Bressler Risk Blog

“Attorney appointed to represent Peter Angelos denies having conflicts of interest” —

• “The attorney appointed to represent Orioles owner Peter Angelos in his family’s fight over his fortune has rejected a move to disqualify him from the case, calling allegations that he has conflicts of interest ‘absurd’ and a ‘distraction.'”
• “Angelos, 93, has been incapacitated by illness for several years, and his younger son Louis sued his mother, Georgia, and brother, John, the chairman and CEO of the Orioles, in June over control of the team, the family patriarch’s renowned law firm and other assets. Georgia Angelos subsequently sued Louis Angelos, likening his transfer of the law firm from his father to himself to elder abuse.”
• “Georgia Angelos has been trying to dissolve or sell the decades-old firm, while Louis Angelos, who has been managing the practice since his father fell ill, has fought to keep it in operation.”
• “In a court filing Friday, Benjamin Rosenberg said the attempt to disqualify him is part of Louis Angelos’ ‘increasingly desperate effort’ to conceal the finances of the law firm, which is currently much smaller than at its peak when it won billions of dollars in awards and settlements for victims of asbestos and tobacco.”
• “Rosenberg, who was appointed by Baltimore County Circuit Judge Keith R. Truffer in October to represent Peter Angelos, said in court documents that he needs information about the firm’s finances and cases to develop an informed opinion on the dispute over its future.”
• “But Louis Angelos has long refused to share that information, as far back as 2019 with his mother and her advisers as they sought to shut down the firm, and now with Rosenberg, he said in the most recent filing.”
• “Louis Angelos’ attorney, Jeffrey E. Nusinov, is seeking to disqualify Rosenberg from the case, saying he has a personal ‘animus’ against the Angelos law firm because it once sued one of his law partners, a close friend. Additionally, Nusinov argued, the firm Rosenberg founded, Rosenberg Martin Greenberg, had represented a company, Bestwall, that accused the Angelos firm of failing to fully disclose evidence in its asbestos-related bankruptcy case.”
• “That should disqualify Rosenberg from now being allowed to ‘rummage around’ in the Angelos firm’s records, Nusinov wrote in a motion to remove Rosenberg from the current case.”
• “Rosenberg countered in his filing that he was not involved in the Bestwall case, which was largely handled by a partner who has since left the firm. Rosenberg Martin had a limited role in Bestwall’s bankruptcy case — it was retained by a Charlotte, North Carolina-based firm to act as local counsel — and that ended on Aug. 25, he wrote.”
• “Rosenberg also questioned the timing of Nusinov’s attempt to disqualify him, more than three weeks after he was appointed to represent Peter Angelos. Rosenberg said Nusinov could have objected to his appointment in October but didn’t, and is only now raising the alleged conflicts to give his client a ‘tactical’ advantage in the dispute over access to the Angelos firm’s finances.”

For those raising eyebrow’s at a certain story last week, comes New York “Judicial Ethics Opinion 22-78” —

• “A full-time judge’s non-lawyer grandchild, a college student, expects to work for a local law firm as a paid temporary clerical intern during the summer. The judge will not hear any cases involving the law firm during the internship, but asks if it is necessary to disqualify in matters involving this law firm after the internship ends.”
• “In particular, a judge must not allow family, social, political or other relationships to influence the judge’s judicial conduct or judgment (see 22 NYCRR 100.2[B]). Therefore, a judge must disqualify from any proceeding in which the judge’s impartiality ‘might reasonably be questioned’ (22 NYCRR 100.3[E][1]), including where the judge knows that a sixth-degree relative ‘has an interest that could be substantially affected by the proceeding’ (22 NYCRR 100.3[E][1][d][iii]) or that a fourth-degree relative ‘is acting as a lawyer in the proceeding or is likely to be a material witness in the proceeding’ (22 NYCRR 100.3[E][1][e]).”
• “We have previously considered the effect of a judge’s child’s temporary employment as a law student intern or summer associate with a law firm. We determined that where the judge’s child completes the summer associate program and does not contemplate future full-time employment with that firm after law school graduation, the judge’s obligations depend on whether the judge’s child was involved in the particular case before the judge.”
• “If so, the judge is disqualified in the matter, subject to remittal where available (see Opinion 11-94; 22 NYCRR 100.3[F]). We explained in a footnote that ‘the judge may rely on his/her child to inform him/her of the cases in which the child was involved, without further inquiry,’ unless the judge learns otherwise ‘during the normal course of a proceeding’ (Opinion 11-94 fn 2). In other cases involving that law firm, where the judge’s child had no involvement, the judge need not disqualify or disclose the child’s former association with the law firm as a summer associate (id.).”
• “However, we have not previously considered a judge’s obligations when the judge’s child or grandchild has an internship with a law firm as an undergraduate, doing clerical work.”

