Bressler Risk Blog

“Opioid Defendants Appeal Judge’s ‘Untenable’ Order on Special Master DQ” —

• “Two companies have appealed a judge’s order refusing to disqualify the special master in the opioid multidistrict litigation after he inadvertently hit ‘reply all’ on an email meant for himself.”
• “Polster, of the Northern District of Ohio, ruled that the email was protected under judicial deliberative privilege, but the petition says the judge abused his discretion. Cohen, the petition says, never asserted such a privilege.”
• “The Sixth Circuit petition clarified that it was not seeking to disqualify Cohen in cases involving other defendants, only the pharmacy benefit managers. The petition, filed on Monday, comes after Polster ordered the parties on Oct. 27 to ‘work with Special Master Cohen to address any disagreements’ in the bellwether trial plan.”
• “‘They should not be forced to participate in proceedings before a special master whose disclosed thoughts—even if disclosed inadvertently—would lead any reasonable person to question his impartiality,’ the petition says.”
• “Lawyers were in the midst of scheduling bellwether trials when Cohen accidentally hit ‘reply all’ in an Aug. 28 email with notes to himself. He wrote: ‘PBMs’ goal is to complicate and delay (including a request to do nothing and set a status 4 weeks hence). I say Ps add claims against PBMs as mail-order pharmacies. Two reasons: (1) Ps are the master of their own complaint, and (2) claims against PBMs as mail-order pharmacies will show how much PBMs knew (and they knew a lot).'”
• “‘Under the district court’s rule,’ the petition says, ‘a judicial officer who reveals an improper bias against a litigant could avoid disqualification so long as he claims that he intended for the message to remain private. That is not and should not be the law.'”

“Report Raises Security Concerns About Australian Law Firms Acting for Chinese Entities” —

• “Chinese enterprises pursuing ownership of Australia’s critical infrastructure and critical minerals are using law firms to circumvent Australia’s foreign transparency and interference laws, a recent report claims.”
• “‘Law firms operating in Australia have been engaged by advanced technology companies that the Five Eyes [intelligence alliance between Australia, Canada, New Zealand, the U.K., and the U.S.] consider high-risk vendors, social media giants that refuse to appear at Australia’s foreign interference inquiries, and PRC state-owned energy leaders that have majority ownership in Australian electricity companies,’ the report states.”
• “‘Meanwhile these law firms are entrusted with legal engagements involving Australia’s critical infrastructure and Australian Government entities responsible for countering national security risks.’”
• “Law firms say they are just providing legal advice, but Potter said Internet 2.0 found that firms are promoting the signing of memorandums of understanding with the Chinese government in Hong Kong for its Belt and Road initiative.”
• “The Belt and Road Initiative is a global infrastructure development strategy adopted by the Chinese government in 2013 to invest in more than 150 countries and international organizations.”
• “‘That’s not law work, that’s lobbying,’ Potter said.”
• “The report states that law firms are providing foreign entities with ‘legitimacy and confidentiality’ as they pursue their strategic objectives in Australia, and this risks helping them circumvent the intent of Australia’s foreign transparency and interference laws.”
• “In particular, he said some law firms have email accounts for lawyers in different countries on the same domain—using a .com.au address for Australian and foreign emails, for instance. This is considered a bad idea because if an organization is hacked in one country it is easier for them to be hacked in another, he said.”
• “The report singled out Ashurst. Public mail exchange records show that the email accounts of Ashurst employees based in the People’s Republic of China share the same email servers as their Australian counterparts, it said, which results in ‘a lack of infrastructure isolation risking exposing Australian email traffic to PRC’s intelligence laws.’”
• “The report says that IP Australia, the Australian government agency responsible for administering the country’s intellectual property law, lists Ashurst as Huawei’s firm for legal services for intellectual property filings in Australia. It also quotes a Bloomberg report saying that Huawei delivered a malicious software update to Australian telecommunication networks in 2012, before Australia classified Huawei as a high-risk vendor alongside the Five Eyes.”
• “Responding to the claims, an Ashurst spokesperson said the firm did not contribute to the Internet 2.0 report and was not contacted by the report researchers to comment on its position.”
• “‘We are not able to comment on individual clients or security measures, but the report contains inaccuracies, including in relation to our IT systems and the clients that we act for,’ the spokesperson said.”
• “The report also singles out King & Wood Mallesons, saying that the email accounts of firm employees based in Hong Kong share the same email servers as their Australian counterparts, ‘a lack of infrastructure isolation risking exposing Australian email traffic to PRC’s 2018 Hong Kong National Security Law.’”
• “The firm’s Swiss verein structure enables it to operate as an international firm while maintaining separate local partnerships—KWM Australia, KWM China and KWM Hong Kong, the spokesperson said.”
• “KWM maintains separation of IT systems between KWM Australia and other parts of the KWM network, and these systems are subject to rigorous security audits to satisfy internal and client obligations and expectations, she said. ‘We take our legal and fiduciary duties seriously and use robust conflict checking systems and business acceptance protocols.’”

