Bressler Risk Blog

“Federal Judge Disqualifies Baker McKenzie From Representing Russia’s VUZ Bank” —

• “Attorneys from Baker McKenzie have been disqualified from representing Russia’s VUZ Bank after a federal judge in Virginia determined a conflict of interest was present.”
• “The court granted both Deniz Bahceci’s and Alettin Bahceci’s motions to quash the subpoenas and to disqualify Baker McKenzie counsel from representing VUZ Bank due to a conflict of interest.”
• “Dillon said Baker McKenzie attorneys violated Virginia Rules of Professional Conduct when attorneys from the firm met with Kroll, an agent of Hakan Agro, concerning the company’s insolvency and possible liquidation in June 2021 while representing VUZ Bank in a similar matter.”
• “Dillon rejected the bank’s argument that the intervenors do not have standing, saying Deniz and Alettin Bahceci are ‘clearly implicated,’ with Deniz Bahceci representing the minor children and Alettin Bahceci being the potential target of criminal proceedings in Dubai. Attorneys Brian Lee Whisler, Jacob Kaplan and Robert Edward Duffy III of Baker McKenzie previously represented VUZ Bank. A request for comment from the attorneys went unanswered.”
• “Dillon noted that a nearly identical scenario occurred in the U.S. District Court for the Northern District of Georgia when VUZ Bank sought information from Georgia resident Ashley Anderson Bahceci, the ex-wife of the now-deceased Hakan Bahceci, who founded Hakan Holdings.”
• “The Georgia court determined that Baker McKenzie should be disqualified from representing VUZ Bank pursuant to Georgia Rule of Professional Conduct 1.18(c), which says ‘that [a] lawyer [who has learned information from a prospective client] shall not represent a client with interests materially adverse to those of a prospective client in the same or a substantially related matter if the lawyer received information from the prospective client that could be significantly harmful to that person in the matter, except [if both the prospective client and current client have given informed consent in writing].'”
• “Just like in the Georgia case, Baker McKenzie failed to obtain informed consent in writing regarding the conflict of interest for the Virginia case, Dillon said.”
• “All Baker McKenzie attorneys are disqualified due to a Virginia rule not allowing representation from any lawyer at a firm in which a disqualified lawyer is ‘associated,’ the filing said.”

“Camden Diocese Insurer Wants Cole Schotz Out Over Conflict” —

• “One of the Diocese of Camden’s insurers has called foul on the diocese’s plan to hire Cole Schotz PC as special counsel in its bankruptcy case on the grounds that the firm is already representing one of the sex-abuse claimants against the diocese.”‘
• “The diocese’s main attorney, Richard Trenk, filed on Oct. 21 to bring on Cole Schotz as special counsel to defend him during a court-directed deposition. Century called the move ‘improper,’ as Cole Schotz is also the counsel of record for one of the claimants, confidential claimant No. 532.”
• “‘While the Debtor goes on to say that this representation is solely in connection with a motion to allow a late-filed proof of claim, it offers no evidence to confirm that is the case but even if it did, it would not matter,’ Century wrote in its objection.”
• “That claimant’s motion is still pending, and representing both the claimant and the diocese is a conflict of interest under New Jersey’s Rules of Professional Conduct, Century wrote.”
• “Warren Usatine, the co-managing shareholder of Cole Schotz who Trenk proposed to hire, acknowledged the connection with confidential claimant No. 532 in working on the late-filed proof of claim, but maintained in his application to represent Trenk that it wasn’t a conflict of interest. ‘Insofar as I have been able to ascertain after diligent inquiry, neither I, nor Cole Schotz, nor any member, counsel or associate thereof have any connection with, or have an adverse interest to, the parties on the Entity List except as set forth herein,’ he wrote.”
• “Century was not convinced. ‘To be clear, this is not a mere technical conflict,” it wrote. “The information Mr. Trenk may discuss with counsel should not be disclosed to counsel for claimants. And, by allowing this concurrent representation, such disclosure is possible.'”

