Bressler Risk Blog

Always interesting spots by David Kluft: “Can an attorney agree to be bound by a settlement agreement’s non-disparagement clause?” —

• “A TN lawyer representing a plaintiff in a product liability case was presented with a settlement agreement containing a provision that would make the lawyer a party to the agreement and prohibit him from disparaging the defendant corporation thus limiting his ability to use and discuss negative information about the defendant in other cases.”
• “The TN Board of Professional Responsibility opined that the agreement would violate public policy because it would restrict public access to the information, undercut the role of plaintiff’s counsel as an industry watchdog, and create a potential conflicts with the interests of future clients who may have a claim against the defendant. The attorney therefore cannot ethically agree to be bound by the non-disparagement provision.”
• See: Formal Ethics Opinion 2025-F-171

“UK judge warns of risk to justice after lawyers cited fake AI-generated cases in court” —

• “Lawyers have cited fake cases generated by artificial intelligence in court proceedings in England, a judge has said — warning that attorneys could be prosecuted if they don’t check the accuracy of their research.”
• “High Court justice Victoria Sharp said the misuse of AI has ‘serious implications for the administration of justice and public confidence in the justice system.'”
• “In the latest example of how judicial systems around the world are grappling with how to handle the increasing presence of artificial intelligence in court, Sharp and fellow judge Jeremy Johnson chastised lawyers in two recent cases in a ruling on Friday.”
• “They were asked to rule after lower court judges raised concerns about ‘suspected use by lawyers of generative artificial intelligence tools to produce written legal arguments or witness statements which are not then checked,’ leading to false information being put before the court.”
• “In a ruling written by Sharp, the judges said that in a 90 million pound ($120 million) lawsuit over an alleged breach of a financing agreement involving the Qatar National Bank, a lawyer cited 18 cases that did not exist.”
• “In the other incident, a lawyer cited five fake cases in a tenant’s housing claim against the London Borough of Haringey. Barrister Sarah Forey denied using AI, but Sharp said she had ‘not provided to the court a coherent explanation for what happened.'”
• “The judges referred the lawyers in both cases to their professional regulators, but did not take more serious action.”
• “Sharp said providing false material as if it were genuine could be considered contempt of court or, in the ‘most egregious cases,’ perverting the course of justice, which carries a maximum sentence of life in prison.”
• “She said in the judgment that AI is a ‘powerful technology’ and a ‘useful tool’ for the law.”

“Judge Rules Law Firm in Litigation With Musk Can Hire Ex-SEC Chief Litigation Counsel” —

• “The U.S. District Court for the Southern District of New York ruled Thursday that Bernstein Litowitz Berger & Grossmann can hire as a partner Jorge G. Tenreiro, who held a number of positions at the U.S. Securities and Exchange Commission, including chief litigation counsel, and, most recently, served in the agency’s Office of Information Technology.”
• “Defendant Elon Musk argued that the ‘extremely short time’ that elapsed between the filing of an SEC action over the billionaire’s purchase of Twitter Inc. and Tenreiro’s outreach to BLB&G, which is lead counsel for the plaintiff, the Oklahoma Firefighters Pension and Retirement System, in a class action over the Twitter acquisition, created an ‘appearance of impropriety.'”
• “But U.S. Magistrate Judge Gabriel W. Gorenstein disagreed.”
• “‘[T]he timing of Tenreiro’s departure appears to have been precipitated by his being assigned to detail in an office with a focus unrelated to his prior work and the agency’s offering of a voluntary separation package,’ Gorenstein found. ‘More to the point, given that Tenreiro did not know that BLB&G was counsel in this case until sometime between March 15 and March 17, 2025, the length of the period between Tenreiro’s alleged involvement with SEC actions against Musk and outreach to BLB&G is immaterial.'”
• “Oklahoma Firefighters brought the underlying case, alleging that the defendants, who include Musk, committed securities fraud when Musk concealed his ownership stake in the social media platform X, then operating as Twitter. The putative class action is on behalf of investors who sold Twitter securities between March 25, 2022, and April 4, 2022.”
• “And on April 22, BLB&G asked the Southern District of New York to approve a ‘routine ethical screen’ of Tenreiro, court records show. BLB&G later clarified that the ex-SEC employee accepted an offer of employment from the law firm contingent on the court’s approval of the screening procedures, according to the opinion and order.”
• “Historically, Tenreiro was employed by the SEC from December 2013 to April 2025. Between October 2022 and November 2024, he secured several rulings against prominent digital asset companies as the deputy chief of the SEC’s Crypto Assets and Cyber Unit. In December 2024, Tenreiro was promoted to the agency’s chief litigation counsel.”
• “During Tenreiro’s tenure as chief litigation counsel, the SEC sued Musk in connection with his purchase of Twitter shares. Tenreiro claimed that he did not ‘substantively participate in the SEC investigation’ or any related matter.”
• “In January, Tenreiro began looking for outside work and was transferred to the IT department before his departure from the agency. The next month, an ex-classmate of Tenreiro’s connected him to BLB&G, and Tenreiro claimed that he first became aware of the law firm being counsel in the underlying case in mid-March.”
• “And in the opinion and order, Gorenstein found that the conflict check—which included Tenreiro identifying the cases brought by the law firm and ones connected to the SEC, and a consultation from a ‘professional legal ethics expert’—was sufficient under the Code of Professional Responsibility.”
• “‘For similar reasons, we find that Tenreiro’s ‘likes’ of social media posts do not create an appearance of impropriety, particularly since the posts have nothing to do with the SEC enforcement action against Musk or the instant litigation,’ Gorenstein ruled. ‘Accordingly, we conclude that BLB&G’s screening procedures cure Tenreiro’s conflict of interest.'”

Kerri Riley, Global Head of Conflicts at Quinn Emanuel dropped me a note (I always welcome reader tips!) to note that she’s co-authored an amendment to Rule 7.3 to prohibit solicitation of respondents in domestic violence cases prior to being served: “Proposed Amended Rule of Professional Conduct 7.3” —

• “Amended Rule 7.3 would: Address the documented risks, including a heightened risk of violence and death during separation from an abuser, by ensuring petitioners can complete safety planning and avail themselves of protections afforded by the courts. Creates a clear temporal boundary for when solicitation is permissible; and Address a specific, documented public safety concern.”
• “(f) Even when not otherwise prohibited by this rule, a lawyer shall not solicit professional employment from a respondent in a domestic violence restraining order proceeding in connection with such proceeding, until after the respondent has been legally served with notice of the proceeding and proof of service appears on the court docket.”
• “[5] Paragraph (f) addresses solicitation in domestic violence restraining order proceedings where solicitation of respondents prior to legal service may increase the risk of petitioner facing abuse, violence or even death. This limitation serves the State Bar’s mission to protect the public, as recognized in Business and Professions Code section 6001.1”
• Comments should be submitted using the online Public Comment Form. The online form allows you to input your comments directly and can also be used to upload your comment letter and/or other attachments.

