Bressler Risk Blog

New York Judicial Ethics Opinion 25-01: “A judge need not disqualify in matters involving the judge’s former election opponent, provided the judge can be fair and impartial” —

• “Digest: A judge need not disqualify in matters involving the judge’s former election opponent, provided the judge can be fair and impartial.”
  Rules: Judiciary Law § 14; 22 NYCRR 100.2; 100.2(A); 100.3(E)(1); Opinions 19-78; 90-136; People v. Moreno, 70 NY2d 403 (1987).”
• “Opinion: The inquiring judge was opposed during his/her recent election campaign by a practicing attorney who may appear before the judge in the future. The judge describes the campaign as uneventful, without ‘debates or any acrimonious interactions.’ The judge asks if he/she must disqualify when the former election opponent appears.”
• “A judge must always avoid even the appearance of impropriety and act to promote public confidence in the judiciary’s integrity and impartiality (see 22 NYCRR 100.2; 100.2[A]). A judge must disqualify in any proceeding where the judge’s impartiality ‘might reasonably be questioned,’ including where required by rule or law (22 NYCRR 100.3[E][1]; Judiciary Law § 14). Where disqualification is not mandatory, however, the judge is the sole arbiter of recusal, a discretionary decision within the personal conscience of the court (see People v. Moreno, 70 NY2d 403, 405 [1987]).”
• “A judge need not disqualify merely because an attorney appearing before the judge on behalf of a client is the judge’s former election opponent (see Opinions 19-78; 90-136). As we explained in Opinion 90-136:”
• “Whether the judge’s impartiality might reasonably be questioned in this case depends on the facts and circumstances, including the time elapsed, the bitterness of the campaign, and the personal quality of the campaign. This Committee is not in a position to pass on such factual issues and the judge must decide for himself or herself whether his or her impartiality might reasonably be questioned. Of course, if the judge doubts his or her ability to be impartial, the judge must disqualify himself or herself.”
• “Indeed, considering these factors, we have advised that a former opponent’s legal challenge to the judge’s nominating petition does not, by itself, mandate disqualification (see Opinion 19-78). We reasoned that the filing of litigation challenging nominating petitions is a ‘common circumstance in contested election campaigns’ that does not by itself establish a level of ‘bitterness’ mandating disqualification (id.).”
• “Here, as the judge indicates the campaign was neither controversial nor acrimonious, the judge need not disqualify in matters involving the judge’s former election opponent, provided the judge can be fair and impartial.”

“Consultation into the second exposure draft of the [Australian] Anti-Money Laundering and Counter-Terrorism Rules” —

• “The Australian Transaction Reports and Analysis Centre (AUSTRAC) has initiated consultation (Consultation) on its second exposure draft of the Anti-Money Laundering and Counter-Terrorism Financing Rules 2025 (Cth) (Draft Rules) and the AML/CTF (Class Exemptions and Other Matters) Rules 2007 (Cth) (Class Exemption Rules). These Rules, read with the amended Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth) (Act), will implement the most transformational changes to the anti-money laundering and counter-terrorism financing (AML/CTF) framework since the Act commenced in 2006.”
• “These changes under the Act and Rules will apply to existing reporting entities by 31 March 2026 and for new reporting entities by 1 July 2026.”
• The Draft Rules contain significant updates to the first exposure draft rules which were released for consultation in December 2024. The updates include:
  • AML/CTF policies, procedures, systems and controls to comply with AML/CTF obligations, including requiring designated entities to have financial sanctions compliance policies
  • New rules relating to groups of regulated businesses
  • Changes to the proposed customer due diligence rules
  • Correspondent banking and nested services relationships
  • The travel rule, being the requirement for information about the payer and payee to be included with telegraphic transfers, remittances, transfers of virtual assets and other value transfers
  • Cross-border movement reports and compliance reporting
  • Keep open notices and the form of these notices
  • Disclosure of AUSTRAC information to foreign counterparts”
• “In addition to the above, the exposure Draft Rules now propose:
  • Reportable details for ‘suspicious matter reports’ must be given to AUSTRAC by reporting entities under section 41 of the amended AML/CTF Act.
  • Reportable details for ‘threshold transaction reports’ must be given to AUSTRAC under section 43 of the amended AML/CTF Act.”
    Updated and modernised enrolment applications for all reporting entities.
  • “Registration application and administrative decision-making processes for ‘remittance service providers’ and ‘virtual asset service providers’.”

“Accounting firms should build AML/CTF program ‘sooner rather than later’” —

• “Ahead of the ACE25 Accounting Conference and Expo, Jessica Tsiakis, partner at Holding Redlich discusses how businesses can prepare for the upcoming AML/CTF regulations.”
• “‘The AML/CTF Act has been amended to ensure the AML/CTF regime can effectively deter, detect and disrupt money laundering and terrorism financing,’ said Tsiakis.”
  “‘There have been a number of changes to the legislation, but key for accountants are the changes to expand the regime to capture certain high-risk services provided by accountants,’ she added.”
• “There are three key objectives of the Amendment Act including expanding the AML/CTF regime to high-risk services provided by tranche two entities; modernising the regulation of digital currency, virtual assets, and payments technology; and simplifying the AML/CTF regime to better prevent and detect financial crime.”
• “‘The regime is expanded by including new definitions of what are referred to as designated services,’ she said.”
• “‘If you provide a designated service, you are regulated by the regime in respect of those services (and referred to as a ‘Reporting Entity’).'”
• “‘Professionals such as accountants, lawyers, and real estate agents are impacted by the expansion of the regime.'”
• “The updated AML/CTF obligations will come into effect on 1 July 2026 for tranche two entities, with enrollment with AUSTRAC available from 31 March 2026.”
• “This timeline provides newly regulated entities the chance to understand and prepare for the new obligations before they come into effect next year.”
• “‘Accounting firms need to ensure that they have developed an appropriate AML/CTF Program, which is in place well prior to the deadline, so that they are in a place to comply by July 2026,’ Tsiakis said.”
• “‘Accounting firms must also develop appropriate policies, procedures, systems and controls to properly manage these risks.'”
• “‘Accounting firms will need to ensure all professional services staff have a broad understanding of what is required by the regime, including how to properly identify and monitor their customers, and who within the business to alert if they notice suspicious transactions or conduct by their clients,’ she added.”
• “Tsiakis urges organisations to start the preparations sooner rather than later, stating that ‘some key challenges in complying will be ensuring that the organisation’s AML/CTF program is up and running before the new regime commences, so that any issues, such as the appropriate monitoring of transactions, or proper customer due diligence, can be ironed out prior to that time,’ she concluded.”

