Bressler Risk Blog

“Be Aware of Risks in Serving on an Outside Board of Directors” —

• “It is not uncommon for lawyers in private practice to join a board of directors for an outside organization. The opportunity may be in support of a cause of personal importance or for a private company.”
• “At the outset, it can be helpful for the lawyer acting as a board member to define the scope of his or her role—specifically, whether the lawyer is acting as counsel to the board or whether he or she is simply a member of the board who happens to have a law degree.”
• “Even where a lawyer is serving on the board in a nonlawyer capacity, attorneys may nevertheless feel tempted to provide legal advice to the organization. It is also possible that other members of the board may even solicit, or expect to receive, the attorney’s opinion as to the legality of the organization’s plans or ventures.”
• “An attorney’s role on a board of an organization may give rise to alleged conflicts of interest for the attorney and the attorney’s law firm, regardless of whether there is an attorney-client relationship between the attorney and the outside organization.”
• “Law firms can consider whether to require that their lawyers obtain firm approval prior to any board membership service, while also retaining the right to revoke approval. This is not required by the rules of professional conduct, but would allow law firms to evaluate the pros and cons of outside board service from a client service or even a public relations perspective.”
• “The policy could vary depending on whether the entity is for-profit or nonprofit, or whether the organization is a client of the firm. It may also be worth noting the attorney’s relationship with the organization in the firm’s conflicts clearance database to avoid any potential conflicts with current or future clients.”
• “Even where there is no actual or apparent conflict of interest, lawyers serving on outside boards can consider the optics of their role. Indeed, when an attorney serves on a board, the public may view the attorney’s law firm as supporting or having an association with the organization. This is especially so when the outside organization uses the board member’s firm name or logo to identify the board member.”
• “To counteract the appearance of a formal relationship, law firms may consider implementing restrictions on the use of their name or logo, particularly for organizations with strong public viewpoints or political reputations.”
• “Another issue to consider is ensuring adequate insurance coverage when serving as a board member to an outside organization. Generally, a law firm’s professional liability insurance only provides coverage for allegations of negligence in the provision of legal services in the event of a claim against the firm.”

“Citing ProPublica’s Reporting on McKinsey, Senators Propose Bill Addressing Contractors’ Conflicts of Interest” —

• “McKinsey consulted for the FDA without informing the agency of its work for opioid makers. Now lawmakers have introduced a bill to ensure federal contractors disclose conflicts of interest arising from private-sector work.”
• “A bipartisan group of senators announced a bill this week aimed at curtailing the risk of improper influence when companies do work for both the federal government and businesses or other clients. Under the legislation, federal agencies would require prospective contractors to disclose business relationships with ‘public, private, domestic, and foreign entities’ that might pose a conflict of interest.”
• “Existing federal rules already require the disclosure of actual or potential conflicts, which U.S. government agencies rely on to determine whether the situation can be mitigated or should disqualify a company from working on a given project. But most attention has focused on conflicts arising from work on different federal government projects. The question of how the existing rules apply to a contractor’s corporate clients is an issue that has received scant attention until recently, experts in contracting law say, and the new legislation seeks to remove any ambiguity around whether companies have to disclose possible conflicts arising from private-sector work.”
• “There’s no evidence that McKinsey consultants working at the FDA took steps to benefit the firm’s commercial clients. Yet existing federal procurement rules require contractors to disclose relationships that present not only actual but also potential conflicts of interest, as well as ‘the existence of any facts that may cause a reasonably prudent person to question the contractor’s impartiality because of the appearance or existence of bias.’ Those rules were incorporated into McKinsey’s FDA contracts, which ProPublica obtained after filing a lawsuit under the Freedom of Information Act.”
• “Jessica Tillipman, an assistant dean and government procurement law expert at George Washington University Law School, called the legislation a welcome development. As government contractors have merged in recent decades, the industry has grown more concentrated, increasing the risk of conflicts of interest, and the federal contracting industry, Tillipman said, could use clearer guidance on disclosure requirements tied to the private-sector work of government contractors.”
• “‘Any attempt to address these growing problems is a good thing,’ Tillipman said, ‘and important to ensuring that we reduce these risks in the government procurement system.'”