“Trump ‘Paying for the Silence’ of Mar-a-Lago Witnesses—Former Prosecutor” —

• “A former federal prosecutor has suggested there could be a conflict of interest to Donald Trump’s political action committee paying the legal fees for key witnesses in the former president’s classified documents criminal case.”
• “Jim Walden was reacting to the reports that Trump’s Save America PAC is supplying lawyers to represent two people connected to the investigation into whether the former president mishandled top secret materials recovered from his Mar-a-Lago resort in August, and also attempted to obstruct the federal attempt to retrieve the documents.”
• “According to The Washington Post, Trump’s PAC has paid more than $120,000 to the Brand Woodward Law firm, which is now representing witnesses Kash Patel, a close adviser of Trump, and Walt Nauta.”
• “Trump is accused of telling Nauta to move boxes of documents into a storage room at his Florida resort after the former president received a government subpoena to return them in May.”
• “‘It looks like the Trump political action committee is either paying for the silence of these witnesses, for them to take the Fifth, or for favorable testimony,’ Walden said. ‘These circumstances should look very suspicious to the Justice Department, and there’s a judicial mechanism for them to get court oversight if there’s a conflict.'”

“Alston & Bird’s alleged conflict may be ‘time bomb’ in ex-Cognizant GC’s bribery trial” —

• “A New Jersey federal judge refused last week to countenance what he called a ‘backdoor’ attempt by the former general counsel of Cognizant Technology Solutions Corp to oust Alston & Bird from representing the company as federal prosecutors prepare for a March 2023 bribery trial against the onetime top lawyer.”
• “But at a hearing on Friday in the government’s criminal case, U.S. District Judge Kevin McNulty of Newark, New Jersey, left open the possibility that the former GC, Steven Schwartz, can nevertheless ask witnesses about an hours-long meeting attended by Schwartz, one of his lawyers and an Alston & Bird partner who was subsequently retained by Cognizant.”
• “McNulty, who previously referred to Alston & Bird’s involvement in the Schwartz case as a ‘time bomb,’ said there remains ‘a danger of this issue blowing up at trial.'”
• “Alston & Bird’s outside counsel, Kevin Marino of Marino, Tortorella & Boyle, said in an email statement that Kramer, a former New Jersey federal prosecutor, is “a person of impeccable character,” and that Schwartz’s attempt to impugn her account of their meeting is ‘baseless.’ ‘She and her law firm are pleased to have this unpleasant episode behind them, and will continue to vigorously represent Cognizant in its capacity as a government witness against Mr. Schwartz,’ Marino said.”
• “The ex-GC denies the government’s allegations that he and Coburn authorized a $2 million scheme to bribe Indian officials for permits to speed up construction of Cognizant offices. Schwartz has insisted that he is being scapegoated by his former employer, an information technology services company, which Schwartz has accused of trying to sandbag his defense.”
• “The story behind the unusual proceeding on Friday, as I’ll explain, is complicated. But the dispute over Alston & Bird’s involvement highlights the unforeseen pitfalls that can develop when prosecutors in corporate crime cases rely on cooperation from defendants’ former employers.”
• “McNulty said in May that he would hold an evidentiary hearing on the disqualification motion. But in July, on the eve of the hearing, Schwartz reached an agreement with Alston & Bird. The ex-GC withdrew his disqualification motion in exchange for Kramer’s sworn declaration answering certain questions. Schwartz also consented to Alston & Bird’s continued representation of Cognizant.”
• “That provision led to a revival in August of the conflict dispute – and this time, the government got involved. Schwartz’s lawyers informed prosecutors that he intended to raise the issue of his meetings with Kramer to challenge government evidence elicited at trial. Prosecutors cried foul to the judge, arguing that Schwartz should not be allowed to use allegations of a conflict to tar government witnesses after sidestepping an evidentiary hearing by ditching his disqualification motion.”

Clyde & Co with one of those jaw dropping tales (if you watch the linked firm’s video): “Ethical and Liability Implications of Promoting Achievements on Client Matters” —

