Bressler Risk Blog

“Tesla threatened to fire law firm in bid to block Musk pay critic – court document” —

• “A Delaware law professor accused Tesla on Monday of threatening to fire one of its longtime law firms if he proceeded with plans to file a friend-of-the-court brief criticizing the company’s bid to restore CEO Elon Musk’s $56 billion pay package.”
• “Retired professor Charles Elson of the University of Delaware alleged in a legal filing, that Holland & Knight, for which Elson has worked for nearly three decades as a consultant, told him that Tesla said it would end its relationship with the law firm unless Elson abandoned plans to submit his brief.”
• “Tesla’s tactic was ‘extraordinary and appalling,’ Elson said in the filing, which seeks permission from the court to submit the brief.”
• “After he learned of the electric carmaker’s alleged threat to Holland & Knight, Elson said in the filing, he resigned from his consulting arrangement ‘to protect that firm from retaliation while upholding the important principle of academic freedom.'”
• “Tesla did not respond to a query about Elson’s allegations.”
• “Holland & Knight denied in an email statement that it was pressured by Tesla. ‘Holland & Knight determined that Charles Elson’s proposed course of action was inconsistent with the firm’s obligations to its client, Tesla,’ the statement said. ‘This determination was not based on any coercion or threats by anyone, including Tesla.'”
• “Holland & Knight represents Tesla in unrelated employment matters, including a race discrimination suit by a California civil rights agency and a separate race discrimination case by the U.S. Equal Employment Opportunity Commission, according to news reports.”
• “Elson, a corporate governance expert, submitted a previous friend-of-the-court brief that was cited several times in the Delaware Chancery Court opinion that voided Musk’s pay package. The judge called the compensation granted by Tesla’s board “an unfathomable sum” that was unfair to shareholders.”
• “Elson sought to file his second brief after Tesla announced last month that it intends to hold a new shareholder vote to reinstitute Musk’s compensation. Elson’s proposed brief argues that Delaware law does not permit the ‘unprecedented’ maneuver of undoing a Chancery Court judgment through a shareholder vote.”
• “Elson’s lawyer, Joel Fleming from the Equity Litigation Group, sent the proposed new brief to Tesla on Friday morning, according to Elson’s filing. A Tesla lawyer from DLA Piper called Fleming later that day to assert that Elson had a conflict of interest, and that Fleming should wait before filing the proposed brief, Elson’s filing said.”
• “Elson said in his filing that there is no conflict of interest because he is not a lawyer at Holland & Knight but only consults with the firm on corporate governance matters. Elson also said he is acting as a friend of the court, not an advocate, in the Musk case.”
• “‘I am very disappointed with these events,’ said Elson in an interview. He declined to say how much Holland & Knight paid him, but said the monthly payment ‘helped cover my mortgage.'”

“Sullivan Hits Back Against FTX Investors’ ‘Dubious’ Fraud Claims” —

• “FTX law firm Sullivan & Cromwell is slamming the ‘claim by some of the failed crypto exchange’s investors that its lawyers were complicit in a billion-dollar fraud.”
• “A federal lawsuit against the firm by FTX investors is based on ‘innuendo masquerading as facts,’ Sullivan Cromwell said Monday in a court filing. Defrauded FTX customers are set to get all of their money back from the failed exchange in bankruptcy proceedings, according to the firm.”
• “‘Plaintiffs in this action, a handful of alleged FTX customers, purport to bring claims against Sullivan & Cromwell to recover the same damages for which they are already being compensated through the bankruptcy process,”’ the firm said, asking a federal judge in Florida to dismiss the lawsuit.”
• “A proposed class of investors represented by The Moskowitz Law Firm in February sued the firm for allegedly aiding and abetting the fraudulent activity that happened at the exchange. The firm is also facing a court-mandated review into whether it has any conflicts of interest that should have been addressed as it leads FTX through bankruptcy proceedings.”
• “Controversy over the powerful Wall Street firm’s work for FTX ultimately caused it to lose out on a high-profile outside monitor assignment overseeing crypto exchange Binance Holdings Ltd, Bloomberg News reported.”
• “In Monday’s filing in the US District Court for the Southern District of Florida, the firm said FTX investors have still made no accusation that Sullivan & Cromwell had knowledge of any fraud while performing certain legal services. Courts have held that ‘lawful legal services to a fraudster does not impute knowledge of the fraud,’ said the firm’s counsel, lawyers from Hunton Andrews Kurth.”