“Russian model wants Leon Black’s lawyers kicked off N.Y. lawsuit” —

• “A Russian model who is suing Leon Black for defamation and sexual misconduct asked a judge on Thursday to disqualify one of the billionaire’s law firms, saying it created a flagrant ethical conflict when it hired a top Manhattan prosecutor earlier this month.”
• “Perry Guha LLP, a small New York firm that is representing Black in Guzel Ganieva’s lawsuit, last week said it hired Joan Illuzzi-Orbon, who previously led the trial division in the Manhattan District Attorney’s Office, as ‘of counsel.'”
• “Illuzzi-Orbon received confidential information about Black when Ganieva reported his alleged sexual misconduct to Manhattan prosecutors last year, Jeanne Christensen, Ganieva’s attorney, wrote in a Thursday filing in New York County Supreme Court.”
• “‘Incredibly, out of the several thousand litigation firms in NYC, the one law firm Ms. Illuzzi-Orbon decided to associate with happened to be the same law firm representing Black in this case,’ Christensen wrote.”
• “Perry Guha has only two partners and five other lawyers, Christensen said, making it impossible to wall off Illuzzi-Orbon from its work on the Black case.”
• “Perry Guha in a statement called the move to disqualify it ‘nothing more than an exercise of gamesmanship,’ adding that it ‘warrant sanction.’ Illuzzi-Orbon will be working on ‘select new matters’ and has had no involvement in the Black case at the firm, it said.”

“City firm found itself acting for both parties in banks’ dispute” —

• “A partner’s human error led to a City firm inadvertently working for clients on both sides of a ‘passing off’ dispute between two banks, a High Court judgment has revealed. However in The Bank of London Group Limited v Simmons & Simmons LLP, the court dismissed an application for an injunction by a start-up bank stating that there was no reason to suspect a breach of confidentiality.”
• “The court heard that The Bank of London Group, licensed in 2021, engaged Simmons & Simmons to review and advise on draft service agreements, including with the provider of its patented technology. The work was done with no formal engagement letter for a fee of £5,435 (plus VAT).”
• “‘Unbeknown at that time to the defendant’s team dealing with the claimant, the defendant also had a long standing relationship with another client, Bank of London and The Middle East plc (BLME),’ Stuart Isaacs KC, sitting as a deputy judge in the High Court, observed. On behalf of that client, the firm had written to the start-up threatening a passing-off action over the use of the name ‘Bank of London.'”
• “The firm found itself in this position because of a human error in a conflicts check by Simmons partner Alexander Ainley, the judge ruled.”
• “Ruling on the remaining matters, the judge found that any criticism of the firm’s approach to the handling of confidential information could not be sustained. ‘No challenge is made to the integrity of the solicitors at the defendant,’ he said. He found ‘no real risk’ that confidential information would be disclosed.”
• “A spokesperson for Simmons & Simmons said: ‘We take client confidentiality very seriously and have well-established procedures and policies in place to ensure security and confidentiality at all times. We were always confident that the judge would reject the claim from Bank of London.'”

“Launch House splits with law firm conducting its harassment investigation” —

• “In response to the allegations first surfaced by the news publication Vox, the startup claimed that it would undergo an independent, third-party investigation. But as some former members of Launch House have noted, the company is using the same law firm for both its defamation warnings and its independent investigation.”
• “While it’s not a violation to have the same law firm handle two somewhat connected legal matters — one on behalf of Launch House for defamation and one to look into the allegations raised by victims — it is an optical challenge.”
• “After all, Launch House advertised that the firm was expected to conduct a neutral investigation, but it’s not really ‘third party’ if the same firm is going after employees, members and journalists speaking about the allegations.”
• “Indeed, the appearance of conflict of interest — or the idea that the law firm, Benesch Friedlander Coplan & Aronoff, LLP — could provide a more favorable outcome to Launch House due to its other work with the startup, was enough to rock the boat. After a TechCrunch inquiry about Launch House’s heavy reliance on the outfit, co-founder and CEO Brett Goldstein said that the startup has asked the law firm to end its investigation into the company and is turning to another law firm for its fresh perspective.”
• “Goldstein added that a completely separate team within Benesch Friedlander Coplan & Aronoff has been working on the investigation, and that Launch House ‘trusted their ability to remain impartial with those standard separation practices.'”
• “However, he said in his statement, ‘we do not want there to be even the appearance of any conflict, so a new law firm will be engaged as soon as possible to conduct this crucial work… We must learn exactly what happened, so we can best ensure it never happens again.'”