“Judiciary Panel Seeks Comment on Proposal to Require ‘Grandparent’ Corporations Disclosure” —

• The federal judiciary’s Committee on Rules of Practice and Procedure will seek public comment on a proposal to require corporations named in lawsuits to disclose their parent and ‘grandparent’ organizations. The proposed rule was sparked by a suggestion from U.S. Court of Appeals for the Eighth Circuit Judge Ralph Erickson, who raised concerns that a judge could unknowingly hold a financial interest that requires recusal.”
• “‘Although there have not been serious concerns that judges have acted in a biased manner due to the lack of information on corporate grandparents or great grandparents, it can threaten perceptions of the court’s legitimacy and impartiality when a judge presides over a case in which she has an arguable financial interest,’ said Tenth Circuit Judge Allison Eid.”
• “The amendments approved for public comment would require disclosing any ‘parent business organization and any publicly held business organization that directly or indirectly owns 10% or more’ of a party.”
• “‘Requiring disclosure of direct or indirect owners of 10% or more of a party intends to prompt disclosure of grandparents or others who may own a significant share of a party via another intermediate entity,’ Eid said. ‘The language, in our view, is not perfectly precise, but the parties have long been trusted to meet their disclosure obligations.'”
• “The disclosure proposal now goes before the Judicial Conference of the United States and, if approved, to the U.S. Supreme Court for final approval.”

“Criminal: Motion to disqualify attorney for co-defendant is rejected” —

• “Where two executives of a home health agency were charged with health care fraud and money laundering, the COO’s motion to disqualify the attorney representing the owner was denied. The attorney previously represented the company, and not the COO. And the COO failed to show what, if any, information would be subject to attorney-client privilege.”
• “According to the indictments, Bryant-Taylor served as an owner, director, president and Chief Operating Officer of 1st Adult N Pediatric Healthcare, a home health agency that provided private duty nursing and personal care throughout Virginia. Okocha was an owner, director, vice president and treasurer of 1st Adult.”
• “Bryant-Taylor now moves to disqualify attorney Robert Jenkins from representing co-defendant Okocha. Bryant-Taylor alleges that during Jenkins’ prior representation of 1st Adult, Bryant-Taylor ‘revealed confidential information about herself and 1st Adult and 1st Adult’s legal situation to attorney Jenkins so that he could adequately represent her company in the civil litigation.'”
• “Bryant-Taylor is now ‘concerned that if she goes to trial and chooses to testify in her own defense, that Attorney Jenkins, in the course of representing Josephine Okocha, may use information the Defendant had revealed to him in preparation of the civil suit for purposes of cross examination or in other ways to her detriment and in violation of attorney/client privilege.’ Thus, she asks that Jenkins be disqualified so that her ‘rights to attorney/client confidentiality be fully protected.'”
• “Bryant-Taylor was not in an attorney-client relationship with Jenkins such that she can now invoke attorney-client privilege on behalf of herself. Although she was 1st Adult’s ‘contact person’ for Jenkins during his representation of the company in the civil case, the engagement letter disclaims that she was the client. The letter expressly states that the business was the client and that the firm did ‘not undertake to provide representation, through this engagement, for the individual interests of any such officer, director or employee of 1st Adult.'”
• “At the April 17 hearing, Bryant-Taylor affirmed that she understood 1st Adult was the client in the civil case and that Jenkins had not specifically agreed to represent her as an individual. Her testimony failed to establish that she held a subjective belief that she was in an attorney-client relationship with Jenkins and that such a belief would have been reasonable under the circumstances.”
• “In sum, there is no evidence that Bryant-Taylor was, in fact, Jenkins’s client for the purposes of Va. R. Prof. Cond. 1.9 and principles governing an attorney’s obligations to former clients. She has not demonstrated an ‘actual’ or a ‘serious potential’ conflict of interest between herself and Jenkins arising from his representation of her co-defendant.”

Judicial Ethics Opinion 25-06(B): “A new judge may hire a law student who previously interned at the judge’s prior law firm as a judicial intern” —

• “Digest: (1) A new judge may hire a law student who previously interned at the judge’s prior law firm as a judicial intern.”
  (2) If, while the judge is already under an obligation to disqualify in matters involving the law firm, the judge wishes to provide an opportunity for remittal of disqualification, the judge may disclose both his/her own prior connection to the firm and the judicial intern’s, and allow the parties and their counsel to consider whether or not they wish to remit the judge’s disqualification. However, if the judge learns that the intern was personally involved with a matter at the law firm, the intern should be insulated from that matter, and such insulation cannot be waived or remitted.”
• “Preliminarily, we note that judges are disqualified from presiding in any case involving their prior law firm or its attorney(s) until two years have passed after the completion of any financial relationship between the judge and the law firm (see e.g. Opinions 18-118; 18-46; 16-36; 22 NYCRR 100.3[E][1]).”
• “Assuming the judge can be fair and impartial, the disqualification is subject to remittal after full disclosure on the record (see Opinion 18-118; 22 NYCRR 100.3[F]). As noted in
• “Opinion 21-22(A), where a judge has a disqualifying conflict, it is not the parties’ burden to request the judge’s disqualification. Rather, it is the judge’s burden to disqualify him/herself at the outset, even if the parties are fully aware of the conflict and do not express any concern (see id.).”
• “…the decision whether to engage a student intern is within the discretion of the judge and does not generally raise ethical concerns. Indeed, where the internship is unpaid, we have advised that the anti-nepotism rule does not apply (see Opinion 14-48 [judge may hire third-degree relative as unpaid intern]). Where a conflict arises in a particular case due to the intern’s outside activities or relationships, it is ordinarily sufficient to disclose the connection and insulate the intern (see e.g. Opinions 22-181; 13-80).”
• “One unusual factor here is that this new judge proposes to hire an intern from his/her former law firm, while the judge is already disqualified from hearing matters involving that law firm. During this period, the judge may, of course, simply disqualify in matters where the law firm appears. Should the judge wish to provide an opportunity for remittal of disqualification, however, the judge may disclose both his/her own prior connection to the firm and the judicial intern’s, and allow the parties and their counsel to consider whether or not they wish to remit the judge’s disqualification. However, if the judge learns that the intern was personally involved with a matter at the law firm, the intern’s insulation from that particular matter cannot be waived or remitted”

David Kluft notes: “Can a law student’s summer associate position conflict them from legal clinic work?” —

• “A MD law school asked the MD bar if its clinical program has to run conflict checks to make sure it isn’t adverse to, for example, the clients of a law firm that employed a clinic student the prior summer, or employs the student currently as a paralegal.”
• “The answer is no. Although law students functions as attorneys within the clinical program, they are non-attorneys outside the clinical program, so for conflict purposes there is not a competing loyalty that can limit the obligation to a clinic client.”
• “However, the student still has an obligation to maintain any client confidential information learned from the outside employment.”

