“Coinbase CEO Threatens Law Firms Over Government Hires” —

• “Coinbase Global Inc. is warning its law firms not to hire any anti-crypto government lawyers or risk losing the company’s work in what could be a sign of things to come for Biden administration attorneys.”
• “Coinbase CEO Brian Armstrong wrote in a post on X on Dec. 2 that ‘we’ve let all the law firms we work with know, that if they hire anyone who committed these bad deeds in the (soon to be) prior administration, we will no longer be a client of theirs.'”
• “Armstrong then singled out Milbank LLP’s hire of Gurbir Grewal in October, who was the former enforcement director of the US Securities and Exchange Commission, saying the firm ‘messed up’ while noting that ‘we don’t work with them now (and never will while he works there).'”
• “Grewal, the former New Jersey attorney general, joined the SEC in 2021 and led the agency’s stepped-up enforcement against the cryptocurrency industry. The agency filed more than 100 actions, including ones against Coinbase, Binance, Kraken and Gemini.”
• “The value of Armstrong’s message is to communicate directly to those firms that are not yet on Coinbase’s roster that this is a consideration that they should bear in mind when they’re when they’re recruiting people to their firm, Paul Grewal, the company’s general counsel, said in an interview.”
• “Coinbase’s Grewal said he hoped Armstrong’s tweet ‘does provoke a wider conversation among industry leaders about the revolving door in Washington and the historic assumption that lawyers in government can essentially do what they want without any consequence.'”
• “Coinbase was charged in June 2023 for operating a trading platform without registering with the SEC as a broker. Coinbase sued the SEC last year demanding new rulemaking for digital assets following a denied petition filed by Coinbase in 2022. Gibson Dunn & Crutcher’s Eugene Scalia represented Coinbase in its appeal.”
• “‘Let your law firms know that hiring these folks means losing you as a client,’ Armstrong said.”
• “Threats like Coinbase’s aren’t anything new, but making a public statement about it is unusual, said Washington-based legal recruiter Jeffrey Lowe at CenterPeak.”
• “‘It might be something that a client will be telling its law firms privately, but to just put it out there just really draws a line in the sand,’ he said.”
• “Firms know when they hire certain people, whether they’re from an administration, a different firm, or a competing company know that they run a risk of there being a perceived business conflict with other potential clients out there, Lowe said.”
• “‘Which position do we want to take? Do we want to be pro Google, or do we want to be pro Amazon or pro Apple or Samsung?’ Lowe said.”
• “‘These are all things that law firms are considering every single day and with the size of the companies and the kinds of engagements at stake, you can be talking easily tens if not hundreds of millions of dollars in lost revenue if you bet on the wrong horse,’ he said.”

Hat tip to Simon Chester at Gowlings for sending word of this recent decision from the Supreme Court of British Columbia: “R. v Gagne, 2024 BCSC 2183 (CanLII)” —

