Bressler Risk Blog

“Firm splits with lawyers who won gun rights case at Supreme Court” —

• “Two of the lawyers responsible for a major victory for gun rights forces at the Supreme Court on Thursday are parting with their prominent law firm after it announced it would no longer handle Second Amendment litigation.”
• “Former Solicitor General Paul Clement and Erin Murphy, a regular Supreme Court litigator, said they were launching their own firm after Chicago-based Kirkland & Ellis decided to step back from gun-related litigation.”
• “Through a firm spokesperson, Kirkland confirmed its decision but did not explain its rationale for dropping gun cases. A key attorney at Kirkland, Jon Ballis, said he hoped the firm could continue to work with Clement and Murphy on matters not related to guns.”
• “Clement’s departure from Kirkland & Ellis echoes a similar episode about a decade ago when he left Atlanta-based King & Spalding after that firm moved to distance itself from Clement’s work to preserve the Defense of Marriage Act, a federal law banning benefits for same-sex couples.”

Not a law firm, but still and interesting conflicts story: “SEC charges Egan-Jones and CEO with conflict of interest breaches” —

• “The Securities and Exchange Commission on Tuesday has charged credit ratings firm Egan-Jones as well as its CEO, Sean Egan, with violating conflict of interest provisions, according to a release.”
• “The Pennsylvania-based company, without admitting or denying the SEC’s findings, will settle the charges with a penalty of $1.7M and over $146K in disgorgement and interest, the securities agency said.”
• “The SEC’s findings concluded that Egan ‘was influenced by sales and marketing considerations while participating in determining a credit rating for that client, which created a prohibited conflict of interest.'”
• “Also, Egan-Jones didn’t ‘establish, maintain, and enforce policies and procedures reasonably designed to manage such conflicts of interest,’ the SEC said.”

More from the SEC order:

• “On July 11, 2019, Client A engaged EJR to issue a rating for a real estate transaction. Although EJR’s typical turnaround time for that type of rating was approximately five days, on July 23, EJR discovered that the client relationship manager for Client A had failed to submit the ratings request to the ratings group.”
• “On July 31, Client A emailed EJR’s client relationship manager to ask about the status of the rating and the reason for the delay. In those emails to EJR, Client A complained that the delay was “beyond ridiculous” and demanded that the rating be issued that day by 5:00 p.m. Client A also threatened to cancel the pending rating request and stop doing business with EJR.”
• “Egan — who at the time was EJR’s president and the head of EJR’s ratings group — spoke to the client relationship manager and stated that Client A was an important client for EJR and that he was concerned that EJR could lose Client A’s business.”
• “Later on July 31, Egan called Client A and promised that EJR would provide the requested rating later that day. Egan also told Client A that the client relationship manager was being replaced.”
• “At around 4:30 p.m. on July 31, a half hour before Client A’s deadline, EJR convened an RRC by telephone to vote on a proposed rating for Client A. Egan and a senior EJR analyst (“Analyst 1”) were the voting members of the committee, with Analyst 1 serving as the chairperson. The presenting analyst on the committee (the “Presenting Analyst”) recommended a rating of BBB+ for the transaction. However, during the RRC meeting, Analyst 1 requested certain information about the transaction that she believed was essential for determining an accurate rating. Because EJR did not have the information that she sought, Analyst 1 abstained from voting on the proposed rating. Without a majority of voting members in support, the proposed rating was not approved by the RRC.”
• “At approximately 5:13 p.m., Client A sent Egan an email stating: ‘We are passed [sic] 5pm. Where is the rating?'”
• “At approximately 5:17 p.m., Egan became the chairperson of the RRC. Analyst 1 was replaced with another EJR analyst (“Analyst 2”) as the second voting member.”
• “At 5:21 p.m., Egan and Analyst 2 voted to approve the proposed BBB+ rating, which EJR then issued”
• “Client A, however, was displeased with the BBB+ rating, and emailed the Presenting Analyst asking why the rating only was BBB+ and noted that EJR had recently rated another, similar transaction for Client A two notches higher. When the Presenting Analyst attempted to explain the reason for the BBB+ rating, Client A replied, ‘Surely you jest. I recommend you go back and verify your models. You must have missed something.’ Client A then forwarded those emails to Egan and asked Egan to call to discuss the rating.”
• “On August 6 and August 7, 2019, Client A emailed Egan asking him whether there was any ‘update’ on the rating.”
• “Around this time, Egan, in his capacity as a member of the prior RRC that had approved the BBB+ rating on July 31, directed the Presenting Analyst to develop a new rating tool in light of Client A’s concerns about the BBB+ rating. On August 12, EJR convened another RRC, with Egan as a voting member and an analyst who had not participated in either of the two prior RRCs as the RRC chair and second voting member (“Analyst 3”). Neither Analyst 1 nor Analyst 2 was invited to serve on this new RRC.”
• “The Presenting Analyst again proposed a rating of BBB+. Notwithstanding the Presenting Analyst’s recommendation, and although EJR had received no substantive information from Client A to support a higher rating, Egan and Analyst 3, relying on the new rating tool referenced above, voted to increase the rating one notch to A-.”

