Bressler Risk Blog

“Tracing Key Legal Developments in the UK’s AML Regime” —

• “Prateek Swaika and Sagar Gupta of Boies Schiller Flexner discuss the regulatory framework of UK’s anti-money laundering regime and explore key legal developments.”
• “In response to the Russian military action in Ukraine, the UK government has continued to impose stringent sanctions and strengthened its anti-money laundering regulations aimed at targeting Russian financial and trade sectors, state-owned media and individuals connected with the Russian government. In turn, this has influenced the attitude, risk appetite and risk exposure of businesses in recent months.”
• “Considering the heightened scrutiny and evolving regulatory landscape, businesses (including accountants, consultants and lawyers) in the UK are facing ever-increasing oversight and must be careful not to run afoul of AML regulations. This includes instituting and maintaining up-to-date policies and procedures designed to promote and achieve AML compliance.”
• “Businesses, particularly small to medium ones, are likely to come under increasing pressure to maintain strict compliance with an ever-growing number of compliance checks and obligations.”
• “We anticipate that this area will continue to see reform, such as with the passing of the Economic Crime and Corporate Transparency Bill, which remains under consideration in Parliament.”
• “This legislation provides for increased investigation and enforcement powers for Companies House, brings crypto assets within the scope of civil forfeiture orders, legislates against the misuse of limited partnership structures and permits businesses to share information to combat economic crime.”
• “Given that AML and sanctions have been front and center of the UK government’s legislative and regulatory agenda in recent months, it is unsurprising that regulators such as the Solicitors Regulation Authority (SRA) are also being given more teeth in order to ensure AML compliance among practitioners.”
• “These changes have brought the role of AML compliance officers in businesses and law firms into sharp focus. With the increased regulatory enforcement owing to the geopolitical situation in Europe, it is likely that businesses will continue to be closely monitored and scrutinized for their AML compliance, including the conduct of AML compliance officers.”
• “With increasing focus on customer due diligence and verification of ultimate beneficial owners, due to the legislation described below, it is likely that firms will need to conduct a lookback review of customer due diligence files and take appropriate action. In view of this increasing compliance burden, it is imperative for AML officers to maintain ongoing dialog with their business teams to promote information sharing and risk reporting.”

“American Lawyers Can Cater to the Corrupt. The ABA Should Act” —

• “Congress narrowly fell short of passing a bill requiring attorneys perform the same safeguards as others to prevent money laundering. The ABA lobbies against these changes but should fight for reform, says Scott Greytak of Transparency International US.”
• “An international law enforcement task force created in the wake of Russia’s invasion of Ukraine recently announced an alarming accomplishment: A guilty plea from an ‘enabler’ of international money laundering and sanctions evasion. The accused had admitted to helping an associate of a known Russian oligarch dodge rules adopted in response to an ‘threat to the national security and foreign policy of the United States.'”
• “Who was this mastermind, who’d helped move millions in dirty money across the world? Was it a Russian operative, covertly channeling illicit transactions from a bunker in Belgorod?”
• “No. It was a New York City lawyer, sitting at his desk. And if the US’s largest association of lawyers, the American Bar Association, continues to have it its way, every lawyer in America will remain exempt from the US’s most important anti-money laundering law.”
• “American lawyers are often the go-to middlemen for criminals looking to move and hide their dirty money in the US. And for good reason—neither federal law nor the model ethics rules put out by the ABA require lawyers to know who their clients are, to conduct due diligence on those clients, or to stop working with them if they suspect they’re using their services to commit a crime.”
• “Unlike every bank in America, American lawyers are not subject to the US’s most important anti-money laundering law, the Bank Secrecy Act. This is true even when they’re providing services that are financial in nature, such as incorporating a company for a client, setting up a trust for a client, or managing a client’s money—none of which require a law license. Adding insult to injury, the ABA’s Model Rules of Professional Conduct do not require American lawyers to have any BSA-grade anti-money laundering safeguards.”
• “Given the razor-thin margin that kept the Enablers Act from becoming law, and perhaps needing to mitigate the reputational damage wrought by its controversial lobbying campaign to block the reform, the ABA recently proposed some changes to its Model Rules. But as with so much legal fine print, the devil is in the details.”
• “If, from that assessment, the lawyer “learns” that the client or potential client seeks to use the lawyer’s services to commit a crime, and the client essentially cannot be persuaded otherwise, the lawyer must decline or terminate the representation.”
• “Note first how this language (and associated comment) do not actually use the words ‘due diligence’ or even ‘client.’ There is intention in this choice. The term “due diligence” carries with it known industry usage and standards, particularly in the context of the BSA.”
• “Note also how the proposal doesn’t require that lawyers have any specific due diligence policies or procedures. Instead, it simply alludes to lengthy guidance documents…”
• “Altogether, the American Bar Association is essentially saying, ‘Hey, we already have ethics rules that address the use of lawyers to launder money. But here’s some more guidance to show how they work.’ But as we all know by now, these rules have failed. Instead, the ABA’s latest proposal serves only as another reminder that what’s needed is action from Washington.”

