Bressler Risk Blog

Here’s the latest from Bill Freivogel, ever vigilant in his reading and research:

• Turnbow v. Hiegel Bldg. Solut., LLC, 2024 Ark. App. 438 (Ark. App. Sept. 18, 2024).
  • “Hiegel is suing the Turnbows to collect amounts owing from construction of Turnbows’ house. Because the Turnbows’ lawyer (‘Lawyer’) had represented other companies in which Hiegel’s owner (‘Owner’) had an interest, Hiegel moved to disqualify Lawyer in this case. The trial court granted the motion.”
  • “In this opinion the appellate court reversed. The court applied Rule 1.13 according to its terms and said because Lawyer never represented Owner individually on any matters related to this one, no conflict. Very fact-specific. The court mentioned Arkansas’ strange adherence to an appearance-of-impropriety test, but found no such violation here.”
• Drake Univ. v. Des Moines Area Cmty. Coll. Found., No. 4:24-cv-00227-SMR-SBJ (S.D. Ia. Sept. 9, 2024).
  • “Drake sues Foundation for trademark infringement and related causes. Lawyer, now at Firm 2, represents Foundation. Lawyer was at Firm 1 from 2000 to 2020. Firm 1 has done Drake’s IP work for many years, including work on the trademarks in question. Drake has moved to disqualify Lawyer on both current-client and former-client principles.”
  • “In this opinion the court denied the motion. As to current client, the court relied on USPTO representation arcana (read the opinion). As to former client, the court found that Drake had not shown that Lawyer, at Firm 1, had learned anything relevant to this case.”
• Naylor v. BAE Sys. Inc., 2024 WL 4112322 (E.D. Va. Sept. 5, 2024).
  • “Plaintiff is an employee of Defendant. Defendant administers Defendant’s benefit plan for employees. Plaintiff brought this case claiming Defendant has mismanaged the plan. Law Firm is representing Defendant regarding Defendant’s administration of the plan and in this case.”
  • “Plaintiff moved to disqualify Law Firm in this case because in its plan advisory role, Law Firm also represents Plaintiff. In this opinion the court denied the motion to disqualify, holding that, usually, the lawyer for a plan and its administrator does not represent a plan’s beneficiary — here, Plaintiff.”
• Nova Oculus Canada Mfg. ULC v. Sather, 2024 ABKB 517 (CanLII) (Ct. K.B. Alb. Aug. 27, 2024).
  • “Order denying a motion to disqualify Law Firm. The opinion has no apparent precedential value, so no extended discussion here. It is a workmanlike treatment of: (1) Was there a lawyer-client relationship?; (2) Was it a near client relationship?; and (3) Did a Law Firm owe a duty of confidentiality to a non-client?”
  • “The case is a dispute between two companies over their past dealings. During some of those past dealings Law Firm lawyer was the only lawyer involved. Only the responding company had an engagement agreement with Law Firm, and paid Law Firm. Very fact-intensive.””
• Gill v. JUS Broad. Corp., 2024 WL 4107251 (E.D.N.Y. Sept. 6, 2024).
  • Plaintiff listed Expert Witness on the valuation of a company. Defendants moved to preclude Expert’s testimony on a number of grounds. One ground was that Expert had a conflict because ‘he and Plaintiff’s counsel refer business to and perform services for each other.'”
  • “While that may be grist for cross-examination, it is not grounds for exclusion. For exclusion, the conflict must be “extraordinary.” See, El Ansari v. Graham, 2019 WL 3526714 (S.D.N.Y. Aug. 2, 2019).”

“[New York] Ethics Opinion 1274: Conflicts of interest, former clients, government lawyers”

• “A lawyer employed in the counsel’s office of a state agency would not have a conflict in representing the agency in an enforcement action against a client the lawyer had formerly represented in private practice unless the lawyer would normally be expected to have acquired confidential information in the course of the lawyer’s prior representation that was material to the enforcement action. If there were a conflict, the conflict would be imputed to the counsel’s office, and screening would not suffice to avoid imputation, absent consent of the former client.”

Ethical issues for lawyers related to the transition to the State Public Defender system: “IDAHO STATE BAR FORMAL ETHICS OPINION NO. 137 September 18, 2024” —

• “Can a reduction in a lawyer’s compensation create a financial issue for the lawyer that may result in a potential conflict of interest? Yes.”
• “Must a lawyer seek withdrawal from a pending case if there is a significant risk that the lawyer’s representation of a client will be materially limited due to a financial personal interest conflict of interest? Yes.”
• “Lawyers whose financial compensation will decrease from their current county pay rate face a potential concurrent conflict of interest. The lawyer must assess whether there is a significant risk that their representation of clients will be materially limited due to their own personal financial interests, i.e., a reduction in pay rate to perform the same legal services. If the lawyer determines that there is a significant risk that their representation of one or more clients will be materially limited because of their own personal interests, then the lawyer has a concurrent conflict of interest under I.R.P.C. 1.7(a)(2).”
• “Some conflicts may be consentable under I.R.P.C. 1.7(b). However, each subpart of I.R.P.C. 1.7(b) must be met for a lawyer with a concurrent conflict of interest to continue the representation. I.R.P.C. 1.7(b)(1) requires the lawyer to reasonably believe that the lawyer will be able to provide competent and diligent representation to each affected client notwithstanding the concurrent conflict of interest.”
• “This may be difficult for a lawyer to “reasonably believe” when the conflict of interest involves the lawyer’s personal financial interest. If the lawyer does not reasonably believe that they can provide competent and diligent representation due to their own personal financial circumstances, informed consent from each affected client in writing under I.R.P.C. 1.7(b)(4) will be ineffective to allow the representation to continue because I.R.P.C. 1.7(b)(1) cannot be met in that instance.”
• “Courts have broad discretion in whether to grant a motion to withdraw. If a court denies the lawyer’s motion to withdraw from the case, even if the lawyer’s request to withdraw is due to a clear conflict of interest, the lawyer must continue to represent the client. ‘When ordered to do so by a tribunal, a lawyer shall continue representation notwithstanding good cause for terminating
• the representation.’ I.R.P.C. 1.16(c).”