“Alta. CA allows law firm to continue representing estate beneficiary, finds it was not in conflict” —

• “The Alberta Court of Appeal has affirmed the decision allowing a law firm to continue representing an estate beneficiary, finding that it did not act in conflict.”
• “In Konkolus v Balanko, 2023 ABCA 303, Jody Balanko is the personal representative of the estate of Elvyn Balanko, also known as Alvin Balanko. Jody and her sister, Peggy Konkolus, are the estate’s primary beneficiaries.”
• “In November 2022, the court declared that Dentons Canada LLP may continue to act for Peggy Konkolus. Jody contended that Dentons acted for Peggy in litigation relating to her actions as the former power of attorney for Alvin Balanko before his death and for her as a beneficiary of the estate. Jody argued that, depending on the issue, Dentons takes whatever position is more favourable to Peggy as either former power of attorney or beneficiary. Jody asserted that this causes Dentons to take contrary positions and act in conflict, which justifies their removal as counsel.”
• “Peggy argued that Dentons only started acting for her in her capacity as former power of attorney following her father’s death and that Dentons had never acted for the estate.”
• “The chambers judge found no conflict existed as she was not persuaded by the contents of a letter submitted by Jody and considered the other evidence speculative and not persuasive. The Alberta Court of Appeal affirmed the chambers judge’s decision, finding that he made no palpable and overriding error.”

“Rogers Communications says it is justified in withholding board information from Rogers sisters: court filing” —

• “Rogers Communications Inc. RCI-B-T says in a new court filing that it has ‘rational’ and ‘justifiable’ reasons for withholding some board information from two of its directors, Melinda Rogers-Hixon and Martha Rogers.”
• “Last month, Ms. Rogers-Hixon and Ms. Rogers, who are sisters, launched a legal challenge to obtain the documents, reigniting a long-standing feud between warring factions of the family that controls the Toronto-based telecom giant.”
• “In its rebuttal, filed in the B.C. Supreme Court on Monday, the wireless giant says it has ‘significant concerns’ about the sisters’ conduct and their choice of counsel.”
• “Ms. Rogers-Hixon is represented by Walied Soliman, the Canadian chair of Norton Rose Fulbright, a firm that also works for Telus Corp. T-T, one of Rogers’s main competitors. Rogers argues this is a conflict of interest as commercially sensitive information could make its way to Telus through the law firm.”
• “The company says it asked Ms. Rogers-Hixon to terminate the firm or to enter into an undertaking that board materials and discussions would not be shared with the firm but she has refused.”
• “‘Given the Petitioners’ conduct, including in retaining as counsel a law firm that is the longstanding and principal advisor to one of [Rogers]’s two fiercest competitors and is actively representing the interests of that competitor directly adverse to [Rogers], [Rogers] is not only entitled but obligated to limit their access to confidential board materials until such a time as the Petitioners and their counsel are prepared to enter into appropriate undertakings to protect those materials,’ the court filing reads.”
• “The sisters have argued that the company’s refusal to give them access to the same information other directors are privy to is ‘oppressive and unfairly prejudicial.’ They say they need access to unredacted documents to make informed decisions and properly perform their duties as directors.”
• “The company noted in its response that it is conducting an independent investigation into the sisters’ conduct as directors and that the review has not yet concluded.”

Once again, Lucian and Trisha promise more ethics fun in an hour than lawyers should be allowed to have with their annual update: “WEBINAR — 2023 Legal Ethics Year in Review” —

• Join Lucian Pera and Trisha Rich for a rollicking one-hour review of the most important developments of the last year (or so) in legal ethics and lawyering.
• They will distill practical guidance from ethics opinions and case law from all over and review what lawyers should know to protect their clients and themselves and practice more effectively.
• Topics will include:
  • NewLaw developments and lawyer regulatory reform
  • Ethical (and unethical) witness preparation
  • The latest cases on advance waivers of conflicts of interest
  • The first lawyers disciplined for falling for wire transfer frauds
  • Ethical (or unethical) deception in investigations
  • Using artificial intelligence (AI) ethically and responsibly
  • Continuing lawyer cybersecurity dangers … and more!

