“Law Firms Caught Up in Litigation Over Cannabis Grower’s Troubles” —

• “A battle is intensifying between law firms connected to an insolvent New Jersey cannabis cultivator known as the Harmony Foundation. Two law firms, Lowenstein Sandler of Roseland, New Jersey and Cyrulnik Fattaruso of New York, are accused of legal malpractice in a suit filed Tuesday by a trustee for Harmony Foundation. The suit claims the two firms have a conflict of interest because they simultaneously represented Harmony and Jeshayahu Brodchandel, who allegedly sought to gain control of over the cannabis company.”
• “The latest suit, filed by Greg Trif of Trif & Modugno in Morristown, New Jersey, also names attorneys Peter Slocum and Christopher Porrino of Lowenstein Sandler and Jason Cyrulnik of Cyrulnik Fattaruso as defendants, along with Brodchandel and others. The filing comes on the heels of another, filed in November 2024, in which Lowenstein Sandler alleges that Trif & Modugno and partner Louis A. Modugno drove Harmony Foundation into insolvency and receivership.”
• “Harmony Foundation started out as a grower and seller of cannabis, and Brodchandel was one of its partners, according to the latest suit. Its dispensary in Secaucus closed in 2023 after the state revoked Harmony’s cultivating and manufacturing licenses due to unpaid fees. Brodchandel sought to squeeze out other investors who put up millions of dollars to make the operation grow, the suit alleges.”
• “The latest suit alleges that Brodchandel retained Lowenstein in 2020, and the firm, ‘in exchange for millions of dollars in fees, disregarded the Rules of Professional Conduct, deployed their unchecked attorneys, and touted alleged political influence to enable and aid Brodchandel in his unsuccessful attempt to seize control and ownership of Harmony to the company’s significant detriment.'”
• “The suit also alleges that Brodchandel sought to convert Harmony from a nonprofit to a for-profit entity, but a company that invested a large sum of money in Harmony, Secaucus Investors, ‘uncovered and then thwarted Brodchandel’s plot by securing an order enjoining Harmony from effectuating the conversion, thereby preventing Brodchandel and the Lowenstein Defendants from completing the final step of Brodchandel’s subversion of Harmony’s assets.'”
• “According to the suit, Lowenstein’s attorneys advanced Brodchandel’s interests in the name of Harmony, ‘despite the non-waivable conflict that prohibited their dual representation.’ That allegedly left Brodchandel unchecked to cause great harm to Harmony and its assets through self dealing, wasting its assets, mismanaging it, breaching his fiduciary duties and ‘effectuating his scheme to seize harm to Harmony and its assets through countless misdeeds for himself and his co-conspirators,’ the suit asserts.”
• “Kevin Marino of Marino, Tortorella & Boyle in Chatham, New Jersey represents Lowenstein Sandler, Slocum and Porrino in connection with the suit by Harmony Foundation. Marino said in an email, ‘this is a frivolous complaint filed by a disgruntled litigation adversary. It was filed in response to our lawsuit against that same adversary for the payment of legal fees. We will seek to collect the full amount of our unpaid legal fees as well as the costs incurred in defending against this meritless and obviously retaliatory claim.'”
• “In November 2024, Lowenstein sued Harmony Foundation, Trif & Modugno and others in an attempt to recoup $766,276 in unpaid legal fees. Lowenstein was retained to defend a hostile takeover lawsuit initiated by Harmony’s lender, Secaucus Investors.”

