“The Lawyers Who Helped Build, and Bring Down, Carlos Ghosn” —
- “In the three years since Carlos Ghosn was detained on a Tokyo airport tarmac, much has emerged about how forces within Nissan Motor Co. worked to remove him. Yet a key group has avoided close scrutiny of their role in the once-powerful car executive’s downfall: the lawyers.”
- “A small clutch of attorneys from Latham & Watkins LLP, one of the world’s largest law firms, advised Nissan for years on how to compensate its then chairman and CEO. That included the remuneration package that would become the basis of the first charges against Ghosn, for concealing the full extent of his income. Then, as Ghosn’s pay became the subject of a criminal investigation in 2018, Latham & Watkins was enlisted to investigate his alleged wrongdoing, despite warnings to Nissan’s board that it posed a serious conflict of interest.”
- “‘I was concerned right from the get-go about their involvement’ in the company-ordered probe, said Ravinder Passi, Nissan’s former global general counsel. Passi sued the carmaker last year for wrongful termination, saying that he was dismissed after questioning whether the law firm acted in Nissan’s best interests. ‘I was incredibly surprised, and shocked. How is this going to appear when you’ve got the same lawyers investigating things, including their own work? The situation was ripe for misbehavior.'”
- “Despite what Passi, who reported to Nada, calls its deeply conflicted position, Latham & Watkins remains Nissan’s top legal adviser, as the carmaker continues to grapple with the fallout from Ghosn’s undoing — including in court. Nissan is facing a raft of lawsuits across the globe from disgruntled shareholders, business partners and former employees.”
- “Azusa Momose, a Nissan spokeswoman, said that Latham & Watkins’s probe into Ghosn and Kelly was ‘robust, thorough and appropriate,’ and that its findings were corroborated by multiple government agencies in their own ‘thorough, independent investigations’ … ‘Latham & Watkins were not at any time conflicted in assisting Nissan to carry out its investigation,’ Momose said.
- ‘Their client is, and always was, Nissan. Any suggestion that Latham & Watkins were conflicted, or that any potential conflict prevented them from assisting in the conduct of a robust investigation, is not supported by any facts.’
- “In a statement provided to Bloomberg, Latham & Watkins said it ‘regularly discussed the firm’s engagement on the internal investigation with Nissan and its executives and employees — including Nissan’s former general counsel, Ravinder Passi — all of whom approved of and agreed to continue with the firm’s engagement.'”
- “James Wareham, Kelly’s U.S. attorney, called Latham & Watkins the ‘most conflicted law firm on earth’ for leading the investigation into its own advice, and that it should never have agreed to take on the probe. Nissan’s board ‘must engage truly independent counsel to revisit the entire affair — Nada’s role, as well as the role of other conspirators; the role of the Ministry of Economy, Trade and Industry; and the role of the Japanese prosecutors,’ he said.”
And with thanks to Sean Ginty, Risk Control Director at CNA who sent in: “‘SPAC’ Clients Pose Unique Risks for Law Firms: Lessons Learned from Defending Lawyers in Malpractice Cases” —
- “Representing the sponsor of a ‘Special Purpose Acquisition Company’ or ‘SPAC’ poses unique risks to law firms.”
- “In this article, we explain what SPACs are and why representing their sponsors may pose risks for law firms and lawyers. We also offer suggestions—based upon experience defending law firms against malpractice and other claims after investments have gone bad—for reducing risks to law firms representing SPAC sponsors. Whether firms represent SPACs or other investment sponsors, these suggestions may make claims less likely. They also may reduce the disruption, expense, and embarrassment if claims arise.”
- “Although all representations pose litigation risks, the sources of litigation risks for lawyers representing SPAC sponsors can differ from other types of investment-fund representations.”
- “After the SPAC raises money, the risk of alleged conflicts- of-interests among the sponsor, the sponsor’s principals, and the SPAC becomes more prominent. With the benefit of hindsight, disgruntled individuals or entities also may criticize the adequacy of the law firm’s advice or other legal services in connection with merger target selection and vetting.”
- “In addition, even if the sponsor and the SPAC elect not to sue the law firm, it is conceivable that the law firm may encounter a derivative claim brought by disgruntled SPAC share- holders alleging a conflict between their interests and those
of the sponsor. See Padgett v. Mitchell, 2002 WL 991022, at *9 (Cal. Ct. App. May 15, 2002) (fiduciary duty claim in shareholder derivative suit targeting outside counsel for the corporation), as modified on denial of reh’g (June 12, 2002).”