Bressler Risk Blog

“Former Penn State General Counsel Reprimanded Over Sandusky Grand Jury Representation” —

• “The former general counsel of Pennsylvania State University, Cynthia Baldwin, was publicly reprimanded in a live YouTube stream Wednesday over how she represented three former university employees during the Jerry Sandusky child abuse investigation.”
• “‘Your concurrent representation of these clients created a significant risk that your ability to consider, recommend or carry out an appropriate course of action for each client would be materially limited by your representation of Penn State,’ James Haggerty, chair of the disciplinary board of the Supreme Court of Pennsylvania, said during the reprimand.”
• “Following the hearing, Baldwin, who served as a justice on the Supreme Court of Pennsylvania from 2006 to 2008, told Corporate Counsel the investigation against her was biased and referred to the process as ‘aberrant.'”
• “Baldwin was accused of disclosing privileged information while testifying before a statewide grand jury and failing to disclose a conflict of interest to former Penn State vice president Gary Schultz, former Penn State president Graham Spanier and athletic coach Tim Curley.”
• “In 2018, a panel appointed by the disciplinary board of the Supreme Court of Pennsylvania recommended that Baldwin be cleared of ethics violations. Baldwin said the high court should have followed their recommendation.”
• “[Chief Justice] Saylor allegedly told Feudale that a lawyer’s disciplinary complaint against Baldwin was forthcoming and that Feudale should ‘assist in every way with providing information in support of the disciplinary investigation.’ Saylor also allegedly said that assistance and discipline was necessary because Baldwin ’caused us a lot of trouble when she was on the Supreme Court with her minority agenda.'”

“Judge Exits Suit Against Disney Because Of Her Park Pass” —

• “A Florida federal judge has recused herself from a proposed class action against a Walt Disney Company subsidiary because the judge has an annual pass to a Disney theme park, making her a potential class member in the suit alleging pass holders were overcharged.”
• “According to the pass holders behind the suit, Disney suspended the monthly charges for the annual pass in April when it closed its parks in response to the pandemic. However, when the parks began reopening in July, the company charged pass holders for several months of payments at once.”
• “The suit seeks to represent a class of Florida residents who were allegedly overcharged, a separate class of all overcharged pass holders in the United States, and a class for those who continue to be charged for the passes without having the promised access to the parks.”

“Lawyer Not Disqualified in Subway Platform Safety Litigation Over Town Hall Question to Transit Official, Judge Rules” —

• “New York County Supreme Court Justice Lisa Sokoloff has denied a motion for disqualification of counsel, finding that personal injury attorney David Roth didn’t compromise his role in a subway safety case by questioning a transit official at a 2018 town hall meeting.”
• “Attorneys for the Metropolitan Transit Authority and New York City Transit Authority argued that Roth, who represented clients in cases related to the subway, failed to identify himself as an attorney and asked then-NYCTA President Andy Byford questions without transit counsel present.”
• “But Sokoloff found there was “no factual support” for the claim that Roth acted deviously or improperly.”
• “If Roth’s question was not connected to his representation of a client, he did not have to identify himself as an attorney, Sokoloff found in a decision dated June 26.”

“Biglaw Firm Wants Associates Off TikTok, Or At Least TikTok Off Their Phones” —

• “Associates at Ropes & Gray recently received a mandate from firm leadership telling them to delete TikTok. It doesn’t matter if it is firm issued or their personal electronics — any device that has access to their firm email has to be rid of the social media app.”
• “In an email to associates, the firm said this mandate came after at least one client request.”
• “Last month, it was revealed that TikTok, along with a host of other apps, was snooping on anything on your device’s clipboard — which could include sensitive client information. TikTok, as well as some of the other apps, promised to do away with the practice. However, according to an Ars Technica report, at least TikTok was caught snooping even after they said they’d do away with the practice. So, now Ropes associates can’t have TikTok on their phones.”