“Take Your Clients at Their Word…At Your Own Risk” —

• “The ABA amended Model Rule 1.16 in 2023, requiring lawyers to actively assess whether a client intends to use legal services for fraud or crime, imposing a duty to investigate suspicious circumstances before and during representation.”
• “Lawyers can face disciplinary action and civil liability for failing to detect or respond to client misconduct, even if they lacked actual knowledge but were negligent or willfully blind to red flags.”
• “Lawyers should evaluate client identity, service nature, jurisdictions involved, and financial flows to assess risk and avoid inadvertently facilitating illegal activity.”
• “Picture this scenario. A client hires you to represent him as the purchaser in a real estate transaction. At the initial consultation, he is insistent that you act as escrow agent. You are surprised when the wire for the transaction comes in from a Russian bank. Your client assures you that everything is on the up and up. The deal closes and everyone walks away happy. Six months later, you get a call from an investigator from the Attorney General’s Office asking you about your client’s involvement in the transaction. It turns out the entire transaction was a scheme to launder money.”
• “This is just one of the ways that unscrupulous clients can take advantage of lawyers’ services for illegal schemes. As regulated professionals, lawyers must be on guard as they are subject to both civil liability and disciplinary consequences. These two enforcement frameworks have apparently different standards when it comes to an attorney’s obligation to investigate its client for fraud, although these two standards are shifting closer together with time.”
• “The American Bar Association’s Model Rules of Professional Conduct have long provided guidance to state supreme courts and legal regulators as they develop lawyer regulation and state rules of professional conduct. While some have argued that the ABA Model Rules were long silent on whether lawyers had an affirmative duty to investigate their client to ensure that the lawyer’s services were not being utilized for illegal means, recent amendments to Model Rule 1.16 clarify a lawyer’s duty to do so.”
• “Traditionally, lawyers could act upon their client’s instructions without doubting their bona fides unless the lawyer had actual or constructive knowledge of the client’s illegal or fraudulent motives. See, e.g., Monroe H. Freedman, Personal Responsibility in a Professional System, 27 CATH. U. L. REV. 191, 200 (1978) (criticizing the practice of ‘assum[ing] the worst regarding the client’s desires’). As use of lawyers to further money laundering, terrorism financing, and other illegal conduct appears to have proliferated, or at least entered the mainstream consciousness, the legal profession has suggested stronger requirements for lawyers to root out such bad actors before they get roped into a criminal enterprise.”
• “In 2023, the American Bar Association amended Model Rule 1.16 (Declining or Terminating Representation) to highlight the responsibility of attorneys to monitor for clients’ nefarious motives. Prior to the change, Model Rule 1.16 listed several scenarios where a lawyer would be prohibited from representing a client, stating, ‘a lawyer shall not represent a client, or where representation has commenced, shall withdraw from the representation of a client if’ any of those factors are present. The factors enumerated were if ‘the representation will result in violation of the Rules of Professional Conduct or other law,’ ‘if the lawyer’s physical or mental condition materially impairs the lawyer’s ability to represent the client,’ or ‘the lawyer is discharged.’ This provision did not specifically address clients who seek to use lawyers’ services to further a crime or fraud.”
• “After the amendment in 2023, Model Rule 1.16(a) now states, ‘A lawyer shall inquire into and assess the facts and circumstances of each representation to determine whether the lawyer may accept or continue the representation.’ In addition to the scenarios listed in the old Rule where an attorney could not represent a client, the new Rule explicitly prohibits representation where ‘the client or prospective client seeks to use or persists in using the lawyer’s services to commit a crime or fraud, despite the lawyer’s discussion . . . regarding the limitations on the lawyer assisting with the proposed conduct.'”
• “As the official comments to the Rule explain, this Rule change ‘imposes an obligation on a lawyer to inquire into and assess the facts and circumstances of the representation before accepting it.’ Rule 1.16 [comment 1].”
• “Does this mean that you have to hire a private investigator any time you want to take on a new client? According to the official comments, no:”
• “The required level of a lawyer’s inquiry and assessment will vary for each client or prospective client, depending on the nature of the risk posed by each situation. Factors to be considered in determining the level of risk may include: (i) the identity of the client, such as whether the client is a natural person or an entity and, if an entity, the beneficial owners of that entity, (ii) the lawyer’s experience and familiarity with the client, (iii) the nature of the requested legal services, (iv) the relevant jurisdictions involved in the representation (for example, whether a jurisdiction is considered at high risk for money laundering or terrorist financing), and (v) the identities of those depositing into or receiving funds from the lawyer’s client trust account, or any other accounts in which client funds are held.”
• “As of now, Maryland, Massachusetts, North Dakota, Oregon, and Wyoming have adopted the Model or similar amendments. Jurisdictions in which proposals are under consideration are: Alaska, Arizona, DC, New York, and Washington. Even if a state has not adopted this rule, a state make take the position, as the ABA did prior to the rule change, that the duty to proactively, not reactively, avoid contributing to clients’ crimes and frauds, is implicit in the duties of the existing rules. See ABA Formal Ethics Opinion 491 (2020). For example, the Colorado Bar Association published an opinion in 2021 cautioning that a lawyer who is willfully blind, in other words, who ‘(1) subjectively believes that there is a high probability that a fact exists; and (2) takes deliberate actions to avoid learning that fact,’ would be deemed to have actual knowledge. Colorado Bar Association Formal Opinion 142 (2021) citing Global-Tech Appliances, Inc. v. SEB S.A., 563 U.S. 754, 769 (2011).Accordingly, ignoring ‘obvious indicators of the client’s intent to use the lawyer to facilitate a criminal or fraudulent act’ would probably be considered misconduct. See Colorado Bar Association Formal Opinion 142 (2021).”
  The Civil Liability Framework”