“DOJ Watchdog Seeks to Reverse Some Fees Paid to Law Firm Jackson Walker” —

• “The Justice Department division that oversees the nation’s bankruptcy courts is seeking to reverse prior court orders granting fees to a Texas law firm that employed a lawyer who had an undisclosed romantic relationship with the presiding judge.”
• “Former Houston bankruptcy judge David R. Jones awarded about $13 million to law firm Jackson Walker for its work in more than two dozen chapter 11 cases over recent years, including about $1 million in fees billed by Elizabeth Freeman, his intimate partner, without either of them disclosing their relationship, the U.S. Trustee’s office said in legal motion filed Thursday. The trustee noted that Jones first confirmed his relationship with Freeman in an interview with The Wall Street Journal last month, and resigned days later after an ethics complaint from a federal court found probable cause to believe that the judge had committed misconduct.”
• “Jackson Walker previously told the Journal that the firm in March 2021 first learned of an allegation that Freeman was in a relationship with Jones. Jackson Walker declined to comment at the time on when it verified that the relationship was real. The firm added that it was either by or before December 2022, when Freeman left Jackson Walker to start her own firm, the Law Office of Liz Freeman.”
• “‘The bankruptcy system was significantly compromised in this and other bankruptcy cases by the undisclosed intimate relationship between Jones and Freeman,’ the trustee said. ‘Jackson Walker’s misconduct in this and other bankruptcy cases risks the public’s confidence in the integrity that is vital to the very legitimacy of the bankruptcy process.'”
• “The secret relationship created an unlevel playing field for every party in interest in every case Jackson Walker had before Jones, as well as Jackson Walker cases in which Jones served as mediator instead of as presiding judge, the trustee said. ‘Judge Jones’s, Freeman’s, and Jackson Walker’s actions have injured the court and cast a cloud on dozens of bankruptcy proceedings.'”
• “The trustee filed similar motions in at least three bankruptcy cases seeking to vacate all orders in which Jones approved fees to Jackson Walker, which would mean that the orders would be nullified. ‘Vacating all orders granting fees and expenses in this case would allow parties in interest, including the United States Trustee, to object to, and to seek the return of, fees and expenses awarded to Jackson Walker under that tainted process,’ the trustee said.”

“China Firm Funds US Suits Amid Push to Disclose Foreign Ties” —

• “A Chinese firm is financing four intellectual property lawsuits in US courts as Congress members scrutinize the role of foreign investment in American litigation and seek to ban the practice in some instances.”
• “Purplevine IP, a Shenzhen, China-based company that touts itself as a provider of one-stop patent solutions, is paying the cost of the lawsuits against Samsung Electronics Co. and a subsidiary, said Daniel Staton, chairman of private equity firm Staton Capital. Boca Raton, Fla.-based Staton Capital is the majority owner of a tech firm, Staton Techiya, bringing the four suits.”
• “Litigation finance is estimated to be a $13.5 billion industry in which investors pay up-front costs of lawsuits in return for some of the proceeds if cases are successful. While UK and Australia firms have been investing in US lawsuits for years, the disclosure of a Chinese company paying for American litigation is rare.”
• “House Speaker Mike Johnson (R-La.) and two other lawmakers in September introduced legislation (H.R. 5488, S. 2805) that would require disclosure of foreign entities funding lawsuits in US courts. The proposal would ban sovereign wealth funds and foreign governments from engaging in the practice.”
• “‘Leaving our courts unprotected from foreign influence—such as from China—poses a major risk to US national security,’ Sen. John Kennedy (R-La.) said in a statement at the time of the bill’s introduction. Sen. Joe Manchin, (D-W.Va.) is also an author of the bill, which is backed by the US Chamber of Commerce and pro-market policy group R Street Institute.”
• “The extent of the role domestic or foreign funders play in US litigation is mostly unknown, as few states and courts require disclosure of the practice. Purplevine’s role was revealed because a Delaware federal judge, Colm F. Connolly, issued a standing order in April 2022 insisting that litigation finance be disclosed for cases in his courtroom. The case was transferred to another judge on Nov. 3.”
• “Purplevine has 400 people in 10 offices worldwide, according to its website. The company’s chief executive officer, Victor Yang, is also vice president/group general counsel for Chinese consumer electronics giant TCL Corp., according to his LinkedIn profile and a September TCL news release that quotes him.”
• “When asked about the relationship between TCL and Purplevine in the case in Judge Connolly’s courtroom, Yang responded via a TCL email address that ‘Purplevine is a management controlled IP firm. It funded the case out of its own decision, which has nothing to do with TCL.'”
• “The disclosure of a litigation funder tied to China ‘is our worst fears confirmed,’ said Joe Matal, former acting director of the US Patent and Trademark Office. ‘Anything China does is concerning because nothing over there is really independent,’ said Matal, who founded intellectual property firm Clear IP.”
• “But Gary Barnett, executive director of the International Legal Finance Association, said national security concerns around litigation finance are ‘pure speculation.'”