“9 AML compliance myths and how law firms can fix them” —

• “In the current climate, no law firm can afford complacency about AML compliance. Yet certain myths persist – misconceptions that can lull firms into a false sense of security. These myths often stem from outdated assumptions or a misunderstanding of SRA requirements.”
• “Unfortunately, reliance on such misinformation can have serious consequences. The SRA has ramped up its enforcement of rules in recent years. Firms that once flew under the radar are now finding themselves subject to audits, fines, and disciplinary action.”
• “COLPs, COFAs, law firm partners, and risk managers should take note: even well-intentioned myths can land a firm in trouble. By dispelling these myths, your firm can shift from a reactive stance to a proactive compliance culture that anticipates regulators’ expectations.”
• “1. ‘We’re too small to need all these formal AML documents.’
  • The Myth: Small firms sometimes believe that comprehensive anti-money laundering controls – like a firm-wide AML policy or risk assessment – only apply to higher risk firms or those handling large financial transactions. A two-partner high-street practice might think, ‘Money laundering won’t happen here – we know our clients, and regulators only focus on large firms.’ This myth implies that limited size or simple client bases exempt a firm from formal AML compliance.”
• 2. ‘As long as we do really thorough ID checks, we’re covered for AML.'”
  • “The Myth: Many solicitors equate ‘AML compliance’ with performing ID checks on clients at onboarding – copying passports, driver’s licenses, utility bills, etc. This myth is the belief that identity verification alone satisfies anti-money laundering due diligence. Once you’ve verified your client is who they say they are, the thinking goes, your anti-money laundering obligations are done. In reality, this is a dangerous oversimplification, based on outdated AML rules.”
• 3. ‘We can’t possibly have to check the other side’s client for sanctions.'”
  • “The Myth: Lawyers often focus AML and sanctions checks on their own client, under the assumption that you are only responsible for vetting those you directly represent. This myth holds that due diligence on opposing parties or the other side’s client is not necessary, since ‘they’re not our client.’ For example, in a transaction between A (your client) and B (opposing party), a solicitor might screen A against sanctions lists but not consider B. The misconception is that sanctions compliance is satisfied as long as you aren’t directly advising a sanctioned individual.”
• 4. ‘The SRA doesn’t really expect us to see our own employees as an AML risk.'”
  • “The Myth: This misconception assumes that anti-money laundering compliance is solely outward-facing – focused on clients and external parties – and that a law firm’s staff are implicitly trusted. Some firms might think employee due diligence isn’t a regulatory requirement, perhaps reasoning that ‘we hired qualified solicitors, we don’t need to screen or monitor them for AML issues.’ Similarly, there might be an assumption that as long as staff are hired in good faith, the firm won’t be held responsible for a ‘rogue employee’ engaging in misconduct.”
• 5. ‘If we report an AML breach, we’ll face harsh consequences.'”
  • “The Myth: Law firm leaders sometimes believe that reporting AML compliance breaches – whether to the National Crime Agency (NCA) or the SRA – is like inviting trouble. The assumption is that disclosing AML issues will inevitably lead to severe penalties or regulatory action, and therefore it’s better to quietly fix any problems internally, turn a blind eye to red flags, and hope regulators don’t notice.”
• 6. ‘The regulators are only really interested in the risk assessment for our firm. Individual matter risk assessments aren’t as important.'”
  • “The Myth: Some firms mistakenly believe that doing a one-time Practice-Wide Risk Assessment (aka Firm-Wide Risk Assessment) is sufficient, and that they do not need to conduct risk assessments for each client or matter. They might have a generic firm AML risk assessment document and assume that covers everything. The myth is essentially ignoring the requirement for matter-specific risk evaluation, perhaps due to misunderstanding the regulations or viewing it as unnecessary form-filling. “
• 7. ‘We’ve never had a regulatory inspection, so we must be a low AML risk.'”
  • “The Myth: This is a complacency-driven myth – the notion that silence implies everything is fine. Many firms have not yet been subject to an SRA AML inspection or any kind of in-depth compliance audit, but the SRA is thought to be planning around 800 per year. It’s easy to assume that since the regulator hasn’t knocked on the door, your policies and procedures must be acceptable. Some might even think the SRA only audits firms it suspects of issues, so being un-audited means you’re low-risk or off their radar.”
• 8. ‘We’ve known the client for years – they’re not a risk.'”
  • “The Myth: A common assumption in legal practices is that long-term or well-known clients pose little to no money laundering risk. Firms often think, ‘We’ve acted for this client for over a decade, we know their business inside out,’ or ‘They’re a local business owner we’ve seen grow from day one – surely there’s no risk here.’ “
• 9. ‘We onboarded this client in a low-risk area, so we don’t need to do AML checks again.'”
  • “The Myth: A frequent assumption is that if a client initially instructs the firm in a low-risk area like employment law, they pose minimal or no money laundering risk across the board. The reasoning often goes: ‘We onboarded them for straightforward redundancy advice,’ or ‘They’ve only needed us for staff contracts – there’s no complexity here.’ This myth creates a ‘passporting’ effect – where a client is allowed to access other, potentially riskier services without updated checks, just because they originally entered through a low-risk door.”