“Attorney conflicts, delays — seeking justice for Dan Markel continues” —

• “The Godfather’s Tom Hagen repped Vito and Michael Corleone; Maurice Levy, in The Wire, took on the causes of multiple members of the Barksdale crime family; Mob City’s Sid Kleinman served as defense for Bugsy Siegel and Mickey Cohen as well as other members of their crime syndicate; and of course in The Sorpanos, multiple lawyers including Neil Mink, Harold Melvoin, and Robert Baccalieri, represented the (often conflicting) interests of numerous family members.”
• “On TV, it may be easier to cast one lawyer for all members of a crime family across episodes to build continuity and allow fans to benefit from familiar characters. But in real life, it just doesn’t happen. And shouldn’t.”
• “Unless you’re Florida defense attorney Daniel Rashbaum, who took up the flag, collected the fees – and has now fallen on that predictable sword – in his representation of multiple members of a family accused (and in one case convicted) of murdering FSU law professor Dan Markel.”
• “Markel was killed in July 2014 by hitmen Sigfredo Garcia, sentenced to life, and Luis Rivera, who pled and cooperated, sharing how the two were hired to kill Markel by members of his ex-wife Wendi Adelson’s family. Wendi has been named as an unindicted co-conspirator. Her brother, Charlie Adelson, was convicted in November 2023, and now her mother, Donna Adelson, awaits trial. The hitmen were linked to the Adelson family through Katherine Magbanua, Charlie’s then-girlfriend and the mother of Garcia’s children.”
• “Following a sting operation and the arrests of the hitmen in 2016, Rashbaum entered the scene first as Donna’s lawyer. Charlie hired David Oscar Markus (who successfully defended former Tallahassee Mayor Andrew Gillum and members of the Cali Cartel).”
• “But shortly after Charlie’s arrest in April 2022, Markus withdrew as his counsel, and Rashbaum stepped in to take his place. Donna and her husband Harvey found a new attorney to speak for them as needed – at least on paper. In reality, the connection between Donna and Rashbaum only grew stronger during Charlie’s incarceration. Publicly released jail calls suggest extensive communication between Donna and Rashbaum through this time, with Donna using the lawyer for personal counsel and serving as an intermediary between the mother and son on Rashbaum’s secure, unrecorded jail line.”
• “But her plans weren’t foolproof, despite Donna’s best efforts to avoid incriminating content on monitored lines. On one recorded call – captured a few days after Charlie’s conviction – Donna can be overheard speaking after she thought the call had dropped. She and they were discussing their plans to flee to a non-extradition country and hoping to avoid one possibility Rashbaum warned of – that while they may get out in time, they could get stopped at the airport. That’s precisely what happened, too.”
• “The entire growing universe of legal experts covering Markel’s murder online gave a collective gasp when Rashbaum reentered as Donna’s counsel. Here’s why: multiple layers of conflict are inherent when one lawyer tries to represent various members of the same family or criminal syndicate, even if sequentially. Doing so presents significant ethical, legal, and practical challenges.”
• “Lawyers are bound by ethical obligations to zealously represent the best interests of their clients. When a lawyer represents multiple members of the same family or conspiracy, their loyalty can become divided. For example, one family member might cooperate with law enforcement, while another might prefer to fight the charges in court. The lawyer’s duty to both clients become compromised if those strategies conflict. Representing both clients would likely lead to a situation where the interests of one client are directly at odds with the others.”
• “All of this was explained to Donna Adelson by Judge Stephen Everett when she first re-retained Rashbaum as her “new-again” attorney. Donna acknowledged the conflict and waived it. Repeatedly. So, too, did Charlie Adelson – or so the court was led to believe.”
• “Rashbaum insists that Charlie had given Rashbaum his verbal waiver, permitting his sort-of-former lawyer to represent his mother in her trial. And that remained the case until today – Sept. 17, the first day of what would have been jury selection in Donna’s trial. More than 100 prospective jurors were already in the courthouse when it was revealed that Charlie decided to revoke his waiver, permitting Rashbaum to represent his mother.”
• “Worse, Rashbaum didn’t even have such a waiver in writing.”
• “‘Rashbaum’s insistence on representing both Donna and Charlie despite a clear conflict of interest and against common sense has only increased taxpayer cost in prosecuting the case and delayed, once again, justice for Dan Markel, his family, his loved ones, and members of the public who patiently wait for full justice to be served,’ said Tamara Demko, an attorney who serves as a co-manager of Justice for Dan, Inc.”
• “For his part, Rashbaum may have some new concerns on his mind. ‘I’m not worried about the Constitution,’ he was overheard saying on a live mic before one of Tuesday’s conflict hearings. ‘I’m worried for me now, with the Bar,’ it sounds like he says.”