“Dunkin’ wants lawyers disqualified from lawsuit over ‘plant-based’ sausage” —

• “Dunkin’ Brands Inc told a Florida federal court Wednesday that law firm Troutman Pepper Hamilton Sanders should not be allowed to represent a Philadelphia company suing it for trademark infringement because the firm represents another Dunkin’ unit in a different case.”
• “Troutman’s defense of Dunkin’ Donuts Franchising LLC in a New Jersey sexual harassment and discrimination lawsuit should disqualify it from representing Vegadelphia Foods in its lawsuit over Dunkin’ and Beyond Meat’s “Great Taste, Plant-Based” slogan, the company said.”
• “Vegadelphia, which sells plant-based beef and chicken, said in its April lawsuit that Dunkin’ and Beyond Meat’s slogan for their Beyond Sausage Sandwich is likely to cause confusion with its trademarked slogan, ‘Where Great Taste is Plant-Based.'”
• “Dunkin’ said in its Wednesday filing that ‘for all practical purposes, Troutman has sued a current client.’ It said Troutman was hired to represent Dunkin’ Franchising in January.”
• “The filing said Dunkin’ Franchising is a shell company used solely to contract with Dunkin’ franchise owners. Any ruling against Dunkin’ Brands would also hurt Troutman’s client in the New Jersey case, the company said.”

“Nelson Mullins Atty’s Work Was ‘Conflict Ridden,’ Jury Hears” —

• “A legal ethics expert testified Thursday that a Nelson Mullins lawyer’s work for a wealthy Florida family was rife with conflicts of interest, and a waiver letter he asked them to sign was an ethical minefield.”
• “Charles Wolfram, a law professor emeritus at Cornell University, took the stand in a lawsuit claiming that Nelson Mullins Riley & Scarborough LLP lawyer Carl Rosen mishandled trust work for Dr. Steven Scott and his wife, former nurse Rebecca Scott, allowing their eldest son, Rob Scott, to reap $46 million from a trust against their wishes.”
• “Wolfram told the jury that Rosen’s work for eight members of the same family — there were four other children besides Rob, plus a mother-in-law — was a ‘classical conflict of interest.'”
• “At a May 2012 meeting in his office, Rosen presented the family members with a consent waiver, which they all signed. In Wolfram’s view, however, the letter was riddled with ethical problems.”
• “For example, it was an attempt to waive both past and future issues, which Wolfram called ‘an impossible request.’ Rosen has testified it was only for past issues.”
• “Elsewhere, the letter explains that for each signatory, Rosen will not disclose confidential information from that person to other family members, even if the information is adverse to another family member.”
• “Wolfram described this as ‘a very controversial method of representing clients that some members of the estate planning community embrace, but many think [is] very, very difficult to maintain.'”
• “‘You could very easily get into a conflict situation and not be able to deal with it,’ he said.”