“Suspension for solicitor who acted on both sides of case” —

• “A solicitor whose firm acted for both sides in litigation over a debt, despite him being told of the obvious conflict, has been suspended for six months.”
• “The Solicitors Disciplinary Tribunal (SDT) heard that Satnam Singh Talwar did not respond either when a paralegal at his firm pointed out the Solicitors Regulation Authority (SRA) rules or when debt collection firm Equivo did the same in declining his instructions, telling him that he was ‘clearly conflicted’.”
• “The tribunal said the case ‘served as a stark reminder to members of the profession to take great care and caution not to place themselves in a position where they act when there is a conflict of interest or the risk of one occurring’.”
• “Mr Talwar, 51 and admitted in 2003, was director and owner of City firm QC Law/Queens Court Law, and held all the compliance roles at the time.”
• “According to a statement of agreed facts and outcome approved by the tribunal, the SRA explained that QC Law acted for Client A over a debt and obtained default judgment against Ms L on 8 July 2022.”
• “Four days later, Ms L instructed QC Law to apply to set aside the judgment, becoming Client B.”
• “As required by the conflicts policy Mr Talwar had only approved that April, a paralegal drew his attention to the conflict, but Mr Talwar went ahead and filed the application to set aside the judgment.”
• “This was accompanied by a statement from the client, drafted by Mr Talwar, which acknowledged that she had instructed the same law firm as the claimant, but that there were safeguards in place to avoid any conflicts.”
• “On the same day, Client A instructed QC Law to enforce the debt and it contacted Equivo. But eight days later, it asked Equivo to stop.”
• “Equivo declined to act on the matter on 12 August and Mr Talwar replied that, as the compliance officer, he would consider what to do next. But it was not under October that the firm ceased to act for both clients, with the paralegal having sought advice from the SRA’s ethics helpline.”
• “Soon after, Client A’s new solicitor asked why Mr Talwar did not seek her consent to act for Client B and why it took three months to inform her that it was. Mr Talwar replied to say that he had decided in mid-August to stop acting, accepted he had breached the SRA code, that he would make a self-report to the SRA. He did not, however, and the SRA was alerted six months later by Client A’s solicitor.”
• “Mr Talwar admitted he had acted with a lack of integrity and been reckless in acting when was there a conflict.”

“Atkins-led SEC Recognizes that Conflicts of Interest must be ‘Material’ in Complaint alleging Fraud and Breaches of Fiduciary Duties by Investment Adviser” —

• “SEC v. Nagler is the second enforcement action charging an investment adviser with undisclosed conflicts of interest since Chair Paul Atkins began his tenure on April 21, 2025. The Securities and Exchange Commission (SEC) announced the first of those cases, In the Matter of Transamerica Retirement Advisors, LLC (‘Transamerica’), just four days after Chair Atkins took office, on April 25, 2025.”
• “Both filings acknowledge the SEC’s obligation to allege conflicts of interest that are ‘material’ to investors in connection with alleged breaches of fiduciary duties under the Advisers Act.3 In this regard, the filings are consistent with the First Circuit’s recent decision in SEC v. Commonwealth Equity Servs., LLC, which vacated a United States District Court’s grant of summary judgment to the SEC on the basis that a jury should decide whether the conflicts at issue were ‘material.’4 “
• “Nagler also serves as a reminder for advisers to check their ‘may’ disclosures in light of developments in their business, and that the SEC’s antifraud jurisdiction extends to state-registered advisers with assets below the threshold for registering with the Commission.”
• “On June 2, 2025, the SEC filed a litigated action against David A. Nagler (‘Nagler’) and his investment advisory firm, New Line Capital, LLC (‘New Line’), alleging fraud and breaches of fiduciary duties under the Investment Advisers Act of 1940 (‘Advisers Act’).5 The complaint alleges that Nagler and New Line promised to ensure their advisory clients never paid advisory fees exceeding 2.0% of assets under management when, the SEC claims, many of their clients paid more than that amount.6 “
• “The complaint further alleges that Nagler and New Line hid material conflicts from clients by failing to disclose Nagler’s practice of charging additional fees on a discretionary basis without first obtaining client approval.7 According to the SEC, New Line’s brochures disclosed that clients ‘may’ be charged discretionary fees, but further stated that New Line would provide clients with an agreement specifically addressing any such fees.8 The SEC interpreted this as an assurance that discretionary fees would not be charged without advance client approval.9 “
• “In the SEC’s view, the failure to disclose discretionary fees – and Nagler’s financial interest in charging them – denied clients a full and fair opportunity to determine whether to continue using New Line’s advisory services.10 Importantly, given the SEC’s opportunity to frame its allegations in the context of a litigated action, the complaint explicitly alleges facts to support an allegation that the undisclosed conflict was ‘material’ instead of holding to the Enforcement Staff’s previously stated position, recently rejected in Commonwealth Equity Servs., LLC, that investment adviser conflicts are per se material.11”
• “Nagler reads as a variation on the typical ‘may’ disclosure case (in which the SEC alleges that disclosing the possibility of conduct is misleading when that conduct is actually underway) because New Line allegedly told clients not only that discretionary fees ‘may’ be charged, but that such fees would not be charged without advance notice. Arguably, the alleged promise to provide advance notice minimized the effectiveness of the disclosure that discretionary fees could be charged in the future and exacerbated the lack of disclosure when New Line actually charged those fees without notice. The SEC’s litigation release, however, emphasizes that New Line misled investors by disclosing that it ‘may’ offer hourly fee services ‘when, in fact, New Line was providing such services,’ and Transamerica, which the SEC released early in Chair Atkins’s tenure, involved the typical ‘may’ fact pattern. “
• “Together, these cases signal that an Atkins-led SEC may stay the course in bringing disclosure cases involving potential conflicts (in line with the Commission’s June 5, 2019 guidance for investment advisers)12 and provide an apt reminder that advisers should regularly review ‘may’ representations when drafting and updating disclosure documents.”
• “Nagler is noteworthy for the additional reason that it concerns a state-registered investment adviser that had de-registered with the Commission five years before the conduct at issue, in 2014.13 Just as the SEC’s antifraud jurisdiction can extend to transactions in securities that are not publicly traded or registered with the Commission, it extends to investment advisers who are not SEC-registered or do not meet the requirements for registration.”
• “Approximately six weeks into Chair Atkins’s tenure, it remains to be seen whether disclosure cases against investment advisers will be a significant part of the SEC’s Enforcement agenda, including because a new Director of Enforcement has yet to be announced, but Transamerica and Nagler provide an early indication that these cases are not among the new administration’s strongly disfavored categories of enforcement actions. “

David Hricik at Mercer Law School recently: “wrote a paper on this topic and gave a CLE and thought it would be useful to pass it along. It is here: The Ethics of When Lawyers Make Mistakes”

• “It goes through in a step-by-step way the way to approach fessing up to a mistake, as well as analyzing the different approaches that jurisdictions take to the issue.
• “For example, some view the duty as arising from the need to keep a client reasonably informed, while others view it as part of a conflict-of-interest analysis.”
• “That matters because breach of the duty depends on which source applies: if it’s to keep the client reasonably informed, it’s basically triggered by knowing the client has a malpractice claim, but if it’s a fiduciary duty that is the source, then it’s triggered by the lawyer’s interest conflicting with the client’s.”
• “…it also addressed the critical issue of talking to your carrier and addresses a couple of related cases where lawyers’ duties were triggered by other sources.”