“Exclusive-Law firm tied to bankruptcy judge resignation did not make conflict disclosures -data analysis” —

• “A Texas law firm did not follow standard disclosure practices in at least 27 cases that might have revealed its former partner was secretly in a romantic relationship with U.S. Bankruptcy Judge David Jones while the firm was appearing before him, a data analysis by Reuters has found.”
• “Jackson Walker, a firm with nearly 500 lawyers and deep roots in the state, failed to disclose in court filings in major bankruptcy cases including oilfield services company McDermott International whether it had checked for connections between its attorneys and any judges on the Houston court, according to a review of the docket.”
• “Court records show Jones approved millions of dollars in fees for Jackson Walker, the leading local counsel firm for corporate debtors filing for bankruptcy in Houston since 2019, according to Bankruptcydata.com. Freeman became a partner in 2018.”
• “Jackson Walker said in a statement following Jones’ public acknowledgement that it first learned in March 2021 of an allegation of a romantic relationship between the judge and Freeman, who joined the firm after six years working as a clerk for Jones.”
• “Jackson Walker said it investigated the allegation and consulted with outside ethics experts, and instructed Freeman not to work or bill on any cases before Jones. It did not identify the ethics experts it consulted or say what it learned from the investigation.”
• “Law firms and other professionals employed by debtors are required under a bankruptcy rule to publicly list potential connections so that judges and other parties in the bankruptcy can assess if there might conflicts of interest.”
• “The rule does not mention judges specifically; it refers to debtors, creditors and ‘parties in interest.’ But disclosing connections to judges appears to be a standard practice. In the court filings Reuters reviewed, the larger national law firms that worked for the debtor alongside Jackson Walker always indicated that they had searched for connections to the judges on the bankruptcy court.”
• “Reuters reviewed Jackson Walker’s initial applications to represent debtors with at least $1 billion in debt that were filed in Houston since 2018 to the present. The list was compiled by Debtwire.”
• “Jackson Walker filed applications in 30 such cases in Houston during the period, according to the Reuters analysis of court records. In only three applications did it file papers indicating that it had searched for connections to judges, and the firm said it had found none. It was not immediately clear why Jackson Walker searched for connections to judges in these three cases and apparently not the others.”
• “If Jackson Walker lawyers knew of the relationship between Jones and Freeman but failed to report the connection in cases the firm was involved in, they may face accusations of having violated bankruptcy disclosure rules, eight legal experts said. Such violations can result in disgorgement of fees or even, in rare cases, criminal prosecution, they said.”
• “In addition, there could be violations of rules of professional conduct, which require lawyers to report to the state bar association if they became aware of another lawyer whose conduct raises a substantial question about their honesty, the experts said. Violations of the rules could lead to a loss of a license to practice.”
• “These reports are rare, as are findings of violations, the experts said.”

“Proskauer Nearing Settlement with Ex-COO in Trade Secrets Suit” —

• “Proskauer Rose is close to reaching a settlement with a former executive it accused of stealing a huge swath of records relating to its finances and business strategy before leaving the firm.”
• “Proskauer and Jonathan O’Brien, the firm’s ex-chief operating officer, are ‘optimistic’ they can finalize a settlement agreement within 30 days, according to a letter submitted Tuesday by O’Brien’s counsel, Russell Beck. Beck asked the court to pause proceedings in the matter until Dec. 3.”
• “The letter arrives nearly a year after Proskauer sued O’Brien in New York’s Southern District alleging he pilfered electronic files related to the firm’s finances, strategy and billing rates before abruptly resigning last December. The firm claimed O’Brien planned to use the files for a then-planned role at rival Paul Hastings, though the latter firm said in January O’Brien would not be joining.”
• “O’Brien has denied allegations of stealing, claiming he had copied the firm’s confidential information on two hard drives to work on issues relating to his exit while on vacation on a remote tropical island in the Indian Ocean.”
• [Previously on this]

Three lawyers at Kramer Levine say: “Proposed Expansion of Auditor Liability Would Be Ill-Advised” —