“Third DCA Affirms Disqualification of Lawyer” —

• “Florida’s Third District of Appeal upheld Miami-Dade Circuit Judge Lisa Walsh’s order disqualifying plaintiff’s attorney Tim Taylor for representing defendant Taras S. Diakiwski’s surety in a related dispute.”
• “The case originated from a 2015 lawsuit between contractor Diakiwski and the defendant, Craft Construction Co. The plaintiff claims he is entitled to $1.4 million in profits from the Boca Beach House Project, which he allegedly helped secure during his seven-month employment with Craft Construction. After a jury trial found Craft Construction liable, a separate trial will determine the amount of damages.”
• “Berkley Surety Group was the primary surety on Craft Construction’s projects. In 2023, the Boca Beach House’s owner entered into a dispute with Craft Construction and sent a ‘consideration of default’ letter to Craft Construction and its surety, Berkley.”
• “According to the defendants, after Berkley and Craft Construction received the letter, they began meeting to strategize a response and those meetings were conducted under a joint representation agreement. However, Taylor of Taylor Corwin & Van Cleaf accepted representation of Berkley, and the situation escalated when he appeared at a Zoom meeting with Craft Construction’s principal, who became irate.”
• “Taylor abruptly left the meeting and later withdrew as Berkley’s counsel.”
• “Craft Construction, in filing a motion to disqualify plaintiff’s counsel because in the case regarding the $1.4 million disgorgement, alleged that Taylor violated the Florida Rules of Professional Conduct.”
• “According to the order, the evidentiary hearings on the motion showed that Craft Construction’s lawyers acted as Berkley’s lawyers through a joint representation agreement and attorney-client privileged information was shared between Craft Construction, Craft Construction’s lawyers and its Berkley.”
• “Furthermore, Walsh pointed out how the joint representation of Berkley and Craft Construction occurred on a matter related to the case.”
• “‘It is an inescapable inference that confidential information openly shared for months between CCC, its lawyers and Berkley was relayed to Taylor during his brief stint as Berkeley’s lawyer,’ Walsh, referring to Craft Construction, ruled, and in doing so, granted the attorney’s disqualification.”
• “On Wednesday, the Third DCA affirmed the ruling.”
• “‘We are pleased that the appellate court has affirmed the trial court’s well-reasoned disqualification Order, which was factually necessary and legally required to do justice and uphold the Florida Rules of Professional Conduct,’ said Frank Murray, with Stumphauzer Kolaya Nadler & Sloman, who represents the defendant. ‘We look forward to continuing our pursuit of justice in this case.'”

“Judge Rejects DQ Of Smith Gambrell In Defamation Suit” —

• “A New York federal judge denied a former Major Lindsey & Africa recruiter’s bid to disqualify Smith Gambrell from representing Major Lindsey in the employee’s $75 million federal defamation suit, saying the request wasn’t ripe for consideration yet.”
• “In a memorandum opinion and order signed Monday, U.S. District Court Judge Gregory H. Woods of the Southern District of New York declined Sharon Mahn’s request to disqualify Smith Gambrell & Russell LLP from representing her onetime employer in the suit she filed in November under the so-called witness-advocate rule. Judge Woods did so without prejudice, saying in the opinion that Mahn’s bid for disqualification on the grounds that attorneys from the firm would have to testify in the case was made too early.”
• “‘Plaintiff’s motion for disqualification is, at a minimum, premature. The witness-advocate rule only requires disqualification of an attorney if the movant establishes that the attorney’s testimony is necessary to trial and is substantially likely to be prejudicial to their client,’ Judge Woods said. ‘Because plaintiff has not carried her burden of demonstrating that testimony from defendants’ counsel would prejudice defendants’ case, plaintiff’s motion to disqualify defendants’ counsel is denied.'”
• “Mahn filed the motion to disqualify in January, arguing that three attorneys from Smith Gambrell were key witnesses to help determine liability. Mahn told the court that the attorneys ‘literally lied’ in an underlying action and would therefore be needed to testify as to the impetus for the alleged misrepresentations.”
• “Bad blood between Mahn and the recruitment firm goes back at least to 2009, court records show, when Major Lindsey fired Mahn. The recruiter later sued over allegations that Mahn exchanged trade secret information with firm competitors for monetary kickbacks. That suit was dropped to enter arbitration, which resulted in a $2.9 million arbitral award for Major Lindsey.”
• “But, Judge Woods said it was not yet appropriate to disqualify the firm’s attorneys from representing Major Lindsey. To do so under the witness-advocate rule, one would have to show that they would have to testify and in doing so they were likely to harm the defendant’s case, and Mahn hadn’t shown that yet, the opinion said.”
• “‘At this early stage in the case, there is little, if any, evidence on the record to suggest that testimony from defendants’ counsel would be materially inconsistent with defendants’ case at trial,’ he said. Because Mahn hadn’t yet shown that the attorneys would need to provide testimony likely to hurt their client, Judge Woods refused her request to disqualify the firm while leaving the issue open for later consideration, his opinion said.”

“North Carolina Man Challenges Judge’s Decision for Undisclosed Conflicts of Interest” —

• “The Wake County Superior Court will hear arguments Friday and decide if an order from one of its judges should be set aside because he did not disclose his conflicts of interest.”
  Plaintiff T. Craig Travis is asking the court to consider setting aside Special Superior Court Judge Hoyt G. Tessener’s April order dismissing his defamation suit.”
• “Travis claimed Tessener did not tell the court or either party of his professional association with politicians U.S. Rep. Tim Moore and state Sen. Phil Berger Sr. Travis alleged that Tessener could not be neutral because of this professional relationship, as both men have had longstanding political influence in North Carolina and were heavily associated with one of the defendant political organizations, GOPAC.”
• “Moore, the former speaker of the state’s House of Representatives, is now a representative for North Carolina’s 14th District in the U.S. House of Representatives, and Berger has been president pro tempore of the North Carolina Senate since 2011 and is the father of another defendant.””

