Risk Update

Conflicts Accusations Overcome — Sidley Stays In, Keller Rohrback Continues Suit Against Former Client

Posted Dan Bressler

“Sidley Austin Beats Hiring Challenge in Boy Scouts Bankruptcy” —

  • “Sidley Austin LLP was approved to serve as bankruptcy counsel for the Boy Scouts of America after overcoming a conflict of interest objection raised by an insurance provider the law firm previously represented.”
  • “The firm has shown it’s a disinterested adviser and has established appropriate firewalls in the Boy Scouts’ Chapter 11 case, Judge Laurie Selber Silverstein of the U.S. Bankruptcy Court for the District of Delaware said in an oral ruling issued Friday.”
  • “Sidley’s retention by the Boy Scouts, which filed for bankruptcy in February to deal with the fallout from hundreds of child sexual abuse claims, came under fire because of the firm’s prior engagements with Century Indemnity Company, one of the organization’s insurers.”
  • “Convinced that any sensitive information Sidley learned during the course of its work for Century ‘has not and will not be passed on to BSA’s restructuring team,’ Silverstein said in her ruling Friday that disqualification isn’t necessary.”

“Keller Rohrback May Represent Homeowner Against Former Client” —

  • “Seattle-based law firm Keller Rohrback LLP may continue to represent homeowners suing USAA Casualty Insurance Co. over its alleged bad-faith refusal to pay for expenses after a house fire, the Washington Supreme Court said in a matter of first impression.”
  • “The case is factually distinct from Keller’s previous defense of USAA in a bad-faith insurance suit involving a house fire, the high court said Thursday. Its decision interpreting changes to professional conduct rules reverses a state appeals court ruling disqualifying Keller and reinstates the trial court’s order.”
  • “USAA sought to have the Keller attorneys disqualified. A team at the firm represented USAA in over 165 matters from 2007 to 2017, was privy to its litigation strategy and many other confidential matters, and handled a bad faith claim involving an alleged refusal to provide alternative housing after a house fire, it said.”
  • “The court looked to other states’ interpretations of the American Bar Association’s version of the rule on conflicts of interest and its comments, which Washington ‘effectively adopted’ in 2006, it said. The rule bars a lawyer from representing someone ‘in the same or a substantially related matter in which that person’s interests are materially adverse’ to a former client’s interests, without the former client’s consent.”