“Appeals Court Says ‘Gentleman’s Agreement’ Between Law Firm and Client Does Not Outweigh Contract” —

• “The New Jersey Appellate Division has rejected Basil Law Group’s claim that it is due $400,000 in fees and additional work promised in a ‘gentleman’s agreement’ with Noah Bank, after the bank’s CEO stepped down amid criminal charges.”
• “Shin asked Basil to reduce the fixed fee balance of $550,000 in exchange for a $250,000 fee, an oral promise the firm would remain primary counsel for all litigation matters, and a promise the board would pay the firm to perform in an advisory capacity. The agreement was only verbal, which Basil claimed in a deposition was at Shin’s request. Basil stated that Shin said that he would pay off the additional $400,000 but could not put it in writing, according to the opinion.”
• “In what Shin called ‘a gentleman’s agreement’ during his deposition, Noah would not have to pay the full agreement price of $650,000 in exchange for providing additional legal work, the opinion said. He also admitted to stating that he would pay the $400,000 if ‘he were able to do so’ or if there was ‘a merger transaction in which everybody hit the lottery.'”
• “Noah’s chairman of the board, Edwin Lloyd, asked Basil to conduct an internal investigation into the criminal allegations to protect Noah’s interests. However, James learned that Basil was also assisting Shin with his criminal defense. Basil requested and received a waiver of conflict from James to proceed with Shin’s representation, according to the opinion.”
• “After consulting with outside counsel, James recommended Noah terminate Basil’s services for the company citing a conflict of interest. Basil was terminated from all pending litigation and future work. In a discussion with the board, all were in agreement that a conflict existed. However, Lloyd testified that Noah terminated Basil because of cost and because the services were no longer needed, the opinion said.”
• “In August 2019, Basil attempted to collect the additional $400,000 in fees and asserted that Noah’s reason for terminating the firm was strategic and demanded payment within 30 days. The bill went unpaid and Basil brought this action in Bergen County Superior Court. The trial court found ‘no ambiguity’ in the 2019 contract and therefore concluded that there was no breach of contract, according to the appeals court’s opinion.”
• “On the final claim regarding termination of Basil’s services by Noah, the trial court found nothing that indicated ‘malice or ill motive.’ James received advice from counsel that indicated a conflict existed and the board no longer felt satisfied with Basil’s services once he represented Shin in the criminal matter.”
• “‘Basil conceded defendant could terminate plaintiff under the oral agreement if defendant became dissatisfied with plaintiff’s representation,’ the appeals court said. ‘Therefore, defendant did not breach the implied covenant in terminating plaintiff’s services. We see no reason to disturb the court’s order finding no breach of the covenant of good faith and fair dealing.'”

“Atty DQ Bid Takes Back Seat In Restaurant Ownership Fight” —

• “A Georgia state judge said the issue of ownership must be decided before he could determine whether an attorney can represent both a business and its CEO in a dispute over the corporate ownership of a metro Atlanta sushi restaurant and possible breaches of fiduciary duties.”
• “Ryan Isenberg of Isenberg & Hewitt PC, who represents Yijae and Lee, contended that Moore couldn’t represent both defendant Dongin Kim and EJ & Don as a necessary nominal party in the suit because a corporation’s attorney can’t represent an individual shareholder in a case in which his interests are adverse to those of other shareholders.”
• “Moore contended that he should be able to represent both the company and Kim at least until the issue of ownership is decided.”
• “‘I think this motion puts the cart before the horse,’ Moore said. ‘I think we have to first determine who is a shareholder. That’s a fundamental merit-based argument. We don’t believe that Lee or Yijae are shareholders based on the evidence. That’s a merit-based argument, and if it’s true, they have no standing to contest whether I can represent the organization and its CEO.'”
• “Judge Davis agreed with Moore, saying the dispute at the heart of the case is whether Yijae and Lee are shareholders in the company at all and that issue must be decided before he could determine whether Moore can represent both Kim as CEO and EJ & Don.”
• “Yijae and Lee first filed suit against Kim in January after they said he claimed they were merely lenders, not shareholders, in EJ & Don and asked them to refrain from coming on the premises of the restaurant. They sought a declaratory judgment that they are actually the controlling shareholders of the company and that they are entitled to a preliminary and permanent injunction barring Kim from exercising control over it.”