“A Failure to Decentralize: A Messy 4 Months at Lewis Brisbois Has Roots in Belated Succession Planning” —

• “Although talks of reconfiguring Lewis Brisbois Bisgaard & Smith’s governance structure and management personnel had been underway for years, it took the departure of more than 150 lawyers so far this year to serve as an impetus for action.”
• “For years, partners and executives have complained about the firm’s opaque leadership, unilateral decision-making and lack of succession planning, sources with knowledge of the firm, some of whom agreed to speak to The American Lawyer on the condition of anonymity, said.”
• “Abrupt shifts that have taken place within the last month at the Am Law 100 firm, including Lewis’ resignation and the dissolution of the executive committee, speak to the challenges of tactfully transitioning leadership from the founding generation to a new one, according to lawyers and consultants interviewed for this story.”
• “Grievances of opaque management spilled over into the public square last week when a 2019 letter by former chief operating officer Robert Kamins to California state authorities surfaced, alleging financial impropriety and asset-hoarding by longtime chairman Bob Lewis and other ‘insiders’ at the firm. (Firm leaders have denied the allegations.)”
• “The letter claims Kamins discovered ‘questionable practices which he reasonably believed violated the law,’ and alleges that following his termination, the firm ‘continued to make operational changes that—rather than stopping the unlawful conduct—have further solidified the control of the Firm in the hands of those who are behind the unlawful conduct.'”
• “Within the last 10 years, two cybersecurity groups acquired by the firm have left, most recently, the firm’s 44-person cyber group who left for Constangy, Brooks, Smith & Prophete. In 2014, a team of cyber lawyers from now-defunct Nelson Levine opened the firm’s Pennsylvania office before starting cybersecurity boutique Mullen Coughlin two years later.”
• “In a 2021 interview with The Legal Intelligencer, leaders of Mullen Coughlin said it was founded by partners who sought to evade the constraints of larger firms—namely, territorial competition for clients and origination credit, pressure to maintain a sizeable book of business and inefficiency in checking for conflicts of interest.”
• “‘We need to be fast on conflict checks, and when you’re at a firm with 1,000-plus lawyers, you can’t,’ John Mullen said, adding that in Big Law, there are ‘too many lawyers with too many clients who keep them as clients forever.'”
• “Competition for cybersecurity legal professionals comes from all sides, and law firms can be viewed as a training ground from which higher-paying companies can recruit.”
• “Departures and leadership changes have come as a shock to some number of Lewis Brisbois employees, who received an email May 5 from firm leaders apologizing for failing to give notice about the departures and changes before they were publicized by media outlets like The American Lawyer.”
• “Emails downplaying the seismic exits have been circulated this month seeking to instill morale among employees in the face of seismic exits and media attention, sources inside the firm said.”

And more: “Ex-Lewis Brisbois partners resign from new firm after racist, sexist emails found” — “The name partners of U.S. law firm Barber Ranen have resigned after their former law firm Lewis Brisbois Bisgaard & Smith found dozens of emails that showed the lawyers using racist, sexist, homophobic and antisemitic language while they were there, according to Barber Ranen’s chief executive officer.”

“Federal judge who ruled against DeSantis will recuse himself from Disney case” —

• “A federal judge who has a history of ruling against Ron DeSantis is stepping aside from presiding over a high-profile case where Disney sued the Florida governor.”
• “The state previously pushed to disqualify U.S. Chief District Judge Mark Walker based on comments he made in court about the ongoing dispute between the entertainment giant and Republican governor. DeSantis, who mounted a presidential bid, has made his fight with Disney a key part of his political brand.”
• “Walker on Thursday called the motion filed by the state ‘meritless.’ But he said he’ll remove himself from the case because he discovered last week that an unidentified ‘third-degree’ relative of his owns 30 shares of Disney stock.”
• “‘Even though I believe it is highly unlikely that these proceedings will have a substantial effect on The Walt Disney Company, I choose to err on the side of caution — which, here, is also the side of judicial integrity — and disqualify myself,’ Walker wrote in a 14-page order. ‘Maintaining public trust in the judiciary is paramount, perhaps now more than ever in the history of our Republic.'”
• “Walker, who was appointed to the bench by former President Barack Obama, has presided over several contentious legal fights in the past several years that have involved DeSantis, former Gov. Rick Scott and the GOP-controlled Florida Legislature.”
• “The result of Walker’s decision is that the Disney lawsuit has now been reassigned to U.S. District Judge Allen Winsor, an appointee of former President Donald Trump who once worked as Florida’s solicitor general under then-state Attorney General Pam Bondi.”