“NLRB Scraps CVS Ruling, Citing Ex-Member Emanuel’s Conflict” —

• “The National Labor Relations Board has vacated a second case involving William Emanuel, a former board member who violated ethics rules by participating in cases where he owned stock in one of the companies.”
• “A three-member panel Monday scrapped the Feb. 5, 2021 decision, in which the board sided with CVS Health Corp. in a dispute over the scope of a bargaining unit in 33 of its Chicago-area pharmacies.”
• “The two Democrats on the panel, Chair Lauren McFerran and member Gwynne Wilcox, vacated the decision and replaced it with a retroactive order guaranteeing the same outcome. They said it wouldn’t unravel a subsequent contract reached between CVS and the International Brotherhood of Teamsters, but would serve to clean up Emanuel’s conflicts.”
• “The NLRB members cited an earlier decision to vacate an Exxon Mobil ruling, saying it’s the best remedy when a board member is accused of violating ethics law.”
• “In both cases, the NLRB inspector general found that Emanuel—a former shareholder at the management-side firm Littler Mendelson— broke federal ethics law by failing to monitor his investments in companies with cases pending before the board. The IG concluded Emanuel had disqualifying conflicts of interest in five cases.”
• “A Bloomberg Law investigation published in March found that Emanuel repeatedly ignored the advice of ethics officials, creating at least the possibility of self-enrichment in his public role. Emanuel held close to $300,000 at some points in two exchange-traded sector funds that invested substantially in the companies’ shares, according to hundreds of emails and financial documents obtained through records requests and released by the board.”

“Dechert and former partner Neil Gerrard sued over hacking claims” —

• “International law firm Dechert has been named as a defendant in a $100m claim alleging that its former head of white crime, Neil Gerrard, used cyber mercenaries to hack the emails of Farhad Azima, an Iranian-American aviation mogul who lives in Kansas City, RollonFriday reports today (21 October).”
• “Gerrard, a former policeman who was Dechert’s head of white collar crime, was instructed by the UAE sheikhdom Ras al-Khaimah (RAK) to investigate allegations the former head of its Investment Authority was engaged in fraud.”
• “As the scope of Dechert’s investigation under Gerrard expanded, it encompassed Karem Al Sadeq, the Investment Authority’s former legal advisor, who said that as a result of the probe he was wrongfully arrested and incarcerated in a UAE prison. Al Sadeq is suing Dechert, Gerrard and other partners in a separate claim and alleges that he was blindfolded and tied to a chair while Gerrard interrogated him.”
• “You can read the article in full using the link above. A spokesperson for Dechert told RollOnFriday: ‘The claim against the firm is denied and will be defended.'”
• “The link to the claim, which is being brought in The United States District Court for the Southern District of New York, is here.”
• “The High Court has previously ruled that Gerrard committed deliberate acts of wrongdoing in relation to the fees he generated while conducting a probe into corruption at ENRC mining conglomerate. That extremely lengthy judgment is here.”