April marks the third anniversary of the Bressler Risk Blog.

These milestones present nice opportunities to take a moment and reflect. (Nothing deep or surprising ahead — the risk band is not breaking up or selling out. Though I briefly considered a suggestion to start delivering these stories via video TikToks. Hear that’s big with the kids these days. If anyone creates a conflicts dance be sure to drop me a link and I’ll post it…)

But I did want to take a moment to thank all of you for reading — especially to those of you who have sent in comments, encouragement, article links, or otherwise connected — always rewarding to know that folks are reading and find these updates valuable.

Some interesting BRB stats and developments:

• Over the past two years, we’ve posted over 550 updates.
• Our readership is now 1000+.
• We welcomed the folks at Intapp as a sponsor about a year ago. (Others interested in reaching this elite risk readership are welcome to explore opportunities as well…)
• The risk jobs board/sponsored post experiment we launched late last year has been a success, with about half a dozen firms participating to date.

Part of the fun of this project is watching these numbers go up and making a small dent in the risk universe — so if you have have a law firm risk friend or colleague that isn’t signed up for email updates, I’d definitely be grateful if you could steer them this way.

Now, back to the blogging.

“BB&K Disqualified From Calif. School District Cleanup Suit” —

• “Best Best & Krieger LLP has been disqualified from representing a California city in its battle with a local school district over cleanup costs for contamination on a school property, with a federal judge ruling that the bid to remove the firm, which came three years into the litigation, was not too late.”
• “U.S. District Judge Maame Ewusi-Mensah Frimpong in her Tuesday decision rejected BB&K’s argument that the Long Beach Unified School District’s motion to disqualify was an ‘eleventh hour’ tactic in its yearslong suit against the firm’s client, the city of Avalon. The school district, Judge Frimpong said, raised the issue as soon as it realized the extent of the firm’s prior work for the district.”
• “‘The District has submitted multiple declarations attesting that it did not actually perceive the conflict of interest until October 2021, when a review of … privileged documents revealed that talking points contemplating litigation related to the contamination at the Avalon School had been shared with BB&K during their prior representation,’ Judge Frimpong wrote in the decision.”
• “The school district moved to disqualify BB&K in January, saying that it had recently discovered documents showing that while representing the district in the mid-2000s, the firm had been given access to privileged and confidential documents that concerned the contamination and potential litigation.”
• “BB&K fired back that the district had known of the potential conflict all along and had trotted out its motion to disqualify now as the case proceeds toward trial. The firm also implied that the timing of the motion was suspect, coming just months after BB&K successfully argued for summary judgment on four of the district’s five claims.”

“Attorneys Disciplined for Defrauding Law Firm, Power Grab at Branch Office, Other Ethics Violations” —

• “Nancy Martellio was suspended three months after sending misleading letters to clients in an attempt to take control of a branch office of her firm.”
• “Neil Mittin is barred from pro hac vice admission in New Jersey after he devised a scheme to get a bigger cut of fees from personal injury suits from his law firm.”
• “Gareth David DeSantiago-Keene was issued a three-month suspension after he allowed a client to set up an account on the state judiciary’s eCourts system in his name.”
• “Two attorneys have been disciplined in separate cases after demonstrating disloyalty to their law firms. A Vineland lawyer received a suspension for plotting a takeover of a branch office of her firm, and a Philadelphia lawyer was hit with reciprocal discipline for a scheme to get a bigger share of the fees in his firm’s personal injury cases.”
• “Nancy Martellio was suspended three months for her efforts to take over a branch office of her firm. Martellio worked for Goldenberg, Mackler, Sayegh, Mintz, Pfeffer, Bonchi & Gill when she was asked to open a new office for the firm in Vineland. She established the new office in 2012 and worked there until 2015. Martellio thought, wrongly, that the firm was planning to shut down the Vineland office after the managing partner sent out a memo discussing streamlining, according to court records.”
• “Court records show that on April 10, 2015, she had the office locks changed and did not inform the firm of the change. Three days later, she incorporated the name Law Office of Nancy Martellio at the Vineland address used by the Goldenberg Mackler office.”
• “On April 20, Martellio sent out letters to 150 clients on Goldenberg Mackler letterhead, announcing that the Vineland office was being taken over by her solo practice.”
• “The Disciplinary Review Board found that the client letter that Martellio sent out contained material misrepresentations and omissions that made it misleading. And her false representation to the landlord that she was authorized to terminate the lease on the Vineland office was forgery, and against the law, though she was not charged with a crime.”
• “‘There is no evidence that Goldenberg Mackler was planning to close its Vineland office or to transfer client files to the Atlantic City location. To the contrary, the record reflects that [the firm] never planned to close its Vineland location and still maintains a presence in Vineland. Therefore, by virtue of respondent’s intentionally misleading letter, she provided [the firm’s] clients with information based on her misguided perception, which she intentionally chose not to fact-check,’ the DRB said.”