Interestingly, another service caught up in this “monitored clipboard” issue is LinkedIn. Which begs the question if that’s to remain on the approved list: “LinkedIn sued over allegation it secretly reads Apple users’ clipboard content” —

• “According to Apple’s website, Universal Clipboard allows users to copy text, images, photos, and videos on one Apple device and then paste the content onto another Apple device. According to the lawsuit filed in San Francisco federal court by Adam Bauer, LinkedIn reads the Clipboard information without notifying the user.”
• “A LinkedIn executive had said on Twitter last week that the company released a new version of its app to end this practice.”

“Seven ‘no log’ VPN providers accused of leaking – yup, you guessed it – 1.2TB of user logs onto the internet” —

• “A string of “zero logging” VPN providers have some explaining to do after more than a terabyte of user logs were found on their servers unprotected and facing the public internet.”
• “This data, we are told, included in at least some cases clear-text passwords, personal information, and lists of websites visited, all for anyone to stumble upon.”
• “UFO stated in bold in its privacy policy: “We do not track user activities outside of our site, nor do we track the website browsing or connection activities of users who are using our Services.” Yet it appears it was at least logging connections to its service – and in a system anyone could access if they could find it.”

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.”

“Panama Papers law firm Mossack Fonseca sues Netflix over The Laundromat” —

• “The partners of the offshore law firm whose confidential files were exposed in the Panama Papers leak, Mossack Fonseca, have launched defamation action against Netflix over a movie about the scandal that is due to be released on Friday.”
• “In a US lawsuit filed on Tuesday, Jurgen Mossack and Ramon Fonseca say The Laundromat, in which they are respectively played by Gary Oldman and Antonio Banderas, portrays them as ‘ruthless uncaring lawyers who are involved in money laundering, tax evasion, bribery and/or other criminal conduct’ and ask the court to stop it from being screened.”
• “In documents filed to the court they say the release of the film is likely to subject them to ‘additional bail and/or conditions for each new crime imputed to them in the movie’ in Panama, where they are set to go on trial on charges related to the law firm.”
• “And it would also interfere with their right to a fair trial in the US, where they are under investigation by the FBI, they said in a legal memorandum filed with the district court in Connecticut.”

And thus we witness the Streisand Effect in action. Netflix has yet to respond, but no doubt appreciates the promotional attention… (Given that the article notes the actors in play, I’m now thinking about the issue of who plays whom in these kinds of films. Can one argue that Gary Oldman evoking both Batman’s Commissioner Gordon (good guy) and the Fifth Element’s Zerg (bad guy) will affect my perception of Mr. Mossack when I now watch this film? (It also features Meryl Streep, who is always excellent…) Oh, it looks like the movie bills itself as a comedy.)

And since we’re in “odds and ends” territory, this one caught my eye recently (the law firm’s identity has not yet been published): “The Nigerian Email Scammer Who Stole Millions From Premier League Club, NY Law Firm, Banks” —

• “Abbas, 37, was arrested when he arrived in Chicago from Dubai on Thursday night. He faces criminal charges for being the leader of a transnational network that allegedly conspired to launder hundreds of millions of dollars through email scams and other schemes, some of which targeted a New York law firm, a foreign bank and an English Premier League soccer club.”
• “However, when one member was arrested in October, 2019, shortly after a New York law firm was duped into wiring almost $1 million, investigators obtained a search warrant to go through his iPhone and found messages that blew open the inner workings of the group.”
• “Abbas had allegedly tricked one of the law firm’s paralegals into wiring $922,857, intended for a client’s real estate refinancing, to a Chase Bank account controlled by Abbas. The paralegal emailed a Citizens Bank email address to verify instructions for the wire transfer but it was a spoof email address set up by Abbas.”

“Junior solicitor banned for lies about briefcase left on a train” –

• “A junior solicitor who left a suitcase with sensitive documents on a train – then lied to her firm to buy herself time to find it – has been struck off the roll. Claire Louise Matthews had been working in the Birmingham office of national firm Capsticks for a month when she left a colleague’s briefcase on the train on her commute home.”
• “Matthews told the Solicitors Disciplinary Tribunal she was ‘overcome by uncontrollable fear, anxiety and panic’ in the following days. Six days after losing the briefcase she told a colleague that she had left it at home, then a day later she emailed her supervisor to say it had been left on a train that morning.”
• “The briefcase contained a matter file for a sensitive case involving a litigant in person who had made a claim against the Solicitors Regulation Authority. Capsticks is regularly instructed by the SRA for its regulatory and litigation work.”
• “The SRA said Matthews’ conduct was not a ‘moment of madness’. Rather, her conduct was self-serving and her only motivation was to protect herself against the risk, as she perceived it, of jeopardising her employment.”

