Risk Update

Conflicts Allegations, Disqualification — Ethical Wall Fail, Disclosure Deferred Debate

Posted Dan Bressler

“Goulston & Storrs Faces $300M Suit Over Role in Failed Boston High Rise Project” —

  • “Am Law 200 firm Goulston & Storrs is facing a $300 million lawsuit based on allegations the firm failed to disclose client conflicts and relevant information to a construction client in Boston, ultimately causing a major real estate development project to flounder. The firm says the claims are without merit.”
  • “The complaint, filed Friday by construction magnate John Fish and his company JFF Cecilia in Massachusetts State Court, centers on a billion-dollar, mixed-use high rise project in Boston’s Back Bay neighborhood, referred to in the complaint as the St. Cecilia’s Project. Also involved in that project was Stephen Weiner and his firm, Weiner Ventures, which conceived the project, according to Fish’s complaint.”
  • “According to the complaint, Goulston & Storrs has contended that it never represented Fish or JFF Cecilia in the project, and that it only represented the joint venture entity, ADG Scotia Holdings LLC.”
  • “But Fish’s complaint referred to ‘five years of emails,’ including screenshots of some of them, that refer to representation of Fish. It alleges that Goulston & Storrs collected about $12 million in fees from Fish, and that Goulston & Storrs formed the entity JFF Cecilia on Fish’s behalf.”
  • “In its statement Friday, Goulston & Storrs added, ‘We made clear at the outset of our engagement that we represented the joint venture entity, not the individual interests of Mr. Fish or the other participants relative to the project. In fact, each party signed a conflict waiver letter with our firm acknowledging this agreement, and our team of attorneys fulfilled their professional and ethical obligations at all times. Neither party received preferential treatment; we treat all of our clients with the same respect and superior service.'”
  • “In a footnote of the complaint, Fish alleged that ‘Goulston & Storrs itself has confirmed that it failed to obtain a relevant conflict waiver.’ It said when a new lawyer representing Fish asked Goulston & Storrs for engagement letters or conflict waivers related to the project in 2019, the firm responded that it did not have any, according to the footnote.”

“Gibson Dunn DQ’d From Military Contractors’ Copyright Fight” —

  • “A California federal judge on Wednesday disqualified Gibson Dunn & Crutcher LP from representing military helicopter maker MD Helicopters Inc. in its copyright infringement suit against government contractor Aerometals, finding that the firm is conflicted in light of its past representation of Aerometals in related fraud litigation.”
  • “In an 18-page order, U.S. District Judge Troy L. Nunley agreed with Aerometals Inc. that Gibson Dunn ‘clearly still possesses confidential and possibly privileged information’ from representing Aerometals in prior litigation from 2002 through 2005, and that none of the actions that Gibson Dunn took after learning of the possible conflict could cure the issue.”
  • “‘A number of California courts have found vicarious disqualification of a firm to be required where a substantial relationship is proven, ‘even if the firm erects an ethical wall around the attorney who possesses the opponent’s confidences,” the order says. ‘Accordingly, this court too finds Gibson Dunn’s ethical wall insufficient to prevent the firm from vicarious disqualification.'”
  • “Gibson Dunn sought to serve as co-counsel for MD Helicopters in July 2019, but Aerometals asked the judge to disqualify Gibson Dunn the following September. Aerometals argued that roughly 12 attorneys at the law firm had represented the company in four related matters from 2002 to 2005, and had charged Aerometals more than $1.1 million in fees and costs.”
  • “Aerometals had expressed concerns to Gibson Dunn about its past representation of the company, but the firm argued in response that most of the attorneys who worked on those cases no longer practice at Gibson Dunn and that none of the attorneys working on the instant suit worked on the prior cases. Gibson Dunn also said that it had implemented an ethical wall since receiving Aerometals’ objection, and that disqualifying the firm at this stage of litigation would be highly prejudicial.”