• “The LA Times reported that defense counsel told jurors during closing arguments in April 2022 to disregard the death certificate, which attributed death to an infection from the punctured colon. Instead, defense counsel argued that plaintiff died from nonsurvivable alcohol-related pancreatitis, failures of other hospital staff to relay key information, and pointed to defense’s expert opinion finding no negligence occurred and another doctor disputing plaintiff had an infection.”
• “But defense counsel reportedly summarized the case differently during an inter-office celebration in May: ‘A guy that was probably negligently killed, but we kind of made it look like other people did it,’ defense counsel is reported as saying to his colleagues. ‘And we actually had a death certificate that said he died the very way the plaintiff said he died and we had to say, ‘No, you really shouldn’t believe what that death certificate says, or the coroner from the Orange County coroner’s office.””
• “The speech was recorded and posted on the firm’s social media page. It was then downloaded before being deleted, and is still circulating on Twitter.”
• “In a statement to The LA Times, defense counsel said his remarks to his staff were ‘ineloquent’ and ‘imprecise’; he did not know they would be recorded and posted, and were ‘intended purely as an internal briefing to our staff, using shorthand phrases which might understandably cause confusion for a lay audience unfamiliar with the case at hand, and the law in general.'”
• “Based on these facts (as well as other trial irregularities), Orange County Superior Court Judge James Crandall, who presided over the trial has reportedly vacated the verdict, ordering the case back to court.”
• “At the outset, Comment [5] to Rule 1.6 states, in relevant part, ‘Lawyers in a firm may, in the course of the firm’s practice, disclose to each other information relating to a client of the firm.’ Therefore, counsel’s comments during an inter-office meeting setting were not per se improper within the confines of his law firm. However, the firm, by posting these comments on its social media website disclosed information relating to the representation of the client without the client’s consent. The identity of a firm’s clients is itself confidential unless already very widely known.”
• “Since the firm’s social media post would be considered an “imprecise” advertisement, by the attorney’s own admission, then it is also likely in violation of ABA Model Rule 7.1 (duty to not make false or misleading communication about a lawyer’s services).”
• “Finally, the attorney’s purported statement to the LA Times that he, a named partner, did not know his statement would be recorded and posted serves as a reminder that Rules 5.1 and 5.3 obligates attorneys at the firm to assure that lawyers and staff they supervise comply with these confidentiality obligations.”

“More Bang for Your Blunder: Rise in Severity of Legal Malpractice Claims” —

• “It has long been recognized by industry experts that financial stress for clients and general economic instability or uncertainty can lead to an uptick in claims against attorneys. And recent data indicates that attorney mistakes are becoming more expensive. Legal malpractice claims are becoming more expensive to defend. And others have observed that a remote work landscape can lead to new kinds of severe claims, such as those arising from remote supervision of junior attorneys and staff, ever-present cyber security risks, and issues related to the rush to hire attorneys.””Allegations of conflicts of interest are among the most common—and most dangerous—claims that can be made against attorneys.”
• “It is expected that claims arising from conflicts of interest may be exacerbated by expedited hiring processes in the competitive lateral market. Although conflicts can be complex, using established conflict systems to accurately identify and swiftly resolve conflicts of interest is a common tool that can help reduce exposure to law firm and attorneys alike. These systems, however, are inherently limited by the information they process.”
• “If attorneys do not take steps to thoroughly identify the right parties to cross-check for potential conflicts, a conflict of interest might pass through the system unnoticed and create exposure for the firm. As the old adage goes, ‘Garbage in, garbage out.’ Many law firms and attorneys take steps to ensure the system considers accurate and timely information to enable proper conflict checks.”
• “While some attorneys may think the identification of conflict of interest means the representation must end, that is not always the case. There may be ways to resolve the conflict through the use of waivers or screening procedures. Simply choosing to ignore potential or established conflicts, however, can create risks that are becoming increasingly more expensive to resolve.”
• “Another commonly alleged malpractice error that may be intensified in the era of remote working involves missed deadlines or failures to timely file. Use of docketing or calendaring systems is obviously a tool that can help mitigate the risk of a missed deadline. Although deadlines can still be missed even where such a system is being used, the use of those systems may evidence the firm’s efforts to avoid risk, rebutting any argument that the firm was careless in tracking deadlines.”
• “Another ripe area for legal malpractice claims involve allegations that lawyers have failed to learn about recent law or failed to properly apply it.”

“Hong Kong asks Beijing to step in into row over UK lawyer” —

• “Hong Kong’s leader said on Monday he will ask Beijing to rule whether to let foreign lawyers be involved in national security cases after the city’s top court allowed a prominent pro-democracy publisher to hire a British lawyer for his upcoming trial.”
• “‘At present, there is no effective means to ensure that a counsel from overseas will not have conflict of interest because of his nationality. And there is also no means to ensure that he has not been coerced, compromised, or in any way controlled by foreign governments, associations or persons,”’ he said. “
• “The move was targeting overseas counsels who do not have the general practice qualification to carry out legal service in Hong Kong, he added.”
• “Lai, the founder of the now-defunct Apple Daily and one of the most prominent figures in the city’s pro-democracy movement, was arrested after Beijing imposed a tough national security law to crack down on dissent following widespread protests in 2019. He faces collusion charges and a maximum penalty of life imprisonment. “
• “Hong Kong, a former British colony that returned to China in 1997, uses the same common law jurisdiction as the U.K. Apart from having overseas judges in the city’s courts, lawyers from other common law jurisdictions can work within the city’s legal system, especially when their expertise are needed for some cases.”
• “Last month, the lower court granted the approval for him [‘Timothy Owen, a London-based legal veteran who specializes in criminal and human rights law.’] to represent Lai, saying it was in the public interest to have an eminent overseas specialist like Owen involved at the trial. But the secretary of justice insisted on his objections despite other judges rejecting his bids to overturn that ruling. He suggested a blanket ban on overseas lawyers involved in national security cases unless under exceptional circumstances.”
• “The National Security Law criminalizes acts of succession, subversion, terrorism, and collusion with foreign forces. It has led to the arrests of many prominent democracy activists and damaged faith in the future of the international financial hub.”