“Judge Denies Cooley’s Bid to DQ King & Spalding in WhatsApp Case” —

• “King & Spalding can continue to defend a surveillance technology firm accused of deploying malware targeted at WhatsApp Inc. users after a federal judge blocked the Facebook subsidiary’s attempt to boot the firm from the case.”
• “In an order Tuesday, U.S. District Chief Judge Phyllis Hamilton of the Northern District of California denied WhatsApp’s motion to disqualify King & Spalding from representing NSO Group Technologies, finding that WhatsApp did not demonstrate that the law firm still has access to confidential material, or even that the material is substantially related to the new case.”
• ‘”Hamilton noted the difficulty of comparing the two cases given that one of the matters is entirely under seal and both are mired in technical coding language. Yet, her analysis found that WhatsApp ‘has not demonstrated that the two matters are substantially related and absent such a relationship, there is no presumption that K&S acquired material confidential information.'”

“Morgan Lewis DQ Reversed In Calif. OT Case” —

• “Morgan Lewis & Bockius LLP should not be disqualified from representing a real estate settlement service provider even though its attorneys allegedly communicated with members of an unpaid overtime class action, because the class didn’t establish that the firm violated ethical rules, a California state appellate court held.”
• “The class members failed to demonstrate that Morgan Lewis obtained “confidential information material to the pending litigation” from the individuals during the conversations, which occurred after a decertification order but before a formal dismissal was entered, according to Thursday’s ruling by the Fifth Appellate District.”
• “‘Proof of unauthorized contact with a represented party is not alone sufficient to justify disqualifying the culpable lawyer,’ the three-judge panel said.”

“L’Oreal Can’t DQ Lerner David In Cosmetics Patent Dispute” —

• “A Texas federal judge on Wednesday denied L’Oreal’s bid to disqualify Lerner David Littenberg Krumholz & Mentlik LLP from representing a rival skin care line in their patent dispute, ruling the patents at the center of cases the firm previously worked on for L’Oreal are not substantially related to the one in this suit.”
• “‘The ‘841 patent was prior art to both prosecutions in question, does not share a common priority application with either the ‘082 patent or the ‘319 application, and exhibits distinguishing technical factors,’ Judge Yeakel said. ‘The ‘082 patent and ‘319 application were prosecuted for French entities under the L’Oreal umbrella, not for L’Oreal USA Creative Inc. Lerner David has never represented L’Oreal USA Creative Inc.'”
• “He further noted that the current action involves patent litigation, not prosecution, which is all that Lerner David had worked on for L’Oreal.”
• “Judge Yeakel also pointed out that the attorneys who were primarily involved with the prosecution of L’Oreal’s patents have not been employed by Lerner David for years.”

“Appeals Court Reinstates Ex-Client’s Malpractice Case Against Archer & Greiner” —

• “A New Jersey appeals court has reinstated a legal malpractice case against Archer & Greiner over a suit it filed against an ex-client. At issue is a potential conflict between Archer & Greiner’s representation of Engine Distributors Inc. from 2005 to 2007 and its present representation of the wife of the company’s former president and chief shareholder in divorce proceedings. Engine Distributors filed a malpractice suit against Archer & Greiner after a judge granted the law firm’s motion to make that company a party in the divorce.”
• “The case illustrates the hazards a law firm can face when it agrees to represent a party in a dispute with one of the firm’s former clients.”
• “But the appeals court panel of Judges Ellen Koblitz, Mary Gibbons Whipple and Hany Mawla reversed, finding that collateral estoppel did not apply, that the Family Part judge did not adjudicate the conflict-of-interest issue, and that the judge left open the possibility that the Law Division could conclude there was a conflict of interest.”
• “Indeed, the Family Part judge left open the possibility that the Law Division judge’s adjudication of the issue could conclude there was a conflict of interest. For these reasons, collateral estoppel did not apply, the panel said.”