“SMART COMMUNICATIONS, HOLDING, INC. v. GLOBAL TEL-LINK CORPORATION” —

• “Before the court is Plaintiffs’ motion to disqualify the Mette Evans and Woodside Law Firm as counsel for the York County Defendants, and to reassign this and the related patent case1 to District Court Judge Christopher C. Conner, who was formerly presiding over both actions until he recused. (Doc. 23.) For the following reasons, the court will grant Plaintiffs’ motion to disqualify counsel, but deny Plaintiffs’ motion to reassign these cases.”
• “On November 3, 2021, two attorneys from Mette Evans and Woodside (“MEW”) entered their appearances on behalf of York County, YCP, and Mr. Ogle (collectively, ‘the York Defendants’) in this action. (Docs. 14, 18.) The next day, Judge Conner entered an order in this case stating that because an attorney from MEW entered an appearance and the law firm was listed on his conflict list,3 he would recuse. (Doc. 19.) The order further stated that because the patent case was related to the instant case and that reassignment of both would further the interests of justice and judicial economy, that he was likewise recusing himself from the patent case. (Id.) Both cases were reassigned to the undersigned in accordance with the court’s assignment policy.”
• “The Third Circuit Court of Appeals has not established the standard to apply when deciding whether to disqualify an attorney whose appearance has resulted or will result in a judge’s recusal. Other circuits have considered the question and held that disqualification may be warranted based upon consideration of certain circumstances. See, e.g., In re BellSouth Corp., 334 F.3d 914, 962-65 (11th Cir. 2003) (applying the factors test set forth in Robinson v. Boeing Co., 79 F.3d 1053 (11th Cir. 1996) even though the disputed attorney’s appearance occurred at the outset of the case rather than interrupting it after substantial judicial investment);”
• “Potential for Manipulation and Impropriety. This last factor is elusive, but important in the analysis of the instant motion to disqualify… As discussed above, judge shopping and manipulating the random assignment of judges constitutes a threat to the orderly administration of justice. Litigants should not be permitted to utilize disqualification of a judge as a trial strategy. McCuin, 714 F.2d at 1258. Furthermore, there is a concern that judge-shopping could ‘become an additional and potent tactical weapon in the skilled practitioner’s arsenal.’ Selkridge, 360 F.3d at 168.”