“Motion: Gateway Church lead counsel David Middlebrook ‘must be disqualified’” —

• “Lawyers for Robert Morris, the former Gateway Church pastor who had an inappropriate relationship with a teenager decades ago, asked a Fort Worth judge to remove one of the lead attorneys representing the church in litigation over disputed financial payments.”
• “In court documents filed Friday, Morris’ attorneys want the judge hearing the case to disqualify David Middlebrook, Gateway’s longtime outside general counsel, because he previously represented Morris in several matters, including giving Morris legal advice about the issues that are at the heart of the current dispute.”
• “‘David Middlebrook represented Gateway Church and Pastor Robert Morris for years in connection with issues relating to Pastor Morris’s past relationship with Cindy Clemishire,’ lawyers for Morris stated in an 18-page motion. ‘Specifically, Pastor Morris sought, relied on, and followed Middlebrook’s legal advice in responding to CC or her lawyer in 2005, 2007 and 2011. Gateway now relies on those very same events and issues in this dispute, invoking them in an effort to evade its payment obligations to Pastor Morris.'”
• ‘Middlebrook and his law firm must be disqualified due to his violation of Rule 1.09 and to avoid the appearance of impropriety,’ Morris’ lawyers argued in Friday’s motion. ‘Finally, Middlebrook also is a central fact witness to the events leading to this dispute and is barred from continued representation by Rule 3.08(b) as well.'”
• “Oklahoma officials indicted Morris two months ago on five counts of lewd and indecent acts.”
• “Last month, Morris told Gateway leaders that the church owed him millions of dollars in promised payments and retirement benefits. Lawyers for Morris sought to have the dispute settled via arbitration. In response, Gateway lawyers filed documents earlier this month in Tarrant County District Court to stop the arbitration proceedings, arguing that Morris’ improper conduct and the criminal charges nullify any prior agreement with the former pastor.”
• “In the motion filed Friday, Morris’ attorneys point out that Middlebrook also provided legal representation to Morris on preparing estate-planning documents, helping create Morris’ nonprofit foundation and forming a living trust.”
• “‘Throughout these engagements, Pastor Morris revealed confidential information to Middlebrook in the context of a personal attorney-client relationship — one separate from the lawyers’ representation of Gateway,’ Morris’ lawyers argued.”

“Prosecutors Ask Judge to Question Charlie Javice Lawyer Over Alleged Conflict” —

• “Federal prosecutors are asking a judge to investigate whether or not an attorney for Charlie Javice, the founder of the student loan fintech start-up Frank, may have a conflict of interest, given that he represented her in a prior investigation unrelated to her pending fraud case.”
• “David Siegal of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo is not accused of wrongdoing, according to the U.S. Attorney’s Office for the Southern District of New York. But prosecutors do want the judge to bar Siegal from cross-examining witnesses or making arguments relating to matters in which he was personally involved.”
• “The case is before U.S. District Court Judge Alvin Hellerstein of the Southern District of New York. Prosecutors claim Javice willfully misled JPMorganChase into acquiring her start-up for $175 million. She has pleaded not guilty.”
• “The alleged misconduct included misuse of corporate credit cards for personal use,and use of personal emails and devices for business purposes.”
• “While Siegal at that point turned over some of Javice’s texts to Morgan investigators, prosecutors say they now know her messages contained significantly more responsive communications—including about the alleged fraud on J.P. Morgan.”
• “Prosecutors say they intend to present some of those communications at trial and claim Javice caused Siegal to convey false information as part of his representation.”
• “Siegal has agreed not to cross examine one of the investigators from Morgan, but has not agreed to ‘refrain from arguing to the jury regarding matters to which he was a witness,’ the letter reads.”
• “Though they do not seek to disqualify him, prosecutors ask Hellerstein to hold a Curcio hearing, to address any potential conflicts that may arise as a sworn or unsworn witness at trial.”

David Kluft notes: “If my former firm misleads my clients into thinking I no longer want to work with them, is that false advertising under the Lanham Act?” — 

• “A NY lawyer teamed up with a firm to start an arbitration practice. After a dispute over funding, the lawyer was fired. The firm unilaterally sent an email to the clients telling them their cases were now being handled by someone else.”
• “The lawyer sued the firm, inter alia, for false advertising in violation of the Lanham Act : creating the misleading impression that the lawyer was not willing to represent them and not tell the clients they had a choice.”
• “The Court recognized that this might be an ethics violation but held that this alone did not give rise to a Lanham Act claim. The Court dismissed because the emails were to existing clients (not commercial speech intended ‘to penetrate the relevant market’) and because the Lanham Act does not impose an affirmative duty of disclosure.”