“The Metaverse for the Risk-Averse: Legal Ethics in the Virtual World, Part I” —

• “As lawyers rush to claim a stake in the Metaverse [sic], it’s vital to consider how the Rules of Professional Conduct will apply. Is it a virtual Wild West, with little or no jurisprudence to guide its players? Or is it the next iteration of the internet where competing avatars understand the legal and ethical norms of a thriving commercial wonderland?”
• “Whether practicing in the real world or the Metaverse, acting in the best interest of the client requires that lawyers avoid a conflict of interest.”
• “In a time of increasing globalization, firms have expanded on an international level. To achieve this growth and this global reach, several of the world’s largest law firms have organized themselves under the verein structure.”
• “Within the Metaverse, the concept of establishing a verein structure may appear to be a foreign one as there are no national boundaries in the Metaverse. Whether such a structure will apply to the Metaverse turns on whether such global initiatives in the modern era of globalization will continue to center on the contours of borders as we know it.”
• “While the Metaverse as envisioned will be an interconnected system that transcends national borders, a verein structure could be adapted to such an environment by either allowing a law firm to offer legal services in multiple virtual environments within the Metaverse or by recreating the real-world environment of well-defined countries and allowing those law firms to offer their services in those recreated real-world environments.”
• “Whether and how avatars will ‘travel’ in the Metaverse is still to be determined. Nonetheless, if verein firms are established in the Metaverse, they will need to address conflicts and determine who are deemed current or former clients. This poses an additional concern given that it is unknown whether a user could have multiple avatars, thereby posing as a different client or whether a user is limited to one avatar that is an extension of their ‘personhood.'”

“How Google’s former CEO Eric Schmidt helped write A.I. laws in Washington without publicly disclosing investments in A.I. startups”

“IF YOU WERE NOTIFIED IN APRIL 2021 BY THE LAW FIRM BRICKER & ECKLER THAT YOUR PERSONAL, MEDICAL, OR FINANCIAL INFORMATION WAS POTENTIALLY ACCESSED IN A RANSOMWARE ATTACK, YOU MAY BE ELIGIBLE FOR COMPENSATION.” —

• “On January 31, 2021, Bricker learned that it was the target of a ransomware attack. Upon learning of the incident, Bricker immediately took measures to contain the incident and launched an investigation, with the assistance of third-party cybersecurity forensic experts. Bricker also notified federal law enforcement.”
• “Findings from the investigation indicate that the party obtained some data from certain Bricker systems during this period, including personal and medical data that Bricker had in its possession for purposes of providing legal advice to TriHealth, Inc. and Adena Health System (the ‘Health Systems’).”
• “You are a member of the Settlement Class if your personal, medical, or financial information was potentially exposed in the Incident.”
• “Under the Settlement, Bricker will pay $1,950,000.00 into a non-reversionary Settlement Fund that will be used to provide the following benefits…”
• “You must submit a claim in order to receive reimbursement for unreimbursed Out-of-Pocket Losses and/or loss of time paid at $20 per hour. You may claim Out-of-Pocket and Extraordinary Out-of- Pocket Losses, Undocumented Time, and Documented Time under the Settlement.”

“Wife of Retired MLB Player Sues BakerHostetler, Patent Attorney Over Fiduciary Breach” —

• “Fulton County plaintiffs Brittany Fletcher Beckham and Lutzy Inc. claim BakerHostetler counsel’s ‘mishandling’ of patent applications resulted in a conflict of interest that blocked the plaintiff from activating her app. Now the wife of retired Major Legal Baseball infielder Gordon Beckham is seeking uncapped punitive damages through a jury trial, per a complaint filed with the Fulton State Court.”
• “According to the plaintiff complaint, Brittany Beckham retained BakerHostetler to file patent applications for her ‘Smart Closet’ following an introductory phone call with attorneys Jeffrey Rosedale and Greg Grissett in January 2015.”
• “But Grissett’s representation of a home and textile client named Welspun Indian Limited would soon create an issue for Beckham, prompting her to sue. In the two months after Grissett filed Brittany Beckham’s provisional patent application, he also filed patent and nonprovisional applications for Welspun that contained language identical to the plaintiff’s application, the complaint alleged.”
• “‘In our research, most of the patent ethics cases we have seen involved different lawyers in different offices writing competing applications,’ said plaintiff attorney Randy Edwards of Cochran & Edwards in Smyrna. ‘Here, we have the same lawyer, cutting and pasting from one patent application into the other within a few weeks of filing the first, while the first application is unpublished and confidential.'”
• “The complaint alleged that if Brittany Beckham practiced her invention, ‘she may have problems with the Welspun ‘589 Patent.’ ‘The other patent blocks our client from practicing the invention that she hired Baker to protect,’ Edwards said.”