• “A proposed negligence standard that would expand the liability of accountants for contributing to rule violations is unreasonable given the growing complexity of audits, say Kramer Levin’s Michael Dell, Daniel Ketani, and Samantha Alman.”
• “The Public Company Accounting Oversight Board’s proposed revisions in September to its Rule 3502 significantly expand its authority to impose liability on accountants for contributing to a violation of PCAOB rules, securities laws, or professional standards. The board shouldn’t make these changes. The deadline for comments on the proposal is Nov. 3.”
• “Rule 3502 prohibits people associated with registered public accounting firms from taking or omitting an action while ‘knowing, or recklessly not knowing, that the act or omission would directly and substantially contribute to a violation.’ This means the PCAOB must establish scienter—at a minimum, an ‘extreme departure from the standard of ordinary care for auditors’ in the face of a known or obvious risk.”
• “The board wants to replace this with a negligence standard, under which an associated person could be fined and prohibited from associating with a registered public accounting firm for an ‘act or omission that the person knew or should have known would contribute’ to a primary violation. The accountant’s intent wouldn’t matter.”
• “The PCAOB acknowledges its proposal nearly mirrors the original version of Rule 3502 it proposed in 2004. Back then, the PCAOB changed its mind, instead deciding a scienter requirement ‘strikes the right balance.’ Now it suggests that developments in the law and the auditing profession in the past two decades warrant expanding its authority to discipline auditors.”
• “That logic is flawed. First, its proposed changes to Rule 3502 stand on shaky legal ground. The Sarbanes-Oxley Act of 2002, which created the PCAOB, doesn’t mention what the PCAOB calls ‘contributory liability.’ Section 105(c)(6) of the act creates secondary liability for certain supervisors of associated persons who commit violations, but it includes requirements and a safe harbor that are absent from Rule 3502.”
• “Chair Erica Williams observed in September that the Securities and Exchange Commission is able to ‘seek civil money penalties in enforcement actions against associated persons when they negligently cause firm violations.’ But Congress extended that authority to the SEC, not the PCAOB. And while the SEC can discipline accountants for ‘improper professional conduct’ that contributes to a violation of professional standards, the bar is much higher than what the PCAOB has proposed: The SEC must prove that the accountant engaged in ‘intentional or knowing conduct,’ ‘highly unreasonable conduct,’ or ‘repeated instances of unreasonable conduct.’”

“Yelp’s Failed Attempt to Block Paul Weiss From Google Antitrust Case Shows Obstacles to Big Law DQ Bids” —

• “A recent ruling allowing Paul, Weiss, Rifkind, Wharton & Garrison to continue representing Google in antitrust litigation, despite not seeking a waiver from former client Yelp, shows it takes more than alleging an inherent client conflict to get a large firm kicked off a case.”
• “Nonparties Yelp and News/Media Alliance had filed a motion to disqualify the Am Law 50 firm, with Yelp arguing that it retained Paul Weiss in 2016 to provide legal counsel on several antitrust matters. That representation, Yelp argued, included communications between counsel and federal antitrust enforcement officials regarding Google’s business practices and how that alleged conduct impacted Yelp’s business decisions, according to the opinion filed Oct. 16 in the U.S. District Court for the Eastern District of Virginia. “
• “Paul Weiss never sought a conflict waiver from Yelp or NMA for the present litigation, which the U.S. and eight states commenced in January, seeking substantial damages on behalf of federal agency advertisers, equitable relief and divestiture of Google’s digital advertising business, the opinion said.”
• “However, in ultimately rejecting Yelp’s motion, Judge Leonie M. Brinkema first considered whether Paul Weiss violated Virginia’s Rules of Professional Conduct pertained to former clients and representing a person with interests directly adverse to those of a client represented by a lawyer who formerly was associated with the firm.”
• “‘Here, Paul Weiss represented Yelp and NMA three years ago, primarily to communicate with federal antitrust officials regarding Google’s purported anticompetitive conduct in the Internet search industry,”’ Brinkema wrote in her opinion. ‘That representation was led by lawyers who are no longer at the firm—with one exception, Daniel Crane, who is no longer participating in the Ad Tech litigation… As such, Yelp and NMA have failed to provide ‘patently clear’ evidence demonstrating how specific confidential information Paul Weiss may have obtained during the previous representation is substantially related to the dispute in the instant litigation.'”
• “However, as an apparent precautionary measure, Brinkema ordered Paul Weiss to screen its attorneys and support staff to see if any of them participated in the previous representation of Yelp or NMA in relation to Google’s alleged anticompetitive conduct. If so, Paul Weiss is ordered to prohibit those members from participating in the present action, the judge ordered.”
• “Still, Brinkema said that a violation of the rules ‘does not automatically yield disqualification of counsel.’ In Google’s case, disqualification of Paul Weiss ‘this late stage in a complex, and fast-moving case would impose unnecessary expense, risk a delay in the trial and waste both plaintiffs’ and Google’s resources,’ she wrote.”
• “The ruling in the Google case is the latest example of a judge deciding a large law firm had taken adequate steps to avoid a conflict. The ruling in Google’s case is the latest example of a judge taking mitigating steps around an issue, rather than completely disqualifying Paul Weiss.”
• “In another case, the U.S. Court of Appeals for the Third Circuit ruled in September 2022, that White & Case was not conflicted out of a bankruptcy case after hiring a partner from opposing counsel Sidley Austin who previously worked on the matter.”
• “When Jessica Boelter, who had participated in the initial pitch by Sidley to represent YPF and billed 300 hours on the representation, moved to White & Case, she went through a standard conflict-screening process. On Boelter’s first day, White & Case implemented an ethical wall, obtained Boelter’s agreement to comply with that wall and periodically certified that compliance, according to the opinion.”
• “But YPF ‘never thought any screen could be good enough’ and moved to disqualify White & Case, according to Judge David J. Porter, who wrote the opinion for the Third Circuit. The bankruptcy court denied YPF’s motion after applying a multifactored test, finding no exceptional circumstances existed to impute Boelter’s conflict to the entire firm despite a screen, according to the opinion.”
• “More recently, over this past summer, a federal judge denied Coca-Cola Co.’s motion to disqualify its longtime outside counsel Paul Hastings from representing a startup that filed a $100 million lawsuit against Coke. U.S. Magistrate Judge Robert Norway of the Middle District of Florida found that Paul Hastings’ representation of the startup was a conflict, but that Coke signed an enforceable conflict waiver in 2021.”
• “There’s a laundry list of potential conflicts law firms must watch out for, from attorneys having their own financial interest from a separate business to lawyers needing to serve as witnesses.”
• “But University of Arizona James E. Rogers College of Law Professor Keith Swisher found that nearly half of federal motions filed for disqualifications tracked in civil cases between 2003 and 2013 were related to a former client, he wrote in ”The Practice and Theory of Lawyer Disqualification,” which was published in the Georgetown Journal of Legal Ethics in 2014.”
• “For that same decade, nearly 74% of civil disqualification motions were denied, Swisher’s research showed.”