“Judge: GOP head can’t share lawyers with other fake electors” —

• “The chairman of the Georgia Republican Party cannot share lawyers with 10 other fake electors in matters related to a special grand jury investigation into possible illegal meddling in the 2020 election in the state, a judge ruled Wednesday.”
• “[Fulton County District Attorney] Willis has made clear that she is interested in the actions of 16 Republicans who signed a certificate declaring falsely that Trump had won and also declaring themselves the state’s ‘duly elected and qualified’ electors. Willis has said in a court filing that she notified lawyers for those 16 people that they are targets of her investigation, meaning they could face criminal charges.”
• “Eleven of those fake electors, including Georgia Republican Party Chairman David Shafer, are represented by two lawyers paid by the party, Holly Pierson and Kimberly Debrow. Willis’ team in October filed a motion seeking to disqualify the two from representing all of those clients, citing a conflict of interest.”
• “Pierson and Debrow countered that none of their clients have committed any crimes or know of any crimes committed by the others. The district attorney’s ‘assumption that the jointly represented nominee electors can ‘flip’ on each other or otherwise provide incriminating information as to any other jointly represented elector is simply inaccurate, as well as legally insufficient,’ they argued.”
• “They also noted their clients have signed waivers attesting that they understand the implications of joint representation.”
• “Fulton County Superior Court Judge Robert McBurney, who’s overseeing the special grand jury, wrote in his order Wednesday that ‘the best waiver in the world cannot fix a non-waivable conflict’ but said he finds ‘very few such conflicts’ at this phase of the investigation.”
• “McBurney noted that if charges are brought against any of the fake electors, one of them could be called to testify against another at trial. At that point, the judge noted, Pierson and Debrow likely could not represent either one.”
• “Shafer, however, is an exception because of his role in establishing and convening the slate of fake electors, his ‘communications with other key players’ in the investigation and ‘his role in other post-election efforts to call into question the validity’ of Georgia’s election results, McBurney wrote.”
• “This ‘imbalance in exposure’ to the investigation “makes it impractical and arguably unethical” for Pierson and Debrow to continue to represent all 11 of their clients, McBurney wrote. The pair of lawyers may represent Shafer or the other 10, but not both, he concluded.”

And the latest from the eagle-eyed Bill Freivogel:

• Seaman Corp. v. Zurich Am. Ins. Co., 2022 WL 17251819 (N.D. Ohio Nov. 28, 2022).
  • “In another case Target sued Seaman for selling defective roofing membranes. In this case Seaman is suing Zurich over insurance coverage for the Target case.”
  • “While at Firm 1 Lawyer was on a team of lawyers defending Seaman against Target. Lawyer left Firm 1 and joined Firm 2. Firm 2 is defending Zurich against Seaman in this coverage case. Firm 2 screened Lawyer from this case. Nevertheless, Seaman moved to disqualify Firm 2.”
  • “In this opinion the magistrate judge granted the motion. First, the court found that this case arises out of the ‘same matter’ as the Target case. Second, the court found that Lawyer had “substantial responsibility” in the Target case. Thus, under Ohio’s Rules 1.10(c) and (d), Firm 2’s screen would not work. These findings were in the face of Lawyer’s attempting to minimize her status and role on the team representing Seaman in the Target case.”
• Avco Corp. v. Turner, No. 2:20-cv-04073-JDW (E.D. Pa. Nov. 28, 2022).
  • “Lawyer formerly represented Avco in product liability cases involving piston engines. A plaintiff in such a case hired Lawyer for the limited purpose of responding to manufacturers’ Daubert motions (“the Torres case”). Avco had been a defendant in the Torres case, but was dismissed. The plaintiff has been trying to drag Avco back into that case.”
  • ” In this case Avco sued Lawyer for damages. After an appeal the only issue here is whether Lawyer had breached her fiduciary duty to Avco and whether Lawyer should disgorge fees earned from Avco. In this opinion the court granted Lawyer summary judgment. The court held that Avco had failed completely to show how Lawyer was using information against Avco in the Torres case that Lawyer had obtained while representing Avco.”
• In re Easterday Ranches, Inc., 2022 WL 17184713 (E.D. Wash. Nov. 23, 2022).
  • “Chapter 11. Two debtors, a corporation, and a partnership. Both debtors are owned by members of the Easterday family. This proceeding is the result of a massive fraud by owners and the president of the corporation, involving more than $244 million. Law Firm has served as debtors’ counsel for both entities. Ultimately, a plan was negotiated and approved.”
  • “The U.S. Trustee’s objected to Law Firm’s fee request, claiming that Law Firm had an unacceptable conflict of interest. The bankruptcy judge approved the fee request over Trustee’s objection. Needless to say, the corporation and partnership had obligations and rights relative to each other as well as to creditors.”
  • ” The opinion discusses at length the role of debtor’s counsel and the application of the Bankruptcy Act. On balance, the judge concluded that Law Firm did not have an actual conflict of interest, did the best it could, and best served the interests of all concerned. The court said Law Firm probably saved the estate years of costly litigation.”