“Know Your Client: 3 Issues Facing In-house Counsel in 2023” —

• “A 2022 survey by the Legal Value Network (LVN) highlighted a critical disconnect between law firms and the clients they serve: A strong majority (79%) of law firms said they made “strong efforts” to understand the challenges that law departments face, yet fewer than half of their clients agreed.”
• “According to the LVN survey, 43% of clients said they have terminated a law firm or legal service provider for failing to follow their guidelines.”
• “Cyber insurance is harder. When we say ‘harder,’ that’s exactly what we mean: harder to get, harder (more expensive) to pay for and harder to use. Many carriers are exiting the cyber insurance market; actual losses far exceeded early estimates, and the threat landscape keeps changing. The remaining carriers have substantially upgraded their underwriting process: if, two years ago, underwriting was a two-page questionnaire, it’s now a 15-page mini-audit plus external security scanning. Rates have also dramatically increased.”
• “Everyone gets a regulation! Even just a few years ago, meaningful cybersecurity regulations only touched a few sectors of the U.S. economy… Because these privacy laws have far wider reach across industry sectors, their increasingly meaningful cybersecurity requirements likewise catch more companies… A few years ago, the majority of your clients likely had no cybersecurity regulatory requirement; not long from now, it will be a rare outlier client that doesn’t.”
• “Over the past two years, the legal industry has come under increasing pressure to move the needle on diversity, equity, inclusion and belonging (DEIB). Outside counsel, specifically large and mid-size law firms, will be held accountable. The Institute for Inclusion in the Legal Profession’s recent 2022 report on diverse outside counsel portends a serious push among corporate departments to take decisive action.”

“Marketing Team Exits Cooley for Fried Frank, Highlighting Competitive Landscape for Business Pros” —

• “In a rare group move of law firm professionals, a marketing team at Cooley left for Fried, Frank, Harris, Shriver & Jacobson in the last month, following a chief marketing officer who made the move in the last year.”
• “In all, the lateral group includes six marketing and communications professionals who transferred between the two law firms. One law firm marketing expert said law firms in general could start seeing more business professional group moves such as this one, describing the team departure as a ‘harbinger of things to come’ in the industry.”
• “[a source] said that there ‘is an added efficiency when teams join together—they can really hit the ground running as it removes some of the initial hurdles of learning new personalities and work styles.'”
• “Robyn Addis, the chief marketing and business development officer at Legal Internet Solutions and a veteran of the law firm community, said that, depending on the team and the level of personnel, such a move could be as significant as a team of attorneys changing firms. ‘In my opinion, it has the potential to be as impactful as a group of lawyers moving,’ she said. ‘You are taking a strategic group, one that was working on the marketing strategy of a competitor. Really taking the brain trust of a department and moving it.'”
• “Attorneys have long enjoyed the leverage of being able to pick up their practice group and move it to a competitor if they feel the practice would benefit from a different platform, or managing partner, or client base. The same cannot be said for business professionals at law firms. Although mobile, most of the moves are done individually, with perhaps a high-level leader bringing on a captain or two in the months after they make a move. Addis said that in her years in the legal profession, she has not seen many group moves by law firm business professionals, but this could be a new modus operandi for hiring groups of law firm staff.”