“Judge presiding over Big Oil climate change lawsuit reveals connection to plaintiff’s eco lawyers” —

• “The Hawaii state judge presiding over a high-stakes climate change case between the City of Honolulu and several multinational oil corporations is facing calls for recusal over his indirect relationship to plaintiffs.”
• “Mark Recktenwald, the chief justice of the Hawaii State Supreme Court, quietly disclosed this month that he presented for an April course in collaboration with the Environmental Law Institute (ELI) Climate Judiciary Project. According to the ELI, the project is designed to educate judges across the country on how to handle climate change litigation that comes before them.”
• “The ELI, though, boasts numerous connections to Sher Edling, the eco law firm representing Honolulu and a number of other jurisdictions, including Minnesota, New Jersey, New York City, and San Francisco, in similar climate nuisance cases against oil corporations in which plaintiffs argue the fossil fuel industry has spearheaded a decades-long campaign of deception about global warming risks.”
• “In his disclosure earlier this month, Recktenwald publicly shared the slide deck for his ELI presentation titled ‘Rising Seas and Litigation: What Judges Need to Know About Warming-Driven Sea Level Rise.”‘ The chief justice spoke about a number of ongoing climate nuisance suits and discussed arguments plaintiffs have made in court, the slide deck showed.”
• “Recktenwald’s disclosure notably failed to mention that he also presented at a December ELI webinar titled ‘Hurricanes in a Changing Climate and Related Litigation.'”

“Law Firm Mergers, Pitched as Benefiting Clients, Also Can Bring Headaches, Conflicts” —

• “When Allen & Overy and Shearman & Sterling announced their merger plans Sunday, they said it was ‘driven by clients’ needs for a seamless global offering of the highest quality and depth.'”
• “But Brennan and other in-house veterans who have experienced mergers say there also can be dark sides, such as new conflicts, administrative hassles and cultural tensions.”
• “Kimberly DeCarrera, who was a legal chief and chief financial officer for a nearly a decade before starting her own fractional general counsel business, said conflicts checks are always the No. 1 concern for legal teams when news of a law firm merger breaks. ‘Obviously there are headaches any time a relationship changes,’ DeCarrera said.”
• “She recalled being in the middle of a case when the law firms representing both sides decided to combine. ‘It wasn’t a bet-the-company type of case, but how do you handle that process?’ DeCarrera said.”
• “Conflicts are becoming increasingly unavoidable as more firms combine, said Brennan, who was an associate general counsel at Carvana before joining Axon in 2021. ‘There’ve been so many mergers that it’s almost inevitable that every big firm is going to be representing our primary competitor,’ she said.”
• “‘As these mergers continue to happen, law firms and clients need to be prepared. The conflicts piece is really the biggest con. And being flexible and finding a way to draft language and create understandings that both clients feel comfortable with is really important.'”
• “Sometimes firms may have to cut ties with clients if they can’t work around conflicts.”

“Judges join lawyers in the bear pit” —

• “While we catch our breath as change and challenge rain down on our profession, we may take cold comfort from the fact that we are not alone: judges are beginning to feel the heat, too, from the evolving expectations of a society under stress.”
• “You may wonder what that has to do with us, but the Financial Times reported last week that High Court judges had invested in controversial tax avoidance schemes which were challenged by HM Revenue & Customs, including one judge who has ruled on tax avoidance cases – and each has retained their interests in the schemes after taking their positions as High Court judges. Whatever one’s take, it is clearly not of the same order as the allegations against the justice of the US Supreme Court.”
• “The UK does not require its judges to make systematic disclosures about their interests. The UK Guide to Judicial Conduct, which is written by judges themselves, merely requires judges to make ad hoc disclosures to parties in particular cases if the judge views they have any conflict of interest or if they believe there is the risk of an appearance of a conflict of interest. In other words, judges decide for themselves.”
• “We lawyers have been under heavy pressure for years over our alleged role in facilitating tax avoidance, for instance following the Panama and Paradise Papers’ leaks. This has led to a serious debate about our ethics, for instance when something is lawful but viewed by others to be wrong. Judges have different roles, but it surely cannot be long before there is a beefed up and binding code of conduct for our judges.”
• “Lawyers are private actors, with an element of choice. Judges are state actors who have been seen as above the fray. But as the two examples of tax avoidance and climate change show, judges are now as much in the mêlée as we are.”

Chances are, you’ve read about: “A lawyer used ChatGPT to prepare a court filing. It went horribly awry.” This ripple, which I hope wasn’t drafted by an AI, caught my eye: “Federal Judge Requires ‘Mandatory Certification Regarding Generative AI’” —

• “All attorneys appearing before the Court must file on the docket a certificate attesting either that no portion of the filing was drafted by generative artificial intelligence (such as ChatGPT, Harvey.AI, or Google Bard) or that any language drafted by generative artificial intelligence was checked for accuracy, using print reporters or traditional legal databases, by a human being.”
• “These platforms are incredibly powerful and have many uses in the law: form divorces, discovery requests, suggested errors in documents, anticipated questions at oral argument. But legal briefing is not one of them. Here’s why. These platforms in their current states are prone to hallucinations and bias. On hallucinations, they make stuff up—even quotes and citations.”
• “Another issue is reliability or bias. While attorneys swear an oath to set aside their personal prejudices, biases, and beliefs to faithfully uphold the law and represent their clients, generative artificial intelligence is the product of programming devised by humans who did not have to swear such an oath. As such, these systems hold no allegiance to any client, the rule of law, or the laws and Constitution of the United States (or, as addressed above, the truth). Unbound by any sense of duty, honor, or justice, such programs act according to computer code rather than conviction, based on programming rather than principle. Any party believing a platform has the requisite accuracy and reliability for legal briefing may move for leave and explain why.”
• “Accordingly, the Court will strike any filing from an attorney who fails to file a certificate on the docket attesting that the attorney has read the Court’s judge-specific requirements and understands that he or she will be held responsible under Rule 11 for the contents of any filing that he or she signs and submits to the Court, regardless of whether generative artificial intelligence drafted any portion of that filing.”