“High Court: Sanctioned Russians “probably owned” litigation funder” —

• “There is ‘reasonable cause to suspect’ that the funder of the claimant in a $1.3bn action was controlled by sanctioned Russians, the High Court has ruled.”
• “Mrs Justice Cockerill said the sale of A1 LLC for a mere £714 as its founders were sanctioned was of particular concern.”
• “‘The figure given for the sale price is surprising on its face. The financial documentation adduced (in a lengthy and full exchange of evidence) fails to provide a coherent or robust justification for that figure.'”
• “Her ruling was the latest in long-running litigation brought by Vneshprombank LLC (VPB) over an alleged massive fraud carried out by Georgy Bedzhamov.”
• “In the hearing before Cockerill J, Mr Bedzhamov sought a declaration that there was reasonable cause to suspect that A1 – which had to that point funded VPB and the trustee – was owned or controlled by designated persons under the Russia sanctions regulations.”
• “The judge said the application ‘has to some extent been prompted by judicial concerns’ – Mrs Justice Falk said in a ruling last year that it was ‘impossible at this stage to dispel the concern that the March 2022 transaction was not genuine, but instead arranged to give the appearance that A1 is no longer under the control of sanctioned individuals.'”
• “Falk J said A1’s role was ‘an unusual one that appears to go well beyond that of a conventional litigation funder,’ as it was managing the proceedings on the liquidator’s behalf.”
• “A1 is no longer funding the case, having been replaced by Cezar Legal Consulting Agency in March, after the latest hearing.”
• “A1 is part of the Alfa Group, which describes itself as ‘one of the largest privately owned financial-investment conglomerates in Russia.'”
• “Up until March 2022, A1 was owned by a Luxembourg company whose major shareholders were Mikhail Fridman, German Khan and Alexey Kuzmichev. All three were all designated under the sanctions regime on 15 March 2022.”
• “VFB said that, around the date but before Mr Khan and Mr Kuzmichev – who between them held 52% of A1 Investment – were designated, they sold their shares to an Alfa director who was not. A week later, all the shares were sold to another undesignated director of A1, a Mr Fayn, for £714.”

Hinshaw partner Matthew Henderson on: “What Law Firms Should Know Amid Rise In DQ Motions” —

• “Disqualification motions are being filed with more frequency. But that only tells half of the story. Such motions are often filed under seal, either by counsel seeking to avoid publicity or by corporate clients that do not want to air their dirty laundry — such as employment discrimination claims, white collar criminal matters, etc. — in a public forum. Also, law firms may quietly withdraw from representation when initially faced with a well-grounded request before anything has been filed.”
• “Disqualification motions tend to be more prevalent in intellectual property litigation, particularly in the bioscience and chip technology sectors, because of the relatively small number of practitioners in those highly technical areas.”
• “When a lateral partner moves to a competitor, there is a risk of disqualification motions being filed by the partner’s former clients, who may become adverse to the new firm. However, the risk may not be realized unless the new client engages in litigation with the lateral partner’s prior client, possibly months or years later.”
• “To reduce the risk of disqualification motions, law firms are proactively including advance conflict waivers in their engagement letters.”
• “Two recent cases — IBM Corp. v. Micro Focus (US) Inc., decided in May 2023 by the U.S. District Court for the Southern District of New York, and SuperCooler Technologies Inc. v. The Coca-Cola Co., decided in July 2023 by the U.S. District Court for the Middle District of Florida[4] — suggest that such prior consent can be effective in opposing disqualification.””The risk of disqualification motions can be considerable for clients engaged in high-stakes litigation, including losing their counsel of choice who are familiar with the case and having to retain successor attorneys to get up to speed.”
• “Disqualification can likewise lead to a claim for legal malpractice, as illustrated in the April 2022 decision of RevoLaze LLC v. Dentons in the Eighth Appellate District of the Ohio Court of Appeals,[6] or breach of fiduciary duty against a law firm.”
• “Disqualification motions can also have profound financial implications for law firms that earn large fees in complex and protracted litigation, particularly in the intellectual property field. Thus, law firms seeking to preserve attorney-client relationships in high-profile cases may choose to pay outside counsel themselves to oppose disqualification motions. Alternatively, in close cases of disqualification, clients may be willing to pay the attorney fees to retain access to their counsel of choice.”
• “The best risk management practice is to identify and analyze potential conflicts of interest at the onset of the attorney-client relationship. This is a labor-intensive process that involves reviewing attorney time records and interviewing lawyers to determine the scope of the prior representation and what confidential information the law firm may possess.”
• “Careful vetting of lateral attorneys is likewise imperative to reduce the possibility of facing a disqualification motion. Often, law firms want to move quickly in onboarding a new partner. However, it pays to complete thorough conflicts checks going back three, five or even seven years.”
•  Engagement letters should contain (1) a disclaimer of future duties after termination of the attorney-client relationship, and (2) a sunset provision setting forth that if the law firm has not performed any legal work for the client in 12 months, it will be treated as a former client for conflicts purposes.”
• “Given that concurrent and former conflicts of interest are imputed to entire law firms, it is also prudent to have robust screening protocols to ensure that lawyers with potential conflicts are unable to access confidential client information on a law firm’s server. Disqualification may be avoided where a law firm can demonstrate that it had promptly and carefully screened allegedly conflicted counsel.”
• “Once a disqualification motion has been filed, a law firm must promptly consult with its client, evaluate the chances of prevailing and obtain its client’s informed consent to oppose the motion. If the conflict is serious, it is often best to withdraw.”
• “Disqualification motions appear to be proliferating in both public and private forums, including arbitration proceedings. Law firms need to be aware of the types of conflicts that most often lead to disqualification and the types of attorneys who may be affected.”

“ABA Issues Opinion on Disclosing to Clients When Using Listservs” —

• “Lawyers should not reveal any information relating to a client’s representation to a wide group of lawyers in a computer listserv, or group email list, without informed consent, the American Bar Association has advised in a formal opinion Wednesday.”
• “The new guidance for the use of email lists by lawyers addresses when it’s permissible to ask large groups of other lawyers questions that could identify a client and their legal issues.”
• “‘Participation in most lawyer listserv discussion groups is significantly different from seeking out an individual lawyer or personally selected group of lawyers practicing in other firms for a consultation about a matter,’ according to the opinion issued Wednesday by the ABA Standing Committee on Ethics and Professional Responsibility.”
• “Without informed client consent, the opinion found, ‘lawyer participating in listserv groups should not disclose any information relating to the representation that may be reasonably connected to an identifiable client.'”
• “The opinion added that lawyers may participate in listserv discussions related to legal news or changes in the law without getting a client’s consent, if the lawyer doesn’t disclose information about a client representation.”
• See complete text of Formal Opinion 511.