“NJ Health System Repeats Call For Proskauer DQ” —

• “New Jersey health network CarePoint Health Management Associates LLC has redoubled its call for a New Jersey federal judge to disqualify Proskauer Rose LLP from representing competitor RWJBarnabas Health Inc. amid antitrust claims brought by CarePoint, arguing CarePoint’s prior representation by Proskauer is substantially related to the case.”
• “CarePoint acknowledges the two sides previously agreed Proskauer could represent RWJBarnabas Health, but CarePoint’s Tuesday reply in support of its motion to disqualify counsel argues Proskauer misconstrued or misunderstood what knowledge it had and how that knowledge would be used.”
• “‘At the start of this litigation, Proskauer antitrust counsel, on behalf of Proskauer and Barnabas, definitively represented to CarePoint counsel that this antitrust matter is not related in the slightest to Proskauer’s prior representation of CarePoint,’ CarePoint says in the reply brief. ‘Proskauer did not reveal that it would make information at the heart of its prior confidential representation of CarePoint — decisions regarding related-party payments — a central part of Barnabas’s litigation strategy two years later.'”
• “While a prior Proskauer counsel now declares that even he initially believed that the Proskauer’s past representation of RWJBarnabas Health was not related to this antitrust matter, CarePoint said, information that came to light amid discovery proved that understanding was unfounded. Now, CarePoint asserts, Proskauer has shifted gears, claiming both sides should have known all along.”
• “‘Proskauer now claims that CarePoint knew or should have known all along what Proskauer claims it did not know — that Proskauer was turning against its former client on substantially-related matters,’ the brief states.”
• “CarePoint sued RWJBarnabas in September 2022, accusing the rival health system of conspiring to monopolize the acute care market in Hudson County, New Jersey. According to the suit, RWJBarnabas opened a stand-alone emergency department near a CarePoint hospital in an attempt to siphon patients and doctors from the competitor’s facilities and eventually thwart a sale of the hospital system.”
• “When RWJBarnabas hired Proskauer, the two sides agreed to the representation, with Proskauer instituting a ‘screen’ out of what the firm later called an abundance of caution. The firm had previously represented CarePoint in a matter related to COVID-19 relief funds and the CARES Act.”
• “‘When Proskauer told CarePoint’s counsel that it intended to enter its appearance in the case, CarePoint readily consented,’ RWJBarnabas said in its opposition brief Aug. 20. ‘Fast forward two years, and CarePoint has had a change of heart. Proskauer, it says, has been too aggressive in pursuing discovery into the funds CarePoint funneled to its founders at the expense of its patients. That discovery, it believes, vitiates its prior consent and warrants disqualification. It does not.'”
• “Despite calling for Proskauer to step aside based on new information, RWJBarnabas asserted, ‘CarePoint does not identify a single relevant fact it was unaware of when it provided consent,’ and ‘does not deny that it had full knowledge of the scope of the prior representation.'”
• “In its Tuesday reply, CarePoint says Proskauer’s strategy has had the effect of making its prior representation of CarePoint relevant to the RWJBarnabas antitrust matter, as the firm has called into question payments made to CarePoint’s founders.”
• “‘Proskauer can mislabel and minimize its prior representation as limited ‘CARES Act advice,’ but it is beyond dispute that Proskauer received tens-of-thousands of dollars to provide advice to CarePoint regarding related-party payments and CarePoint’s finances,’ CarePoint’s Tuesday brief states. ‘Proskauer has rendered the prior representation substantially related to this case by making Barnabas’s case all about related-party payments rather than antitrust.'”

“New rules for court-appointed and certified mediators” —

• “The Supreme Court [of Florida], acting September 12 on the recommendations of its Committee on Alternative Dispute Resolution Rules & Policy, has approved a series of revisions to rules that govern court-appointed and certified mediators.”
• “Amendments to Rule 10.340 (Conflicts of Interest) add a provision to subdivision (b) (Burden of Disclosure) that ‘requires potential conflicts of interest to be disclosed in a way that lets parties exercise their self-determination rights.'”
• “A new subdivision (d)(Conflict of Interest) is added to explain circumstances that constitute clear conflicts of interest, and language clarifying restrictions is added to relettered subdivision (e) (Conflict During Mediation). A new subdivision (g) (Social Networking) is added ‘to explain how social media and social networks can impact conflict of interest determinations. Finally, a new committee note is added to explain changes to rule 10.340,’ the ruling states.”
• “‘Notably, in the proposal we published for comment, subdivision (b)(7) included the phrase ‘clear conflict of interest,’ but the Committee revised its proposal to delete the word ‘clear’ in consideration of the comments received by the Court,’ the order states. ‘The amendment that we adopt omits the word ‘clear’ from the language of subdivision (b)(7).'”

“Foley & Lardner Must Face Ex-Clients’ Breach-Of-Duty Action” —

• “A Texas appellate court has reversed a decision that let Foley & Lardner LLP escape a suit filed by two partners in an oil and gas venture who allege that the firm failed to disclose conflicts of interest and misused their confidential information after representing them in several matters.”
• “In a memorandum opinion Tuesday, a three-judge panel of the First Court of Appeals ruled that a lower court erred when it dismissed Stephen Dernick and David Dernick’s suit, which had alleged breaches of fiduciary duty against Foley & Lardner, formerly Gardere Wynne Sewell LLP, and three attorneys. The Dernicks, who are brothers, are former Gardere clients, according to court filings.”
• “In their action, the Dernicks allege breach of fiduciary duty and other claims against Foley & Lardner and three attorneys who represented them in several matters, accusing the firm of failing to disclose conflicts of interest, placing the interests of other clients over their interests, and ‘improperly using the Dernicks’ confidences and confidential information,’ according to the decision.”
• “Among conflicts of interest asserted was the firm’s representation of Dernick Encore LLC, an oil and gas company that was formed by the Dernicks in 2010, in a Chapter 11 petition filed by the Dernicks after a dispute with a lender, the opinion said.”
• “The Dernicks contend that Foley & Lardner had a conflict because it engaged in actions adverse to their interests in the bankruptcy petition, including filing an adversary proceeding against its former clients that accused them of fraud and other claims, according to the opinion.”
• “Although the adversary proceeding and other disputes between the parties were resolved under a global settlement, the Dernicks filed their action against Foley & Lardner asserting breach of fiduciary duties they say they were owed because of the firm’s previous representation of them, according to the appellate panel’s ruling.”
• “Foley ‘represented Encore and other clients in claims that were substantially related to [Foley’s] representation of the Dernicks,’ the opinion said of allegations in the Dernicks’ 2021 suit. The firm ‘did so without adequately disclosing the conflict of interest to the Dernicks or obtaining their consent to engage in the joint representation.'”
• “‘We agree with the Dernicks that the TCPA is not implicated because their legal action is not based on or in response to appellees’ communications in the adverse proceedings, but rather their alleged actions and conduct in representing Encore adverse to the Dernicks — Foley’s alleged former clients — without disclosing such representation or seeking their prior consent, and also based on appellees’ alleged improper use of the Dernicks’ confidential information,’ Justice Veronica Rivas-Molloy wrote for the panel.”