“Calif. Ethics Panel Weighs Judge DQs In Racial Justice Cases” —

• “A California judge who previously served as a district attorney need not be recused from a case involving California Racial Justice Act claims solely because the judge previously handled cases involving elements that may be subject to discovery under the act, the state’s judicial watchdog has put forward in a draft opinion.”
• “In its latest draft opinion, shared Tuesday, the California Supreme Court Committee on Judicial Ethics Opinions, or CJEO, proposed that in instances where a judge weighs recusal for prior prosecutorial work but opts against it, the judge must ‘disclose on the record any facts reasonably relevant to the determination of disqualification.'”
• “The committee invited members of the public to provide comments on the draft opinion by July 11. All comments not marked ‘confidential’ will be posted publicly, according to guidance provided by the CJEO, and committee members will use public input to ‘help ensure that the committee considers all potential solutions, consequences, and points of view, which serves to improve the final opinion.'”
• “The draft opinion considers a judge’s recusal duties under the 2020 act, which ‘prohibit[s] the state from seeking a criminal conviction or sentence on the basis of race, ethnicity, or national origin,’ according to the legislation.”
• “Under the act, a defendant may ‘file a motion requesting disclosure of all evidence relevant to a potential violation of that prohibition that is in the possession or control of the prosecutor,’ the legislation states.”
• “The act is found to be violated if a defendant proves they were ‘convicted of a more serious offense than other defendants of other races who are similarly situated; and evidence shows the prosecution more frequently sought convictions for other people of defendant’s race, ethnicity, or national origin in that county,’ the draft opinion states.”
• “The judge who requested guidance told the committee they worked as a prosecutor from 1998 to 2010 and handled cases from the county’s gang and homicide units involving firearm enhancements.”
• “The requesting judge is now presiding over a case in which prosecutors have sought to add a firearm enhancement, and defense counsel have moved for discovery seeking all cases in the county where a firearm enhancement would expose a defendant to a life sentence, dating back to 2000.”
• “The judge reported they had not served as an administrator or policymaker in the district attorney’s office at the time, and never handled a case involving the defendant in the present matter, but reached out to determine if recusal or disclosure would be necessary, given the potential that the judge’s prior prosecutorial work would be invoked in discovery.”
• “In the draft opinion, the CJEO stated that recusal would be necessary only in an instance where, ‘if the judge’s prior prosecutorial involvement was such that a reasonable person, aware of the circumstances, could justifiably doubt the judge’s ability to remain impartial.'”
• “In making its proposed finding, the CJEO weighed its own prior opinions, including those focused on judges who previously worked as prosecutors. In this instance, the committee found, there was no ‘nexus’ tying the previous cases with the present case.”
  reasonable doubt of their impartiality.”

“Law Firms That Caved to Trump Suddenly Lose a Lot of Big Business” —

• “At least 11 large companies—including Morgan Stanley, Microsoft, and Oracle—are cutting ties with law firms that caved to President Trump’s threats of political retribution, according to The Wall Street Journal.”
• “General counsels for multiple companies told the Journal that the law firms’ willingness to cut deals with the president, rather than stand up for themselves, greatly eroded their confidence in the ability of those firms to represent them in court or in high-pressure negotiations.”
• “Massive law firms that work on lucrative contracts, like Paul, Weiss, Kirkland & Ellis, and others, struck deals with the Trump administration after he aimed six executive orders at them, removing clearances, building access, and government contracts from firms he thought were attacking him. The law firms capitulated, offering billions of pro bono work to the Trump administration, allegedly in the name of protecting their clients and their contracts.”
• “But multiple lawyers at each firm think that their leadership should’ve put up a tougher fight. One staffer told the Journal she felt ‘physically ill’ upon hearing of Paul, Weiss’s sellout to Trump. Some younger lawyers have even quit over these deals, as one associate at Simpson Thacher said in his exit email that he would not ‘sleepwalk toward authoritarianism.'”
• “The firms that decided to strike back did end up losing clients but kept some of their principles intact. Jenner & Block declared in a statement that folding to the Trump administration would require ‘compromising our ability to zealously advocate for all of our clients and capitulating to unconstitutional government coercion, which is simply not in our DNA.'”

New York Judicial Ethics Opinion 25-01: “A judge need not disqualify in matters involving the judge’s former election opponent, provided the judge can be fair and impartial” —

• “Digest: A judge need not disqualify in matters involving the judge’s former election opponent, provided the judge can be fair and impartial.”
  Rules: Judiciary Law § 14; 22 NYCRR 100.2; 100.2(A); 100.3(E)(1); Opinions 19-78; 90-136; People v. Moreno, 70 NY2d 403 (1987).”
• “Opinion: The inquiring judge was opposed during his/her recent election campaign by a practicing attorney who may appear before the judge in the future. The judge describes the campaign as uneventful, without ‘debates or any acrimonious interactions.’ The judge asks if he/she must disqualify when the former election opponent appears.”
• “A judge must always avoid even the appearance of impropriety and act to promote public confidence in the judiciary’s integrity and impartiality (see 22 NYCRR 100.2; 100.2[A]). A judge must disqualify in any proceeding where the judge’s impartiality ‘might reasonably be questioned,’ including where required by rule or law (22 NYCRR 100.3[E][1]; Judiciary Law § 14). Where disqualification is not mandatory, however, the judge is the sole arbiter of recusal, a discretionary decision within the personal conscience of the court (see People v. Moreno, 70 NY2d 403, 405 [1987]).”
• “A judge need not disqualify merely because an attorney appearing before the judge on behalf of a client is the judge’s former election opponent (see Opinions 19-78; 90-136). As we explained in Opinion 90-136:”
• “Whether the judge’s impartiality might reasonably be questioned in this case depends on the facts and circumstances, including the time elapsed, the bitterness of the campaign, and the personal quality of the campaign. This Committee is not in a position to pass on such factual issues and the judge must decide for himself or herself whether his or her impartiality might reasonably be questioned. Of course, if the judge doubts his or her ability to be impartial, the judge must disqualify himself or herself.”
• “Indeed, considering these factors, we have advised that a former opponent’s legal challenge to the judge’s nominating petition does not, by itself, mandate disqualification (see Opinion 19-78). We reasoned that the filing of litigation challenging nominating petitions is a ‘common circumstance in contested election campaigns’ that does not by itself establish a level of ‘bitterness’ mandating disqualification (id.).”
• “Here, as the judge indicates the campaign was neither controversial nor acrimonious, the judge need not disqualify in matters involving the judge’s former election opponent, provided the judge can be fair and impartial.”

“Consultation into the second exposure draft of the [Australian] Anti-Money Laundering and Counter-Terrorism Rules” —

• “The Australian Transaction Reports and Analysis Centre (AUSTRAC) has initiated consultation (Consultation) on its second exposure draft of the Anti-Money Laundering and Counter-Terrorism Financing Rules 2025 (Cth) (Draft Rules) and the AML/CTF (Class Exemptions and Other Matters) Rules 2007 (Cth) (Class Exemption Rules). These Rules, read with the amended Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth) (Act), will implement the most transformational changes to the anti-money laundering and counter-terrorism financing (AML/CTF) framework since the Act commenced in 2006.”
• “These changes under the Act and Rules will apply to existing reporting entities by 31 March 2026 and for new reporting entities by 1 July 2026.”
• The Draft Rules contain significant updates to the first exposure draft rules which were released for consultation in December 2024. The updates include:
  • AML/CTF policies, procedures, systems and controls to comply with AML/CTF obligations, including requiring designated entities to have financial sanctions compliance policies
  • New rules relating to groups of regulated businesses
  • Changes to the proposed customer due diligence rules
  • Correspondent banking and nested services relationships
  • The travel rule, being the requirement for information about the payer and payee to be included with telegraphic transfers, remittances, transfers of virtual assets and other value transfers
  • Cross-border movement reports and compliance reporting
  • Keep open notices and the form of these notices
  • Disclosure of AUSTRAC information to foreign counterparts”
• “In addition to the above, the exposure Draft Rules now propose:
  • Reportable details for ‘suspicious matter reports’ must be given to AUSTRAC by reporting entities under section 41 of the amended AML/CTF Act.
  • Reportable details for ‘threshold transaction reports’ must be given to AUSTRAC under section 43 of the amended AML/CTF Act.”
    Updated and modernised enrolment applications for all reporting entities.
  • “Registration application and administrative decision-making processes for ‘remittance service providers’ and ‘virtual asset service providers’.”