“Ohio Doctor Takes Dinsmore DQ Fight To 6th Circ.” —

• “An Ohio doctor told the Sixth Circuit Thursday that it should undo his employer’s win in his retaliation suit against it, as the lower court did not rule on his bid to disqualify Dinsmore & Shohl LLP as the hospital’s counsel for previously representing him in a suit against a ‘rogue orthopedic surgeon’ he had blown the whistle on.”
• “Dr. Charles Mehlman, also an orthopedic surgeon, had claimed in his 2020 complaint that his employer, Cincinnati Children’s Hospital Medical Center, sought to ‘punish him’ for speaking up about the now-infamous Dr. Abubakar Atiq Durrani and his practice of performing unnecessary spinal surgeries on patients, including children. Mehlman was deposed by plaintiffs who sued Durrani for malpractice, and he was represented by Dinsmore & Shohl LLP at the time, which he said in his brief should have disqualified it from representing the hospital in his retaliation suit.”
• “When Mehlman filed his retaliation suit after receiving a two-week suspension ‘without notice or other form of process,’ the hospital retained Dinsmore & Shohl as its legal counsel and ultimately secured an early win in January despite Mehlman’s motion to disqualify the firm, which the lower court did not address, his brief states.”
• “‘The district court should have ruled on Dr. Mehlman’s motion to disqualify counsel prior to ruling on defendants’ motion for summary judgment because a motion for disqualification has the potential to alter the course of proceedings substantially,’ Mehlman said.”
• “According to the brief, the district court shirked its precedential requirement to decide on his disqualification motion before making a dispositive ruling like a summary judgment grant, and it was inappropriate for the court to allow Dinsmore & Shohl to represent the hospital since Mehlman’s claims were ‘inextricably linked’ to the Durrani depositions the firm had represented him for.”

“California Ethics Group Tells Judges Not to Party With Lawyers” —

• “California judges should refrain from attending law firm celebrations at the firm’s offices with complimentary food and beverages under a draft ethics advisory out for comment.”
• “The California Supreme Court’s Committee on Judicial Ethics Opinions’ draft opinion follows a request on whether a judicial officer could attend a 50th anniversary celebration.”
• “‘A judicial officer’s presence at such an event may suggest that the judicial officer has a special relationship with the law firm, which may undermine the impartiality of the judiciary or convey the impression that the law firm is in a position to influence the judicial officer’s judicial decisions,’ the draft said.”
• “In a footnote, the draft said attending a law firm celebration ‘is distinguishable from attending a bar association or legal education event sponsored by law firms. Such activities do not generally undermine judicial impartiality, and a specific exception to the gift prohibition applies.'”

“PwC in the firing line and AFP drawn in as Senate asks hard questions about conflict-of-interest drama” —

• “PwC gets paid millions to get companies and governments out of trouble, but it’s in the middle of an international crisis after a former tax partner used confidential Treasury information to make millions for the consulting firm.”
• “‘PwC was brought in as a trusted adviser and expert to help shape [new] laws,’ says columnist and author Tom Ravlic. ‘They’ve taken that knowledge and then used it to undermine them almost immediately.'”
• “Now PwC Australia’s biggest client — the federal government — is seething.”
• “About a decade ago, the government asked PwC tax expert Peter-John Collins to help it design laws to better tax multinational companies. Large companies, particularly tech giants, were shifting profits from higher-taxing countries like Australia to others like The Netherlands and Singapore with lower tax rates.”
• “Mr Collins signed multiple confidentiality agreements, specifying the knowledge could not be disclosed. But he shared the secret knowledge within PwC, helping the firm create a system for those companies to avoid paying the new taxes.”
• “The company used the scheme to make money and win new clients, then gloated about it. The Tax Practitioners Board was damning in its assessment of Mr Collins, saying he ‘did not act with integrity’ and disqualifying him from working in the field for two years.”
• “The board said he signed multiple confidentiality agreements and it was clear the Treasury information was being disclosed on a confidential basis.”
• “But will there be criminal or civil charges? That’s unclear, according to UNSW business law expert Dr Scott Donald. That’s because the allegation so far is that PwC benefited from a breach of a confidentiality agreement. An agreement we haven’t seen.”
• “So far, all we know is that PwC won $2.5 million in fees from new clients when it marketed the arrangements. (There is no suggestion the clients were aware of how the information was obtained).”
• “Dr Donald says that’s underquoting what probably occurred, because the firms create value by having close relationships with government and ‘being able to interpret, anticipate, perhaps even influence the way that government sets up various regimes, whether it’s tax or other sorts of (policy) and then being able to then sell that information that knowledge off to their clients. ‘So the profit that they make isn’t $2.5 million. It’s actually much larger than that, because they have a whole business. This is what they do.'”
• “People working in finance are blown away by the scandal, because there are clear rules about confidentiality and managing conflicts of interest — particularly when you have your hands on other people’s money.”