“AML/CTF Amendment Bill: Implications for new and existing reporting entities” —

• “This has been one of the most impactful periods for legal and regulatory change in Australia for some time. Yesterday a bill was introduced to Parliament amending Australia’s anti-money laundering and counter-terrorism financing (hashtag#AML/CTF) laws to include lawyers, accountants and real estate professionals, among other sectors. Additionally, today changes to Australia’s hashtag#Privacy Act have been introduced. Such changes will have significant impact on many regulated entities.”
• “Oversight and Governance: Governing bodies (e.g. Boards and senior management) will be required to take reasonable steps to ensure the business is appropriately identifying, assessing, managing and mitigating money laundering and terrorism financing (ML/TF) risks.”
• “Risk Assessment: The existing requirement will be clarified to expressly require reporting to undertake and update ML/TF risk assessments.”
• “Customer Due Diligence (hashtag#CDD): There will be substantially redesigned obligations for initial customer due diligence (before designated services are provided) as well as for ongoing due diligence during the course of a business relationship.”
• “Reporting Group: The current concept of a ‘designated business group’ will be replaced with a ‘reporting group’ concept, imposing obligations and expanded liability on the ‘lead entity’ of a reporting group.”

Samuel Estreicher, professor, and Samual Ball, second-year JD candidate, at New York University School of Law, present an interesting analysis of: “Positional Conflicts Under ABA and New York Rule 1.7” —

• “The NYU Center for Labor and Employment Law is in the process of developing initiatives to help address the gap in access to civil counsel for low- and middle-income New Yorkers, particularly those who are ineligible for services through federally funded legal service providers but who still cannot afford to hire an attorney. Through law firm participation in a program providing pro bono representation short of litigation, workers could receive advice, assistance with negotiation, and other services. In conversations with management-side attorneys, as well as some direct services providers, fear of creating positional conflicts among firms representing companies was a reoccurring theme. We believe that it would be highly unlikely that this type of non-litigation representation could create a positional conflict under either the ABA’s Model Rules or New York’s Rules of Professional Conduct.”
• “In the case of the ABA Model Rules, the prohibition against positional conflicts originates in Model Rule 1.7’s general prohibition of concurrent conflicts of interest: ‘A lawyer shall not represent a client if the representation involves a concurrent conflict of interest. A concurrent conflict of interest exists if: (1) the representation of one client will be directly adverse to another client; or (2) there is a significant risk that the representation of one or more clients will be materially limited by the lawyer’s responsibilities to another client, a former client or a third person or by a personal interest of the lawyer.’ Ann. Mod. Rules Prof. Cond. Section 1.7. The annotation to Model Rule 1.7 describes a positional conflict as ‘when a lawyer’s successful advocacy of a client’s legal position in one case could be detrimental to the interests of a different client in another case.’ Ann. Mod. Rules Prof. Cond. Section 1.7. “
• “The ABA elaborated its stance on positional conflicts in Formal Opinion 93-377, where it was asked to opine on positional conflicts in the litigation context. The ABA Committee on Ethics and Professional Responsibility found that:
  • ‘When a lawyer is asked to advocate a position with respect to a substantive legal issue that is directly contrary to the position being urged by the lawyer (or the lawyer’s firm) on behalf of another client in a different and unrelated pending matter which is being litigated in the same jurisdiction, the lawyer, in the absence of consent by both clients after full disclosure, should refuse to accept the second representation if there is a substantial risk that the lawyer’s advocacy on behalf of one client will create a legal precedent which is likely to materially undercut the legal position being urged on behalf of the other client. If the two matters are not being litigated in the same jurisdiction and there is no substantial risk that either representation will be adversely affect by the other, the lawyer may proceed with both representations.’
• “The Committee emphasized the chance of adverse precedent being created, writing, ‘if the two matters are being litigated in the same jurisdiction, and there is a substantial risk that the law firm’s representation of one client will create a legal precedent, even if not binding, which is likely materially to undercut the legal position being urged on behalf of the other client, the lawyer should either refuse … the second representation or … withdraw, unless both clients consent after full disclosure.'”
• “The Committee concluded that ‘even though there is a significant potential for the representation of one client to be limited by the representation of the other, the lawyer nonetheless reasonably believes that the determination in one case will not have a significant impact on the determination of that issue in the second case and that continuing to handle both matters will not cause her, or her firm, to ‘soft-pedal’ the issue or to alter any arguments that otherwise would have been made, the lawyer may proceed with both representations, provided that both clients consent after full disclosure has been made to them of the potential ramifications (including the possibility that the law firm’s adversary in one case might become aware, and be able to make advantageous use, of the briefs filed by the law firm in the other case).'”
• “Even though litigation is the paradigm for thinking through positional conflicts under the ABA and New York rules, other forms of advice, negotiation, and transactional work are not clearly excluded. ABA Model Rule 1.7 highlights this when casting the issue as one where ‘successful advocacy’ (rather than litigation, or formation of precedent) on behalf of one client is potentially detrimental to another client’s interests.”
• “Turning towards the initiatives envisioned by the NYU Center for Labor and Employment Law, the pro bono work, at the initial stage, would not involve litigation. Participating management-side firms would be involved in screening clients, offering advice, and transactional work, but any litigation would be referred out to plaintiff’s attorneys or other organizations. This eliminates the largest risk of a positional conflict, as mentioned by New York and the ABA, both of which focus on the possibility of adverse precedent: (‘Is the issue one of such importance that its determination is likely to affect the ultimate outcome of at least one of the cases?’ [Formal Op. 93-377]).”
• Nor would giving advice pose an issue of a positional conflict. It would be unlikely that ‘a reasonable lawyer would conclude’ (the standard for New York’s Rule 1.7, 22 N.Y.C.R.R Section 1200.7) that the representation of either a pro bono employee or a billed employer would be materially limited by giving advice on an unrelated employment matter.”
• Positional conflicts can be a major barrier to firms participation in pro bono work involving direct delivery of services, but the barrier is one rooted more in perception rather than legal analysis of ethics rules. As noted by the California Bar’s Standing Committee on Professional Responsibility and Conduct, when broadly defined, positional conflicts are ‘prolific in our adversarial system’ and often unnecessarily diminish ‘the pool of available attorneys.'”
• The California Bar’s Committee found: ‘While the facts here are extreme, to find a conflict employing a test which could be imposed uniformly to ‘issues conflicts’ of all stripes threatens the ability of attorneys to carry out their roles in the legal system. In practice areas like family law and in small communities, the practical problems stemming from such an expansive rule would be insurmountable. Indeed, every time an attorney argues a point of law it is probable that other clients will then or later be adversely affected. In accepting an engagement, would the attorney be required to advise the client and seek consent every time an issue arises where the attorney has taken the other side?'”
• When we examine the risks alongside the current legal standards, we see that concerns about many positional conflicts are conjectural at best, keeping firms from helping broaden access to civil justice for low-income and middle-class people in our community.”