“Fla. Panel Affirms Atty Conflict DQ In Construction Dispute” —

• “In a one-word opinion, Florida’s Third District Court of Appeal affirmed a trial court’s decision to disqualify a plaintiff’s attorney in a long-running construction ownership dispute after finding he briefly represented the defendant’s surety company in a related matter.”
• “A three-judge panel on Wednesday upheld a February 2024 disqualification order handed down by the state’s Eleventh Judicial Circuit in Miami-Dade County. The lower court found that Timothy Taylor’s role as representative for Craft Construction Company LLC’s surety company, Berkley Surety, represented an irreconcilable conflict that must lead to his removal as plaintiffs counsel for his client, Taras S. Diakiwski, in the business dispute.”
• “In its order to disqualify, the trial court noted a ‘long-standing relationship’ between Taylor and Diakiwski and the ‘great expense and inconvenience’ the plaintiff would face due to the disqualification, but found it was necessary given Taylor’s access to privileged information about Craft Construction.”
• “Represented by Taylor, Diakiwski sued Craft Construction and its founder, Barry Craft, in December 2015 alleging breach of contract and other violations, and seeking disgorgement of alleged profits he said he was owed through their partnership.”
• “Given that the surety company holds eight years of confidential Craft Construction information, the Craft parties argued, Taylor must be disqualified.”
• “In response, Diakiwski argued that the Craft parties had not shown what privileged information, if any, Berkley had provided to Taylor about Craft Construction that could be used in the matter. Diakiwski pointed out that Craft itself had never been Taylor’s client, and no attorney-client relationship existed.”
• “Craft, in turn, argued that due to Taylor’s conflict of interest, it was not necessary for the court to find proof that privileged information was shared with the lawyer.”
  “The trial court found that the Boca project matter for which Taylor represented Berkley was substantially related to Diakiwski’s case against the Craft parties, which the court referred to as ‘CCC.'”
• “‘CCC disputes plaintiff’s allegation of the profitability of the Boca project,’ the trial court said in its disqualification order. ‘In this case, plaintiff seeks to disgorge millions of dollars allegedly realized as CCC’s purported profits from the Boca project.'”
• “The court further found that alleged mismanagement of the Boca project was directly at issue in Diakiwski’s case, because the contractor had alleged that the Craft parties were in over their heads without him and unable to take on such a large project. Information about Craft Construction’s value and financial exposure were also key elements of Diakiwski’s case, the court further ruled.”
• “The court stated that while Taylor ‘did not appear to consider the consequences in his representation of Mr. Diakiwski in this case related to the Boca project where the interests are clearly adverse,’ it was not his intent, but the outcome, that the court must weigh, later noting: ‘There is no document that can simply be excluded from trial. This court cannot instruct Mr. Taylor to unknow what he has learned.'”

“Skadden’s New Pro Bono Case Runs Counter to Trump on Immigration” —

• “Skadden, after cutting a deal with President Donald Trump to take on causes he supports, is moving in the opposite direction by helping an immigrant try to avoid removal from the US.”
• “Skadden lawyers are representing a 38-year-old woman from Mexico who sued US Citizenship and Immigration Services on May 23 for denying her a visa for crime victims that would allow her to stay in the country. Monserrat Belen Arreola was denied the visa in 2023 during President Joe Biden’s administration, though Trump has stepped up efforts to remove undocumented immigrants from the US.”
• “The involvement of Skadden, Arps, Slate, Meagher & Flom in the case is noteworthy in two ways: The law firm is taking on a pro bono effort that counters a Trump goal, and it is partnering with a group that top law firms have been avoiding during the president’s second term.”
• “The group, National Immigrant Justice Center, has been struggling to find major law firms to take its cases, Lisa Koop, the group’s national director of legal services, wrote in a court filing in a separate case last month.”
• “Several of the group’s usual partner firms ‘have suspended acceptance of new immigration matters due to messaging from the White House about pro bono involvement in immigration matters,’ Koop wrote.”

“OpenAI slams court order to save all ChatGPT logs, including deleted chats” —

• “OpenAI is now fighting a court order to preserve all ChatGPT user logs—including deleted chats and sensitive chats logged through its API business offering—after news organizations suing over copyright claims accused the AI company of destroying evidence.”
• “Before OpenAI had an opportunity to respond to those unfounded accusations, the court ordered OpenAI to ‘preserve and segregate all output log data that would otherwise be deleted on a going forward basis until further order of the Court (in essence, the output log data that OpenAI has been destroying),’ OpenAI explained in a court filing demanding oral arguments in a bid to block the controversial order.
• “‘As a result, OpenAI is forced to jettison its commitment to allow users to control when and how their ChatGPT conversation data is used, and whether it is retained,'” OpenAI argued.
• Meanwhile, there is no evidence beyond speculation yet supporting claims that ‘OpenAI had intentionally deleted data,’ OpenAI alleged. And supposedly there is not “a single piece of evidence supporting” claims that copyright-infringing ChatGPT users are more likely to delete their chats.
• “‘OpenAI did not ‘destroy’ any data, and certainly did not delete any data in response to litigation events,’ OpenAI argued. ‘The Order appears to have incorrectly assumed the contrary.'”
• “For OpenAI, risks of breaching its own privacy agreements could not only ‘damage’ relationships with users but could also risk putting the company in breach of contracts and global privacy regulations.
• “Millions of people use ChatGPT daily for a range of purposes, OpenAI noted, ‘ranging from the mundane to profoundly personal.'”
• “And for business users connecting to OpenAI’s API, the stakes may be even higher, as their logs may contain their companies’ most confidential data, including trade secrets and privileged business information.”
• “Users who found out about the preservation order panicked, OpenAI noted.”
• “One tech worker on LinkedIn suggested the order created ‘a serious breach of contract for every company that uses OpenAI,’ while privacy advocates on X warned, ‘every single AI service ‘powered by’ OpenAI should be concerned.'”
• “Also on LinkedIn, a consultant rushed to warn clients to be ‘extra careful’ sharing sensitive data ‘with ChatGPT or through OpenAI’s API for now,’ warning, ‘your outputs could eventually be read by others, even if you opted out of training data sharing or used ‘temporary chat’!”