“Warnings raised as PwC paid $8.7m to collect Australian aged care data while helping to set industry prices” —

• “The Consultancy firm PwC will be paid $8.7m to collect sensitive commercial data from aged care providers while helping the Australian government set new service prices, despite simultaneously charging the industry for advice on pricing.”
• “Senators and unions have warned the contract, which could give PwC access to protected pricing information subject to secrecy provisions, is fraught with potential conflicts of interest that may be difficult to avoid.”
• “PwC will collect ‘cost and activity data’ from facilities across the country and develop a new costing framework for the federal government.”
• “At the same time, another division in PwC is selling consultants to the aged care industry who can ‘benchmark your organisation against others in the industry,’ or ‘assist service providers to remain viable and accountable to their service costs and pricing.'”
• “PwC’s work with government is under renewed scrutiny after the global firm allegedly profited from sharing confidential government tax policy with clients. This $8.7m contract with IHACPA was signed days before those allegations were first published by the Australian Financial Review.”
• “The government spokesperson said PwC was required to immediately disclose any conflicts of interest and failure to do so could result in the contract being terminated. But Rice said relying on PwC to disclose conflicts of interest was not an adequate response given its extensive work with the aged care industry.”
• “A PwC spokesperson would not comment on the IHACPA contract, but stressed the firm had ‘strict conflict and risk management processes’ that were ‘always followed rigorously before an engagement is commenced.'”
• “In a submission to an ongoing inquiry into the government’s use of consultants, PwC’s chief executive, Tom Seymour, apologised for the tax policy breach reported in January. ‘We have taken extensive steps to both raise awareness of the significance of these issues across all partners and staff in the firm and have invested further in policies and training which address these matters to protect against future recurrence,’ Seymour said.”

“Climate Authority Under Fire for Conflict of Interest After PwC Scandal” —

• “The Minister for Climate Change and Energy has been urged to review potential conflicts of interests at Australia’s key climate change agency in light of the integrity scandal at PwC and the consulting services sector.”
• “In a letter to Minister Bowen, the Australia Institute has raised concerns regarding appointments to the Climate Change Authority (CCA) and highlighted legal questions raised by potential conflicts of interest held by CCA board members, including the chair of the agency, Grant King.”
• “Australia Institute research has revealed the extensive overlap between industry and government in Australia, and the risk this puts to independent policymaking. The senate inquiry raises the question of whether scrutiny must go beyond consulting firms being employed by government agencies, to conflicts of interest within government agencies themselves.”
• “‘We believe there are serious integrity questions regarding conflicts of interest at the highest levels of climate policy making in Australia,’ said Polly Hemming, Director of the Climate & Energy Program at the Australia Institute.”
• “‘The PwC scandal and the Inquiry into consulting services has shown us that potential conflicts of interest are not always disclosed, let alone managed… The public should have access to a transparent register of declared interests by statutory officials. Then they could decide whether conflicts were being managed appropriately or not.'”

“DeSantis asks that judge be disqualified from Disney’s free speech lawsuit” —

• “Gov. Ron DeSantis is asking that a federal judge be disqualified from the First Amendment lawsuit filed by Disney against the Florida governor and his appointees, claiming the jurist’s prior statements in other cases have raised questions about his impartiality on the state’s efforts to take over Disney World’s governing body.”
• “DeSantis’ motion said Walker referenced the ongoing dispute between his administration and Disney during hearings in two unrelated lawsuits before him dealing with free speech issues and fear of retaliation for violating new laws championed by DeSantis and Republican lawmakers. One of those was a First Amendment lawsuit filed by Florida professors that challenged a new law establishing a survey about ‘intellectual freedom and viewpoint diversity’ on state campuses.”
• “Walker, who was nominated to the federal bench in 2012 by President Barack Obama and is now chief judge of the district, tossed out that lawsuit on the grounds that the professors didn’t have standing to challenge the law championed by DeSantis and Florida lawmakers.”
• “In the first case, Walker said, ‘What’s in the record, for example — is there anything in the record that says we are now going to take away Disney’s special status because they’re woke?'”
• “In the second case, the judge said, ‘And then Disney is going to lose its status because—arguably, because they made a statement that run afoul—ran afoul of state policy of the controlling party,’ according to the DeSantis motion.”
• “Disney filed the First Amendment lawsuit against the Florida governor and the DeSantis-appointed board last month in federal court in Tallahassee, and it landed in Walker’s court. The DeSantis-appointed board earlier this month sued Disney in state court in Orlando seeking to void the deals the company made with the previous board.”