In California, noted in the May meeting of the Committee on Professional Responsibility and Conduct: “Discussion of Draft Opinion 19-0004 [re Client File Release and Retention Duties], and Possible Approval for Circulation for Public Comment” —

• “What are the ethical obligations of lawyers with respect to retention and destruction of client files, materials, and property in closed civil and criminal matters?”
• “California Rules of Professional Conduct do not specify a fixed retention period for closed client files. A lawyer’s file retention duties generally turn on the lawyer’s obligations as the bailee of the client’s papers and property and the lawyer’s duty to avoid reasonably foreseeable prejudice to a former client.”
• “If not returned to the client, original documents, property furnished to the lawyer by the client, and items of intrinsic value must be retained by the lawyer and cannot be discarded or destroyed without the client’s consent.”
• “In civil matters, absent an agreement to the contrary, other client materials and property may only be destroyed after the lawyer uses reasonable means to notify the client of their intended destruction and gives the client a reasonable time to respond. If a client cannot be located or fails to respond to reasonable notice of intended destruction of the file, the lawyer may destroy items whose retention is not required by law and is not necessary to avoid reasonably foreseeable prejudice to the client. Items that the lawyer believes are reasonably necessary to the representation may be preserved in electronic form only, unless the lawyer believes the loss of physical copies will prejudice the rights of the client.”
• “Client file retention and disposal can be challenging for California lawyers due in no small part to the absence of a clear rule on the topic. The California Rules of Professional Conduct and the State Bar Act do not specify how long a lawyer must retain a client’s file in a closed matter. They also do not provide when and how a lawyer may destroy the contents of closed client files.”
• “Ethics opinions generally agree that absent an agreement or other legal proscription to the contrary, certain file contents in closed civil matters may be destroyed after the lawyer makes reasonable efforts to notify the client of their intended destruction, but they disagree on whether there should be a fixed, minimum retention period applicable to all file contents.”
• “The California Rules of Professional Conduct and the State Bar Act are also silent on the destruction of closed client files. Regardless, before disposing of any item in a closed client file, a lawyer must take certain precautions to prevent any reasonably foreseeable prejudice to the former client.”
• “Before disposing of any item in a closed civil file, absent an agreement to the contrary, a lawyer must make reasonable efforts to locate and notify the former client of the existence of the file, of the client’s right to examine and retrieve the file, and of the intended destruction.”
• “If the lawyer is without personal knowledge of the contents of the file, the lawyer should consider whether to examine the file to determine whether there are any items that must be retained (as described above) or might result in reasonably foreseeable prejudice to the client if destroyed.”
• See the complete draft document for a number of submitted comments.

“Bankruptcy Judges Aren’t ‘Clubby’—Ethical Networking Is Key” —

• “The resignation of former US Bankruptcy Judge David Jones and scrutiny of a popular two-judge panel in Houston has prompted questions over whether bankruptcy judges should attend social events with bankruptcy practitioners.”
• “There is an unwritten rule about attendance by judges at social events. Small talk such as the weather, a recent Supreme Court decision, your golf game, or your favorite sports team are permissible… Any attorney worth their salt knows this rule and doesn’t want to alienate a judge by breaking it.”
• “Because bankruptcy law is highly specialized, the bankruptcy bar is a relatively small group. Practitioners tend to deal with the same people on a regular basis. If you have been practicing long enough, you probably know everyone in the bankruptcy bar. Bankruptcy judges often are former bankruptcy practitioners. All this can contribute to a public impression of ”clubbiness.'”
• “Attendance by bankruptcy judges at social events may be viewed as supporting a mission of the host organization. Their attendance also may be a ‘draw’ for practitioners to attend such events.”
• “This creates a potential dilemma for members of the judiciary about which events to attend, especially since socializing with practitioners at events is impossible to avoid. But does it—or should it—create an appearance to the public of impropriety or a lack of impartiality?”
• “The commentary to Canon 4 acknowledges that ‘a complete separation of a judge from extrajudicial activities is neither possible nor wise; a judge should not become isolated from the society in which the judge lives.'”
• “The code of conduct specifically says judges may attend fundraising events of law-related and other organizations. The problem is with judges’ behavior at such events—socializing with practitioners—and the public’s perception of that behavior. Judges and practitioners know the rules, and social interaction shouldn’t be interpreted as anything other than that.”