“Jumio, FaceTec liveness IP legal tussle accelerates with new motion” —

• “There is new sauce on the ongoing legal beef between Jumio and FaceTec over a patent for liveness detection technology.”
• “Having already had Jumio’s original legal counsel, Perkins Coie LLP, disqualified, FaceTec filed a motion to have its replacement disqualified, too.”
• “But Jumio is arguing to a California court that there’s no reason to disqualify law firm Morrison & Foerster LLP, because they really didn’t have much to do with Perkins Coie.”
• “Perkins was disqualified earlier in the year for having previously worked with and represented FaceTec in matters ‘substantially related’ to the litigation. In effect, FaceTec says the firm communicated confidential information about its biometric technology to Jumio; specifically, patents covering FaceTec’s flagship biometric liveness detection product, ZoOm. It now says that Morrison & Foerster LLP, which had some overlap with Perkins, should not be able to access documents prepared by Perkins, and that it should also be disqualified, to boot.”
• “Jumio disagrees. ‘FaceTec’s motion depends on the fundamentally incorrect assertion that the disqualification of one firm raises an ‘irrebuttable presumption’ that its co-counsel must be disqualified,’ says Jumio’s motion to dismiss the request. ‘But courts in this district have repeatedly held that the disqualification of one firm does not automatically compel the disqualification of co-counsel, particularly where, as here, co-counsel had no contact with any lawyer at the disqualified firm who possessed the adversary’s confidential information.'”
• “Furthermore, ‘Morrison has been representing Jumio in disputes with FaceTec relating to the same technology at issue here for four-and-a-half years.'”

David Kluft notes: “Can I force a judge to recuse from my cases by sending her an insulting private letter?”

• “A NY judge received a private letter from a lawyer accusing the judge of personal animosity towards the lawyer and threatening to file a public recusal motion unless the judge privately ‘agreed’ to recuse.”
• “The Committee on Judicial Ethics committee opined that the judge under no circumstances could privately “agree” to recuse, and doesn’t have to recuse at all unless in her discretion she doesn’t think she can be fair and impartial. The judge need not but may report the attorney to the Attorney Grievance Committee.”
• Text of the full opinion here.

“Lima Accuses Foley Hoag Of Conflict In $200M Award Case” —

• “The Peruvian city of Lima has urged a D.C. federal court to vacate its confirmation of about $200 million in arbitral awards favoring a highway contractor, saying the municipality’s former counsel at Foley Hoag LLP concealed a conflict of interest.”
• “The Metropolitan Municipality of Lima argued in a Wednesday memorandum that it had relied on Foley Hoag for years to protect its interests in multiple arbitrations and annulment proceedings against highway contractor Rutas de Lima SAC related to a major toll road concession in the city.”
• “But the capital city of Peru discovered only after losses in arbitration and before the court that Foley Hoag also represented affiliates of Brookfield Asset Management Inc., the parent company of Brookfield Infrastructure Partners, the majority Rutas stakeholder, according to the municipality.”
• “‘This conflict was deemed important enough that Foley confidentially disclosed this conflict to the Republic of Peru while soliciting work in a separate arbitration over the concession contract — while trying to minimize it as only a ‘potential’ conflict — but never informed MML of the conflict, in violation of its professional ethical and contractual obligations to MML,’ the Metropolitan Municipality of Lima said.”
• “The alleged conflict tainted Foley’s representation of Lima, with devastating results, according to the municipality.”
• “‘MML lost two Foley-led arbitration proceedings resulting in adverse awards of approximately $200 million,’ Lima asserted in its 50-page memorandum.”
• “As an example of the undisclosed conflict, the memorandum claims that Foley didn’t seek a pause in arbitration proceedings pending resolution of Peruvian criminal investigations over alleged bribery tied to the concession contract. Nor did Foley adequately prepare a key witness on corruption claims related to a Brazilian court’s 2016 sentencing of Odebrecht SA’s CEO, Marcelo Odebrecht, to 19 years in prison, Lima’s memorandum said.”
• “Lima’s Wednesday memorandum asks U.S. District Judge Ana C. Reyes to vacate judgment under Federal Rule of Civil Procedure 60(b), which governs relief of a party from a final judgment or order. Judge Reyes issued a decision in March 2024 enforcing the arbitral awards made to Rutas de Lima, now worth approximately $200 million.”
• “‘Relief under Rule 60(b) is warranted,’ the memorandum argues. ‘MML was deprived of meaningful representation because Foley, burdened with an undisclosed conflict of interest, undermined MML’s defenses. Foley’s acts, omissions and conflicts, taken together, resulted in the entry and confirmation of adverse awards.'”