Some recent information security news and updates focused on law firms. First, Eileen Garczynski at Ames & Gough flagged this story the other day: “Amid BigLaw Data Attacks, Breaches Surge For Smaller Firms” —

• “In mid-January, a cyberattack targeting New York law firm Cleary Gottlieb Steen & Hamilton LLP exposed the firm’s email servers to unauthorized actors, potentially breaching the personal information of about 40 of the city’s residents, it told New York officials.”
• “Cleary, however, was just one of the hundreds of law firms — from BigLaw firms to solo offices — that have reported data incidents in the past year and a half as they become increasingly targeted by cybercriminals, according to public records and cybersecurity experts.”
• “Based on extensive public record requests, Law360 Pulse identified about 90 law firms that reported data breaches to authorities across 17 states in 2021, almost doubling the number from 2020, which also tracked the same states except for Illinois. The number also continues to rise this year, with at least 27 law firms already reporting data incidents in the first four months.”
• “And while the number of data breaches reported by large law firms has remained steady at about a handful, such incidents reported by midsize and small law firms have increased significantly since 2020.”
• “Similar to the breaches recorded in 2020, nearly all the recently hit firms that have notified state authorities identified external breaches — including phishing, hacking and malware attacks — as the most commonly identified cause of data exposure.”
• “Meanwhile, less than 10% of firms reported that they experienced data breaches through other factors, such as a third-party data breach, stolen or lost devices, or insider wrongdoing.”
• “The breakdown in percentages reflects that smaller, midsize firms often ‘don’t have the staff, resources and expertise’ of larger law firms and are therefore compromised far more often, said Frank Gillman, a former BigLaw chief information officer who now works at consulting firm Vertex Advisors. While smaller firms also spend money on security defense systems, Gillman said many lack the expertise to identify the risk and react before it becomes a bigger issue.”
• “And the idea of hiring a sophisticated and experienced forensic expert is also not as appealing with law firms being more conscious about their expenses during the pandemic, Rast added, raising another reason why smaller firms become more vulnerable than the larger firms. ‘It’s a resource issue, as well as a training issue,’ Rast said. ‘Larger firms generally have the budgets to roll out the rather extensive training, [which] is now pretty standard.'”

Next via the SRA: “Risk Outlook report: information security and cybercrime in a new normal” —