“Prepetition Waivers Sway Invitae Judge On Kirkland Hire” —

• “A New Jersey bankruptcy judge approved the retention of Kirkland & Ellis LLP as bankruptcy counsel for debtor Invitae Corp. Tuesday, the same day he approved a $239 million sale of its assets to Labcorp.”
• “During a hearing in Trenton, U.S. Bankruptcy Judge Michael B. Kaplan said a prepetition waiver signed by Kirkland client Deerfield Management Co. — the largest secured creditor in Invitae’s Chapter 11 case — swayed him to overrule the objections to Kirkland’s retention as the debtor’s bankruptcy counsel.”
• “But Judge Kaplan said the prebankruptcy relationship between Kirkland and Deerfield did not create a situation where there is a conflict in Kirkland representing Invitae in its restructuring.”
• “‘The existence of the expansive prepetition advance waivers as well as language in the retainer agreement are significant for this court,’ Judge Kaplan said of Deerfield’s agreement not to assert a conflict. ‘You cannot waive yourself, or your firm, out of meeting the requirements of Section 327 as a whole. But the waivers can, if done appropriately and tactfully, address some of the issues the court must decide if there is a level of adversity warranting a finding of potential actual conflict.'”
• “Kirkland and Invitae argued in court filings and at Tuesday’s hearing that a debtor’s choice of counsel should be given deference, and that disqualification should only be applied in extreme cases. Here, Kirkland represented Deerfield in fund formation matters unrelated to restructuring and the total amount billed by Kirkland over the life of its representations is about $2.4 million. That amount represented about 0.03% of the firm’s annual revenue, according to Kirkland attorney Mark McKane.”
• “Deerfield’s waiver of conflicts allowing Kirkland to work for Invitae in the Chapter 11 case are also an important factor in considering the retention applications, he said. ‘There is no actual conflict here,’ McKane argued. ‘We have valid, enforceable waivers that delineate whether it’s an actual conflict or a potential conflict.'”
• “Committee attorney Christopher M. Shore of White & Case LLP argued that Kirkland’s relationship with Deerfield creates a conflict in a critical facet of the case, namely a 2023 debt exchange transaction through which Deerfield obtained 78% of Invitae’s secured debt. Kirkland failed to disclose the prepetition work for Deerfield to the debtor and should be relegated to a more minor role in the Chapter 11 case, he said.”

Lucian Pera writes on: “The Madness of the Lawyer Fee-Sharing Ban” —

• “To begin to test that premise, consider with me this question: Does today’s law on what is, and is not, prohibited as fee-sharing with nonlawyers make sense? Does it consistently protect a lawyer’s professional independence?”
• “I submit that no rational person—note I did not say ‘lawyer’—could believe that the law as it stands today is a sensible and good policy, consistently aimed at protecting the independence of lawyer judgment. I invite you to check my work.”
• “Virtually every state follows reasonably closely the core verbal formulation of ABA Model Rule of Professional Conduct 5.4(a): ‘A lawyer or law firm shall not share legal fees with a nonlawyer,” followed by a series of exceptions, about which more later.'”
• “A legal fee is the $1 that Perry Mason occasionally asked a new client to give him to seal the deal to become their lawyer (and prove their innocence within the hour)… Lawyers are not accountants, but every ethics opinion on this subject takes a much more expansive view of a legal fee. We ethics lawyers uniformly tell lawyers that the fee-sharing ban means that not only can Perry not share that $1 before he hands it to Della, he also cannot share his revenue from his firm, or the profits from his firm, with any nonlawyer.”
• “Knowing now that the ban actually covers fees, revenues and profits, Rule 5.4(a) means we cannot “share” them ‘with a nonlawyer.’ Sounds like we cannot give a nonlawyer a portion or percentage of them. Clearly, Perry can, in fact, pay Paul Drake’s expenses or the rent with money that comes from fees. But many authorities blur this line. Sadly, some aim directly at innovative services that would, in fact, aid in the availability of legal services.”
• “Over the decades, a patchwork of exceptions to the ban have been recognized, many ill-defined. Many seem to have little justification when compared to similar situations where the ban remains strong. See if you can find the common policy thread, tied to lawyer independence, that controls.”
• “Profit-sharing bonuses with employees versus consultants. Nonlawyer employees of lawyers can be paid a share of the firm’s profits, so long as they are not paid a share of fees on individual cases or specific groups of cases. But employees certainly cannot be paid a share of the profits from the cases on which they worked. And there’s no exception at all for consultants to lawyers and law firms, as opposed to employees, even if the consultants are doing the same work as an employee—for example, marketing.”
• “Financing. Someone who advances money for a law firm’s expenses—say, to market or pay the expenses of a new line of work—cannot be paid a fee for that financing based on the profits resulting from that line of work. Unless, of course, the financier is a licensed lawyer, in which case, that’s perfectly fine.”
• “Sharing court-awarded fees. In most states, a lawyer may share court-awarded fees with a nonprofit organization that employed, retained or recommended the lawyer’s employment. But not with a for-profit organization that did the same.”
• “So, do you think that lawyers who engage in conduct prohibited above are less independent in their professional judgment for clients than lawyers controlled by these prohibitions?”
• “First, is the professional judgment of a lawyer who does share fees with a nonlawyer impaired, or somehow less than, the professional judgment of a lawyer who does not? I have never understood that logic, especially in the face of so many other sources of a lawyer’s obligation to maintain the independence of her professional judgment for, and her undivided loyalty to, a client.”
• “Second, even assuming an affirmative answer to the first question, does the current patchwork, inconsistent ban on fee-sharing effectively separate problematic fee-sharing from benign fee-sharing? Clearly not. Are we really worried about percentage leases, or fee-sharing with law firm employees leading to lack of professional independence?”