“Accounting firms should build AML/CTF program ‘sooner rather than later’” —

• “Ahead of the ACE25 Accounting Conference and Expo, Jessica Tsiakis, partner at Holding Redlich discusses how businesses can prepare for the upcoming AML/CTF regulations.”
• “‘The AML/CTF Act has been amended to ensure the AML/CTF regime can effectively deter, detect and disrupt money laundering and terrorism financing,’ said Tsiakis.”
  “‘There have been a number of changes to the legislation, but key for accountants are the changes to expand the regime to capture certain high-risk services provided by accountants,’ she added.”
• “There are three key objectives of the Amendment Act including expanding the AML/CTF regime to high-risk services provided by tranche two entities; modernising the regulation of digital currency, virtual assets, and payments technology; and simplifying the AML/CTF regime to better prevent and detect financial crime.”
• “‘The regime is expanded by including new definitions of what are referred to as designated services,’ she said.”
• “‘If you provide a designated service, you are regulated by the regime in respect of those services (and referred to as a ‘Reporting Entity’).'”
• “‘Professionals such as accountants, lawyers, and real estate agents are impacted by the expansion of the regime.'”
• “The updated AML/CTF obligations will come into effect on 1 July 2026 for tranche two entities, with enrollment with AUSTRAC available from 31 March 2026.”
• “This timeline provides newly regulated entities the chance to understand and prepare for the new obligations before they come into effect next year.”
• “‘Accounting firms need to ensure that they have developed an appropriate AML/CTF Program, which is in place well prior to the deadline, so that they are in a place to comply by July 2026,’ Tsiakis said.”
• “‘Accounting firms must also develop appropriate policies, procedures, systems and controls to properly manage these risks.'”
• “‘Accounting firms will need to ensure all professional services staff have a broad understanding of what is required by the regime, including how to properly identify and monitor their customers, and who within the business to alert if they notice suspicious transactions or conduct by their clients,’ she added.”
• “Tsiakis urges organisations to start the preparations sooner rather than later, stating that ‘some key challenges in complying will be ensuring that the organisation’s AML/CTF program is up and running before the new regime commences, so that any issues, such as the appropriate monitoring of transactions, or proper customer due diligence, can be ironed out prior to that time,’ she concluded.”

“9 AML compliance myths and how law firms can fix them” —

• “In the current climate, no law firm can afford complacency about AML compliance. Yet certain myths persist – misconceptions that can lull firms into a false sense of security. These myths often stem from outdated assumptions or a misunderstanding of SRA requirements.”
• “Unfortunately, reliance on such misinformation can have serious consequences. The SRA has ramped up its enforcement of rules in recent years. Firms that once flew under the radar are now finding themselves subject to audits, fines, and disciplinary action.”
• “COLPs, COFAs, law firm partners, and risk managers should take note: even well-intentioned myths can land a firm in trouble. By dispelling these myths, your firm can shift from a reactive stance to a proactive compliance culture that anticipates regulators’ expectations.”
• “1. ‘We’re too small to need all these formal AML documents.’
  • The Myth: Small firms sometimes believe that comprehensive anti-money laundering controls – like a firm-wide AML policy or risk assessment – only apply to higher risk firms or those handling large financial transactions. A two-partner high-street practice might think, ‘Money laundering won’t happen here – we know our clients, and regulators only focus on large firms.’ This myth implies that limited size or simple client bases exempt a firm from formal AML compliance.”
• 2. ‘As long as we do really thorough ID checks, we’re covered for AML.'”
  • “The Myth: Many solicitors equate ‘AML compliance’ with performing ID checks on clients at onboarding – copying passports, driver’s licenses, utility bills, etc. This myth is the belief that identity verification alone satisfies anti-money laundering due diligence. Once you’ve verified your client is who they say they are, the thinking goes, your anti-money laundering obligations are done. In reality, this is a dangerous oversimplification, based on outdated AML rules.”
• 3. ‘We can’t possibly have to check the other side’s client for sanctions.'”
  • “The Myth: Lawyers often focus AML and sanctions checks on their own client, under the assumption that you are only responsible for vetting those you directly represent. This myth holds that due diligence on opposing parties or the other side’s client is not necessary, since ‘they’re not our client.’ For example, in a transaction between A (your client) and B (opposing party), a solicitor might screen A against sanctions lists but not consider B. The misconception is that sanctions compliance is satisfied as long as you aren’t directly advising a sanctioned individual.”
• 4. ‘The SRA doesn’t really expect us to see our own employees as an AML risk.'”
  • “The Myth: This misconception assumes that anti-money laundering compliance is solely outward-facing – focused on clients and external parties – and that a law firm’s staff are implicitly trusted. Some firms might think employee due diligence isn’t a regulatory requirement, perhaps reasoning that ‘we hired qualified solicitors, we don’t need to screen or monitor them for AML issues.’ Similarly, there might be an assumption that as long as staff are hired in good faith, the firm won’t be held responsible for a ‘rogue employee’ engaging in misconduct.”
• 5. ‘If we report an AML breach, we’ll face harsh consequences.'”
  • “The Myth: Law firm leaders sometimes believe that reporting AML compliance breaches – whether to the National Crime Agency (NCA) or the SRA – is like inviting trouble. The assumption is that disclosing AML issues will inevitably lead to severe penalties or regulatory action, and therefore it’s better to quietly fix any problems internally, turn a blind eye to red flags, and hope regulators don’t notice.”
• 6. ‘The regulators are only really interested in the risk assessment for our firm. Individual matter risk assessments aren’t as important.'”
  • “The Myth: Some firms mistakenly believe that doing a one-time Practice-Wide Risk Assessment (aka Firm-Wide Risk Assessment) is sufficient, and that they do not need to conduct risk assessments for each client or matter. They might have a generic firm AML risk assessment document and assume that covers everything. The myth is essentially ignoring the requirement for matter-specific risk evaluation, perhaps due to misunderstanding the regulations or viewing it as unnecessary form-filling. “
• 7. ‘We’ve never had a regulatory inspection, so we must be a low AML risk.'”
  • “The Myth: This is a complacency-driven myth – the notion that silence implies everything is fine. Many firms have not yet been subject to an SRA AML inspection or any kind of in-depth compliance audit, but the SRA is thought to be planning around 800 per year. It’s easy to assume that since the regulator hasn’t knocked on the door, your policies and procedures must be acceptable. Some might even think the SRA only audits firms it suspects of issues, so being un-audited means you’re low-risk or off their radar.”
• 8. ‘We’ve known the client for years – they’re not a risk.'”
  • “The Myth: A common assumption in legal practices is that long-term or well-known clients pose little to no money laundering risk. Firms often think, ‘We’ve acted for this client for over a decade, we know their business inside out,’ or ‘They’re a local business owner we’ve seen grow from day one – surely there’s no risk here.’ “
• 9. ‘We onboarded this client in a low-risk area, so we don’t need to do AML checks again.'”
  • “The Myth: A frequent assumption is that if a client initially instructs the firm in a low-risk area like employment law, they pose minimal or no money laundering risk across the board. The reasoning often goes: ‘We onboarded them for straightforward redundancy advice,’ or ‘They’ve only needed us for staff contracts – there’s no complexity here.’ This myth creates a ‘passporting’ effect – where a client is allowed to access other, potentially riskier services without updated checks, just because they originally entered through a low-risk door.”