• “Covid-19 brought about greater use of IT. The post-pandemic ‘new normal’ will likely see that trend continue. However, as with most changes, this increased dependence on IT brings both opportunities and challenges. As well as creating opportunities and advantages for businesses and consumers, it also creates more opportunities for cybercriminals. And although we know firms have adapted to these threats and taken steps to defend themselves, cybercriminals continue to adapt too.”
• “The fundamental challenge of how cybercrime threatens the data and information held by firms has not changed in the last few years. However, the reduced commercial activity in some areas during the lockdowns affected some types and levels of cybercrime.”
• “The most significant threats, which we expect to remain the key areas, fall into three broad groups: phishing and email modification, ransomware, third-party attacks”
• “We are seeing an increase in email frauds that target a wider range of practice areas, in addition to conveyancing, where firms might be less alert to this threat. Another sign of adaptation comes from a report of criminals intercepting and falsifying physical mail between a firm and client to request funds.”
• “With firms focusing on the security of their IT systems, it is possible that criminals might make more use of false physical documents or voice-based phishing in the hope that their targets are less prepared.”
• “Ransomware will continue to increase in sophistication and to use a wider range of methods to influence its targets. It is likely to increasingly become fully automated, attacking any target with suitable weaknesses.”
• “Most attacks will be random and be because the firm has a weakness that could be detected. However, some might be targeted intentionally. This could be used by unscrupulous parties to damage the operations of a firm that is acting for an opponent in litigation, for example. Those acting for clients operating nationally-significant infrastructure could be at higher risk of this in this time of international tension. The same applies to firms identified as acting for Ukrainian, Russian or Belarussian clients. There have been reports of cyberattacks used as a deniable weapon and solicitors’ firms might be seen, rightly or wrongly, as a less secure target than some of their clients.”
• “Any firm holding money or confidential information is a potential target for theft. And any firm could be targeted with ransomware. As such, protecting clients’ information must be a priority for all firms. Effective protection means having the right culture, systems and training.”
• “One of the certainties about the ‘new normal’ is that information security threats will still be there. The underlying reasons why criminals try to hack legal firms have not changed. And in a legal market that is increasingly dependent on IT systems, criminals have more potential opportunities to attack using that method.”
• “As we said in our previous Risk Outlook report, we want to build a better dialogue between ourselves and firms. This helps to build the best understanding and decision making, and lets us know how these risks are directly affecting those we regulate.”

“NYC Teachers Target Third Judge in Vaccine Case Over Drug Stocks” —

• ” New York City teachers want a third federal judge off their pandemic vaccine case over potential stock ownership conflicts, this time for what they say are stakes in Pfizer and Johnson & Johnson.”
• “The teachers asked Judge Naomi Reice Buchwald in the Southern District of New York to recuse herself from their challenge to the city’s Covid-19 vaccine mandate for education workers after she was assigned to the case on Tuesday.”
• “Two other judges at the Manhattan court were off the case after the teachers requested they recuse themselves for similar holdings.”
• “The moves come as judicial stock holdings are under increased scrutiny. A Wall Street Journal report that found at least 131 judges heard cases in which they or a family member had a stock conflict prompted a new federal law requiring judicial financial disclosures be publicly accessible online.”

“Amazon Atty Survives DQ Bid, But Court Questions Credibility” —

• “A California federal judge on Monday declined to disqualify a senior in-house patent lawyer at Amazon from infringement litigation brought by MasterObjects Inc., though the judge did say that the attorney’s failure to bring up that he previously worked at a firm that represented MasterObjects “undermines” his credibility somewhat.”
• “U.S. District Judge William Alsup refused to disqualify lawyer Scott Sanford or Amazon.com Inc.’s outside counsel at Hueston Hennigan LLP, both of whom MasterObjects had hoped to boot from the case. While Judge Alsup didn’t knock the potential for a conflict of interest, he said he couldn’t conclude that Sanford ever personally possessed MasterObjects’ material confidential information while working at Fliesler Meyer LLP.”
• “That said, the judge noted that Sanford had told the court conflicting things about whether he was aware of a potential conflict of interest. In a February declaration, Sanford said he didn’t realize MasterObjects was a client of Fliesler Meyer until MasterObjects filed its disqualification bid. However, at his deposition, he testified multiple times that he had raised his connection with the firm to Hueston Hennigan.”
• “After a break, Sanford walked back his testimony, which ‘does undermine attorney Sanford’s credibility somewhat,’ Judge Alsup said Monday.”
• “Judge Alsup said Monday that a substantial relationship exists between the present litigation and the matters handled by Fliesler Meyer while Sanford worked there. It was during that time that the firm drafted and filed the application that eventually became a patent highly relevant to the litigation, he said. However, Sanford didn’t personally represent MasterObjects during his tenure at the firm, the judge said.”
• “The big question here is whether Sanford ever received confidential information relevant to the present litigation during his Fliesler Meyer days, Judge Alsup said.”
• “MasterObjects hasn’t turned up any documents connecting Sanford to the company, per the decision. And the size and structure of the firm doesn’t lead to the conclusion that Sanford would’ve received confidential information regarding MasterObjects while there, Judge Alsup said. Sanford has also said his background in mechanical engineering meant his practice focused on matters related to semiconductors, medical devices and other nonsoftware technologies, the judge added.”