“Delaware Supreme Court Holds MFW Inapplicable Based on Banker Conflict Disclosure Deficiencies” —

• “The Delaware Supreme Court has reversed a Court of Chancery decision dismissing challenges to the acquisition of Inovalon Holdings, Inc. by a consortium led by Swedish private equity firm Nordic Capital in a decision demonstrating the importance of disclosure of financial advisor conflicts in order to obtain the benefit of business judgment rule review under Kahn v. M&F Worldwide Corp. – the MFW decision.”
• “The Supreme Court held that the majority-of-the-minority stockholder vote approving the transaction was not fully informed, based on inadequate disclosure of conflicts of interest on the part of financial advisors to the special committee of Inovalon’s board.”
• “The Court found that the Inovalon proxy statement failed to adequately disclose conflicts of both financial advisors. It found that language stating that the second advisor “may provide” services to Nordic and its co-investors was misleading given that the advisor was in fact providing such services, creating a concurrent conflict.”
• “In the case of the first advisor, the Court held that disclosure that the bank would receive “customary compensation” in connection with disclosed concurrent representations was insufficient because it kept stockholders from “contextualizing and evaluating” the conflicts. It also found that the proxy statement failed to disclose the first advisor’s fees for prior work for members of Nordic’s equity consortium, which amounted to nearly $400 million in the relevant two-year period.”
• “The Court stated that while ‘there is no hard and fast rule that requires financial advisors to always disclose the specific amount of their fees from a counterparty in a transaction,’ the question is subject to a materiality standard. The Court found that in this case that materiality standard was met, noting that the undisclosed compensation was roughly 25 times the disclosed fees that the first advisor received from Nordic and 10 times the fees that it received in the transaction, thus creating a misleading picture.”
• “Finally, the Court addressed disclosure about the second advisor’s role in the bidder outreach process, which the plaintiffs claimed had been overstated in the proxy. The Court observed that the disclosures about the second advisor’s role ‘do not sit comfortably’ with corresponding accounts in the minutes, and it cautioned boards, committees and their advisors to take care in accurately describing events and roles played by board and committee members and their advisors – but the Court declined to “pile on” another basis for reversal.”

“Research Finds Companies Where Chief Legal Officer is Also Corporate Secretary Experience Fewer Incidents of Shareholder Litigation, Regulatory Violations, and Regulatory Penalties” —

• “The Association of Corporate Counsel (ACC) today announced its selection for the inaugural winner of the Carl Liggio Memorial Paper Competition. The winning submission examines the legal risk implications at companies where the Chief Legal Officer (CLO) is also the Corporate Secretary, showing that the upside impact is significant, especially when combined with an independent board of directors. These companies experience fewer incidents of shareholder litigation, regulatory violations, and regulatory penalties.”

The paper itself: “Independent or Informed? How Combining the Roles of Corporate Secretary and Chief Legal Officer Impacts Legal Risk” —

• “On the other hand, serving in a dual capacity as a corporate secretary and CLO may exacerbate conflicts of interest. This conflict arises because the board is responsible for overseeing the CLO (and the rest of the executive team) but does so based on the information and advice received by the CLO.”
• “This provides the opportunity for the CLO to “gloss over” legal issues (for which she is responsible) and avoid accountability for failing to minimize legal risks.”
• “Furthermore, both roles are demanding. One person who fulfills both capacities will necessarily have less time and attention to devote to any singular role, leading to less effective management of legal risks. We refer to this as the ‘impaired independence’ explanation.”

“Judge should be censured for street brawl, conflict of interest, New York judicial conduct commission says” —

• “A New York judge should be censured for engaging in a street brawl with his neighbors and for participating in matters involving an attorney who was buying the judge’s law practice, according to the New York State Commission on Judicial Conduct.”
• “Grisanti is a judge on the court of claims and is an acting justice for the trial-level supreme court in Erie County, New York.”
• “The street brawl happened in Buffalo, New York, in June 2020, according to findings of fact by the judicial conduct commission. It involved neighbors said to have a history of conflict with others. The confrontation began after the neighbors parked their cars near Grisanti’s driveway. Grisanti called 911 to request that the cars be ticketed or towed if they weren’t moved.”
• “One of the neighbors ripped off Grisanti’s shirt… When Grisanti’s wife resisted handcuffing, an officer brought the 110-pound woman to the ground. Grisanti shoved the officer. A second officer restrained Grisanti with a bear hug. Grisanti warned officers that they should not arrest his wife. He said his son and daughter are police officers, and he was good friends with the mayor of Buffalo. Prosecutors did not file charges against the Grisantis.”

For the conflict issue: “STATE OF NEW YORK COMMISSION ON JUDICIAL CONDUCT” —

• “Charge III alleged that in or about 2016, respondent filed a Financial Disclosure Statement (“FDS”) with the Ethics Commission for the New York State Unified Court System in which he inaccurately reported the income he received from the sale of his law practice in 2015.”
• “On or about May 18, 2015, respondent entered into an agreement to sell his law practice to attorneys Peter J. Pecoraro and Matthew A. Lazroe. The agreement provided for the sale of the “goodwill” of respondent’s law practice for $50,000, with $15,000 down and monthly payments of $730 beginning on July 1, 2015 and extending until the balance was fully paid.”
• “Upon becoming a judge, respondent placed Mr. Pecoraro on his recusal list, but did not include Mr. Lazroe on the list.”
• “From in or about May 2015 through in or about June 2019, in connection with the agreement for the sale of his law practice, respondent received approximately $27,530 from Mr. Lazroe which included monthly installments during that period. The final installment of $365 was paid in June 2019.”
• “Respondent took judicial action in five cases involving Mr. Lazroe while Mr. Lazroe and respondent were engaged in an ongoing financial relationship.”