“US judges advised to restrict clerks from seeking political jobs” —

• “Federal judges should restrict their law clerks from seeking employment with political organizations while they are still working for the court system to avoid the risk of compromising the judiciary’s independence, according to new ethical guidance.”
• “The U.S. Judicial Conference’s Committee on Codes of Conduct issued the guidance on Thursday in an election-year update to an advisory opinion on what types of political activities are permissible or prohibited by judicial employees.”
• “The code of conduct for judges already advised them to refrain from political activities, and employees were prohibited under prior guidance from taking part in various activities including belonging to partisan political organizations.”
• The new guidance goes a step further by advising judges to restrict their clerks from seeking post-clerkship jobs with political parties, partisan groups or organizations focused on advocating against candidates or parties in elections.”
• “The revised ethical opinion came as the judiciary has been weighing whether to issue new guidance on the ethical duties judges themselves have in the hiring of law clerks.”

“Fla. Judge Faces DQ Bid Over ‘Hostility’ In Ex-Law Prof’s Case” —

• “A former law professor at Florida A&M University wants the federal judge assigned to her retaliation lawsuit against the university to recuse himself, saying he has shown a ‘pattern of hostility’ toward her in multiple court orders, according to a motion filed Tuesday.”
• “Plaintiff Jennifer Smith argued that U.S. District Judge Paul G. Byron’s orders have created an appearance of bias that would cause anyone to question his impartiality.”
• “‘Specifically, the Court has used inflammatory adjectives and fussbudget phrases consistently in its orders, thereby demonstrating a difficulty, in fact, an inability, of the judge to put ‘his previous views and findings aside,” Smith argued.”
• “Smith is embroiled in a retaliation lawsuit against her former university and argued that Florida A&M paid her almost $25,000 less than a male coworker for performing similar duties when Smith had a decade more of legal experience than he did, according to her complaint.”
• “In her motion Tuesday, Smith pointed to a number of incidents that call for Judge Byron to recuse himself, including that he ‘chided’ her for essentially hoping to require the university to keep her on the payroll until the litigation has concluded despite her alleged inability to do her job. Smith said she told the court that she took her teaching position at a significant pay cut.”
• “Smith also said the court intentionally misrepresented the facts of the case and manufactured its own justification for Smith’s firing independent of the university’s actions.”
• “‘The Court asserted: ‘While Plaintiff contests the student’s version of the encounter leading to her termination, the student’s account — corroborated by five witnesses — resulted in FAMU’s decision to terminate Plaintiff for improper conduct.’ This statement is patently false and unsupported by the record,’ Smith said.”
• “‘While adverse rulings alone do not generally warrant recusal, the tone and language used in these orders suggest a level of hostility that would cause any reasonable observer to question whether the judge can rule impartially in this case,’ Smith said.”

“Ed Burke’s law firm once worked for family of judge who sentenced him to prison” —

• “The family of the judge who sentenced former Ald. Edward M. Burke to two years in prison for strong-arming developers to retain his law firm once hired Burke’s firm to help their company fight City Hall and hold onto a lucrative city deal, a Chicago Sun-Times investigation has found.”
• “Land and Lakes Co., a northwest suburban business owned by the family of Chief U.S. District Judge Virginia Kendall, had filed a lawsuit against the city of Chicago in 1994. It was seeking to stop the city from shutting down its landfill on the Southeast Side for violating a moratorium on expanding or opening new landfills that Burke had helped pass.”
• “As part of the company’s clout-heavy legal team, it hired Burke’s firm, Klafter & Burke, court records show.”
  “There’s no record that the longtime powerhouse Chicago City Council member himself was involved in the civil case.”
• “But court records show his wife, now-retired Illinois Supreme Court Justice Anne Burke, was one of the landfill owners’ lawyers. At the time, she was an attorney in private practice, specializing in child-welfare matters.”
• “Responding through an intermediary, Kendall said she had been unaware until contacted by the Sun-Times that her family had hired Burke’s firm as part of the legal team in their court battle with City Hall in the mid-1990s.”
• “The judge — a former federal prosecutor who was appointed to the judiciary in 2006 and recently was elevated to the post of chief judge — said she has no reason to believe that her family’s hiring of Burke’s law firm would have posed a conflict of interest for which she would have needed to recuse herself from hearing Burke’s corruption case.”
• “But, in response to questions from the Sun-Times, she said she sought an opinion from the general counsel for the Administrative Office of the United States Courts — the administrative arm of the federal court system. She said the opinion she received this month, more than two months after sentencing Burke, was that she would not have needed to step aside from the case.”
• “‘Upon receipt of your inquiry, and out of an abundance of caution, Chief Judge Kendall contacted the Office of General Counsel at the Administrative Office of the U.S. Courts and confirmed with the counsel overseeing the Codes of Conduct Committee that she does not, and did not, have an obligation to recuse from the case because there was no conflict (even if she had been aware, which she was not).'”
• “Bruton’s letter also said Kendall ‘has never been employed by Land & Lakes Company, and she is not a director. Like many children, Chief Judge Kendall chose to pursue an entirely separate career path from her parents. Nevertheless, ever since becoming a Judge, Chief Judge Kendall has listed her parents’ businesses on her recusal list.'”