“Dentons claims $32 mln malpractice verdict unfairly opens door for plaintiffs” —

• “Law firm Dentons US has asked the Ohio Supreme Court to scrap a former business client’s $32 million malpractice verdict that the global law firm said will pose ‘serious threats’ to the legal profession if it is allowed to stand.”
• “Lawyers for Dentons on Friday filed their legal challenge in the state’s highest court, after an appeals court in April upheld the disqualification of the firm’s U.S. arm over its failure to disclose conflicts tied to its counterpart Dentons Canada.”
• “Dentons contends the appeals court opened too wide a door for plaintiffs to sue over alleged malpractice and that ‘guardrails’ are needed for evidence and damages standards.”
• “‘At stake is the fundamental nature of the relationship between attorney and client and the need to protect lawyers and law firms of all types against speculative claims for losses they did not cause,’ Yvette McGee Brown of Jones Day, a lawyer for Dentons, wrote in the filing.”
• “Dentons uses a “Swiss verein” structure in which the firm treats its outposts in other countries as separate entities. Dentons has more than 12,000 lawyers in more than 80 countries.”
• “In the ruling against Dentons, appellate judge Emanuella Groves said the firm’s structure, ‘with a common conflicts base, that shares client confidential information throughout the organization’ was ‘irreconcilable with Dentons US’ contention that it was separate from Dentons Canada.'”

“Canada: Lawyer Who Was Consulted By Another Lawyer Disqualified From Acting Against Other Lawyer” —

• “2658396 Ontario Inc. v. Sanayei. The action stemmed out of mortgage proceedings in which the plaintiff, which was the second mortgagee on a property, learned that the defendant lawyer had acted for the mortgagor on the property in relation to a subsequent third mortgage registered on the same property. A term of the plaintiff’s second mortgage prohibited the registration of any subsequent mortgages. The defendant lawyer did not contact the plaintiff at the time the third mortgage was registered.”
• “The plaintiff later retained his current lawyer (DB), who was one of the lawyers referred by the defendant lawyer, and commenced a mortgage enforcement action of its own against the mortgagor.”
• “The defendant lawyer contended that DB was in a conflict of interest in the action against him. The defendant lawyer provided evidence that DB had previously acted for him on matters that overlapped the mortgage enforcement dispute and that before DB had been retained by the plaintiff he had consulted with DB and sought advice about the second and third mortgage problem that was the subject matter of the plaintiff’s action.”
• “Although there was no formal retainer between the defendant lawyer and DB, the defendant lawyer viewed the consultation as an occasion whereby he conveyed confidential and privilege protected information to DB.”
• “The defendant lawyer and DB had known each other for 20 years and they had maintained a friendly and professional relationship during this period of time.”
• “DB acknowledged that he knew the defendant lawyer for 20 years and that he had represented the defendant lawyer on a few matters over the years. In July 2019, DB had been specifically retained by the defendant lawyer to act for his mortgage company on the enforcement of a mortgage on another property. However, DB denied having disclosed to the plaintiff any information about this retainer and did not recall the defendant lawyer ever imparting any confidential information on him that could be used in the action against the defendant lawyer.”
• “After retaining DB, but prior to commencing the action against the defendant lawyer, the plaintiff’s principal surreptitiously recorded a meeting between himself and the defendant lawyer. In this meeting, the defendant lawyer was told that DB had considered an appraisal given to the plaintiff about the value of the property was illegal, that DB advised the plaintiff to not accept settlement offers in respect of the mortgage enforcement and that the plaintiff’s principal was not interested in power of sale proceedings or purchasing the property.”