New York State Bar: “Ethics Opinion 1265: Conflicts of interest” —

• “A lawyer formerly employed by a Legal Aid Society office would not have a conflict in representing a client in a matter adverse to a party who had been represented by other lawyers in that office at that time unless the lawyer, while at Legal Aid, acquired confidential information that was material to the new matter and the matters were substantially related.”
• “The inquirer was employed by the Legal Aid Society of her county for a number of years, representing clients in Family Court. She left employment at Legal Aid and practiced in another area of the law and now is representing clients in the same Family Court in private practice (not as an employee of the Legal Aid Society). She inquires whether she has a conflict in representing clients adverse to a party that was represented in Family Court by another Legal Aid Society lawyer during the time she was employed by the Society.”
• “Does a lawyer formerly employed by the Legal Aid Society have a conflict of interest in appearing in Family Court adverse to a party who was represented by a different Legal Aid Society lawyer during the time that the inquiring lawyer was employed by the Society?”
• “Under Rule 1.9(b), a lawyer who did not herself represent a client of the Legal Aid Society would have a conflict in representing someone “materially adverse” to that former Legal Aid Society client only if the lawyer had “acquired” confidential information that was ‘material’ to the new matter and if the matters were ‘substantially related’ … But even if the matters were substantially related, if the lawyer did not acquire material confidential information about the former matter on which other Legal Aid Society lawyers worked (but on which the inquirer personally did not work), then the lawyer would have no conflict appearing adverse to the former Legal Aid Society client.

“A Defense Win in Texas on the Issue of ‘But For’ Proximate Causation in a Legal Malpractice Case” —

• “The Texas Court of Appeals held that when a plaintiff’s claim against her former attorney properly is grounded in professional negligence, the plaintiff cannot also bring a breach of fiduciary duty claim against the attorney.”
• “Further, the court ruled that a legal malpractice plaintiff must prove that her lawyer’s negligence was the proximate cause of cognizable damages and, in situations regarding contract formation, that the other contracting party would have agreed to the aPlaintiff alleged that defendant failed to exercise ordinary care and had various undisclosed conflicts of interest. Specifically, plaintiff alleged that the contracts were negligently drafted and allowed Schnur and Anderson to ‘circumvent’ or ‘cut out’ plaintiff from future deals.dditional or changed contractual terms.”
• “In June 2014, plaintiff entered into a series of contracts with Alan Schnur and David Anderson, who owned several apartment complexes for investment purposes. The series of contracts executed between plaintiff, Schnur and Anderson essentially merged their businesses and formed a new entity to solicit new investors to purchase additional properties. Plaintiff alleged that her attorney, the defendant, represented not only the plaintiff but also Schnur and Anderson during the contract negotiations and drafting.”
• “Plaintiff claimed that defendant did not draft the contracts herself but engaged another law firm to draft the contracts without plaintiff’s consent. Plaintiff also alleged that defendant had financial interests in the apartment properties. If the defendant had disclosed her conflicts, plaintiff would have hired new counsel and benefited from more favorable contract terms.”
• “Plaintiff argued that she had an attorney-client relationship with defendant, and that defendant breached her fiduciary duty by undertaking the representation ‘fraught with conflicts of interest’ and by hiring a separate law firm to draft the agreements.”
• “The court held that Forshee’s allegation that Moulton hired another law firm to draft the agreements sounded in negligence, not a breach of fiduciary duty. The court also held that simultaneous representation, without more, did not constitute a breach of fiduciary duty, noting that plaintiff failed to show that defendant obtained any improper benefit or placed her own financial interests over plaintiff’s interests.”

“Massachusetts lawyer reprimanded after accidentally copying opposing counsel email to lawyer with plan to avoid judge’s call” —

• “… the recent Massachusetts Board of Overseers Order imposing a reprimand on a lawyer who sent an email to another lawyer to evade a judge’s and accidentally copied opposing counsel.”
• “The judge stated that he wished to telephone the bankruptcy attorney from the bench, and CSI’s counsel provided the bankruptcy attorney’s phone number to the clerk.”
• “While the clerk was dialing the bankruptcy attorney’s number, the respondent took his cell phone from his pocket and sent the bankruptcy attorney an email that stated ‘Court is going to call you. Don’t pick up.’ He also sent the bankruptcy attorney a text message that stated: ‘Don’t pick up your phone.’ The bankruptcy attorney did not pick up the phone because he was occupied with another client, and not because of the respondent’s email and text.”
• “The respondent did not inform the judge that he was sending the email and text to the bankruptcy attorney. However, he inadvertently copied the email to CSI’s counsel. The next day, CSI’s counsel brought the email to the judge’s attention.”

“Former Watergate Defense Attorney Leaves Squire Patton Boggs for Boutique, Citing Conflicts” —

• “Miami-based boutique Heise Suarez Melville is bringing on a former managing partner for Squire Patton Boggs’s Miami office after he spent almost two decades there.”
• “Alvin Davis began his career in the U.S. Airforce, where he served as a staff judge advocate in Southeast Asia. Shortly after, he started practicing civil law in D.C., focusing on election law, where he defended Jeb Magruder, one of the people who pled guilty for involvement in the Watergate scandal.”
• “Davis eventually moved to Florida where he served as Squire Patton Boggs’s Miami managing partner after the firm acquired his previous firm Steel Hector & Davis, where he also served as its Miami managing partner. Since he moved to Florida, Davis has represented some local staples such as Florida Power & Light as well as the Miami Herald.”
• “Davis says he left Squire Patton for a boutique firm, partly because he kept running into conflict issues at the bigger firm.”
• “‘With a large firm, there are a lot more business conflicts where you have clients that don’t want you to take on other clients. There are legal theories that you may want to use that may cause problems for other clients,’ Davis said. ‘This is a time in my practice when the advantages of a small firm are very appealing to me.'”
• “The conflicts were especially in the way over the past few years, according to Davis.”
• “Despite the many practices global firms like Squire Patton may offer, Davis says smaller firms can also offer plenty of opportunities. ‘There are clients who are adverse to large firms because they don’t want to pay for the large apparatus of the large firm. There are lawyers who will not refer matters to a large firm because they’re afraid that they’ll refer the matter and lose the client,” he said. “So I think there are going to be a number of opportunities that will arise at the new firm that might not have occurred, where I [was].'”