“How Hospice Became a For-Profit Hustle” —

• “But at AseraCare, a national chain where Farmer worked, she solicited recruits regardless of whether they were near death. She canvassed birthday parties at housing projects and went door to door promoting the program to loggers and textile workers. She sent colleagues to cadge rides on the Meals on Wheels van or to chat up veterans at the American Legion ba. ‘We’d find run-down places where people were more on the poverty line,’ she told me. ‘You’re looking for uneducated people, if you will, because you’re able to provide something to them and meet a need.'”
• “It might be counterintuitive to run an enterprise that is wholly dependent on clients who aren’t long for this world, but companies in the hospice business can expect some of the biggest returns for the least amount of effort of any sector in American health care.”
• “Up to a point, the way Medicare has designed the hospice benefit rewards providers for recruiting patients who aren’t imminently dying.”
• “Almost immediately after the Asera-Care takeover, Farmer’s supervisors set steep targets for the number of patients marketers had to sign up, and presented those who met admissions quotas with cash bonuses and perks, including popcorn machines and massage chairs.”
• “Farmer’s bigger problem was that her patients weren’t dying fast enough.”
• “But Farmer’s company, like many of its competitors, had found ways to game the system and keep its money.”
• “Less than a year later, the Justice Department, after conducting its own investigation, intervened in the whistle-blowers’ complaint, eventually seeking from AseraCare a record two hundred million dollars in fines and damages.”
• “Before the trial started, the judge in the case, Karon O. Bowdre, disclosed that she’d had good experiences with hospice. Her mother, who had an A.L.S. diagnosis, had spent a year and a half on the service, and her father-in-law had died in hospice shortly before the trial. Principals in the case disagree about whether she disclosed that the firm handling AseraCare’s defense, Bradley Arant, had just hired her son as a summer associate.”
• “The defense team had petitioned Bowdre to separate the proceedings into two parts: the first phase limited to evidence about the ‘falsity’ of the hundred and twenty-three claims in question, and the second part examining, among other things, the company’s ‘knowledge of falsity.'”
• “The Justice Department objected to this ‘arbitrary hurdle,’ arguing that the purpose of the False Claims Act was to combat intentional fraud, not accidental mistakes. ‘The fact that AseraCare knowingly carried out a scheme to submit false claims is highly relevant evidence that the claims were, in fact, false,’ the government wrote. Nonetheless, in an unprecedented legal move, Bowdre granted AseraCare’s request.”
• “But the government lawyers seemed genuinely confused about what the judge would and wouldn’t allow into the courtroom during the trial’s ‘falsity’ phase.”
• “The judge’s prohibition on ‘knowledge’ during the trial’s first phase constrained testimony in sometimes puzzling ways. Richardson, for instance, could talk about admitting patients, but she couldn’t allude to the pressure she was under to do so. The audit by the Corridor Group that corroborated whistle-blower claims was forbidden because it wasn’t directly tied to the specific patients in the government’s sample.”
• “Its medical directors were part time, as is common in the industry, and workers testified that they’d presented these doctors with misleading patient records to secure admissions. One said that a director had pre-signed blank admissions forms. ‘Ask yourself: How could a doctor be exercising their clinical judgment,’ Wertkin told the jury at one point, ‘if he’s signing a blank form?'”
• “She needn’t have worried. Bowdre’s restrictions prevented Farmer from testifying about much of anything. ‘I felt like the judge did not want to know the truth,’ she said. ‘The whole time that I was on the stand, I kept thinking, Why would you not listen to the story?'”
• “After nearly two months of testimony, the jurors deliberated for nine days on phase one. On October 15, 2015, they found eighty-six per cent of the patient sample ineligible for some period of hospice care. Elated, Barger rushed out of the courtroom to call Farmer and tell her that the jury had come back overwhelmingly in the government’s favor.”
• “The next part never happened. A few days later, Bowdre made a startling announcement: she had messed up. The instructions that she’d given the jury had been incomplete, she said, and because of this ‘major reversible error’ she was overturning the jury’s findings and granting a request by AseraCare for a new trial.”
• “She invited the government to submit evidence other than Liao’s opinion to prove that the claims were false; the government replied that the record presented ample evidence of falsity. Five months later, in March, 2016, Bowdre granted summary judgment to AseraCare.”
• “It’s unusual for a judge to overturn a jury’s findings, order a new trial, and then declare summary judgment on her own accord, Zack Buck, a legal scholar at the University of Tennessee who studies health-care fraud, told me. The case, he said, ‘just kept getting weirder.'”
• “On September 9, 2019, the False Claims Act took a second hit when the U.S. Court of Appeals for the Eleventh Circuit published a long-anticipated ruling on the AseraCare case. The judges concurred with Bowdre that the government needed more than the testimony of an outside expert to prove a claim was false. However, they vacated Bowdre’s summary judgment, saying that the prosecution should have been able to present all its evidence, including AseraCare’s alleged “knowledge of falsity,” and sent the case back to her courtroom for a retrial. ‘When the goalpost gets moved in the final seconds of a game,’ the judges wrote, ‘the team with the ball should, at the least, have one more opportunity to punch it into the endzone.'”
• “The government did not appear enthusiastic about trying the AseraCare case for a second time before Bowdre, though.”
• “In February, 2020, eleven years after Farmer and Richardson filed their complaint, the government reached a settlement with AseraCare, for a million dollars. As in most such settlements, AseraCare paid the sum, admitted no wrongdoing, and was allowed to keep billing Medicare. Jack Selden, a partner at Bradley Arant who worked on the defense team, told the trade journal Law360, ‘When a case settles for $1 million where the claims have been for over $200 million, I think that speaks for itself.'”