“Nixon Peabody Atty Faces DQ Bid In Nazi-Plundered Art Suit” —

• “The heirs of a Jewish art collector claim a Nixon Peabody lawyer representing the Museum of Fine Arts, Houston, should be disqualified because he is filling the roles of both witness and advocate.”
• “Heirs of Max Emden, who allegedly was forced to sell paintings to an art buyer for Adolf Hitler in 1938, asked a federal judge in the Southern District of Texas to kick Thaddeus Stauber of Nixon Peabody LLP off the case, in a motion filed on Thursday. They claim that Stauber is acting as both attorney and witness and that if allowed to argue before a jury, it could muddy jurors’ understanding of what is fact and what is opinion.”
• “At a hearing in March before U.S. District Judge Keith P. Ellison to address a motion to dismiss the heirs’ original complaint, Stauber argued for the defense and reportedly referred to his role in investigating the history of the ownership of ‘The Marketplace at Pirna.’ Stauber traveled to Berlin and Munich with museum representatives, including Peter Marzio, who is now deceased, and wrote letters that the heirs claim are central to the defense’s case.”
• “The heirs argue that procedural rules support Stauber’s disqualification. The heirs say that they will be prejudiced by juror confusion if Stauber is allowed to act in ‘dual roles.’ They also note that as a defense lawyer Stauber will be allowed to remain in the courtroom throughout the trial while other witnesses are excluded so that their testimony is not influenced by the proceedings.”

“U.S. Watchdog Wants Kirkland Out of 3M Earplug Unit Bankruptcy” —

• “The Justice Department’s bankruptcy watchdog wants Kirkland & Ellis LLP removed as counsel to 3M Co.’s bankrupt earplug manufacturing unit, saying the law firm has a conflict because it also defends the parent company in mass earplug lawsuits.”
• “Kirkland & Ellis doesn’t possess ‘undivided loyalty’ to its client, 3M subsidiary Aearo Technologies LLC, according to court papers filed by the Office of the U.S. Trustee on Thursday objecting to the firm’s retention. The U.S. Trustee said that Kirkland can’t be loyal to Aearo because its bankruptcy process is being financed by 3M, which the firm also represents in roughly 230,000 personal injury lawsuits pending against the company in federal court in Pensacola, Fla.”
• “3M placed Aearo under chapter 11 protection in July in the U.S. Bankruptcy Court in Indianapolis, hoping to move the earplug lawsuits against the subsidiary and its solvent parent out of the tort system. Aearo’s chief restructuring officer said in court papers in August that Kirkland is well qualified and uniquely able to represent Aearo in chapter 11 because of its familiarity with the company’s business and potential legal issues that might arise in bankruptcy.”
• “The bankruptcy depends on 3M’s commitment to provide unlimited funding toward resolving the earplug litigation in return for a full release from liability. As counsel to Aearo, Kirkland has a fiduciary duty to maximize 3M’s contribution—and by implication to maximize 3M’s share of their combined tort liability, the U.S. Trustee said Thursday.”
• “‘Yet this presents a conflict with Kirkland’s duty, in its capacity as litigation counsel to 3M, to minimize those same liabilities as to 3M,’ government lawyers wrote.”

“Roche Firm Booted From Tether Action After Crypto Leaks Post” —

• “A New York judge on Thursday removed Roche Freedman from representing plaintiffs in a class action that accuses the crypto exchange Bitfinex and Tether, the issuer of the USDT stablecoin, of market manipulation.”
• “The decision is a blow for Roche Freedman after videos posted on a website called Crypto Leaks showed founding partner Kyle Roche boasting about the law firm’s relationship with the crypto startup Ava Labs.”
• “Allowing the firm to continue serving as counsel ‘with the metaphorical baggage they now carry is not in the best interests of the class,’ Failla said.”
• “During an Oct. 3 hearing, Failla called Roche’s comments ‘uniquely stupid’ and pressed co-founder Devin ‘Velvel’ Freedman on the firm’s conduct while litigating the 2019 lawsuit.”
• “Roche has denied his firm has used litigation to target Ava Labs competitors. Ava Labs CEO Emin Gün Sirer has also said that the videos posted on Crypto Leaks showed Roche making false statements about their relationship.”
• “Following the disclosure of the recordings in August, Roche’s firm kicked him off its class action practice and barred him from participating in ongoing class matters. Freedman argued that it took such steps to protect against the appearance of impropriety.”
• “Still, Bitfinex and Tether moved to terminate Roche Freedman from the case, claiming the comments raised concerns about the firm’s motivations. Roche Freedman’s co-counsel, meanwhile, argued that booting the firm would eliminate a distraction.”
• “Roche Freedman faces disqualification motions in at least four other cases, according to federal court filings.”
• “A different New York judge has scheduled a Friday hearing in an action the firm brought on behalf of investors against the Tron Foundation, the company behind the TRON blockchain protocol.”
• “Launched in 2019 by expats of the prominent litigation shop Boies Schiller, Roche Freedman has become one of the most active firms in the cryptocurrency class action space.”