“Kirkland Moves to Dismiss Suit Tying Firm to Texas Judge Romance” —

• “Kirkland & Ellis LLP moved to dismiss a lawsuit accusing the legal giant of helping to hide a romantic relationship involving a prominent Texas bankruptcy judge and a local lawyer.”
• “‘That relationship has nothing to do with Kirkland,’ the firm said in a Tuesday filing in the US District Court for the Southern District of Texas.”
• “The former CEO of petroleum barge company Bouchard Transportation Co. Inc. accused Kirkland of making misleading legal filings to conceal the romance between bankruptcy Judge David R. Jones and onetime Jackson Walker attorney Elizabeth Freeman. Kirkland often partnered with Jackson Walker to handle large Chapter 11 cases in Texas, including Bouchard’s. Jones presided over Bouchard’s bankruptcy in the US Bankruptcy Court for the Southern District of Texas.”
• “‘Bouchard brings serious claims against Kirkland on what amounts to a tortured theory of bystander liability,’ Kirkland said in the filing.”
• “That theory rests on what the firm called an inaccurate assertion that Kirkland should have acted on allegations about the relationship between Freeman and Jones, who resigned in October. Bankruptcy Judge Marvin Isgur had determined in 2021 that the allegations weren’t ‘credibly substantiated’ after holding a hearing related to the bankruptcy of McDermott International, Kirkland said.”
• “Bankruptcy rules didn’t require Kirkland to disclose potential conflicts of Jackson Walker, the firm said in the Tuesday filing.”

“Conflict Draws Reciprocal Suspension” —

• “The full Massachusetts Supreme Judicial Court imposed a three-year suspension as reciprocal discipline for a sanction imposed by the United States Patent & Trademark Office.”
  • “In 2019, an administrative law judge determined that Correll had violated several sections of the USPTO Code of Professional Responsibility… by representing private parties before the USPTO while he was employed by the Federal government (as an electronics engineer for the United States Department of the Navy). The director of the USPTO subsequently affirmed the administrative law judge’s decision in a final order issued in February 2021.”
  • “The detailed facts of Correll’s misconduct — of his representation of private parties before the USPTO while he was a Federal government employee — are set forth in the final order from the USPTO, as well as in two Federal court decisions, see note 4, supra, and need not be reiterated here.”
  • “As to Correll’s primary argument, in particular, that his suspension violates his First Amendment rights to free speech and association… Correll was not disciplined — his license was not suspended — on the basis of the content of his speech, but rather on the basis that in representing private parties before the USPTO, he violated certain of the USPTO’s disciplinary rules. Moreover, as the District Court noted, ‘the only prohibition on [Correll’s] speech was the speech [he] exercised when representing private clients in front of the USPTO. [He] was free to speak on patent and trademark matters otherwise.'”
  • “Acting through his firm, Mr. Correll represented private clients, for pay, at the PTO while a Navy employee, filing or prosecuting 211 patent applications and 80 trademark registration applications between 2002 and October 25, 2017. S. App’x 130, 132. He did this despite receiving a reminder, as part of a PTO-distributed practitioner survey in 2003, that federal employees may not represent private clients at the PTO. S. App’x 199. Mr. Correll did not resign from federal employment until September 2018.”