“Lawyers Should Be Key Reporters in Anti-Money Laundering Efforts” —

• “As attorneys who have spent substantial portions of our careers working to combat money laundering and financial crime, we understand well the threat posed by the unchecked flow of dirty money. These transactions through the US financial system often stem from corruption, drug trafficking, and other serious crimes.”
• “It’s a discomforting, if instructive, truth that when crooks and dictators consider hiding their criminal proceeds in the US, their first stop is often, unfortunately, a lawyer.”
• “International standards have evolved to include legal professionals among those required to help prevent and report cases of money laundering. But loopholes in US anti-money laundering laws continue to exempt many gatekeepers in the financial system. This includes certain lawyers and accountants, as well as company agents and trust providers, who help clients anonymize and hide dirty money. America is nearly unique in this way.”
• “The Establishing New Authorities for Businesses Laundering and Enabling Risks to Security Act—or ENABLERS Act—is an amendment to the annual National Defense Authorization Act. It would close these loopholes by authorizing the Treasury Department to require certain categories of financial service providers to adopt anti-money laundering safeguards. This would include filing a notice when they suspect that a transaction is being used to launder funds.”
• “If passed, the ENABLERS Act would incorporate into federal law principles already established as official best practices by the international anti-money laundering standard setter, the Financial Action Task Force. These best practices require customer due diligence and record-keeping protocols for lawyers and other independent legal professionals and accountants who implement transactions for clients in corporate formation, money management, and similar business services.”
• “This team has worked extensively on money laundering matters representing a range of parties in many, often complex, situations and environments. We have zero concern that the ENABLERS Act would threaten attorney-client privilege, client confidentiality, or any principles governing the ethical obligations of attorneys and other professionals to their clients.”
• “Notably, the ABA’s model ethics rules already allow America’s lawyers to report criminal activity by clients to prevent a crime that would cause substantial injury to the financial interests or property of another, or to mitigate injury when the client has used the lawyer to do this. The ENABLERS Act is consistent with this framework.”
• “Lawyers are among the first defenders of our freedoms. They should be enlisted to help protect our financial system from being a conduit for criminal and kleptocratic funds. Congress has a crucial opportunity right now to bring lawyers in as partners in fighting financial crime.”

“Conflict of Interest? Attorney Disqualification Requested in Houston Real Estate Trust Fight” —

• “Citing potential ethics violations, counsel for the former head of a publicly traded real estate investment trust is asking a Houston judge to disqualify the opposing counsel because of his past relationship with a client.”
• “In Pillarstone, counsel for Mastandrea asked opposing counsel Alistair Dawson of Beck Redden to withdraw and Dawson refused, according to court documents. Mastandrea responded with the Nov. 14 filing of the disqualification motion.”
• “Peter Tropoli, Whitestone’s general counsel, told Texas Lawyer that Dawson is on the case at their request and he has never represented Pillarstone, which is the plaintiff. While Mastandrea is chairman of the board, he is not a named plaintiff.”
• “‘There is no conflict that would prevent him from continuing to represent Whitestone in this case,’ Tropoli said. ‘In our judicial system, when people are sued, they get to choose who represents them.'”

“Tucker Ellis Disqualified From Insurance Fight With Seaman Corp” —

• “Seaman Corp. got Tucker Ellis LLP disqualified as Zurich American Insurance Co.’s counsel due to a conflict of interest in a suit alleging it failed to fully defend it in a product liability case.”
• “Seaman sued Zurich and Everest National Insurance Co. after the insurers allegedly failed to provide a complete defense of the litigation, brought by Target Corp. Seaman moved to disqualify Tucker Ellis as Zurich’s counsel here, arguing that Lindsey Sacher—formerly employed by Calfee, Halter & Griswold LLP—represented Seaman in the same matter involving Target.”
• “Sacher has a former client conflict under Ohio Rule of Professional Conduct 1.9, according to US Magistrate Judge Amanda M. Knapp of the US District Court for the Northern District of Ohio. Knapp agreed with Seaman that Sacher had substantial responsibility for representing Seaman in the insurance coverage matter when she was with Calfee.”
• “Knapp also held that Sacher’s role in the underlying matter was substantial enough to impute the conflict to Tucker Ellis under the rules in Ohio.”