In the UK: “The solicitors’ duty to advise on their own negligence” —

• “In limited circumstances solicitors have a duty to advise their client that they may have been negligent. Allegations of breach of that duty normally arise in the context of claims which are brought after the normal six-year limitation period, and after three years from the date of knowledge. One may think that such claims would be rare, but in my experience they are not that unusual. There are, though, limited reported cases on the issue, and the recent case of Evans v Hughes Fowler Carruthers [2025] EWHC 481 (Ch) is therefore of some interest.”
• “Evans v Hughes Fowler Carruthers was a successful appeal by the claimant on an application to strike out her claim. Ms Evans instructed the defendant (‘HFC’) and Mr Howard QC in her ancillary relief proceedings which were before Mostyn J. HFC also acted for Lady Mostyn in her divorce from Mostyn J. In April 2012, when his judgment in Ms Evans’ case was in draft, it was alleged that HFC and Mr Howard QC had emails as a result of acting for Lady Mostyn in which the Judge had made disparaging comments about HFC and Mr Howard QC. This gave rise to an obvious conflict, and HFC and Mr Howard QC could not continue to act. Ms Evans instructed Farrers and new Leading Counsel, and a successful challenge was made to set aside Mostyn J’s judgment. This enabled HFC and Mr Howard QC to act for Ms Evans again, and there was a further trial before a different judge and a judgment in May 2013, with consequential matters continuing until 2018.”
• “There were two categories of negligence alleged. The first was that in 2011 and 2012 Ms Evans was not sufficiently advised of the risks of continuing her action before Mostyn J, and in particular she was not told that there was a special arrangement approved by the President of the Family Division that cases involving HFC would, if the clients desired it, be automatically transferred from Mostyn J to another judge. If the allegation was correct, and Ms Evans could prove that she would have sought a different judge, then the costs of the first trial were wasted and would be recoverable in damages.”
• “However, those allegations were statute barred, as the claim was brought in 2021. The Judge below who had struck out the claim held (and this was not appealed) that Ms Evans had actual knowledge by July 2012 that HFC had not advised her to have her case moved to another Judge, and thus she could not rely on section 14A of the Limitation Act 1980. That section does not, of course, require knowledge that the impugned act or omission was negligent.”
• “The second category of negligence was necessary to circumvent this limitation defence. Ms Evans alleged that she was not told that she might bring a claim against HFC for their earlier negligence in 2011.”
• “On appeal, Adam Johnston followed Bacon J.’s formulation in Cutlers Holdings and concluded that Ms Evans had a real prospect of showing that HFC knew or ought to have known that there was a significant risk that their earlier conduct was negligent. He rejected the point that had impressed the judge below that that the breach was not flagged up by Farrer & Co, Mr Howard QC, or the SRA, as there may have been reasons for that, such as the limitation on the scope of Farrers’ retainer.”
• “Why does there have to be actual or ostensible knowledge by the solicitor that there was a significant risk, rather than any risk, that their earlier advice was negligent, and what does this mean? Adam Johnson J concluded at [43] that a fanciful or spurious risk was not enough to trigger the duty, following the conclusion in Cutlers that the risk had to be substantial, without expressly explaining why.”
• “One reason may be that this duty arises only in a relatively exceptional case. Neuberger J held in Gold that it would, otherwise the provisions of the Limitation Act would be evaded in many cases in an artificial way, and that it would give rise to some sort of implied general retainer. Bacon J in Cutler made a parallel with a solicitor having no duty to advise the client of a risk of litigation where the risk was spurious or fanciful.”
• “It makes sense that spurious or fanciful risks should not give rise to any duty. If substantial merely means not spurious or fanciful, which it would appear it does from the reasoning in Cutlers and Evans, then there is no real difficulty with this test. Solicitors’ duties should not be over onerous, and a client needs to know what is really material. Perhaps most significantly, if the risk is spurious or fanciful, or not substantial, the clients will normally have to incur expense in instructing new solicitors.”
• “I would add one point. For the same reasons, the duty should only be imposed if the risk of causation being established was substantial, as well as the negligence. Suppose a solicitor gives negligent advice that the client’s claim has limited prospects of success because he fails to take into account a point of law; the client then comes back six months later for more advice, perhaps because there are new potentially relevant facts, and the solicitor gives the correct advice, including on the point of law. Unless the delay was over the expiry of a limitation period, no loss would normally have been caused by it. The solicitor should have no duty to advise the client on his earlier negligence. Even if he did, it would be causally irrelevant.”

“Basic Ethics Breaks Supreme Court Because Too Many Justices Have Book Deals” —

• “The good news is that the Supreme Court took its self-imposed, entirely toothless ethical code seriously and multiple justices recused themselves from a major copyright case implicating publishers paying them hefty sums for their books. The bad news is… apparently the Supreme Court just can’t hear major copyright cases because they have too many conflicts of interest with publishers paying them hefty sums for their books. “
• “The case is Baker v. Coates, where author Ralph Baker alleged that fellow author Ta-Nehisi Coates plagiarized from Baker’s Stock Exchange in Coates’s The Water Dancer. As part of the lawsuit, Baker named a hodgepodge of media entities as defendants from Oprah to Disney to MGM to Apple. At a certain point, a caption populated with deep pockets creates potential conflicts.”
  • “24-6839, BAKER, RALPH W. V. COATES, TA-NEHISI, ET AL.: Because the Court lacks a quorum, 28 U. S. C. §1, and since the qualified Justices are of the opinion that the case cannot be heard and determined at the next Term of the Court, the judgment is affirmed under 28 U. S. C. §2109, which provides that under these circumstances ‘the court shall enter its order affirming the judgment of the court from which the case was brought for review with the same effect as upon affirmance by an equally divided court.’ Justice Alito, Justice Sotomayor, Justice Gorsuch, Justice Barrett, and Justice Jackson took no part in the consideration or decision of this petition.”
• “As Fix the Court notes, four of the six recusing justices have had or will have books published by Penguin Random House, a subsidiary of a media conglomerate called Bertelsmann, a named defendant. Justices Sotomayor, Gorsuch, Barrett, and Jackson have books with Penguin. The fact that the Supreme Court’s weak ethical guidelines don’t require justices to explain their recusals(Opens in a new window) — even if it intended to inspire that sort of transparency — it’s not immediately clear what prompted Alito to recuse himself.”
• “But still, it should be a problem that the highest court in the land is paralyzed in the face of major media conglomerates. Given that antitrust hasn’t done a particularly good job of policing the media space, these conflicts will only deepen as long justices keep writing books.”
• “And why DO we have justices constantly writing books while still serving the public? It’s a function of paying a public servant salary while allowing aristocratic role. In a normal job where the public trust might be implicated, an official might wait until they retire to cash in on big money book deal. But when life tenure transformed from ‘insulation from partisan whims’ to ‘confirmation-to-grave job security,’ the justices stopped envisioning a memoir-fueled retirement at a reasonable age and decided to start writing early and often as a salary supplement.”

David Kluft notes: “Can the federal government order government contractors to disclose whether they hired a law firm the President doesn’t like?” —

• “A portion of an executive order required government contractors to disclose if they did business with a certain law firm, with the aim of punishing and intimidating the firm and its clients to satisfy the President’s personal grudge.”
• “D.D.C. Judge Beryl Howell found that this order impinged the firm clients’ First Amendment right to engage in private association, and thus needed to be narrowly tailored to support a substantial government interest.”
• “Judge Howell found that the government attorneys ‘misrepresented’ the scope of this provision, ‘confusingly .. ignored’ the government’s burden, and made “zero effort” to explain a substantial interest. The provision was enjoined.”
• The decision.