“Conflict Disqualifies Entire Wyoming Bar Counsel Office” —

• “Andrea Richard moved the Review and Oversight Committee (ROC) to disqualify Special Bar Counsel Wes Reeves and the Office of Bar Counsel from prosecuting the pending disciplinary proceeding against her due to a conflict of interest. She sought the appointment of a new, conflict-free special bar counsel.”
• “The ROC disqualified Mr. Reeves but declined to impute his conflict of interest to the Office of Bar Counsel. After the ROC determined there was probable cause to allow Bar Counsel to file a formal charge, Ms. Richard asked the hearing panel for the Board of Professional Responsibility (BPR) to disqualify the Office of Bar Counsel due to an additional conflict of interest that was unknown to her at the time she filed her first motion and because Bar Counsel used Mr. Reeves’s work product when drafting the formal charge. The BPR denied Ms. Richard’s motion.”
• “We granted Ms. Richard’s petition to review the BPR’s order. We conclude the Office of Bar Counsel must be disqualified due to existing conflicts of interest, and we reverse with instructions to appoint a new, conflict-free special bar counsel.”
• “During the investigation into one of those seven cases, Fields v. Waterhouse, Ms. Richard was briefly represented by Mr. Wes Reeves. Mr. Reeves’s representation consisted of writing letters to then Bar Counsel, Ms. Rebecca Lewis, asserting Ms. Richard’s conduct in that matter did not constitute a violation of the Rules of Professional Conduct. Ultimately, this Court adopted the BPR’s report and recommendation finding Ms. Richard committed multiple rule violations when she forced opposing parties to file repeated motions to compel discovery, failed to comply with court orders to provide meaningful discovery, caused unnecessary delay and needlessly increased the costs of litigation, filed pleadings that were not well grounded in fact or warranted by good faith argument, made allegations in court documents that were not true, and made repeated misrepresentations concerning discovery and other matters.”
• “In November 2022, Mr. Gifford informed Ms. Richard that Mr. Reeves and Ms. Anna Reeves Olson were appointed to serve as Special Bar Counsel in the present disciplinary proceeding. This correspondence indicated Mr. Gifford was aware Mr. Reeves previously represented Ms. Richard in connection with the 2014 Suspension, but Mr. Gifford determined Mr. Reeves did not have a conflict of interest and could serve as Special Bar Counsel. Mr. Reeves did not notify Ms. Richard of any potential conflict prior to accepting the representation, nor did he seek her consent before accepting the representation.”
• “The ROC disqualified Mr. Reeves and Ms. Olson from serving as Special Bar Counsel finding Mr. Reeves’s prior representation was ‘either a conflict of interest, or at the very least the appearance of a conflict of interest, such that Special Bar Counsel cannot continue on in this matter.’ The ROC did not impute Mr. Reeves’s conflict to the Office of Bar Counsel.”
• “The BPR denied Ms. Richard’s motion to disqualify the Office of Bar Counsel and her motion for an order prohibiting the turnover of work product. The BPR found Ms. McCorkle did not have a conflict of interest under W.R.P.C. 1.9 reasoning: “the events that resulted in the 2014 [S]uspension and the 2017 [R]einstatement are in no way related to or in any way the same or substantially related to those at issue in this matter. The persons and the alleged facts are completely different and in no way related to earlier events.” For those same reasons, the BPR found Mr. Reeves “did not and does not now” have any conflict of interest that would require the disqualification of the Office of Bar Counsel or a restriction on access to work product.”
• “The conclusion the current disciplinary proceeding is substantially related to the 2014 Suspension and the 2017 Reinstatement is readily apparent from the pleadings filed by Mr. Reeves and Mr. Gifford in this proceeding. These pleadings show all three proceedings involve the same client, are “relevantly interconnected,” and reveal Ms. Richard’s alleged “pattern of conduct.”
• “Because the proceedings are substantially related, under our case law, there is an irrebuttable presumption Ms. Richard communicated confidential information to Mr. Reeves and Ms. McCorkle during the prior representations.”
• “Similarly, Mr. Gifford sought Mr. Reeves’s appointment as Special Bar Counsel before meeting with Mr. Reeves to discuss any potential conflicts. Once Mr. Gifford became aware of Mr. Reeves’s prior representation of Ms. Richard, rather than seeking the appointment of a new special bar counsel, Mr. Gifford unilaterally determined Mr. Reeves did not have a conflict of interest and could continue with the representation. Because Mr. Reeves was not properly screened and Ms. Richard did not consent to him serving as Special Bar Counsel, we must impute Mr. Reeves’s conflict of interest to Mr. Gifford.”
• “Once Mr. Reeves was disqualified, Mr. Gifford used Mr. Reeves’s work product to draft the formal charge he filed in this proceeding. Although we have not previously addressed whether substitute counsel can use a previously disqualified attorney’s work product, other jurisdictions have recognized once an attorney has been disqualified, transferring the work product of that disqualified attorney poses the same threat to the client’s confidential information, and it may be necessary to restrict access to the disqualified attorney’s work product in order to effectuate the purpose of disqualification.”
• “Given the numerous conflicts of interest that have occurred in this proceeding, the only appropriate remedy is to remand this matter to the ROC with instructions to appoint a new, conflict-free special bar counsel and to prohibit the Office of Bar Counsel from turning over any of Mr. Reeves’s or Mr. Gifford’s work product. This means new special bar counsel will have to begin the investigation anew based on the four complaints.”

“Conflict alleged as Grossman uses same attorney representing DA defendant in Gascón office” —

• “The headline-grabbing criminal case against a top aide to Los Angeles County District Attorney George Gascón has a potentially problematic connection to the ongoing Rebecca Grossman saga: the two high-profile defendants are using the same lawyer.”
• “According to the deputy district attorneys who successfully prosecuted Grossman for second-degree murder in February, a conflict of interest could arise since Assistant DA Diana Teran was above them in the prosecutor’s office chain of command when she was hit with a charge of illegally using police data on April 24. “
• “In a motion filed the following day, prosecutors Ryan Gould and Jamie Castro said Grossman should sign a waiver acknowledging a potential conflict before being represented in post-conviction matters by attorney James Spertus, who is also defending Teran. A hearing on the matter is set for May 17 in Van Nuys Superior Court.”
• “The news about the Teran charge was still a month away, but there was already a wrinkle concerning Grossman’s latest lead attorney: he’s an old coworker of the judge.”
• “‘Mr. Spertus is someone I know from the U.S. attorney’s office when I was a federal prosecutor,’ Brandolino said. ‘He’s not a close friend to the point where I think it would affect my ability to be fair in this case.'”
• “Though he didn’t think the relationship required his recusal in the case, Brandolino considered it worth disclosing. ‘I’ve seen him socially in the past, I haven’t seen him in a while,’ the judge said. Spertus did not respond to a request for comment. He told the Daily Journal, a legal publication, that there is no conflict since he is ‘adverse to the People of the State of California’ in both cases.”