“Ex-Client Gave Up Chance To DQ Brach Eichler, NJ Panel Says” —

• “The panel overturned the court’s Nov. 1 order disqualifying Brach Eichler and firm attorney Bob Kasolas as counsel for entities owned by Dimitrios Prassas in an action against them by Brian Delaney, who claimed Prassas and ex-partners Owen Dykstra and Doug Dykstra misappropriated Delaney’s capital contributions to their former business venture.”
• ‘”Since the firm and Kasolas previously represented Delaney with respect to issues that are ‘relevant and material here’ and they ‘have been privy to issues which bear on the instant litigation,’ Delaney had grounds to seek their disqualification, the panel said.”
• “However, in applying the test set forth in the New Jersey federal court’s 1993 opinion in Alexander v. Primerica Holdings Inc. , the two-judge panel concluded that Delaney waived his right to disqualify them by not challenging their representation in earlier litigation between the parties.”
• “‘Delaney has been constantly involved in litigation in various forms against Prassas, the Dykstras, and their related business entities regarding essentially the same dispute, and never before moved to disqualify Kasolas and Brach Eichler,’ the panel said.”

The always insightful Anthony Davis recently published: “The Good and the Troubling—Recent Developments in Professional Responsibility” —

• “Opinion 492 gives important and useful guidance in understanding the application and operation of New York Rule 1.18… New York Rule 1.18 (a) defines a prospective client as ‘a person who consults with a lawyer about the possibility of forming a client-lawyer relationship with respect to a matter…’ New York Rule 1.8 (b) prohibits lawyers who learn information from prospective clients from using or revealing that information except as Rule 1.9 would permit with respect to information from a former client.”
• “New York Rule 1.8 (c), to which opinion 492 is particularly addressed, prohibits lawyers who have received information as defined in (b), and their law firms, from representing ‘a client with interests materially adverse to those of a prospective client in the same or a substantially related matter if the lawyer received information from the prospective client that could be significantly harmful to that person in the matter, except as provided in paragraph (d).'”
• “The importance of the opinion is that it gives guidance on the meaning of the phrase ‘information that could be significantly harmful.’ The opinion notes that the potential harm must relate to the new matter, and whether or not the information is “significantly harmful” will depend on such issues as the duration of the communication, the topics discussed, whether the lawyer reviewed documents, whether the information is known by others and the relationship between the information in the new matter.”
• “In the absence of consent, the law firm may nevertheless represent another party in the same matter if the lawyer who received information from the prospective client has taken ‘reasonable measures to avoid exposure to more disqualifying information than was reasonably necessary to determine whether to represent the prospective client;’ and the law firm gives notice to all parties including the prospective client; implements effective screening procedures to prevent the disqualified lawyer from participating in the representation of the current client; the disqualified lawyer receives no part of the fee for that matter; and a reasonable lawyer would conclude that the law firm will be able to provide competent and diligent representation.”

He goes on to explore another Opinion (1195) in detail, with this element catching my eye in particular:

• “Opinion 1195 is also troubling in another respect. The opinion refers to a dispute between the lawyer and his former firm with respect to the files of the clients whom the lawyer no longer wished to represent. The departing lawyer had formed his own firm, and apparently the former law firm forwarded those clients’ files to the lawyer at the new firm as a means of establishing that the firm no longer represented the clients and the lawyer was obligated to do so at the new firm. This ignores the fact that the former firm is also counsel to the client and has an ongoing responsibility to ensure that the client is not harmed. This is completely contrary to the well-established case law in New York that files belong to the client and can only be transferred upon the direction of the client.”

