Risk Update

BRB Cribs FOC — Corporate Trees & Engagement Agreements, Client Conflicts, Waivers & More

Posted Dan Bressler

Bill Freivogel has been quite busy in July. Keeping an eye on his voluminous site of cites, I note several interesting updates:

  • Current Client (posted July 15, 2020) Canfield v. SSI&C Techs. Holdings, Inc., No. 1:18-cv-08913(ALC) (S.D.N.Y. July 10, 2020).
    • “This is one of four proceedings involving claims by current and former employees of SS&C for mismanagement of an SS&C ERISA plan. Thirty percent of the plan was invested in Valeant Pharmaceuticals, a huge failure to diversify. Moreover, Valeant had been suspected of dodgy accounting. The defendants include SS&C and “The Advisory Committee of the [SS&C ERISA] Plan.” The Klamann Law Firm (“Klamann”) represents the plaintiffs.”
    • “The problem is that in the Western District of Missouri Klamann represents three former members of the Advisory Committee in a suit against an investment manager of part of the ERISA plan. Although ‘former members’ of the Advisory Committee, they are, nevertheless, defendants in these cases. Several defendants in this case, and in related cases, moved to disqualify Klamann. In this opinion the court granted the motion. [Our note: We had difficulty following the court’s reasoning, possibly because we have had little experience in ERISA litigation. ERISA litigators may want to take a look at the opinion.]”
  • Corporate Families (posted July 10, 2020) Franklin Capital Funding v. AKF, Inc., No. 19-cv-13562 (E.D. Mich. July 2, 2020).
    • “In this opinion the court denied plaintiff Franklin Capital Funding’s motion to disqualify defendant’s law firm, Varnum. Plaintiff Franklin Capital Funding is ‘closely related’ to Franklin Capital Management. (The opinion does not reflect the exact nature of the relationship.)”
    • “Avrohom Baum worked for the Franklin Capital entities and had a meeting with Varnum about representation. Baum provided the name ‘Franklin Capital Management,’ so Varnum could do a conflicts check. They signed a ‘master’ engagement agreement in Which Franklin Capital Management was the designated client. The agreement provided that Varnum would not be representing any of the client’s ‘affiliates.’ Later, Varnum showed up as defendants’ lawyers in this case. Thus, the motion to disqualify. Baum claimed that he always assumed that Varnum was agreeing to represent all the related entities. Basically, the court put the onus on Baum to question the provision about no representation of ‘affiliates’ in the engagement agreement, which Baum did not do.”
  • Waiver; Passage of Time (posted July 6, 2020) Bucolo v. Van Dyke, No. 3408 (Md. Spec. App. Unpub. July 2, 2020).
    • “Brother and Sister inherited from Father. In this litigation, commenced in 2016, Brother and Sister are fighting over various aspects of estate administration. In December 2016 Brother moved to disqualify Sister’s lawyer (‘Lawyer’) because Lawyer had given Brother a bit of advice about Brother’s inheritance. The opinion is not clear whether the trial court ruled on that motion. This appellate opinion refers to the trial court’s ‘declining to rule.'”
    • “In any event, in this opinion the appellate court ruled against disqualification because, after filing the motion in 2016, Brother did nothing to pursue it. Thus, Brother’s conflict claim was ‘unpreserved.’ In a lame discussion of the merits the appellate court noted that although Lawyer might have given Brother advice, Brother did not follow it, but instead went to another lawyer.”