“Judicial Ethics Opinion 21-171” —

• “After the inquiring judge told their administrative or supervising judge (AJ/SJ) about a law firm’s attempted ex parte communication, the law firm started making complaints about the inquirer to the AJ/SJ.”
• “Although the inquiring judge states that some or all of the law firm’s claims are clearly contradicted by documentary evidence, the AJ/SJ has issued an administrative order assigning the law firm’s cases elsewhere and has declined the judge’s recent request to discontinue it. The judge now asks about potential disqualification and/or disciplinary obligations the judge may have with respect to the law firm.”
• “The judge first asks, ‘if the administrative order is lifted, should I consider recusing myself on all cases with this specific firm?'”
• “We cannot answer questions that will be subject to multiple factual variations (see e.g. Opinions 16-85; 15-137). Here, the question is too hypothetical and speculative because neither we nor the inquiring judge can know what circumstances will exist if the administrative order is discontinued. We must therefore decline to respond (see Opinions 17-140; 19-63).”
• “Finally, the judge asks if they must ‘report this attorney’s ongoing untrue complaints and ex parte discussions with another judge.'”
• “With respect to the alleged misconduct of the law firm or its attorney(s), on the facts presented, we believe it is entirely in the inquiring judge’s discretion to determine if the judge has information indicating a ‘substantial likelihood’ a lawyer committed a ‘substantial violation’ of the Rules of Professional Conduct (22 NYCRR 100.3[D][2]). [1] Unless the judge concludes both prongs are met, the judge need not take any action at all with respect to the alleged misconduct.”
• “Conversely, if the judge concludes both prongs are met, the judge must take “appropriate action” (id.). The question of what action, if any, is appropriate under the circumstances is likewise left to the sole discretion of the inquiring judge (see Opinions 19-57; 16-159).”

Published a several months ago (even the best of us don’t always keep up on our risk reading lists…), this white paper crafted by a “who’s who” of information governance experts: “Client Information Governance Requests: How the Landscape Has Changed” —

• “The Law Firm Information Governance Symposium (LFIGS) wrote our seminal white paper on Outside Counsel Guidelines (OCGs) in 2014 and has since added to it with entries in 2016 and 2018.”
• “Client guidelines may come in the form of OCGs, engagement letters or client agreements and, collectively, are referred to as Client Information Governance Requirements (CIGRs). Our papers discuss the opportunities for law firms provided by CIGRs and how Information Governance (IG) professionals can help promote various initiatives by focusing on the topics that clients care about.”
• “In addition, we’ve included a myriad of practical and specific assistance, such as best approaches for setting up CIGR intake procedures, some typical client technology requirements, and ways to better partner with your General Counsel. Chances are, if you have a specific question related to CIGRs, we’ve covered it before or it’s addressed in this paper.”
• “The goal of this paper is to dive into some topics in more detail while also exploring some new topics that have become increasingly important. Where in past papers we briefly touched upon Firm priorities and initiatives that can be furthered with CIGRs as featured considerations, in this paper we delve further into how you can leverage client mandates in a big way. We also get into some best practices by giving anecdotal evidence on what’s been working, what hasn’t, and what we plan to try next.”
• “The last three years have brought a lot of changes to the information landscape and with that comes meaningful changes to the mandates issued by our clients. To that end, we take a look at the Association of Corporate Counsel (ACC) guidelines and how best to develop a standard approach. We also explore the new normal of remote work and how clients are changing their requirements to account for this new way of working.”
• Topics Include:
  • Engagement Letters v OCGs
  • Impact of CIGRS on Firm Priorities and Initiatives
  • OCG Provisions Impacting Multiple Administrative Groups
  • Workflows and Tools
  • Proven Practices
  • Remote Working Environments and Their Impact on CIGRS
  • Standardization and Association of Corporate Counsel (“ACC”) Guidelines

“Stop Saying ‘Powwow’ for Meeting: CMG Adds Language Policy to Outside Counsel Guidelines” —