“Third Party Disclosure Waives Privilege” —

• “The Delaware Court of Chancery has held that a party waived its attorney-client privilege by submitting the documents at issue to the Federal Communication Commission.”
• “The Plaintiffs seek thirty-one (31) documents previously produced by Defendant IDT Corporation (“IDT”) to the Federal Communications Commission (“FCC”) in 2016 in connection with an investigation pertinent to this Action.”
• “But here, I find, IDT did not have an analogous expectation of privacy because the documents were not produced to the FCC under a confidentiality agreement. Instead, IDT merely requested that the documents remain confidential. IDT had no non-disclosure agreements with the FCC, and the Requests cited by IDT are insufficient to show that IDT reasonably believed that the documents would not be revealed to other adversaries.”
• “In other words, IDT found it advantageous to disclose the privileged documents to a third party, the FCC, despite knowing that they could be disseminated. IDT did not have a commitment, let alone an enforceable agreement, with the FCC to keep the documents confidential. In that situation, IDT manifested its intent to waive any privilege by disclosing the documents to a third party.”

“Cybersecurity Education for Lawyers” —

• “One of the most pressing issues facing our legal profession, whether you are a solo practitioner or from a large firm, is the need for cybersecurity protection of confidential and proprietary client and law firm electronic information. “
• “Thus, on June 13, 2020, the House of Delegates of the New York State Bar Association (NYSBA) overwhelming approved the Report of the Committee on Technology and the Legal Profession, presciently proposed prior to the pandemic, to recommend to the New York State Continuing Legal Education Board that the biennial CLE requirement be modified to require one credit of cybersecurity for each of the next two-year CLE cycles.”
• “Social engineering is the psychological manipulation of people in order to convince them to divulge confidential information. Educating lawyers on how to avoid social engineering attacks is imperative because studies have shown that upwards of 97% of malware attacks targeted users through social engineering hacking attempts, and only 3% targeted the technical infrastructure of a company.”
• “Through social engineering, appearing to be associated in one form or another with a lawyer, the law firm, a vendor or friend, a bad actor may seek to convince a lawyer or her staff to provide to him access to confidential information, secured information or a password.”
• “The New York Law Journal (NYLJ) reported in an October 2019 article, entitled “Eight NY Law Firms Reported Data Breaches as Problems Multiply Nationwide,” that the number of law firm data breaches in New York State doubled in 2018…”
• “The article reported that some cybersecurity lawyers and consultants said the numbers ‘likely represent a tiny fraction of the breaches affecting the legal industry. Law firms, like other privately held businesses, don’t often publicize when their data is breached, and many may not report it to state officials, depending on the law.'”

Fascinating catch and analysis by professional liability lawyer Brian Faughnan: “Ethics opinion about a business conflict goes wrong” —

• “It comes out of Ohio and it addresses a conflict issue, but is noteworthy for at least two reasons: (1) it addresses a conflict of interest issue involving representation of a government entity and (2) it sort of addresses something that is more a business conflict issue rather than a true ethical conflict.”
• “Ohio Board of Professional Conduct Adv. Op. 2020-04 weighs in on whether a firm has a problem representing a group of landowners who are opposing a zoning variance sought by an agency seeking to establish a shelter for domestic violence victims. The agency is not a client of the firm in other matters, but the firm does represent a community mental health board that contracts with the agency. The firm has a one-year contract to perform legal services on an “as needed” basis to the board but has not been asked to do any work related to the zoning variance matter. The firm does know though that the board supports the agency’s effort to obtain the variance and wants the agency to succeed.”
• “Now, most lawyers would hear that scenario and see a likely “business” conflict but no ethical conflict. By business conflict, I simply mean that the firm might not have wanted to take on the landowners because it might displease the institutional client – which might be a better source of ongoing and continued business to the firm.”
• “The Ohio opinion, however, finds a way to treat the situation as an ethical conflict but, at its heart, it does so only by turning the business conflict into a material limitation conflict using the idea of ‘personal interest’ of the lawyer as something that could be expanded to be the firm’s “personal” financial interests.”
• “Specifically, the opinion points to the firm’s ‘inherent financial interest in maintaining its standing client-lawyer relationship with the board’ as one of the factors leading to a conclusion that there is a material limitation conflict requiring waivers from both the landowners and the board in order for the firm to continue both representations.”