• “On March 26, 2024, the date that had been set for the Gardiner hearing, Mr. Chesterley and Crown counsel John Boccabella, not Mr. Grabe, appeared before me. Mr. Chesterley advised the Court as follows:
  • ‘… An issue has come up, Justice, and I think I am placed in the position on behalf of Mr. Gagne to seek to adjourn this. And I won’t go into too much detail, but the court will recall that during the course of this trial my paralegal, Ms. Eddy had been accompanying me and taking notes and so forth.’
  • ‘It turns out – and it wasn’t entirely unknown to me, but she was also dating the prosecutor at the time and this has led to a confidence issue from the standpoint of Mr. Gagne, perhaps understandably. I don’t think she did anything inappropriate, but nonetheless certainly that raises an issue and he wants to seek independent legal advice about that.’
• “On June 14, 2024, the defendant swore and filed an affidavit in support of his Mistrial Application, which includes the following:
  • …The day after the above noted conversation, I again spoke with Mr. Chesterley at which time he advised me that his paralegal and Mr. Grabe were in a romantic relationship and that the relationship was ongoing during my trial. I was in a state of shock and disbelief upon learning of this relationship. Mr. Chesterley’s paralegal was assisting him both before and throughout the trial. She was sitting next to him at counsel’s table and was taking and passing him notes. She was also present during our meetings to discuss trial strategy. As far as I was aware, she was part of my legal representation.’
  • ‘After the complainant testified in my trial, I relied on their collective advice in reaching my decision to not testify in my own defence. Had I known in advance that my lawyer’s paralegal was involved in a romantic relationship with the Crown counsel who was prosecuting my case, I would have immediately asked for a new lawyer.'”
• “On July 22, 2024, Crown counsel filed the affidavit of Nicolas Grabe, which includes the following:
  • ‘In approximately August 2022 I began dating a woman named Mary-Anna Eddy. We are still together today. We maintain separate residences and have never lived together… Ms. Eddy is employed at Eric Chesterley’s law office as a legal assistant. She does not have any legal training, but I understand Mr. Chesterley has made her a designated paralegal. I do not know the extent of her role as a designated paralegal, but understand she has from time to time attended court with Mr. Chesterley to assist with note-taking. I do not know exactly when she started working for Mr. Chesterley, but believe she was so employed throughout the relevant time of the Gagne prosecution.’
  • ‘As a government employee, I am aware of my duty to keep information received in the course of my employment strictly confidential. I am also aware of my confidentiality obligations as a lawyer pursuant to the Code of Professional Conduct. At no time during my relationship with Ms. Eddy have I disclosed to or discussed with Ms. Eddy any information about the Gagne prosecution or any other prosecution file.'”
  • ‘As a general rule I do not work from home and do not bring file materials to my residence. I am confident that Ms. Eddy would not have had access to any confidential information while in my residence. Ms. Eddy has never discussed with me any confidential information about Mr. Gagne, his defence, or matters involving the prosecution. I have never seen, been provided, or reviewed any information relating to Mr. Gagne’s matter while at Ms. Eddy’s residence or in her presence. I understand, based on my discussions with Ms. Eddy, that Mr. Chesterley was aware of my relationship with Ms. Eddy prior to the Gagne prosecution.'”
• “The Crown argues the defendant has failed to establish a basis for a mistrial. Crown argues that post-conviction, a defendant seeking a mistrial must establish an actual conflict of interest, and not just an appearance of one, and that the facts in this case do not give rise to an actual conflict of interest. The Crown argues that even if an actual conflict of interest existed, the defendant has not established an adverse effect on Mr. Chesterley’s representation at trial, which it argues is required where conflict of interest is raised after the trial.”
• “However, the case before me does not involve a relationship between two lawyers. It involves a relationship between one lawyer and a person who Mr. Grabe acknowledges ‘does not have any legal training’. There is no evidence before me that ‘paralegals’ (however that may be defined) are a profession regulated in the public interest, guided by a code of ethics by which the conduct of members is gauged.”
• “In my view, the dating relationship between prosecuting Crown counsel and a member of defence counsel’s firm, who was part of the defence team, constituted a conflict of interests for Mr. Chesterley. Ms. Eddy, and by extension Mr. Chesterley and his firm, were personally aligned with the prosecutor. There was a substantial risk both that Mr. Chesterley’s representation of the defendant would be materially and adversely affected by that relationship. There was a risk that Ms. Eddy, a key member of the defence team, would favour Crown counsel because of that relationship. In addition, there was a substantial risk that confidential information to which Ms. Eddy was privy would be disclosed to Crown in the course of that personal relationship. The risk that such confidential information could have been disclosed to Crown by Ms. Eddy is implicitly acknowledged by the fact that Crown counsel prepared an affidavit in which he deposed that no such evidence was received by him. If there was no risk of disclosure, such an affidavit would have been unnecessary.”
• “The relationship was concealed from the defendant. For counsel, for both sides, to have failed to disclose that information to the Court, is conduct so egregious that it creates an appearance of unfairness to such a degree that it would taint the administration of justice in the eyes of a reasonable and objective observer: Ball at paras. 119, 120. A reasonable and objective observer would consider it a betrayal and a fundamental breach of trial fairness for an accused to learn only after he has been convicted at trial that a member of his defence team had been, at least metaphorically, sleeping with the enemy, by being involved in a personal relationship with the Crown, a relationship known to both counsel, but concealed from him.”
• “The defendant’s application is granted. I order a mistrial.”