“Prosecutors Push To DQ Jones Walker In $1.2B Fraud Case” —

• “Prosecutors said Friday that Jones Walker LLP cannot represent an asset manager charged with participating in a $1.2 billion scheme to embezzle money from Venezuela’s state-owned oil company, arguing that the firm has shown it cannot be trusted to refrain from using confidential information gleaned during its previous representation of a witness.”
• “In a hearing before U.S. Magistrate Judge Edwin G. Torres, prosecutor Kurt Lunkenheimer told the court that ‘disqualification is really the only adequate remedy’ to ensure fairness, given that Jones Walker partner Edward Shohat — who now represents defendant Luis Fernando Vuteff — previously represented a person described as Witness 1 in the government’s investigation.”
• “During his representation of Witness 1, Shohat was privy to confidential information in a joint defense agreement with Witness 2, now revealed as Alvaro Ledo Nass, who pled guilty earlier this year to taking $11.5 million in bribes.”
• “‘I don’t see how backup counsel would be able to come in without talking to Mr. Shohat,’ he said. ‘The trial strategy has been tainted by Mr. Ledo Nass’ confidential information. We think the joint defense agreement confidential information has permeated the whole case.'”
• “Lunkenheimer pointed out that there has been no waiver of conflict of interest by either Witness 1 or Ledo Nass.”
• “Shohat told the court that he has not spoken with his former client in years and said Witness 1 and the joint defense agreement are irrelevant in this case.”
• “‘What they’re asking you to do is disqualify us on speculation that somehow, someway Witness 1 will become relevant,’ Shohat said, pointing out that Witness 1 has filed an affidavit in this case saying he has no knowledge of it.”
• “David Weinstein, who joined Jones Walker after Shohat’s representation of Witness 1, said this is not a direct conflict and that Ledo Nass’ testimony ‘is only a corner of the criminal case’ and does not even touch on the money laundering allegations.”

“Walgreens fights ‘staggering’ $642 mln arbitration award to Humana” —

• “National retail pharmacy giant Walgreen Co has asked a U.S. judge to vacate an arbitrator’s award of more than $642 million to Humana Health Plan Inc in a drug-pricing dispute, calling the ‘staggering’ sum the result of a ‘miscarriage of justice.'”
• “Deerfield, Illinois-based Walgreens, a subsidiary of Walgreens Boots Alliance (WBA.O), argued in its filing that the arbitrator who issued the award in March “rewrote” its contracts with Humana. It also accused the arbitrator, from the JAMS arbitration forum, of using a flawed model to assess alleged damages.”
• “In addition, Walgreens claimed that law firm Crowell & Moring should not have been allowed to represent Humana after previously advising Walgreens years earlier on drug pricing matters at the heart of Humana’s 2019 arbitration.”
• “‘The result was that the arbitrator awarded a massive windfall to Humana,’ Walgreens’ attorneys at Reed Smith said in the court filing.”
• “Walgreens separately sued Crowell in 2021 in District of Columbia Superior Court seeking, among other things, indemnification from any arbitral award, an injunction against Crowell and disgorgement of the firm’s profits from its work for Humana.”
• “A judge denied Walgreens’ early effort to bar Crowell from representing Humana. Walgreens’ appeal is pending.”
• “Washington, D.C.-based Crowell has denied any conflict of interest in representing Humana against the law firm’s former client Walgreens. A spokesperson for Crowell on Monday in a statement called Walgreens’ ethics claim ‘meritless’ and said the firm was ‘confident that the arbitrator’s thorough and well-reasoned award will be affirmed.'”

“Mich. Program Wants Miller Canfield DQ’d From Zoning Suit” —

• “The Michigan Township Participating Plan pushed for the disqualification of Miller Canfield Paddock & Stone PLC attorneys representing wineries in a zoning suit against Peninsula Township, arguing on Tuesday that the law firm previously represented the municipal insurance program.”
• “In a filing made in Michigan federal court, the Michigan Township Participating Plan claimed that Miller Canfield was its general counsel when the municipal insurance program was founded in 1985.”
• “But their relationship allegedly ended in February after the insurance program asked the law firm about the conflict of interest between it representing the wineries and the insurance program being involved in insurance coverage for Michigan townships like Peninsula Township.”
• “‘Plaintiffs’ claims for damages in this matter appear to date back to June 5, 1972, when Peninsula Township adopted its original zoning ordinance,’ the Michigan Township Participating Plan argued. ‘As such, Miller Canfield acted as general counsel to MTPP for 38 of the 51-year damages period that plaintiffs claim.'”
• “‘If plaintiffs are awarded damages for this period, MTPP will be responsible to pay a portion of such damages on Peninsula Township’s behalf,’ the municipal insurance program continued. ‘Therefore, MTPP’s interests are directly in conflict with plaintiffs’ (and therefore Miller Canfield’s) and Miller Canfield has then engaged in representation of plaintiffs in direct conflict with [Michigan law].'”
• “Peninsula Township told Miller Canfield about the potential conflict of interest, but the law firm responded in a ‘perplexing’ way by asking MTPP if there was a conflict of interest, the municipal insurer alleged.”
• “MTTP claimed that Miller Canfield sent a ‘cryptic’ message about the situation and let go of the municipal insurance program as a client after the law firm was asked for clarification and guidance. The law firm allegedly stated that the relationship ended due to a conflict that happened after it was hired by MTTP, but the municipal insurer described this statement as ‘patently false.’ Similarly, MTTP alleged that Miller Canfield falsely stated that it never represented the municipal insurance program.”
• “According to MTTP, Miller Canfield violated state law by not consulting with its longtime client after the law firm decided to represent the wineries in their zoning suit. MTTP further argued that an ‘objective disinterested lawyer’ would know that its decision to represent the wineries would impact its representation of the municipal insurance program.”
• “‘The courts universally hold that a law firm will not be allowed to drop a client in order to resolve a direct conflict of interest, thereby turning a present client into a former client,’ MTTP argued, citing multiple court decisions such as Picker Int’l, Inc. v. Varian Assoc., Inc. from the Federal Circuit. ‘Pursuant to this universal rule, the status of the attorney/client relationship is assessed at the time the conflict arises, not at the time the motion to disqualify is presented to the court.'”