“Goodwin Procter Meets EEOC Demand to Supply Diversity Data” —

• “Goodwin Procter axed relationships with major diversity, equity, and inclusion nonprofit organizations that seek to diversify the legal profession in the wake of federal scrutiny.”
• “The firm sent the Equal Employment Opportunity Commission more than 200 pages worth of information that it had demanded, according to documents obtained by Bloomberg Law. The agency, directed by President Donald Trump, wrote to 20 law firms March 17 asking them to hand over information on their diversity initiatives and hiring decisions going back 10 years.”
• “‘These changes, in combination with the firm’s past and ongoing demonstrated commitment to EEO, reflect that the firm’s policies and actions are in accord with the commission’s current guidance,’ a lawyer for Goodwin told the agency.”
• “Texas Attorney General Ken Paxton led a coalition of states that asked the 20 firms to send them the same information. Allan Bloom of Proskauer, who is guiding Goodwin in the EEOC probe, asked for the information to be kept confidential in an April 15 letter to Paxton obtained by Bloomberg Law.”
• “The EEOC also requested specific, identifiable data of past fellowship recipients and those promoted to partner, including names, phone numbers, race and gender. The firm declined to hand over identifiable data but did share anonymously fellowship recipients’ race, gender, school, grade point average and location of the office where they worked.”
• “Reed Smith is in talks with the EEOC over its requests, Perkins Coie declined to respond to the request until its suit contesting a punitive executive order was resolved, according to letters obtained by Bloomberg Law. Hogan Lovells, another firm that was probed for details, requested an extension past the April 15 deadline.”
• “Six firms who also received the EEOC letter— Kirkland & Ellis, Latham & Watkins, Simpson Thacher, A&O Shearman, Skadden, and Milbank— made deals with Trump that included free legal services, in exchange for being released from the probe.”

“KPMG Law Firm Faces California Blockade With Fee Shares Bill” —

• “A California bill aims to throw a wrench into plans by KMPG and law firms backed by outside investors to operate in the state from their perches in Arizona.”
  “The measure (A.B. 931), already passed by the state Assembly, would ban California lawyers and firms from sharing legal fees with ‘out-of-state alternative business structures.’ It was introduced less than two weeks before KPMG won approval to launch a law firm in Arizona under the state’s alternative business structure program, positioning it as the first Big Four accounting, tax, and consulting company to compete head-on with law firms in the US.”
• “KPMG, whose size and reach makes it a competitive threat to Big Law, plans to use staffing agencies and co-counseling relationships with other law firms to serve clients outside of Arizona. The California bill would effectively close off access to the Golden State, an important legal services market.”
• “‘We’ve seen an attempt by some of the ABS’s to come in through the back door over the border to California,’ said Nancy Drabble, CEO of Consumer Attorneys of California. The professional organization for plaintiff’s attorneys is a key backer of the legislation, which Drabble said was designed to prevent large corporations, private equity companies, and hedge funds participating in the Arizona alternative business structure system from entering California through alliances with lawyers in the state.”
• “Litigation funders, private equity, and marketing agencies have flocked to Arizona, which eliminated a rule preventing non-lawyers from owning law firms and created an alternative business structure licensing program. California and other major legal markets have so far declined to enact similar changes, which would open up law firms to direct outside investment and could allow them to go public.”
• “‘There is always a risk that when one state, particularly a big state, passes a law, other states will look at it,’ said Boris Ziser, a partner at Schulte Roth & Zabel and co-head of the firm’s finance group, who has helped set up around half-a-dozen alternative business structures in Arizona. ‘That’s one of the unfortunate byproducts of a bad law.'”
• “KPMG wants to expand some of the legal work it’s already doing outside of the US, including large scale integrations following mergers and acquisitions by its clients. But that would likely require at least some ability to operate in the country’s largest markets, which are outside of Arizona.”
• “The main focus of the legislation is on regulating consumer legal funding—deals in which funders purchase the right to receive a portion of settlements or awards from individual consumers’ legal claims in the state.”
• “It would regulate consumer legal funding agreements and ban attorneys from accepting clients from referral services that are not certified lawyers. The measure excludes lenders and special purpose entities that invest in a consumer legal funding company.”
• “Gov. Gavin Newsom in 2022 signed a law that blocked the California Bar from tinkering with the rules banning non-lawyer ownership of law firms. The move halted discussions of a possible regulatory ‘sandbox,’ like that in Utah, to experiment with alternative business structures.”

David Kluft notes: “Can I brag about the appeal I won for a current client during a pitch to a new prospective client?”

• “Oregon Ethics Opinion 2024-24 opines that non-confidential client information can be discussed during a client pitch, but lawyers must be mindful that some public information may be confidential as to the lawyer, and that could include relatively innocuous data such as the identity of a client or the existence of a legal dispute even if it’s on the public docket.”
• “Why can such information be confidential? Because even if it is publicly available it still may not be generally known, and it be embarrassing or detrimental to the client depending on the context. If you want to discuss client confidential information during a pitch, the client’s informed consent is required.”
• Read the opinion here.

“Judge allows Dallas defense lawyer to stay on Texas 7 case, despite alleged conflicts” —

• “The attorney representing Randy Halprin will remain on his defense team, despite witnessing the execution of another member of the Texas Seven, a judge ruled Monday. The Dallas County district attorney’s office wanted lawyer Heath Harris kicked off the case, arguing his work as a former prosecutor disqualified him from representing Halprin. But state District Judge Lela Lawrence Mays said there wasn’t proof the purported conflict of interest merited removing Harris.”
• “Harris previously held a high-ranking position in former District Attorney Craig Watkins’ administration. Harris, alongside Watkins, attended the 2012 lethal injection of George Rivas, the man described as masterminding the prison break. In their 60-page motion from March, prosecutors also painted a picture that Harris was involved in the Texas Seven’s post-conviction proceedings.”
• “Harris has said he had no involvement in Halprin’s prosecution decades ago and that he would zealously fight to stay on the case; at a hearing last week, Harris testified in his own defense — and cross-examined himself.”
• “‘I never thought there was a conflict,’ Harris told The Dallas Morning News on Tuesday. ‘I didn’t do any work on the Texas Seven case — I’m trying to work as hard as I can to separate (Halprin) from the actions from the Texas Seven.'”
• “The latest ruling is the finale to a spate of legal challenges over conflicts of interest. Prosecutors first sought to oust Harris and then the DA’s office wanted to recuse itself because a prosecutor worked for a law firm that handled Halprin’s post-conviction defense two decades ago.”
• “Jim Coleman, a professor at Duke University’s law school who runs the Center for Criminal Justice and Professional Responsibility, said a judge should err on the side of not making a mistake that could be appealed: ‘Capital cases are not where you want to be out on the cutting edge of the law, particularly one with a long history where there have been errors.'”
• “‘Why not cure something before it can become an issue?’ he said. ‘Why would you force relationships that might appear questionable?'”
• “Brian Owsley, an associate professor at UNT Dallas College of Law, said the DA’s office appeared to ask to recuse itself in good faith and the judge exercised her discretion. If he’s convicted, Halprin has waived his right to appeal based on the DA’s alleged conflict, according to court records.”
• “People facing death should have lawyers they are confident in, said Bruce Green, a professor and director of the Stein Center for Law and Ethics at Fordham University’s law school.”
• “‘If there’s no objection from the defendant — and they want this lawyer — and the lawyer thinks they can do a good job, then interfering in that relationship is problematic,’ Green said. “