• “Nestled alongside the run-of-the-mill policies outlined in Cox Media Group Inc.’s latest outside counsel guidelines, which include such classics as how to get reimbursed for overpriced chocolate-covered peanuts from the hotel minibar and rules on confidentiality, is a curious section on diversity, equity and inclusion that focuses on language.”
• “When he was crafting the policy, CMG general counsel Eric Greenberg realized he had a unique opportunity to, as he says, ‘have some influence on how people think about and use language,’ more specifically, inclusive and non-inclusive language. “
• “‘I’ve been in meetings with people who have used language like, ‘We had a big powwow and now we’ve made a decision,’’ Greenberg said. ‘Then you have things that are seemingly more benign, where people talk about information barriers as a ‘Chinese wall,’ or describe regulatory compliance as being ‘kosher,’ which I think people don’t even think twice about'”
• “CMG’s policy includes examples of non-inclusive language that pop up frequently in daily life, from addressing letters and emails to ‘ladies and gentlemen’ and using ‘Nazi’ or ‘lynch’ to describe aggressive or punitive positions or tactics to asserting that someone is ‘deaf’ to a concern or ‘blind to the truth.'”
• “‘Our goal is neither to police nor mandate the language of our counsel, but to raise the point as a matter of awareness and share with you illustrations of our belief that inclusion is critical in thought, action—and word,’ the guideline states. ‘Moreover, we note that in this engagement, you may be literally speaking on behalf of CMG. Accordingly, we hope that our values of inclusivity will be reflected in the way that we communicate.'”
• “Since CMG unveiled its new guidelines in January, Greenberg said he hasn’t noticed much of a reaction from his outside counsel on the language policy, though other in-house leaders seem enthusiastic about the idea.”
• “One of CMG’s outside lawyers, Wiley Rein partner Ari Meltzer, said the language policy ‘goes above and beyond what we would typically see in outside counsel guidelines,’ but noted that he’s not had to make any language changes in contracts or otherwise as a result of the guideline.”
• “Another CMG outside counsel, Sidley Austin partner Hille Sheppard, stated that the language guidelines ‘capture, in an elegant and non-preachy manner, the true essence of what DEI is and should be, why it is important, and how we can all advance it together in authentic, significant and sustainable ways… CMG’s language guidelines opened my eyes in several respects, and I have forwarded them to Sidley’s training and development professionals to incorporate into our lawyer programming.'”

“How One Oligarch Used Shell Companies and Wall Street Ties to Invest in the U.S.” —

• “Using a network of banks, law firms and advisers in multiple countries, Roman Abramovich invested billions in American hedge funds.”
• “In July 2012, a shell company registered in the British Virgin Islands wired $20 million to an investment vehicle in the Cayman Islands that was controlled by a large American hedge fund firm.”
• “The wire transfer was the culmination of months of work by a small army of handlers and enablers in the United States, Europe and the Caribbean. It was a stealth operation intended, at least in part, to mask the source of the funds: Roman Abramovich.”
• “For two decades, the Russian oligarch has relied on this circuitous investment strategy — deploying a string of shell companies, routing money through a small Austrian bank and tapping the connections of leading Wall Street firms — to quietly place billions of dollars with prominent U.S. hedge funds and private equity firms, according to people with knowledge of the transactions.”
• “The key was that every lawyer, corporate director, hedge fund manager and investment adviser involved in the process could honestly say he or she wasn’t working directly for Mr. Abramovich. In some cases, participants weren’t even aware of whose money they were helping to manage.”
• “The manager of the fund, which oversaw billions of dollars but wasn’t a big name on Wall Street, provided a detailed accounting of his involvement on the condition that neither he nor his firm be named.”
• “The fund manager hired Mourant, an offshore law firm, to get the paperwork for the Cayman vehicle in order. The managing partner of Mourant did not respond to requests for comment.”

SRA on “The importance of complying with Russian financial sanctions” —

• “In the wake of the UK Government imposing sanctions on Russia, we want to remind you and your firm of the importance of your role in ensuring all measures and restrictions are complied with. We have also set out the actions we are taking to both assess and support compliance.”
• “Breaching the financial sanctions requirements can result in criminal prosecution or a fine by OFSI. However, our Code of Conduct also requires all firms we regulate to keep up to date with and follow the law and regulation relating to their work, and we would take disciplinary action should we see evidence of serious non-compliance.”
• “Your firm must have appropriate policies in place to ensure you comply with sanctions legislation, including carrying out regular and appropriate checks of sanctions lists. We expect you to take your responsibilities under the regime to safeguard the UK and protect the reputation of the legal services industry seriously.”
• “The financial sanctions regime prevents law firms from doing business or acting for listed individuals, entities or ships (without a licence). Firms should check the financial sanctions lists before offering services or undertaking transactions for clients. If an individual is on the sanctions list and subject to an asset freeze, firms may not deal with those funds or make resources available to that person.”
• “We are commencing a process of spot checks on firms to assess compliance with the financial sanctions regime.”
• “You must take a risk-based approach to preventing money laundering, meaning you must understand the risks of how your business may be used to launder money and take steps to appropriately mitigate those risks.”
• “Concerns have been raised about Strategic litigation against public participation (SLAPP), the term used to describe misuse of the legal system to discourage public criticism and reporting or action to address serious concerns (such as corruption/money laundering). It can include preliminary steps as well as actual litigation, for example letters from firms suggesting that litigation may follow.”
• “The Rule of Law and our legal system provides that there is a right to legal advice and representation for all. However, you must ensure that proceedings are pursued properly and that your duties to your client don’t override your public interest obligations and duties to the court. That means for example you must not bring cases that are not properly arguable; bring excessive or oppressive proceedings; or mislead or take advantage of others.”