“City seeks outside counsel to handle Cincinnati Southern Railway board ouster demand” —

• “Cincinnati’s top lawyer is in the midst of hiring law firms ‒ at taxpayer expense – to figure out how to handle a request that Cincinnati City Council remove the five board members who oversee the Cincinnati Southern Railway.”
• “Former Republican state Rep. Tom Brinkman, acting as a city taxpayer, sent a letter alleging the board failed to protect taxpayer interests when negotiating the proposed $1.6 billion sale of the city-owned railroad to Norfolk Southern Corp. The deal needs voter approval sometime in the next year and a half.”
• “The city’s municipal code gives the city solicitor the power to ask City Council to remove board members if he or she believes there’s an issue. But the city solicitor’s office also represents the board in legal matters.”
• “City Solicitor Emily Smart Woerner told the lawyer for the citizen in a letter dated May 3 she wanted to get an outside opinion. She wrote that she wanted to ‘ensure that I am providing the best advice and counsel to the city, and to avoid an appearance of any conflict of interest.'”
• “She said she plans to hire two firms to handle the matter. Taft Stettinius & Hollister would represent the city, with the contract stating no more than $40,000 would be spent on this matter and an unrelated matter. Squire Patton Boggs would represent the rail board, with no more than $35,000 spent on this matter. The latter must be approved by the rail board.”
• “Brinkman, who lives in the city’s Mount Lookout neighborhood, last month requested Woerner remove board members after it came to light the board accepted $500,000 less than first promised as part of the deal’s upfront transaction fee, which was first reported by The Enquirer.”
• “Members of the Cincinnati Southern Railway Board − former Cincinnati mayors Charlie Luken and Mark Mallory, former Councilwoman Amy Murray, CPA Paul Sylvester, and Muething, an attorney − voted in November to sell the city-owned railroad to Norfolk Southern for $1.6 billion instead of leasing the railroad to the company as it has for years. The plan is to create a trust with the money and then give the city of Cincinnati money from the trust’s investments to repair infrastructure.”

“Conflict of interest reportedly cited by Chesterfield’s top prosecutor in cases involving former Va. Beach delegate, but to what extent?” —

• “Former Virginia State Delegate Tim Anderson is speaking out after a reported conflict of interest was raised in Chesterfield General District Court Thursday with the county’s top prosecutor.”
• “In a social media post, Anderson said that Chesterfield County Commonwealth’s Attorney Stacey Davenport had ‘declared a permanent ethical conflict and that no prosecutor in Chesterfield can be involved in any case I have because of my public criticism of her in the John Blanchard case.'”
• “Although Thursday’s court appearance was not related to the solicitation of prostitution case against Virginia Beach Pastor John Blanchard, Anderson said that Blanchard’s case was the source of the conflict that was mentioned. It was reportedly raised because Anderson, an attorney, was working as defense counsel for a suspect appearing in Chesterfield General District Court when a representative from Davenport’s office shared the concern about a conflict of interest before presiding Judge Keith Hurley.”
• “Anderson told 8News on Monday that he was handling two cases out of Chesterfield County last week. ‘The Commonwealth’s Attorney refused to handle either and said they needed special prosecutors for both cases,’ he said. ‘Because I have publicly criticized Stacey Davenport in the performance of her office involving the John Blanchard case, that I’m penalized now, that I can’t work with any prosecutor in her office forever, that a permanent conflict exists.'”
• “Anderson said that the prosecutor in court Thursday did not explicitly list Blanchard’s case as a reason for the conflict of interest, but instead referenced Anderson’s criticism of Davenport and a previous instance of saying that she had lied.”