And more on the aforementioned research (curious how the last decade compares to the 2003-2013 data presented in here): “The Practice and Theory of Lawyer Disqualification” —

• “Lawyer disqualification is commonly feared as a ‘strategic,’ ‘tactical,’ and ‘harassing’ ‘potent weapon’ depriving clients of their trusted counsel of choice. Although disqualification comes with costs, fundamental misunderstandings fuel this common fear.”
• “This Article finds that disqualification is a uniquely effective remedy for lawyer misconduct and makes the following contributions to the law and practice of lawyer disqualification:
  • (1) an exhaustive study surveying disqualification cases and refuting the common misconception that disqualification motions are uncontrollably on the rise and uncontrollably bad;
  • (2) an accessible analysis of lawyer disqualification doctrine that permits lawyers and judges to begin assessing common disqualification questions efficiently and comprehensively; and
  • (3) specific suggestions for practical improvements, including cost-shifting, legal presumptions, and better procedures in disqualification proceedings.”

“Nevada Walgreens Lawsuit Raises Conflict of Interest Concerns” —

• “The law firm chosen for the Walgreens opioid-related lawsuit was Egglet Adams, the firm where Attorney General Aaron Ford worked as a partner before taking up his current office. Now some are raising concerns about a conflict of interest.”
• “In July, Attorney General Aaron Ford announced the state had settled with Walgreens for $285 million, holding the pharmacy chain responsible for its role in the opioid epidemic in Nevada. Of that $285 million awarded, at least $65 million went to attorney fees. The law firm chosen for the lawsuit was Egglet Adams, the firm where Attorney General Aaron Ford worked as a partner before taking up his current office. Now some are raising concerns about a conflict of interest.”
• “Additionally, Senate Minority Leader Heidi Seevers Gansert told 2 News that the cap for outside attorney fees increased from $10 million to 25% in 2017 when Ford was the Senate Majority Leader. The statute change happened in the final hours of the 2017 legislature when normal legislative oversight rules were lifted. Two years later in 2019 when Ford was Attorney General, his office selected Egglet Adams, his former firm, for opioid-related lawsuits.”
• “The Communications Director for the Attorney General’s office told 2 News that Attorney General Aaron Ford did not play any role in selecting Egglet Adams. The selection was based on the fact that Egglet Adams is one of the few firms that can bear the upfront costs of lawsuits where evidence gathering costs tens of millions of dollars. Additionally, Nevada received more money by pursuing its lawsuit with the help of Egglet Adams than it would have by joining a multistate case.”
• See the video report from local TV news KTVN: Here.

“Prosecutor: Fred Daibes faces conflict of interest with lawyer in NJ bank fraud case” —