“Elon Musk Opposes Law Firm’s Hiring of SEC’s Former Crypto Enforcement Unit Head” —

• “…Elon Musk is opposing a move by plaintiff-side firm Bernstein Litowitz Berger & Grossmann LLP to hire Jorge Tenreiro, the former chief litigation counsel of the U.S. Securities and Exchange Commission.”
• “In a court filing, Musk argued that Tenreiro had a significant role in an SEC enforcement action against him related to the same issues as a securities fraud lawsuit filed by Bernstein Litowitz concerning Musk’s acquisition of Twitter, now called X.”
• “The law firm announced last month its intention to hire Tenreiro and sought approval from the judge overseeing the shareholder lawsuit for its proposed conflict screening measures to ensure Tenreiro would not work on the case. However, Musk contended in his filing that Tenreiro’s involvement in the SEC’s investigation into him was substantial, including recommending and advancing the enforcement action based on the same conduct alleged in the private litigation.”
• “In 2022, former Twitter shareholders filed a lawsuit against Musk, alleging he delayed disclosing his accumulation of a significant stake in the company to keep stock prices low, saving him approximately $143 million. Musk later acquired Twitter and privatized it, renaming the platform X. During the same period, the SEC, under the Biden administration, also initiated legal action against Musk, claiming he failed to file a timely beneficial ownership report after acquiring more than a 5% stake in Twitter in 2022.”
• “At the time of the SEC’s lawsuit against Musk, Tenreiro served as the agency’s chief litigation counsel, having previously led its cryptocurrency and cyber unit. Musk’s filing stated that Tenreiro participated in discussions about the investigation and reviewed a memorandum recommending that the SEC pursue enforcement action.”
• “Bernstein Litowitz has maintained that Tenreiro’s role in the SEC’s investigation was minimal and emphasized that he would not participate in their lawsuit against Musk. The firm argued that its conflict screening procedures would prevent any issues, noting that defendants in other cases involving Tenreiro’s prior SEC work had approved similar measures.”
• “Musk, however, expressed concerns about the feasibility of effective screening, citing the close-knit nature of Bernstein Litowitz’s securities fraud practice and its relatively small New York office. He also pointed to Tenreiro’s social media activity, noting that the former SEC official had ‘liked’ posts critical of Musk, suggesting bias.”
• “In a court declaration last month, Tenreiro disclosed that he contacted Bernstein Litowitz about employment opportunities after being reassigned to the SEC’s information technology department in February. He accepted a buyout offer and left the agency on April 4. Bernstein Litowitz stated in April that Tenreiro has no memory of confidential government information related to the SEC’s case and does not possess nonpublic information that could disadvantage any defendant in the litigation.”
• “The law firm has requested that the judge approve its conflict screening procedures to proceed with hiring Tenreiro.”

“The hidden reason law firms that cut deals with Trump may regret it” —

• “It is shameful and alarming that nine leading Big Law firms caved when President Trump threatened their financial bottom lines. But putting aside potential criminal exposure — both a perpetrator and a target may be guilty of bribery, for example — these timorous law firms may soon face practical problems that, ironically, affect their financial well-being.”
• “The firms have a serious conflict-of-interest problem that has been hiding in plain sight.”
• “A core element of the ethical rules that bind all lawyers in the U.S. is the understanding that a lawyer may not represent a client if that representation conflicts with the interests of other clients the lawyer represents, or other commitments made by the lawyer. Professional ethics requires that law firms must avoid such conflicts.”
• “Having reached agreements with Trump, these law firms have now expressly aligned themselves with the interests of the federal government. The professional rules against serving two or more masters therefore should disqualify these firms from doing any work against the federal government.”
• “The firms siding with the administration also represent important clients, many with claims against federal agencies. In such cases, if the government seeks to disqualify a law firm because of this obvious conflict, it ought to win.”
• “If these law firms agreed to represent the federal government directly, as Trump announced, this would create an unmistakable conflict. Each American law firm is treated as a single entity, so each lawyer’s client is thus also the firm’s client. And there are few if any large law firms that don’t have cases against the federal government and therefore may not represent the government — even in unrelated matters. If Trump insists on direct representation, as he has touted, any law firm would have to drop all its other clients who oppose the government.”
• “The rules forbidding professional conflicts may sometimes be waived, but any such waiver must come from both parties. Even if a firm’s clients were willing to agree to conflicted representation, why would the government ever waive a conflict in a vigorously disputed matter?”
• “The firms that agreed to Trump’s deal are now in a very precarious position. Engaging in a conflict of interest without a proper waiver violates professional ethical rules in every state, and a firm’s lawyers thereby would risk serious professional sanctions.”
• “It should therefore be extremely difficult for these firms to continue their work when the federal government is an adverse party. Paradoxically, such a major financial hit is far more likely than any possible criminal law exposure resulting from the deals. Trump and his minions need not fear any prosecution by the current Department of Justice.”
• “Nonetheless, the firms that publicly aligned their interests with the federal government have demonstrated that they will compromise to please the president. This is shaky ground. The lingering threat of soft sanctions inevitably infuses the firm’s representation. If the agreement influences the judgment of any lawyer in the firm, this is a conflict situation.”
• “In addition, those law firms that reached an agreement with Trump must worry about possible malpractice claims should any cases against the government go wrong. If there is the slightest evidence that the law firm walked on eggshells in their representation of any private client, the stench of unethical conflicts of interest might follow. Even ignoring the moral and reputational dimensions of these firms’ agreements, their bottom lines may suffer as well.”