While Montana just banned tik tok (and some may have ‘client OCG bans firm installation/use of tik tok app on their risk bingo cards): “Big Law Lawyers Are on TikTok. Their Firms Are Conflicted” —

• “Priscilla Hamilton, an associate at Simpson Thacher & Bartlett who posts content to TikTok under the name ‘legallypriscilla,’ was approached by a brand to do a paid post, she said in a series of now deleted videos. Hamilton said her firm, which she did not name in her videos, told her that doing so was a conflict of interest. Hamilton also said she was also told that any paid partnerships she submits would be rejected ‘even if there’s no conflict of interest.'”
• “‘Simpson Thacher does not permit employees to get paid to promote products or brands, in order to avoid potential business or legal conflicts with our current and future clients, in accordance with applicable law,’ the firm said in a statement. It added that it does not comment on any specific personnel matters.”
• “Tirtasaputra said she’s connected with potential clients through the TikTok app, and some of her videos have influenced people to apply for Fox Rothschild’s fellowship program. At a recent recruitment event at UCLA, she was recognized by some law students who said they were expressly interested in the firm because of her account.”
• “Fox Rothschild doesn’t discourage the use of social media, said its chief business officer Holly Lentz Kleeman, but any brand advocacy or sponsorship opportunities go through formal conflicts review process through its general counsel.”

“Patent Probe Can Proceed Despite Judge’s Cisco Stock Ownership” —

• “Cybersecurity firm Centripetal Networks LLC can’t halt a US Patent and Trademark Office tribunal’s validity review of a patent that was part of a wiped-out $1.9 billion verdict against Cisco Systems Inc., the Federal Circuit ruled Tuesday.”
• “Although the verdict in the high-profile patent-infringement case was vacated due to Cisco stock owned by the presiding judge’s wife, the Federal Circuit said a parallel challenge to the patent’s validity lodged against Centripetal can proceed in the face of an administrative patent judge owning a small amount of Cisco stock.”
• “Centripetal’s petition, filed in March, sought to wipe out all the decisions in the administrative case and to have a brand new panel of administrative judges take up the threshold decision of whether to institute an inter partes review of the patent.”
• “Centripetal told the Federal Circuit the board’s actions thus far should be undone because Brian J. McNamara, one of the three administrative patent judges who originally agreed to hear the patent challenge, owned between $1,001 and $15,000 in Cisco stock and received retirement income from a law firm that did lobbying work for the company.”
• “McNamara and another judge ultimately left the panel, and the PTAB refused to shut down the case or abandon its decisions, including one allowing Cisco to join in the challenge. The board determined that McNamara’s Cisco stock holdings fell below a federal recusal threshold for executive branch employees, and it said Centripetal took McNamara’s former firm’s work out of context.”
• “The Federal Circuit said Centripetal hasn’t been harmed thus far in the process, especially in light of Cisco’s secondary role in the proceeding, which has yet to actually reach whether the challenged claims are invalid.”

“City firm was in ‘intractable conflict of interest’ with client” —

• “City law firm RPC has been ordered to pay a former client damages of £192,500 after it put itself in an “intractable conflict of interest and duty” during its work for her.”
• “Mr Justice Fancourt found that RPC – which is well known for acting for solicitors facing claims – preferred its own interests and those of a funder to whom it introduced the client over those of the client herself.”
• “He rejected the firm’s contention that the terms of the conditional fee agreement (CFA) it signed with Deborah Forster allowed it to put its interests before hers.”
• “RPC acted for her in a dispute with investors in her company who removed her. The case settled during trial in March 2011 with a Tomlin order that they would pay Ms Forster £350,000 and 80% of her costs, with £400,000 on account; the £750,000 was to be paid six months later.”
• “However, only £50,000 was paid and nothing more was recovered. She claimed for loss of the opportunity to enforce the Tomlin order in October 2011 – RPC did not follow her instructions to do so, preferring instead to negotiate – and thereby recover more.”
• “In February 2011, RPC persuaded her to sign a funding agreement with a John Deacon to help pay for disbursements but did not disclose to her that it had an existing relationship with Mr Deacon and his company, Giltspur Capital, in which it was invested.”
• “The firm also failed to disclose that it started to act for Mr Deacon soon after the agreement was signed. The various agreements meant that Mr Deacon would be paid first from any recoveries, followed by RPC and counsel, with Ms Forster receiving anything left.”
• “However, the judge found that, in persuading a reluctant Ms Forster to accept the settlement, RPC gave her ‘a clear assurance’ that she would receive £350,000 out of the £750,000 that was to be paid on 30 September 2011. As a result, the firm was estopped from contending that, because of the terms of the CFA, she lost nothing of value as a result of any breach of duty.”
• Mr Justice Fancourt found:
  • “In relation to the Deacon agreement, ‘RPC had a clear conflict of interests in advising Ms Forster to borrow money from Mr Deacon and then advising and acting for (or in the name of) Mr Deacon in preventing Ms Forster from enforcing the first Tomlin order [without consent, which it did not have]…'”
  • “‘The conflict went further than acting for two clients whose interests in a transaction conflicted because RPC had its own interest in the business of Giltspur and in working with Mr Deacon, which it did not disclose to Ms Forster at any time…'”
  • “‘As a result of the enormous costs incurred on Ms Forster’s claim and the modest settlement in her favour, there was an intractable conflict of interest and duty on the part of RPC once the [other side] defaulted.'”