“Florida Supreme Court Justice Faces Second Motion to Disqualify This Week” —

• “Whitney Boan, an Orlando-based attorney, on Wednesday filed a new motion to disqualify Florida Supreme Court Justice Jamie Grosshans from presiding over litigation in which her husband is a member of the entity whose conduct is at issue.”
• “The cases underlying those motions are based on a dispute about whether several nominees meet residency requirements to fill vacancies on a new Sixth District Court of Appeal and a revamped Fifth District Court of Appeal.”
• “In the case against the Fifth District Court of Appeal Judicial Nominating Commission as a defendant, Boan claimed that Grosshans violated Canon 3E(1)(d)(i) of the Florida Code of Judicial Conduct because her spouse, Joshua D. Grosshans, is a member of the Sixth District Court of Appeal Judicial Nominating Commission.”
• “Boan added that even if an appellate judge determines that a motion for disqualification is not legally sufficient, a jurist could still voluntarily recuse if he or she believed that ‘such recusal would be in the best interests of the administration of justice.'”

“Abraham Watkins Sues Ex-Associate, Alleging He Took Confidential Information, Solicited Clients” —

• “Houston plaintiffs firm Abraham, Watkins, Nichols, Agosto, Aziz & Stogner has sued a former associate, alleging he solicited clients and copied files in preparation for a move to another firm, and then after he left, continued to use confidential client contact information.”
• “Abraham Watkins seeks up to $1 million in damages from Festeryga, now an associate at Ammons Law Firm in Houston.”
  “In a written statement, Alarcon said Festeryga ‘categorically denies’ the allegations.”
• ‘The central allegations in AW’s petition—that Mr. Festeryga secretly solicited clients while employed by AW and that he wrongfully retained client files—are false…What this case is really about is a law firm trying to fleece a young lawyer from a bonus that he earned after recovering a multimillion-dollar fee for the firm. Would-be associates of AW should take notice.'”
• “The firm also sought a temporary restraining order to, among several things, prevent Festeryga from destroying or distributing any information he took from his former firm, using any of its confidential or trade secrets information for any purpose, willfully or intentionally interfering with any of the firm’s clients relationships, communicating with any firm employee for the purpose of aiding or abetting disclosure of confidential or privileged information, or publishing or continuing to publishing any videos on social media or secretly recorded conversations.”
• “Dale Jefferson, who represents Abraham Watkins, said 333rd District Judge Brittanye Morris granted the TRO late Monday afternoon following a zoom hearing.”
• “As alleged in the original petition, Abraham Watkins managing partner Benny Agosto received information in September that Festeryga was leaving to join another firm and soliciting clients, and he confirmed on Sept. 27 with a client that the associate had told her she was ‘obligated’ to go with him to the new firm.”
• “That same day, according to the petition, Agosto confronted Festeryga about the information ‘that he was leaving the law firm, that he had already accepted other employment, that he was copying files, and that he was attempting to solicit AW [Abraham Watkins] clients to leave.'”
• “As alleged in the petition, Abraham Watkins sent Festeryga a demand that he return the information, but he has not done so and has instead continued to publicize private information on social media, including information about a confidential settlement.”

“Firms Could Face More Pressure From Insurers Following Public, Inadvertent Disclosures” —

• “The inadvertent disclosures in the Alex Jones trial and Jan. 6 investigation are likely to put more attention, and more pressure, on law firms’ technology competence.”
• “However, while many firms have legal malpractice insurance, Hinshaw & Culbertson partner Steve Puiszis, a member of the firm’s professional liability practice, noted that inadvertent disclosures aren’t always covered by these policies.’You get professional liability coverage to protect against errors or omissions that occur in the delivery of legal services,’ Puiszis said. ‘Depending on the nature of the policy, there can be exclusions written into the policy for privacy violations and perhaps the inadvertent disclosure of confidential information depending on how that exclusion is written.'”
• “Puiszis argued that this lack of coverage is another reason for lawyers to purchase cyber coverage.”
• “Recently, however, many firms have decided to forgo cyber insurance altogether, as policy coverage is shrinking and premiums are hitting record levels.”
• “Meanwhile, in some cases, an insurer can actually play a big role in helping prevent those mistakes in the first place. Take, for instance, mutual insurers. ‘We are a mutual, so it’s different. We have a unitary rating. So it’s not like their firms’ rates are going to change,’ said Mary Beth Robinson, senior vice president for loss prevention at the Attorneys’ Liability Assurance Society. ‘Instead, we go in there with education.'”
• “‘…We have a data security prototype policy that we circulate that our members have access to that talks about all kinds of things like inadvertent email transmission, dealing with highly sensitive information, document creation [and] cloud-based file sharing…We will turn firms away if we don’t think that they have adequate processes and policies and claims history to join… So, there is a process to be able to join and a minimum size,’ she said.”