“Ethics, Sanctions or Reputation? Why Are Firms Really Leaving Russia?” —

• “That all 25 major commercial law firms with a presence in Russia have confirmed plans to leave in such a short space of time is nothing short of monumental. Even two weeks ago few would have predicted such a rout. But it would be a mistake to believe they are all thinking the same way.”
• “Law.com International’s U.K. team discussed these exact questions and more on a webinar this week all about the war and its implications for the industry… A generous interpretation of events would surmise that firms have pulled out for ethical reasons. They do not want to operate in a regime that wages unprovoked war on a democratic state. Some firms – though not many – have said as much. One London partner is travelling by car to Poland to personally deliver sleeping bags and medical kit to Ukrainian refugees.”
• “A more cynical view would be that the decision is simply a commercial one. Sanctions have forced firms to stop acting for many clients and the Russian operations weren’t very profitable anyway. An excellent analysis of limited liability partnership accounts by Jack Womack found most firms for which data is available had seen their Russia revenues declining and most had suffered a loss at least once in recent years.”
• “An even less charitable view is that firms are thinking only about their reputation. It doesn’t look good to graduates and clients and therefore we need to follow the herd and be seen to be taking action. Particularly as companies (and indeed clients) like BP, Shell, Coca Cola, PepsiCo and McDonalds—companies not exactly known for their glittering ethical records—are pulling out.”
• “Likely, all three issues will have been factored into the decisions to close in Moscow. But if a ceasefire does happen and the war ends – and let’s hope it does soon – then the question some firms will be asking is when they can re-open in the country. At that point we’ll learn what was motivating each firm.”

“German Law Firm to Retain Moscow Presence in Rare Move” —

• “German corporate law firm Advant Beiten is to maintain its Moscow office, in a sharply counter-narrative move that comes at a time when most other Western firms are exiting Russia.”
• “Though its Moscow office remains open, a spokesperson said the firm had ceased work for clients which have any connection to the Russian state or are affiliated with any Russian state-owned enterprises, and would not be accepting new instructions from any such clients.”
• “The Moscow office currently has one partner, 14 lawyers and tax advisors, for a total headcount of 38 (including business support staff), according to another spokesperson. It opened the office in 1992.”
• “Like many other firms, Advant Beiten has condemned the conflict and is engaging in humanitarian support for Ukrainians.”
• “Meanwhile, Gleiss Lutz, one of Germany’s largest full-service firms with six offices in Germany plus Brussels and London, said that it does not have an office in Russia and stopped accepting mandates immediately after February 24, then the invasion began. “

Other interesting, recent stories I’ve noted, which may be of interest:

• “After the Moscow Exodus, Where Will Big Law Go?“
• “‘They’ve Shattered the Playbook:’ MoFo Lawyers on Response to Russian Sanctions for War on Ukraine“

Just honored as the 2022 recipient of the Michael Franck Professional Responsibility Award, Lucian Pera reminds us: “Ethics: The Power of the Disengagement Letter“ —