“Third DCA Affirms Disqualification of Lawyer” —

• “Florida’s Third District of Appeal upheld Miami-Dade Circuit Judge Lisa Walsh’s order disqualifying plaintiff’s attorney Tim Taylor for representing defendant Taras S. Diakiwski’s surety in a related dispute.”
• “The case originated from a 2015 lawsuit between contractor Diakiwski and the defendant, Craft Construction Co. The plaintiff claims he is entitled to $1.4 million in profits from the Boca Beach House Project, which he allegedly helped secure during his seven-month employment with Craft Construction. After a jury trial found Craft Construction liable, a separate trial will determine the amount of damages.”
• “Berkley Surety Group was the primary surety on Craft Construction’s projects. In 2023, the Boca Beach House’s owner entered into a dispute with Craft Construction and sent a ‘consideration of default’ letter to Craft Construction and its surety, Berkley.”
• “According to the defendants, after Berkley and Craft Construction received the letter, they began meeting to strategize a response and those meetings were conducted under a joint representation agreement. However, Taylor of Taylor Corwin & Van Cleaf accepted representation of Berkley, and the situation escalated when he appeared at a Zoom meeting with Craft Construction’s principal, who became irate.”
• “Taylor abruptly left the meeting and later withdrew as Berkley’s counsel.”
• “Craft Construction, in filing a motion to disqualify plaintiff’s counsel because in the case regarding the $1.4 million disgorgement, alleged that Taylor violated the Florida Rules of Professional Conduct.”
• “According to the order, the evidentiary hearings on the motion showed that Craft Construction’s lawyers acted as Berkley’s lawyers through a joint representation agreement and attorney-client privileged information was shared between Craft Construction, Craft Construction’s lawyers and its Berkley.”
• “Furthermore, Walsh pointed out how the joint representation of Berkley and Craft Construction occurred on a matter related to the case.”
• “‘It is an inescapable inference that confidential information openly shared for months between CCC, its lawyers and Berkley was relayed to Taylor during his brief stint as Berkeley’s lawyer,’ Walsh, referring to Craft Construction, ruled, and in doing so, granted the attorney’s disqualification.”
• “On Wednesday, the Third DCA affirmed the ruling.”
• “‘We are pleased that the appellate court has affirmed the trial court’s well-reasoned disqualification Order, which was factually necessary and legally required to do justice and uphold the Florida Rules of Professional Conduct,’ said Frank Murray, with Stumphauzer Kolaya Nadler & Sloman, who represents the defendant. ‘We look forward to continuing our pursuit of justice in this case.'”

“Judge Rejects DQ Of Smith Gambrell In Defamation Suit” —

• “A New York federal judge denied a former Major Lindsey & Africa recruiter’s bid to disqualify Smith Gambrell from representing Major Lindsey in the employee’s $75 million federal defamation suit, saying the request wasn’t ripe for consideration yet.”
• “In a memorandum opinion and order signed Monday, U.S. District Court Judge Gregory H. Woods of the Southern District of New York declined Sharon Mahn’s request to disqualify Smith Gambrell & Russell LLP from representing her onetime employer in the suit she filed in November under the so-called witness-advocate rule. Judge Woods did so without prejudice, saying in the opinion that Mahn’s bid for disqualification on the grounds that attorneys from the firm would have to testify in the case was made too early.”
• “‘Plaintiff’s motion for disqualification is, at a minimum, premature. The witness-advocate rule only requires disqualification of an attorney if the movant establishes that the attorney’s testimony is necessary to trial and is substantially likely to be prejudicial to their client,’ Judge Woods said. ‘Because plaintiff has not carried her burden of demonstrating that testimony from defendants’ counsel would prejudice defendants’ case, plaintiff’s motion to disqualify defendants’ counsel is denied.'”
• “Mahn filed the motion to disqualify in January, arguing that three attorneys from Smith Gambrell were key witnesses to help determine liability. Mahn told the court that the attorneys ‘literally lied’ in an underlying action and would therefore be needed to testify as to the impetus for the alleged misrepresentations.”
• “Bad blood between Mahn and the recruitment firm goes back at least to 2009, court records show, when Major Lindsey fired Mahn. The recruiter later sued over allegations that Mahn exchanged trade secret information with firm competitors for monetary kickbacks. That suit was dropped to enter arbitration, which resulted in a $2.9 million arbitral award for Major Lindsey.”
• “But, Judge Woods said it was not yet appropriate to disqualify the firm’s attorneys from representing Major Lindsey. To do so under the witness-advocate rule, one would have to show that they would have to testify and in doing so they were likely to harm the defendant’s case, and Mahn hadn’t shown that yet, the opinion said.”
• “‘At this early stage in the case, there is little, if any, evidence on the record to suggest that testimony from defendants’ counsel would be materially inconsistent with defendants’ case at trial,’ he said. Because Mahn hadn’t yet shown that the attorneys would need to provide testimony likely to hurt their client, Judge Woods refused her request to disqualify the firm while leaving the issue open for later consideration, his opinion said.”