(“Rollicking” risk review fun from two experts? Count me in!)

Thursday, December 15, 2022 | 12:00 noon – 1:00 p.m. CT

• Join Lucian Pera [Partner, Adams and Reese] and Trish Rich [Partner, Holland & Knight] 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:
  • Judicial ethics and recusal
  • Responding to negative online reviews
  • Crowdfunding
  • Dealing with bad client conduct
  • Cybersecurity
  • Plagiarism
  • Conflicts of interest
  • …and more!

Lucian and Trish promise more ethics fun in an hour than lawyers should be allowed to have.

Ethics CLE credits have been applied for. Approvals pending.

Register here

Remember this story about the lawyers being barred from attending entertainment events at Madison Square Garden and other venues due to some claim about professional rules? Here’s an update via Brian Faughnan: “Dot. Dot.Dash (3 updates)” —

• “…there has now been a ruling in that MSG case where the lawyers for MSG were badly misusing RPC 4.2 to justify barring certain attorneys from attending events at Madison Square Garden in New York City. The good news from a lawyer ethics standpoint is that the Court at least implicitly appears to grasp the flawed nature of the RPC 4.2 argument:
  • ‘The Court also believes that the balance of the equities continues to favor plaintiffs for the reasons previously indicated by this Court, that there appears to be no rational basis for the policy instituted by the defendants except to dissuade attorneys from bringing suit against them. The concern that the defendants could be prejudiced by allowing attorneys who are representing those who have brought action against the defendant to attend events with thousands of other people is unavailing to this Court.’
• “The bad news for the lawyer plaintiffs is that they still didn’t quite manage a win as the only thing they get to attend are concerts not sporting events. The bad news for legal ethics is that the MSG lawyers apparently still do not get it.”
• “According to this ABA Journal online article [“Lawyer can see Billy Joel but not Knicks at Madison Square Garden as result of judge’s ruling“], they are continuing to send letters to lawyers representing people in lawsuits against MSG that continues to assert a ban on lawyers as long as they are engaged in active litigation. The letters, however, at least do not appear to try to argue that the action is justified by New York’s 4.2.”

[If I were a lawyer caught in this web, and the resolution of a matter had some bearing on the ability to attend this Taylor Swift concert series I hear is quite popular, I confess I’d probably be receiving domestic pressure to settle. Thankfully, none of that applies. Though if anyone has a line on Bay Area tickets…#itsmehi]

[I’m the sort that also might be curious that if the grounds for this maneuver stood — revoking a license as the ticket providers put it — would mean that technology vendors involved in legal matters might be able to turn off licenses and access provided to adverse lawyers — since those lawyers might file a support ticket, for example, leading to “prohibited contact”… There goes your phone, word processor, and email server… Just thinking aloud…]

“Tom Girardi Scandal Prompts State Bar to Reconsider Misconduct ‘Snitch Rule’ for Lawyers” —

• “A state bar leader said Thursday that he wants the agency to revisit a potential rule that would require state-licensed attorneys to report colleagues who have committed professional misconduct.”
• “Ruben Duran, chair of the State Bar of California’s board of trustees, said in brief comments at the board’s regularly scheduled online meeting that ‘it’s time to reconsider’ the issue of a so-called snitch rule in light of the recent prosecution and disbarment of trial lawyer Tom Girardi. Duran referred the matter to the bar’s Committee on Professional Responsibility and Conduct, which, among other things, drafts ethics opinions and advises the board on related issues.”
• “Duran made no specific requests but mentioned the American Bar Association’s Model Rule 8.3, which requires a lawyer who ‘knows’ a fellow lawyer or judge has violated professional rules to notify the appropriate authorities.”
• “California lawyers have balked at adopting such a mandate for years, most recently during an overhaul of the Rules of Professional Conduct in 2017. A memo written by a rules drafting team at the time expressed concerns that mandated reporting would force lawyers to breach confidentiality requirements or possibly create a loyalty conflict with current and past clients.”
• “Attorney Carol Langford, who was a member of the rules revision committee, said she and her colleagues dug into issues surrounding a possible mandatory reporting requirement, including whether the perceived misconduct should have to rise to the level of a felony. In the end, she said, members were concerned about the rule’s enforceability, particularly a showing that a lawyer ‘knows’ misconduct was committed.”
• “‘Sometimes you have rules because you want to let people know you don’t like that type of conduct,’ Langford said. ‘But they’re hard to enforce.'”
• “George Cardona, the bar’s chief trial counsel, told the Los Angeles Times last month that he thought adoption of a mandatory reporting rule might help restore public confidence in the state bar.”