“Rachel Leviss’ Lawyer Doesn’t See Brother Representing Tom Sandoval as ‘A Conflict of Interest’” —

• “Rachel Leviss’ lawsuit against Tom Sandoval gets more and more complicated by the day. For those who missed the last major update, Tom hired someone very close to Rachel’s lawyer to represent him. Yes, the lawyers each representing the individual Vanderpump Rules stars are brothers. Literal familial brothers.”
• “So, will that affect the case in any way? Will that change anything? Apparently not. Kind of odd how the U.S. legal system just allows this sort of thing to happen. But hear it from Rachel’s attorney, Mark Geragos.”
  On the September 10 episode of Rachel’s podcast, her attorney joined her to clear the air. ‘We … had a situation when Mr. Sandoval hired my brother,’ Geragos said. At Rachel’s request, he explained, ‘Matt is my little brother and Sandoval hired him. I can’t blame him because Matt is a hell of a lawyer.'”
• “As far as why Tom hired Matt, Mark had his suspicions. ‘I think he thought Matt was going to whisper in my ear at Thanksgiving or something. Who knows what he thought?’ Even if Tom hired Matt without any knowledge of the familial relationship, surely, that would be a conflict of interest, no? Well, Mark didn’t seem to think so.”
• “Geragos assured listeners that he couldn’t say with certainty why Tom hired Matt. ‘I have no inside information as to what transpired or how that transpired. I will tell you that for [the people asking] if that is a conflict of interest, if Matt worked with me then yes. It would be a conflict of interest.’ He added, ‘If we were partners in a law firm, it would be a conflict of interest.'”
• “Mark then explained, ‘It’s not like we’re at Christmas dinner saying, ‘Okay, I’ll do this on Rachel’s end, and you do this on Tom’s end.’ It’s not a conflict of interest. It’s an interesting choice.’ An interesting choice indeed.”
• “Vanderpump Rules is streaming on Peacock.”

“Mich. Atty Says Brother’s Email Hack Harming Clients, Firm” —

• “A Michigan attorney has accused his brother of improperly accessing his law firm’s email accounts and confidential discussions with clients, forcing the attorney to step down as name partner of his firm, allegedly after the brothers’ joint cannabis venture failed. “
• “Business law attorney Gregory M. Yatooma said in a Friday motion for a preliminary injunction that his firm, Fleming Yatooma & Borowicz PLC, was forced to remove his name from the firm because his brother, Chris Yatooma, had used confidential legal emails in the brothers’ litigation over the payout of a major judgment and refused to restore Greg’s access to his email, putting confidential client information in jeopardy.”
• “The firm now operates as Fleming & Borowicz PLC, and Greg Yatooma isn’t listed as a partner. The State Bar of Michigan’s website does not list the firm on Greg Yatooma’s page in its lawyer search database.”
• “The illegal access to his email account is harmful to attorney-client relationships and puts in jeopardy the privilege clients expect with their attorneys, Greg Yatooma said. His filing also claims violations of federal and state computer privacy laws, such as the Computer Fraud and Abuse Act and common law invasion of privacy.”
• “‘Greg was forced to cease operating as FYB, and Greg and his partners determined that given Chris’ actions, it would be best to remove the name ‘Yatooma’ … from the firm, so Chris could no longer claim ‘ownership’ of FYB,’ Greg Yatooma said. “
• “Greg Yatooma asked the court to bar his brother and alleged conspirators from using or accessing his law firm email and to order the defendants to return his confidential information and emails. He also asked the court to order the defendants to destroy any copies of emails they have and restore access to his law firm email.”
• “Greg Yatooma and his brother used to operate ‘many businesses’ in Michigan’s legalized cannabis industry, according to Friday’s motion. Greg operated his law firm out of the same office building as the brothers’ joint ventures.”
• “The brothers’ relationship soured in 2022, and Chris Yatooma bought Greg out of their joint businesses, the motion said.”
• “Stopczy, the former IT director of Greg Yatooma’s law firm as well as for the brothers’ joint entities, told Greg he would have ‘exclusive access and control’ over his emails after Greg ended his business relationship with his brother, Greg Yatooma alleged in his Friday motion.”
• “‘That was a lie,’ Greg Yatooma said.”
• “Under Chris Yatooma’s direction, Stopczy instead downloaded 160,000 of Greg’s law firm emails for Chris to use in the brothers’ other litigation, Greg Yatooma alleged. Stopczy also lied about later telling Greg he would delete emails from Chris Yatooma’s server, Greg Yatooma said. Chris Yatooma and his assistant still have access to and read Greg Yatooma’s emails, Greg Yatooma said.”
• “‘This litigation has revealed that defendants are actively reviewing Greg’s FYB email and using the contents thereof to litigate this case and related cases,’ Greg Yatooma said.”