“Judge Says Young Thug Can Keep Using His Own Attorney In RICO Case” —

• “The Fulton County District Attorney’s office claimed that Brian Steel, a prominent Atlanta-area criminal defense lawyer, should be disqualified because he represents some of the other 27 alleged gang members named in the sweeping criminal case. Steel and another lawyer argued back that Young Thug should not be deprived of his ‘chosen counsel’ as he fights for his life in court.”
• “In a ruling Thursday – issued hours before he denied bond to the rapper at the same hearing – Judge Ural Glanville sided with Steel. Despite ‘strong concerns’ that a conflict of interest might rear its head later in the case, the judge ruled that those fears were only ‘speculative’ in the early stages of the legal battle.”
• “In an indictment unveiled last month, prosecutors claim Young Thug (Jeffery Williams), Gunna (Sergio Kitchens) and 26 others spent the last decade operating a violent street gang called “Young Slime Life” – allegedly the darker alter-ego of their YSL Records label. The case, built on the state’s RICO statute, includes accusations of murder, carjacking, armed robbery, drug dealing and illegal firearm possession against various YSL members.”

“Louisiana Personal Injury Firm Sanctions Upheld in Conflict Row” —

• “A personal injury law firm in Louisiana convinced a state appeals court to affirm $7,500 in sanctions and attorneys’ fees in connection with a case in which the firm was accused of having a conflict of interest.”
• “Rental equipment company Ahern Rentals Inc. sued former employees including Scott Helms and Chadd Turnage alleging theft of confidential information after they were hired by Ahern’s competitor, EquipmentShare.com Inc. Helms and Turnage were rehired at Ahern after losing their jobs at EquipmentShare, and Ahern moved to disqualify their former counsel at Veron Bice Palermo & Wilson LLC from representing the remaining individuals.”
• “Veron opposed disqualification and sought sanctions, asking why Ahern hadn’t dismissed its employees from the action and raising concerns about confidential strategies in litigation. The trial court rejected the bid for disqualification, and granted the sanctions request in the amount of $7,500 in costs and fees.”
• “The Court of Appeal of Louisiana, Third Circuit, affirmed that ruling Wednesday. The appeals court held that the evidence was sufficient to support the trial court’s ruling that Ahern was delaying the dismissal of Helms and Turnage as defendants in an attempt to gain information about EquipmentShare’s strategy.”
• “‘There is evidence that the motion at issue in this case was filed to cause unnecessary delay and as an abuse of process,’ Judge Elizabeth A. Pickett wrote in the opinion.”

“Sidley Austin Had No Conflict in Boy Scouts’ Bankruptcy Work” —

• “Sidley Austin LLP had no conflict of interest in representing the Boy Scouts of America in its bankruptcy case despite the law firm’s connection to one of BSA’s insurers, the Third Circuit ruled.”
• “Century Indemnity Co., a Chubb subsidiary, sought to have Sidley Austin disqualified from BSA’s bankruptcy case, arguing that the law firm had previously provided legal counsel to Century in certain reinsurance disputes.”
• “The district court had upheld a similar conclusion by the US Bankruptcy Court for the District of Delaware, triggering Century’s appeal to the Third Circuit.”
• “The bankruptcy court ‘looked carefully at the specific facts before it and reasonably approved BSA’s retention of Sidley,’ the Third Circuit said. ‘This is nowhere close to an abuse of discretion.'”
• “The Boy Scouts, which filed for Chapter 11 bankruptcy in February 2020 following former scouts’ claims of sexual abuse, has negotiated with Chubb and other insurers for victim payouts.”
• “Sidley is no longer actively involved in the bankruptcy case because the attorneys who represented the Boy Scouts moved to a new firm in September 2020.”
• “The law firm separated itself from the BSA’s insurance coverage issues and didn’t receive any relevant confidential or privileged information, according to the appeals court’s opinion. Sidley’s work for Century did not affect its ability to work for the Boy Scouts, the court said.”