More on this: “Crypto Leaks Risks Roche Freedman Losing More Class Action Work.”

“Recruiter Wants DLA Piper Sanctioned In Trade Secret Case” —

• “A legal recruiting firm that recently won a $3.6 million judgment against an ex-employee for trade secrets theft wants DLA Piper and Tauler Smith LLP sanctioned for their role in what it calls an ‘exceptional’ case of ‘unreasonable and vexatious’ litigation. “
• “Those efforts included avoiding discovery obligations, raising frivolous arguments to disqualify MWK’s attorney, adding unconnected parties to the case, and bringing time-barred and inadequately pled counterclaims that were ‘designed to embarrass and harass the plaintiffs,’ said MWK, which is now known as Counsel Holdings Inc., according to the filing.”
• “DLA Piper pushed back against the allegations in the sanctions motion on Tuesday. ‘DLA Piper vigorously denies the assertion that its representation of Mr. Jowers was in any way improper or would warrant the imposition of sanctions,’ said Fields Alexander of Beck Redden LLP, counsel for DLA Piper, in a statement. ‘As this matter involves ongoing litigation, DLA Piper declines to respond further at this time.'”

DQ-related allegations made in the filing:

• “Along the way, to raise costs and vexation, DLA Piper raised frivolous arguments to obtain a disqualification of Robert Kinney (“Kinney”) from serving as pretrial counsel to Plaintiff. When that failed, DLA Piper sought to block Kinney from seeing documents by over-designating thousands of them (even public websites) as AEO, adding a separate defamation case in Hong Kong that was factually and legally intertwined with the issues before the Court (but could not be handled by Plaintiff’s US legal team), and pursuing discovery against current and former employees of Plaintiff with no intention of or basis for ever using that discovery at trial.”
• “DLA Piper sought to disqualify Kinney solely to raise costs.”
• “[DLA Piper Lawer] Jowers’s statement to the Court admitted the reason for this effort. Jowers said that losing in the DQ effort was the ‘key watershed moment of this litigation…because Kinney would not have continued his litigation…if he lost his leverage of paying no attorneys fees.'”
• “Because Jowers has admitted the purpose of the disqualification effort was to increase costs for his adversaries, the repetitive motions to disqualify further demonstrate bad faith and multiplication of the proceeding.”

“Buchanan Ingersoll Has No Conflict of Interest in Employment Dispute, Pa. Appeals Court Finds” —

• “Pittsburgh-headquartered firm Buchanan Ingersoll & Rooney can continue to represent a vending machine business client in an employment contract dispute with the business’ former president, a Pennsylvania Superior Court panel decided on Friday, despite contentions by the defendant that the firm has a conflict of interest.”
• “The Sept. 30 appellate decision comes 10 months after a trial court denied a motion by defendant Alan Simons, the former president of RDS Vending, to disqualify Buchanan from representing his former RDS business partner John Brown in a dispute over Simons’ employment contract from 2019.”
• “[In the appeal] Simons argued that Buchanan’s representation of RDS leadership, including himself, in the formation of two businesses operated by RDS in the mid-2010s should conflict the firm out of representing Brown and RDS in their suit against Simons.”
• “However, as the judges noted in their decision last week, all invoices for Buchanan’s legal work for the companies’ formations were directed to RDS and not Simons, and the firm has claimed in court filings that it has not performed legal work for RDS regarding the LLCs since 2016.”
• “There was no express agreement indicating that Simons retained the firm when it provided legal services for the formation of one of RDS’s companies, Rite-Vend, the judges found. And while there was an express agreement for the formation of the other RDS company, Regal Vending, the judges reasoned that it was RDS, not the appellant, that retained Buchanan.”