“SEC Expands Insider Trading Case Over Covington Stolen Data” —

• “The SEC is going after another individual over an alleged insider trading scheme related to information stolen from a Covington & Burling attorney’s computer.”
• “The agency on Tuesday said Philip Markin bought Pandion Therapeutics Inc. stock before the biotechnology company was acquired by Merck & Co. in a $1.85 billion deal. Markin allegedly traded on information he received from his cousin, Seth Markin, whose romantic partner was working on the transaction as an associate at Covington.”
• “Philip Markin knew or was reckless in not knowing that the information was material and nonpublic, the Securities and Exchange Commission said in a complaint filed in the US District Court for the Southern District of New York.”
• “The unnamed associate was part of a Covington team that represented Merck in the Pandion deal, which was announced in February 2021. She was working from home during the pandemic and Seth Markin often stayed for multiple days at the attorney’s apartment, according to the complaint.”
• “Seth Markin, a former FBI trainee, misappropriated material nonpublic information about Merck’s planned tender offer for Pandion, the SEC said. He also tipped Philip Markin and several other individuals to the deal, the complaint says.”
• “Covington has not been accused of wrongdoing in the alleged scheme. The firm did not respond to a comment request.”
  “Prosecutors alleged that Seth Markin, in February of 2021, secretly looked through his girlfriend’s confidential work documents and learned that Merck had plans to buy Pandion for approximately three times the value of its share price. He and friend Brandon Wong together allegedly made more than $1.4 million in illegal profits with the stolen information.”
• “Seth Markin’s lawyers argued that he learned of the Merck deal after the associate requested he help her organize materials related to her work at the firm.”
• “Philip Markin has ‘reached a civil settlement with the SEC, and the DOJ has declined to pursue criminal charges,’ his lawyer, Todd Spodek, said via email.”

“Phila. Zantac Plaintiffs Move for Judge to Recuse Over Alleged Conflict” —

• “The plaintiffs in Philadelphia’s mass tort over the antacid Zantac are asking the supervising coordinating judge to recuse himself from the case.”
• “The plaintiffs contend that Judge Joshua Roberts of the Philadelphia Court of Common Pleas has ties to a key drugmaker defendant through his wife’s position at an Am Law 200 law firm representing the company in the national litigation.”
• “‘Although these issues in no way call into question counsels’ belief that this honorable court will expend every effort to always proceed ethically with the intention of ruling without bias, the appearance of impropriety and potential for unconscious bias compel plaintiffs’ counsel to move for recusal in order to protect the interest of plaintiffs in this litigation,’ the plaintiffs said in a motion.”
• “The plaintiffs moved for recusal after Roberts disclosed that his wife, Shannon McClure, is a partner at Reed Smith, which represents Zantac manufacturer GlaxoSmithKline in litigation over the drug.”
• “The law firm has performed Zantac-related legal work for GSK in multiple states, according to the motion. Though Reed Smith’s Zantac work for GSK did not extend to Pennsylvania, the plaintiffs asserted, Reed Smith was involved in the Philadelphia mass tort through its representation of a different pharmaceutical company that is no longer actively part of the case.”
• “Plaintiffs in the Zantac litigation generally allege that the over-the-counter heartburn medication, which the U.S. Food and Drug Administration recalled in 2020, caused various forms of cancer.”
• “The plaintiffs do not allege that McClure, who works in Reed Smith’s global commercial disputes group, is directly involved in the Zantac litigation. However, they argue that McClure’s role at her firm means she—and, by extension, her husband—has a stake in the litigation’s outcome.”
• “Before filing the motion for recusal, plaintiffs counsel sought an ethics opinion from retired U.S. District Chief Judge Lawrence Stengel of the Eastern District of Pennsylvania, now a shareholder at Saxton & Stump. In his review of the matter, Stengel determined that Roberts’ connection to GSK could potentially raise concerns about the appearance of impropriety or bias. He found that Reed Smith appears to derive a significant portion of its business from its pharmaceutical practice and that GSK appears to be an important client for the firm. He also noted that several Reed Smith attorneys regularly author posts, many about Zantac, for a pro-defense blog.”
• “‘While I offer no opinion as to whether Judge Roberts harbors any actual bias in favor of pharmaceutical companies, specifically including GSK, there are many reasons why Judge Roberts’ ability to rule impartially in this case may reasonably be questioned,’ Stengel wrote.”

“Judge Reed O’Connor Seems To Own Too Much Tesla To Rule Against CVS, Just Enough To Rule Against Liberal Fact-Checkers” —

• “Because the Northern District of Texas loves indulging forum shopping to benefit its political fellow travelers, Elon Musk loves bringing cases that have a 1 in 1 shot of being assigned to O’Connor. But sometimes that doesn’t work out! Like the recent case Musk brought against CVS, Unilever, Mars, and — for pretty glaring forum shopping reasons — Orsted. Musk alleged that advertisers who don’t give him money are violating his free speech rights and probably doing the RICO to him.”
• “O’Connor quickly recused himself from the case amidst reporting that he owned a sizable amount of Tesla stock. Which makes sense because, while X (Twitter) is a separate entity, Tesla is a meme stock that ebbs and flows with Musk’s personal brand — having nosedived from heights around $360/share before he launched his X misadventure to the low $200s now.”
• “So a lawsuit involving X’s fight for advertising dollars would likely impact Tesla’s share price were a judge to rule on it. Though O’Connor refused to offer the transparency generally sought by basic tenets of legal ethics. While the federal rules do not require disclosure, that’s supposed to protect judges from divulging embarrassing personal issues as opposed to investments, but that doesn’t stop anyone.”
• “And now we might have some insight into why O’Connor didn’t want to go on the record citing Tesla stock as a specific reason for recusal! Media Matters, the liberal media watchdog that Musk sued in O’Connor’s court, also raised Tesla as an interested party to their case in a roundabout bid that could implicate O’Connor’s investments and get a new judge. Last week O’Connor rejected that request because… reasons.”
  • “‘First, there is no evidence that shows Tesla has a direct financial interest in the outcome of this case. Tesla neither directly nor indirectly holds equity in X, Tesla is not a director or advisor, and it does not participate in the affairs of X. In other words, there is no indication that Tesla has any control over X or any financial ties to X, and Defendants do not claim as much.'”
• “Sure. It’s totally normal for an unrelated entity to lose a third of its value based on what happens with another unrelated entity. There are quantum particles less entangled than Tesla and X, though O’Connor shrugs all this off:”
• “To support this contention, Defendants allege that (1) Tesla’s share price dropped because Musk sold Tesla shares to purchase X; (2) Tesla shares fell in response to Musk’s attack on advertisers; and (3) analysts’ predictions that further losses at X could lead to Musk selling Tesla stock. But these assertions are speculative.”
• “Moreover, O’Connor seems to know it happened because that would be the only plausible excuse for recusing himself in the other case based on Tesla investments. But he didn’t state a reason for that decision, which sure feels like hiding the ball to avoid flagging a conflict in a case amongst a bunch of companies holding no partisan interest for him that could hamstring him in this case where he can find himself hammering liberals.”
• “Maybe this isn’t O’Connor’s rationale. Maybe he really believes his Tesla ownership was not the reason to recuse himself in the advertising case and there’s some other conflict. If O’Connor has some other reason to recuse himself from one case and not the other he is welcome to publicly declare it any time he wants.”
• “Indeed, avoiding the appearance of impropriety in the Media Matters case now demands that he give a clear, defensible, and public explanation for his disparate treatment of the recusal issue.”