• “Most lawyers understand the importance of engagement letters. Sometimes they’re even required by our ethics rules or our law firms. But fewer lawyers understand the power of a simple letter or email to a client saying our representation is over—the disengagement letter.”
• “In 2001, Plum Creek Timber retained a large, national law firm, Holland & Knight LLP, to work on real estate matters. Over the next 14 years, the firm worked on about 20 matters for the client. Those concluded in 2015.”
• “In 2015, Plum Creek merged with Weyerhaeuser, which then engaged the law firm on a Florida utilities matter. That engagement ended on June 14, 2017. Two days later, a careful firm lawyer emailed Weyerhaeuser…This should bring the matter to a close. It has been our pleasure to represent Weyerhaeuser. Please let us know if we can be of further assistance. The lawyer’s Weyerhaeuser contact responded by email, ‘[i]t is nice to bring this to a close.'”
• “Fast forward about a month. Weyerhaeuser revealed an ‘off-gassing’ issue with fire-resistant joists it produced. They allegedly emitted dangerous levels of formaldehyde. Another client of the firm, Dream Finders Homes, had purchased some of these joists. They asked the firm to advise on legal options.”
• “In running a conflict check, the firm found its prior—and very recently concluded—Weyerhaeuser work. The firm concluded that, under Rule of Professional Conduct 1.9(a) concerning former clients, it was free to represent Dream Finders adverse to its former client Weyerhaeuser because Dream Finders’ joists issue was not ‘substantially related’ to any of the firm’s former Weyerhaeuser work. The firm took on the Dream Finders matter, and sued Weyerhaeuser in December 2017.”
• “…Weyerhaeuser was unhappy with the firm’s involvement and moved to disqualify it. The district court’s ruling on that motion offers a potent reminder of the power of a disengagement letter.”
• “Most importantly, the district court quickly determined that Weyerhaeuser must be treated as a former client of the firm, not a current client. After all, the firm’s very clear email (quoted above) established that the firm’s representation was at an end. The firm’s clear written disengagement allowed the court to reach this decision quickly and definitively.”
• “As a practical matter, if the firm had not sent a disengagement email here, the district court would have been required to take on a detailed factual analysis to determine whether Weyerhaeuser was then a current or former client.”
• “The court would have looked at all kinds of facts surrounding the matter to decide whether, in the few weeks between the utility order attached to the email and the firm’s taking on the Dream Finders matter adverse to Weyerhaeuser, the attorney-client relationship with Weyerhaeuser had continued. A client in Weyerhaeuser’s position often then offers affidavit proof that they had continued to believe—quite reasonably, they might say—that the firm still represented them. That type of proof can be hard to overcome.”
• “My advice: Write from a place of gratitude… Do you have to write, ‘This matter is now over, and we are no longer your lawyers’? Or ‘Please consider yourself disengaged. This attorney-client relationship is terminated’? Of course not.”
• “System Solutions Can Help… Knowing that won’t always work, also think about a policy that identifies all open matters in your office that have had no activity in, say, four or six months, and then asks the lawyer responsible for these matters to close them—and send a form disengagement letter.”

“Jones Day Cleared to Represent J&J’s Bankrupt Talc Subsidiary” —

• “A bankruptcy judge authorized Jones Day to continue representing Johnson & Johnson’s talc subsidiary in chapter 11, rejecting arguments that the law firm can’t be trusted to look out for the interests of cancer victims because it designed the strategy to limit J&J’s liability.”
• “A bankruptcy judge authorized Jones Day to continue representing Johnson & Johnson’s talc subsidiary in chapter 11, rejecting arguments that the law firm can’t be trusted to look out for the interests of cancer victims because it designed the strategy to limit J&J’s liability.”
• “Judge Michael Kaplan of the U.S. Bankruptcy Court in Trenton, N.J., said on Tuesday that Jones Day’s past work for J&J on a transaction that sent its talc-related liabilities into chapter 11 doesn’t mean the firm has a disqualifying conflict of interest, as injury lawyers allege.”
• “Judge Kaplan said Jones Day’s work for J&J, which ended two days before the recently-formed talc subsidiary filed chapter 11 in October, doesn’t mean the law firm will favor the interests of the parent company over its bankrupt unit, LTL Management LLC.”
• “Instead, the judge said evidence shows that LTL and J&J have a shared interest in settling the talc liability in chapter 11. That fact ensures that neither Jones Day nor LTL could give priority to a competing interest favoring J&J that could influence the bankruptcy case, Judge Kaplan said.”
• “The committees representing talc claimants argued the restructuring that created LTL was executed for the purpose of capping J&J’s talc liability, which by extension pits Jones Day against plaintiffs seeking to recover as much money as they can from the consumer goods giant.”
• “Judge Kaplan disputed those allegations and said the restructuring that created LTL won’t be central to the chapter 11 case. The key issue is whether talc claimants and LTL can reach an agreement that resolves LTL’s liability, he said.”