• “Fred Daibes, the prominent North Jersey developer charged alongside Sen. Bob Menendez in alleged bribery scheme, faces a conflict of interest with the attorney who represents him in a New Jersey bank fraud case that dates back to 2018, federal prosecutors say.”
• “Daibes is one of five people indicted in an alleged corruption scheme involving Menendez and his wife, Nadine Arslanian Menendez, in a separate case. Daibes pleaded not guilty last week to the superseding indictment.”
• “An attorney representing the United States in the bank fraud case said he believes there is a potential conflict of interest with Daibes’ attornies, Lawrence S. Lustberg and Anne Collart of Gibbons P.C., related to the Menendez indictment.”
• “The indictment shed light on Menendez’s alleged interference with Daibes’ bank fraud charges, saying Menendez nominated a U.S. attorney he believed he could influence in Daibes’ favor.”
• “Hana is represented by Lustberg in the Menendez indictment. ‘Mr. Lustberg knows certain facts allegedly relevant to those charges,’ wrote Vikas Khanna, first attorney for the United States in the district of New Jersey, in a letter to United States District Judge Susan D. Wigenton on Wednesday.”
• “The government requested that Daibes be made aware of the potential conflict of interest and if appropriate, sign a voluntary waiver to continue with Lustberg as his attorney. U.S. District Judge Sidney Stein repeatedly asked Hana if he wanted new representations at the arraignment last week.”
• “Stein noted that Lustberg could be called as a witness because he serves as Daibes’ attorney in a different federal case based in New Jersey. Hana said he was satisfied with Lustberg even after Stein reiterated that he would not be able to appeal on the grounds that Lustberg was conflicted at the end of the trial.”
• “That same day, Hana signed a waiver of any potential conflict of interest caused by Lustberg’s potential conflict of interest by counsel’s concurrent representation of Daibes, according to court documents.”
• “A status conference hearing — originally a sentencing date before a judge withdrew a plea deal for the bank fraud charges — was held for Daibes on Thursday. During the hearing, the potential conflict of interest was discussed for 45 minutes, court records show. The hearing is scheduled to continue on Nov. 16.”
• “Last month, corruption and bribery charges were filed against Menendez by the U.S. attorney for the Southern District of New York. The unsealed indictment said Menendez accepted hundreds of thousands of dollars in bribes from three New Jersey businessmen, including Daibes, in exchange for helping them enrich themselves and trying to get them out of trouble.”

“Why Arbitration Spinoffs Are ‘Part Push, Part Pull’ for Big Law” —

• “For Yas Banifatemi, practicing international arbitration at a large law firm had stopped making sense.”
• “She and her colleagues had for years operated ‘a firm within a firm’ that had become Shearman & Sterling’s ‘crown jewel,’ she said, but as the firm expanded its U.S. presence the global arbitration practice was feeling some unfortunate side effects. As Shearman grew its focus on the energy sector by adding dozens of partners in Texas, Banifatemi and the arbitration team found themselves increasingly conflicted out of matters for longstanding clients.”
• “‘Shearman had a very expanded view of what a conflict is,’ Banifatemi said.””When the firm’s finance team represented a bank as an underwriter, for example, its arbitration practice had to bow out of disputes in which the bank had been involved as a lender but was no longer a party.”
• “‘We lost extremely interesting, prestigious matters to that view of conflict of interest,’ Banifatemi said. ‘That ended up being very annoying. You cannot expand your work and the work you have is losing ground because you have so many conflicts.'”
• “Conflict concerns coupled with the desire to be free of the bureaucracy of Big Law—all those meetings and red tape—led Banifatemi and Emmanuel Gaillard, co-heads of Shearman’s practice, to leave with a 38-lawyer team to start GBS Disputes in 2021.”
• “Their exit was perhaps the loudest and most notable in recent years, but the past decade has seen a growing trend of international arbitration practitioners ditching large firms to branch out on their own. As the arbitration market has matured, small-scale specialist and boutique firms have found clients receptive to the streamlined service they can offer, and many attorneys are finding that the grass truly is greener outside of Big Law.”
• “But in fact, the recent spate of arbitration exits from large firms is ‘part push, part pull,’ according to the head of an international arbitration practice at a global firm. The race toward maximum profitability has become particularly pronounced, and as that’s happened arbitration has lost some of its luster, given its nature as a long-term play with limited margins compared with more lucrative and reliable practices. At certain large firms, the practice leader said, ‘arbitration is no longer the shining star in the firm.’ Those circumstances can open the door to a firm accepting an arbitrator’s exit or even offering a gentle push.”
• “More significant, though, is the pull that arbitrators are feeling, the practice leader said. As the arbitration market has matured and the club of prestigious practitioners has grown, many have seen the proof of concept offered by firms like GBS and Three Crowns and determined that they have better options.”
• “The pressure to maintain profitability in large firms presents itself in other ways, too, according to Weijia Rao, assistant professor at the Antonin Scalia Law School at George Mason University, who previously practiced international law at Sidley Austin and worked at the International Centre for Settlement of Investment Disputes (ICSID). Representing a country in investor-state arbitration often involves a capped fee, she said, which means it isn’t usually as profitable as representing investors or companies. For some arbitration practitioners, that creates an unwelcome tension.”
• “For international arbitrators who have left big firms in recent years, freedom and flexibility were among the most important factors. From avoiding conflicts to selecting clients and even choosing how to hire and train, exiting Big Law allows practitioners a sense of clarity that can be hard to find as part of a full-scale enterprise.”