“Firm Properly Barred for Having Confidential Information” —

• “The Ninth U.S. Circuit Court of Appeals has affirmed an order barring a law firm from continuing to represent the plaintiff based on the firm having received confidential information about the defendants from a disbarred lawyer who gained that information from them while purporting to be their counsel in earlier litigation.”
• “In a memorandum opinion filed Thursday, a three-judge panel found that District Court Judge Percy Anderson of the Central District of California did not abuse his discretion in disqualifying the Mirch Law Firm of San Diego from acting for Seyed Zia Eddin Ahmadi Abhari and others in an action under the Racketeer Influenced and Corrupt Organizations Act against Elias Nakhleh and others.”
• “At a business lunch in 2019—before the RICO lawsuit was filed and while cordial relations existed—Abhari told Nakhleh about his lawyer, Martin Reiner, recommending that Nakhleh utilize his services. Nakhleh took the advice, hiring Reiner and providing him with a $10,000 check for Nakhleh which he regarded as an Nakhleh attorney retainer fee.”
• “Nakhleh eventually developed a suspicion that Reiner was not licensed to practice law and, on March 6, 2020, queried in an email: ‘Is it not true that you have been suspended from practicing law? You have represented being an attorney to me multiple times.'”
• “[The Ruling Noted:] ‘The Court finds The Mirch Law Firm has committed several ethical violations. Based on the evidence provided, Mr. Reiner has falsely represented to Defendants that he was their attorney. The Mirch Law Firm is using Defendants’ privileged information, obtained by Mr. Reiner, to gain a tactical advantage in this case…'”
• “The judge noted that The Mirch Law Firm insisted that Reiner merely acted as a witness for it and “that they have cut off contact with Mr. Reiner following this Motion,” but declared that ‘the damage has already been done’ by giving the firm ‘privileged information which has allowed Plaintiffs to wrongfully acquire an unfair advantage in this case.'”

“EY Dumping Audit Business Is Bad News for Law Firms” —

• “News that Big Four accounting firm EY is considering spinning off its global audit business should sound a warning bell to law firms, as the big consultancies continue to encroach on the legal services business, according to industry observers.”
• “While the development seems aimed at dodging the increasing regulatory scrutiny that audit businesses appear to be facing, it also solves the conflict of interest barriers that EY faces in providing legal services. And there’s speculation that, if EY succeeds in jumping through the substantial hurdles necessary to separate the units, its Big Four peers will follow.”
• “James Jones, a senior fellow at the Center for the Study of the Legal Profession at Georgetown University Law Center, said accounting firms with audit businesses currently face a genuine constraint in moving seriously to legal because they cannot provide legal services for corporations that they audit.”
• “But while law firm managing partners may believe that the Big Four will never go head to head with them on litigation or legal advice, Jankowski [director of the Pacesetter Research team at ALM Intelligence] said they are still an existential threat to law firms. Jankowski explained that the Big Four use their legal service offerings as a way to become stickier with their clients.”
• “‘They approach clients when the client has a key event, such as M&A restructuring, an IPO, change management, or digital transformation projects,’ said Jankowski. ‘Being able to provide the legal services for these events is central to a law firm, but it’s a value add to an accounting or consulting firm.'”
• “‘If I were a big global law firm, I would view this with a little bit of alarm. I think it’s removing the last major obstacle to these firms providing legal services,’ said Jones, explaining that the definition of ‘legal services’ introduces a gray area. For instance, in some practice areas, like tax, nonlawyers—CPAs, for example—draft documents all the time, and therefore compete with lawyers already.”