“Connell Foley Fights DQ Bid In Investment Firm’s Bias Suit” —

• “A group of current and former New Jersey state officials blasted a motion to disqualify their counsel at Connell Foley LLP in a discrimination suit from a Black-owned investment firm in New Jersey federal court, calling the move a frivolous and bad faith stalling tactic.”
• “Blueprint Capital Advisors LLC moved in December to disqualify the firm because one of its attorneys, prominent real estate attorney Elnardo Webster, allegedly represented Blueprint in the discrimination litigation before he moved to Connell Foley in 2023.”
• “The state defendants — including New Jersey Attorney General Matthew Platkin and George Helmy, former chief of staff for Gov. Phil Murphy — however, shot down that argument in a Tuesday brief filed in a New Jersey federal court.”
• “The disqualification motion from Blueprint and one of its owners, Jacob Walthour, concealed the fact that far from representing him, Webster had, at most, a handful of social interactions with Walthour over the timeframe in question and never provided any legal advice, the state defendants alleged.”
• “Walthour ‘resorts to using conclusory buzzwords such as ‘mental impressions,’ ‘advice,’ and ‘confidential information’ that demonstrate his claim of a conflict is an empty one,’ the memorandum said. ‘These buzz words cannot bridge the factual gap. The law is clear that such conclusory statements are insufficient to disqualify opposing counsel,’ they added.”
• “Blueprint claimed Webster began representing it as far back as 2016. However, the state defendants argued, and Webster himself certified, that the 2016 meeting was nothing more than a brief social interaction between Webster and Walthour that did not involve legal advice. Blueprint did not file the suit for four years after that meeting, and when it did, the case had nothing to do with Webster’s specialty of real estate.”
• “‘Plaintiff’s suggestion that incidental social conversations with a non-litigating real estate and land use attorney who was completely unfamiliar with the status of the litigation somehow rose to the level of an ‘attorney-client relationship’ is not credible,’ the state defendants said.”
• “Blueprint and Walthour did not respond to multiple requests from the state defendants for evidence that Webster ever represented them, and the investment firm waited for months after learning Connell Foley was representing the state defendants to file the disqualification motion, the state defendants argued.”
• “The state defendants told the court Blueprint’s motion approached the level of sanctionable behavior, but that they chose not to pursue sanctions. They also said the disqualification bid appears to be a form of retaliation for the state of New Jersey filing a separate complaint against Blueprint and Walthour in November 2024.”
• “The Connell Foley attorneys on the case — John Lacey and Lauren Iannaccone – have spent significant time preparing for about 40 depositions and reviewing tens of thousands of documents, the state defendants said. Disqualifying them now would require any new counsel to take months to get up to speed and delay the deposition schedule, they said.”
• “Blueprint sued the state defendants and the investment firm BlackRock in 2020, alleging the state cast it aside for a contract and instead gave the contract, along with confidential information, to the ‘overwhelmingly white’ financial giant.”

“No Duty To Report Client Fraud” —

• The Ethics” Advisory Panel of the Rhode Island Supreme Court opines on an attorney’s ethical obligations when learning of client fraud in a matter where the attorney did not represent the client”
  • “The inquiring attorney represented a client with a potential Social Security Disability (‘SSDI’) claim pursuant to a referral from the client’s workers’ compensation attorney. During the representation, the inquiring attorney filed an application for SSDI benefits on the client’s behalf in February 2024. The application was denied in April 2024, at which time the inquiring attorney requested reconsideration of the denial. The request for reconsideration was denied in August 2024. On September 9, 2024, the inquiring attorney filed a request for hearing, which remains pending.”
  • “The inquiring attorney reports that during this time his or her client was receiving workers’ compensation benefits. The inquiring attorney did not represent the client in the workers’ compensation matter. On November 14, 2024, the inquiring attorney learned that the client had settled the workers’ compensation matter pursuant to a settlement agreement signed in October 2024 in which the client affirmed that he or she had not applied for SSDI benefits and did not intend to become Medicare eligible within the next thirty (30) months. In response, the inquiring attorney terminated his or her representation of the client on November 15, 2024, and has not communicated with the client since.”
• “Is there a duty to report?”
  • “The Panel’s inquiry now turns to whether Rule 3.3 imposes such a duty of disclosure on the inquiring attorney here. By its plain language, Rule 3.3 ‘governs the conduct of a lawyer who is representing a client in the proceedings of a tribunal’ or who is ‘representing a client in an ancillary proceeding conducted pursuant to the tribunal’s adjudicative authority, such as a deposition.’ Rule 3.3, Comment [1]. Thus, the existence of a proceeding is a condition precedent for the applicability of Rule 3.3. This requirement attaches even in cases where ‘[a] lawyer . . . knows that a person intends to engage, is engaging or has engaged in criminal or fraudulent conduct related to the proceeding . . . .’ Rule 3.3(b). In this case, the inquiring attorney asks whether he or she must report the false attestation the client made in the affidavit settling his or her workers’ compensation matter; however, the inquiring attorney does not now, and never did, represent the client in that case. Accordingly, the duty of candor under Rule 3.3 does not attach here.”
  • “This conclusion is supported by the Panel’s past precedents. In Rhode Island Supreme Court Ethics Advisory Panel Op. 94-19, the inquiring attorney was retained by an insurance company to file suit to suspend workers’ compensation payments to a recipient who was allegedly operating a home business. The inquiring attorney confirmed the allegation following an investigation. The inquiring attorney also learned, however, that his or her law firm provided legal services to the recipient’s home business. On this basis, the inquiring attorney sought to withdraw from both matters. He or she asked the Panel whether he or she was nonetheless obligated to inform the Workers’ Compensation Court of the fraud.”
  • “As an initial matter, the Panel agreed with the inquiring attorney’s decision to withdraw from both matters due to the evident conflict of interest. With regard to the question of the inquiring attorney’s duty of candor, the Panel determined that the inquiring attorney was under no such obligation because he or she did not represent the recipient before the Workers’ Compensation Court. The Panel noted, however, that ‘[t]he attorney’s obligation would be different if the attorney were representing the recipient in the Workers’ Compensation proceeding.'”