And the latest from Bill Freivogel:

• Simmons v. Royal Newfoundland Constabulary Public Complaints Comm’n, 2022 NLSC 27 (S. Ct. Newf. & Lab. Feb. 24, 2022).
  • “Two persons filed a complaint with the Commission regarding the conduct of three police officers who had arrested them (“The Incident”). Lawyer A, a member of Firm X, appeared for one of the officers (“Simmons”). The problem was that Lawyer B, also a member of Firm X, was representing a Sergeant Cole, Simmons’ supervisor, in other proceedings arising out of The Incident.”
  • “Cole was not present at The Incident and is not a party in this proceeding. However, during The Incident they consulted by telephone about what Simmons should do. Given this relationship, the adjudicator assigned to hear this case ruled that Lawyer A had a conflict of interest and could not represent Simmons.”
  • “In this opinion the court reversed the adjudicator. The court discussed the possible ways Cole and Simmons might be adverse, but could not come up with a scenario in which either of them would likely be prejudiced by A’s involvement. Moreover, both Cole and Simmons had consented in writing to A’s involvement. Given the limitations of this site, our discussion leaves out a lot, even as to the conflicts analysis. Among other things, the court discusses at length the applicability of the Supreme Court’s decisions in Neil, MacDonald Estate, McKercher, and Strother.”
• Mehra v. Morrison Cohen LLP, 2022 WL 618995 (N.Y. App. Div. 1st Dept. March 3, 2022).
  • “This case involves a business relationship between Plaintiffs, Mr. and Mrs. Mehra, and Jonathan Teller. In 2014 Defendant Law Firm advised the Mehras and Teller how to reorganize their relationship. In 2019 Law Firm allegedly turned on the Mehras and assisted Teller in disadvantaging the Mehras. In this case the Mehras are suing Law Firm (1) for malpractice in negligently advising the Mehras about the reorganization in 2014, and (2) for breach of fiduciary duty in 2019 (harming the Mehras being a conflict).”
  • “The trial court granted Law Firm’s motion to dismiss, holding that the malpractice claim was filed too late, and that the conflict claim failed because the Mr. Mehra had signed an advance waiver, 2020 WL 5874858 (N.Y. Cty. Oct. 2020). The Mehras appealed the second holding. In this opinion the appellate court reversed the dismissal of the fiduciary duty claim, holding, in effect, that the efficacy of the waiver was a fact issue.”
• Federal Ins. Co. v. Pixarbio Corp., 2022 WL 623735 (S.D.N.Y. March 3, 2022).
  • “Federal brought this interpleader action against a number of parties, including Pixarbio and several of its law firms. Federal is requesting the court to determine where the proceeds of a Federal’s “securities liabilities” policy should be paid. One of the parties was a law firm (The Mintz Fraade Law Firm P.C.). Other parties in the case claimed Mintz Fraade should not receive any of the funds because it had a conflict of interest.”
  • “This whole set of circumstances began when the SEC commenced an investigation of Pixarbio and several of its principals. The SEC told Mintz Fraade that it, too, was a party of interest in the investigation. Nevertheless, Mintz Fraade represented Pixarbio and two officers in the investigation. In this opinion the court ruled that the conflict was unwaivable and that Mintz Fraade should receive no share of the Federal payment. While Mintz Fraade and the Pixarbio parties were parties to the same SEC investigation, it is unclear what Mintz Fraade’s role was in the conduct giving rise to the investigation. Thus, this is not a classic underlying work situation. Nevertheless, because of the diversity of interests among Mintz Fraade and its clients, the conflict, being unwaivable, violated N.Y. Rule 1.7.”