“Justice Alito’s Stock Portfolio Stands Apart on US Supreme Court” —

• “Justice Samuel Alito is the only US Supreme Court member with a stake in more than two dozen individual companies, a distinction that threatens to sideline him from major business cases. “
• “Alito or his wife own tens of thousands of dollars of stock in companies including Raytheon Co., ConocoPhillips and a subsidiary of Johnson & Johnson. The holdings may force him to recuse as oil companies challenge lawsuits blaming them for climate change and J&J tries to settle talc lawsuits by placing a subsidiary into bankruptcy.”
• “Alito’s 2023 financial disclosure report was publicly released last week and shows he continues to own stock in over two dozen companies. Supreme Court disclosures extend to financial interests of spouses and dependent children. In Alito’s case, the filings don’t clarify whether the stocks are owned by the justice or his wife.”
• “Supreme Court justices are allowed to hold individual stocks, but ethics rules deem they should disqualify from cases involving the companies. In the past, more justices held shares in individual companies, but that has become rare. Meanwhile, scrutiny of the judicial ethics has increased after revelations that Justice Clarence Thomas, and to a lesser degree Alito, accepted undisclosed gifts and travel from billionaire benefactors. “
• “‘It’s a question not of ethics, but of judgment,’ said Steven Lubet, emeritus professor at Northwestern University Pritzker School of Law, who focuses on legal and judicial ethics. ‘Not everything that’s legal is a good idea.'”
• “Alito has recused from 64 cases involving corporations he owns shares of since 2021, according to Fix the Court, an advocacy group that supports court reform, including judicial term limits. During the last term, he recused from 15 cases due to stock ownership, far outstripping the number of recusals from all of his colleagues, according to the group’s data. Justices are not required to say why they disqualified themselves from a particular case but the tally is based on the publicly available information.”
• “Chief Justice John Roberts, who previously owned stocks in many individual companies, has sold all but two. Justice Stephen Breyer owned a multitude of stocks before he stepped down from the bench in 2022. Most of the current justices own mutual funds, which do not create a conflict under the court’s ethics code unless the the justice is involved in the fund’s management.”
• “As a reliably pro-business vote, Alito and his family’s stock holdings could make a difference in major cases over the coming years.”
• “‘He’s got major holdings in consumer products, oil and gas, aviation, beverages, and chemicals,’ said Gabe Roth, executive director of Fix the Court. ‘These are industries where there’s a ton of lawsuits making their way through the lower courts.'”
• “Alito has already recused from a pending bid by oil companies to quash a lawsuit alleging they contributed to global warming, likely because he owns stock in ConocoPhillips and Phillips 66, two of the companies involved in the suit. The case, Sunoco LP v. City and County of Honolulu, centers on whether state and local governments can sue fossil fuel companies for damages over harmful greenhouse gas emissions.”
• “Alito didn’t take part in June when the court asked the Biden administration for input on whether to take up the case.”
• “Alito’s recusal leaves the oil companies without a friendly face on the court. Alito has been a critic of federal environmental regulations for decades, and he has a long history of siding with the Chamber of Commerce, which filed in support of the oil companies in the climate change case. Alito last term agreed with the Chamber of Commerce in 73% of cases where the business group weighed in, according to the left-leaning Constitutional Accountability Center.”
• “Johnson & Johnson said in July it would ask the high court to revive the company’s plan to use a bankruptcy maneuver to settle tens of thousands of talc cancer lawsuits. In the time since, the company has continued to engage in settlement talks. A J&J spokesperson did not respond to a request for comment.”

I’m taking a moment of our your regularly scheduled risk news to update our risk reader community on the 2024 Risk Staffing Compensation Survey.

You’re all doing great! (But I’d love to do even more.)

Two weeks in, we have 100 participants, sharing data on about 350+ individual risk leadership and staff positions. (This trends well against our aspirational goal of exceeding last year’s metrics: 125 and 515 respectively!)

The ration of participants to data points also suggests more individuals sharing personal details vs managers sharing team data. (So, catch up, managers!)

Here’s a bit of interesting inside survey detail — over the past year, I’ve had close to 100 non-participants ask for the report or a personal benchmark. So if everyone who provided data last year or asked for the results, participate this year, I’ll really have my hands full getting everyone the results and reports.

Remember:

• The survey closes end of September. (If timing’s an issue, reach out!)
• We’re collecting detail on a variety of staff roles, as well as on management/director roles, which have been a popular data point
• Participation open to law firm risk professionals only (US and Canada at this time)
• All responses will be treated confidentially.
  • (And if anyone has questions/concerns preventing them form participating, please do reach out to me directly. In particular, if having an “anonymous” path to participation would get you over the line, let’s talk. Email readers can do that by just replying to this note — it’ll reach me. Others can use the contact form as well.)
• NEW: We’re collecting some qualitative feedback from managers on staffing issues and investments. Looks like several have contributed, thank you!
  • If you want to see those questions and/or the survey questions ahead of time, feel free to reach out and I can help.

You can read more background on the survey via this link.

Or if you’re ready to jump in now, you can access it directly via this one.

Thanks for reading. More risk news and updates on the way!