Colette Best, Director of Anti-Money Laundering at Solicitors Regulation Authority, introduced several new resource:

• “We have recently published a suite of information to help firms put in place good client/matter risk assessments. These are an essential block of your AML controls to decide what level of customer due diligence is needed to mitigate the risk.”
• We have published a report setting out the findings of our thematic review: “Client and matter risk assessments“
• We have also published a template for client/matter risk assessments for those firms which wish to use it: “Completing the client and matter risk template“
• And a warning notice setting out what firms are getting wrong and what good practice looks like: “Warning notice: Client and matter risk assessments“

“Va. Judge Nixes Defense’s Expert Witness, Finding Previous Work With Opposing Counsel Created ‘Serious’ Conflict of Interest” —

• “A federal court in Virginia has ruled that an expert witness for the defense is conflicted out of a personal injury lawsuit because she previously discussed serving as an expert in a Pennsylvania case with plaintiffs counsel, who shared privileged communications and attorney work product about the Virginia matter.”
• “According to the Oct. 10 opinion by U.S. District Judge Thomas T. Cullen of the Western District of Virginia, the John Doe plaintiff was as student at Turner Ashby High School when then-principal Phil Judd and school guidance counselor Sandy King allegedly failed to protect him from sexual abuse at the hands of former drama teacher Wesley Dunlap, according to the opinion.”
• “Before the court was Doe’s motion to disqualify Dr. Charol Shakeshaft from serving as an expert witness for the defendants, Judd, King, Dunlap and the Rockingham County School Board, about sexual-assault prevention and training.”
• “Doe argued his counsel had previously engaged Shakeshaft to serve as an expert witness for the plaintiffs in the case, disclosing privileged communications and attorney work product to her, and therefore the court should bar Shakeshaft from testifying.”
• “According to the court, Doe’s counsel contacted Shakeshaft to gauge her interest in serving as Doe’s expert witness… Shakeshaft and Doe’s counsel went on to speak over the phone, where Doe’s counsel argued they revealed ‘a trove of confidential information about this case,’ including privileged attorney-client communications and attorney work product, according to the opinion.”
• “Doe contended that, during the call, Shakeshaft confirmed she didn’t have any conflicts that would preclude her from serving as an expert in either of the litigations, leading counsel to explain both cases in detail, including confidential and privileged information, the opinion said.”
• “Shakeshaft claimed that little-to-no substantive information about the Virginia case was shared, including no privileged or protected material, with defendants arguing ‘scant details’ were provided about the Virginia case, including no confidential or privileged information, according to the opinion.”
• “But the court held it was undisputed that Doe’s counsel worked with Shakeshaft on the Pennsylvania case, with counsel claiming it occasionally discussed the Virginia matter during this time. Doe’s counsel went on to pay Shakeshaft for the Pennsylvania expert report.”
• “Defense counsel went on to execute a written agreement with Shakeshaft for her to serve as their expert, paying her a $2,500 retainer. Shakeshaft billed defendants for 58 hours spent reviewing documents and drafting the report, the court said.”
• “After learning that the defendants had retained Shakeshaft and intended to use her as an expert, Doe’s counsel filed a motion to disqualify her. The court granted the motion, concluding that a confidential relationship existed and confidential information had been shared.”
• “‘In support of her representation to the court to this effect, Plaintiff’s counsel provided an affidavit and six-page in camera letter that describes, in detail, the nature and extent of the information shared. This included the substance of two key, privileged communications with her client about a determinative issue in the case,’ the court said. ‘Plaintiff’s counsel also attests that she shared with Dr. Shakeshaft details of her litigation strategy.'”

“Judge’s Recusal Isn’t Needed After Ex-Firm’s Deepwater Cases” —

• “A US judge did not need to recuse himself from cases over the Deepwater Horizon oil spill despite his former law firm’s previous work on the case, a US Court of Appeals for the Fifth Circuit panel ruled.”
• “The New Orleans-based appeals court on Friday affirmed the decision by US District Judge Barry Ashe of the Eastern District of Louisiana to not step away from the cases. The appellate panel said there was ‘no evidence’ that Ashe previously worked on the litigation when New Orleans law firm Stone Pigman represented a decade earlier Cameron International, the manufacturer of a blowout preventer that failed ahead of the oil spill.”
• “The appeals court on Friday said that while Cameron International was ‘directly adverse’ to the plaintiffs in a 2013 liability trial, it is not involved in the ongoing litigation. It also said that Ashe’s longtime partnership at the law firm was well known, but that the parties did not move to disqualify him from the cases until he rejected the inclusion of an expert report in the litigation.”
• “‘Nonetheless, as the arguments on this appeal support, potential conflicts of interest must be taken seriously by every member of the judiciary,’ the court wrote. ‘The litigants and the public need to be confident in the impartiality of those who will decide legal disputes. This appeal is fair warning to each of us of the importance of assuring the reality and appearance of that impartiality.'”