Bill Freivogel notes:

• CALAMCO v. J.R. Simplot Co., 2022 WL 7443383 (E.D. Cal. Oct. 13, 2022).
  • “Plaintiff is suing Defendant for a judgment declaring the parties’ obligations under a fertilizer ‘handling and storage agreement.’ Law Firm represents Defendant. Plaintiff moved to disqualify Law Firm because Law Firm is privy to information turned over by Plaintiff to Plaintiff’s own ‘Class B’ directors, and to Defendant’s subsidiary.”
  • “The complication here is that the Class B directors were appointed by a subsidiary of Defendant. That power to appoint derived from Defendant’s subsidiary’s ownership of ‘many’ of Plaintiff’s outstanding shares.”
  • “Over Plaintiff’s objection, a state court ordered that Plaintiff furnish certain information to the Class B directors and the Defendant’s subsidiary. Plaintiff began doing so. Law Firm, representing the Defendant, the subsidiary, and the Class B directors, necessarily became privy to the information. In this opinion the court denied the motion to disqualify because the information was disclosed to the subsidiary without any ‘protections against later use.'”
• Marchant Realty Partners v. Milborne, 2022 ONSC (CanLII) (Ont. Super. Ct. Sept. 7, 2022).
  • “Plaintiff is suing Defendants to collect unpaid loans. Defendant, Charles Hunter Milborne (‘Hunter’), moved to disqualify Plaintiff’s law firm (‘Law Firm’). Hunter is a shareholder of Niagra Global, a Law Firm current client. Hunter also has familial relationships with the other Defendants as well as some supervisory responsibilities.”
  • “Thus, in this opinion the court found that Hunter is a ‘near client’ of Law Firm, and that Law Firm should be disqualified. The court went on to look at Law Firm’s earlier representation of Hunter himself. After a fact-specific analysis, the court determined that Hunter would have shared enough information with Law Firm to make those matters and this one ‘sufficiently related’ to further justify disqualification. Law Firm had erected a screen about six months after taking on this case. The lateness was due to a glitch in Law Firm’s conflicts checking. The court said the screen was not sufficient.”
• ZW Acquisition LLC v. Volkov, No. 500199/2022 (N.Y. Sup. Ct. Kings Cty. Sept. 29, 2022).
  • “Defendant moved to disqualify law firm (‘Law Firm’) for Plaintiff, claiming Law Firm had represented Defendant in the transaction underlying this case. In this opinion the court denied the motion. The decision turned on whether Defendant was Law Firm’s client at the time of the transaction. While Law Firm’s retainer agreement for the transaction could have been clearer, there was no place for Defendant to sign individually (just as representative of the company subject to the transaction), and Defendant never sought personal advice from Law Firm regarding the transaction.”

“EY’s US partners flouted conflict of interest rules, regulator says” —

• “One in three of EY’s US audit partners has flouted its policies for preventing conflicts of interest, the industry regulator said on Monday, and the firm had failed to address the issue more than a year after it was discovered.”
• “Among lower-level managers the rate of non-compliance with its financial disclosure rules was even higher, at almost half, according to a Public Company Accounting Oversight Board report.”
• “The revelations come on the heels of other ethics scandals at the Big Four firm, including the discovery of widespread cheating on professional exams, which led to a $100mn settlement earlier this year.”
• “EY, which audits about 15 per cent of US public companies, requires staff to adhere to numerous compliance rules designed to ensure the independence of their work. Its own spot checks in 2018 found that 33 per cent of partners and 46 per cent of managers certified they had made the proper financial disclosures without actually doing so.”
• “The issue was reported to the PCAOB as part of its annual inspection by the regulator. It was kept out of the inspectors’ public report, however, to give EY time to address the issue. The PCAOB only makes such deficiencies public if they are not fixed within a year.”