for gas but are not allowed to program the GPS or touch the steering wheel. Here, the attorneys at Banner Witcoff were serving Lincoln’s interests instead of defendants’ interests and the order explains in great detail the ethical violations the attorneys committed under NJ RPC 1.8(f).'”
• “The parties to the payment arrangement could not demonstrate that the client gave informed consent; and they failed to demonstrate that there was no interference with the lawyer’s independence of professional judgment or with the lawyer-client relationship, Espinosa wrote.”
• “‘Defendants present their respective declarations as evidence that the fee arrangement here has not interfered with their lawyers’ independent judgment. But this does not establish that Lincoln has not directed, regulated, or interfered with defense counsel’s professional judgment. The record makes clear that Lincoln is directing, regulating, and interfering with defense counsel’s professional judgment in its representation of defendants, and thus, the second Grand Jury condition is not satisfied,’ Espinosa wrote.”
• “Also, the parties failed to demonstrate there was no communication between the lawyer and the third-party payer concerning the substance of representation of the client, and that once the third-party payer commits to pay for the representation of another, the third-party payer shall not be relieved of its continual obligations to pay without leave of court brought on prior notice to the lawyer and the client.”
• “‘Defendants present their respective declarations as evidence that the fee arrangement here has not interfered with their lawyers’ independent judgment. But this does not establish that Lincoln has not directed, regulated, or interfered with defense counsel’s professional judgment,’ Espinosa wrote. ‘The record makes clear that Lincoln is directing, regulating, and interfering with defense counsel’s professional judgment in its representation of defendants, and thus, the second Grand Jury condition is not satisfied.'”

“New York judge resigns after saying he can’t be on a jury since he thinks all defendants are guilty” —

• “An upstate New York judge has resigned after he got out of jury duty by claiming that he couldn’t be impartial — because he thought everyone brought before a court is guilty.”
• “Richard T. Snyder, who had been a justice of the Petersburgh Town Court for about a decade, left his post after being charged with misconduct by a state judicial commission, officials said Tuesday.”
• “According to court transcripts, Snyder tried to avoid serving on a jury in 2023 by first identifying himself as a judge and then saying, ‘I know everybody come in front of me. I know they are guilty. They would not be in front of me.'”
• “He was eventually dismissed from serving on the jury after he continued to argue that he could not be impartial, saying ‘No. It would not be fair,’ court transcripts from a special grand jury empanelment in Rensselaer County show.”
• “The judge who was overseeing the jury selection reported Snyder to state officials.”
• “At a judicial commission hearing the following year, Snyder said he understood that defendants are supposed to be considered innocent until proven guilty but that he still felt that people wouldn’t be in court if they didn’t commit crimes.”
  “‘I meant, that they were guilty because they did something wrong. But they’re not guilty ‘til they come to court. They’re innocent ’til proven guilty,’ he told the commission. ‘They did something wrong. That’s why they got a ticket. But they’re not guilty,’ he added.”
• “Snyder, who was elected as a justice, is not an attorney and has agreed to never serve as a judge again.”
• “In a statement, Robert H. Tembeckjian, administrator of the New York State Commission on Judicial Conduct, said ‘there is no place on the bench for someone who so deeply misunderstands the role of a judge and the administration of justice.'”
• “‘It is bad enough that a judge would seek to avoid such a fundamental civic responsibility as jury service. It is astounding that the judge would claim an inability to be impartial, and to declare under oath that the accused must be guilty or they would not be in court,’ he said.”

“Philly Judge Rejects Ex-Kline & Specter Attorney’s DQ Bid” —

• “A former Kline & Specter partner can’t disqualify an attorney representing it from his lawsuit against the firm, a Philadelphia judge has determined, because he couldn’t prove he had an attorney-client relationship with the lawyer before he resigned.”
  “Terrance DeAngelo did not submit any substantial emails, agreements or related documents to show he had a privileged attorney-client relationship with Joseph R. Podraza, who advised him when he sat for a deposition in a separate case while DeAngelo was still employed by Kline & Specter, wrote Judge James C. Crumlish in an opinion published Tuesday in the Philadelphia Court of Common Pleas. Podraza now represents Kline & Specter as defendants in DeAngelo’s breach of contract suit, but he should not be removed from the case, the judge said.”
  “Judge Crumlish issued the order denying the disqualification in December and filed the opinion this week in response to notification from DeAngelo that the decision has been appealed to the Superior Court. The opinion asks the Superior Court to affirm the denial, saying DeAngelo did not credibly show he believed he had a privileged relationship with Podraza.”
  “In a statement to Law360 Pulse Friday, Podraza said Judge Crumlish’s opinion ‘speaks volumes and requires no amplification from us.'”
  “DeAngelo’s attorney could not be reached for comment Friday.”
  “In December, Judge Crumlish also granted Kline & Specter’s motion to send the case into arbitration and stayed the proceedings in his court. DeAngelo did not appeal those orders.”
  “According to his motion filed in December seeking the disqualification, Podraza had counseled DeAngelo when he appeared in July for a deposition in a separate lawsuit filed by his friend Thomas Bosworth against Kline & Specter while DeAngelo was still employed there.”
  “DeAngelo asked for legal advice from Podraza about the influence the deposition would have on his own employment at Kline & Specter, thinking Podraza was his attorney, according to the motion. After DeAngelo submitted his resignation in September, Podraza clarified in a letter that he is the firm’s attorney and his representation of DeAngelo was limited to the deposition, the motion said. DeAngelo said in his motion that he shared information with Podraza thinking it was a privileged relationship, and Podraza should be disqualified from a case where he could appear as a material witness.”
  “In his underlying suit against Kline & Specter, DeAngelo makes several claims against it, including that it breached its contractual obligations by failing to treat him in a professional or collegial manner by removing him from cases.”
  “Judge Crumlish points to an email DeAngelo sent to Podraza and copied to Kline & Specter’s principals, Thomas R. Kline and Shanin Specter. The email said, ‘Aren’t you my lawyer? I did not receive any notice from you that you were not continuing to represent me.’ This is the only written material submitted by DeAngelo to establish he believed he had an attorney-client relationship with Podraza, the judge said.”
  “There are no other emails, transcripts from the July deposition, or signed agreements to establish such a relationship, the opinion said. Most notably, Judge Crumlish wrote, Podraza did provide any written document that he would abandon Kline & Specter as clients in order to represent DeAngelo.”
  “Additionally, if DeAngelo truly believed Podraza was his lawyer, he would have notified his attorney in advance of his plan to resign and sought advice on how to proceed, according to the opinion.”