Risk Update

Conflicts and Ethics — Facebook Boots Firm, New York Proposes Pot Ethics

Posted Dan Bressler

“Facebook Gets Law Firm Leading Major Antitrust Case Disqualified” —

  • “Facebook Inc. succeeded in disqualifying one of the firms leading antitrust litigation over its alleged scheme to squash rival startups, when a federal judge in California ruled that Keller Lenkner LLC was compromised when it hired a lawyer who had worked on the tech giant’s antitrust defense.”
  • “Judge Lucy H. Koh removed Keller Lenkner from the proposed consumer class action in the U.S. District Court for the Northern District of California, where it’s one of several parallel lawsuits accusing Facebook of exploiting its troves of data to target competing apps that posed a potential threat.”
  • The judge noted: “The court notes, nonetheless, that the record does not reflect that there has been any disclosure of Facebook confidential information. However, such a disclosure is not required for disqualification… The purpose of a disqualification order is prophylactic, not punitive.”
  • For more history on this one

“NYSBA Ethics Opinion Gives Green Light To Lawyers’ Involvement With Marijuana Businesses” —

  • “Earlier this week, the Committee issued Ethics Opinion 1225, which addresses lawyers’ ethical obligations when engaged in activities regulated by New York’s Recreational Marijuana Law. The Opinion answered three questions:
  • “May an attorney ethically provide legal services to assist a client to comply with New York’s Recreational Marijuana Law?:”
    • “the Committee previously concluded that a New York lawyer could assist a client to comply with the Compassionate Care act, which regulated medicinal marijuana.”
  • “May an attorney ethically use marijuana recreationally and grow it at home for personal use?”
    • “The Opinion reasoned that “the scope of federal forbearance provides inquirer with a ‘reasonablegood-faith belief that no valid obligation exists” to comply with federal narcotics laws that would otherwise prohibit her ownership of an interest in a cannabis business, her home cultivation of marijuana plants for personal use, and her recreational use of marijuana, where and when such activities are authorized by New York State law.'”
  • May an attorney accept an equity interest in a client’s cannabis business in exchange for providing legal services?”
    • “…the Opinion concluded that a lawyer may accept an equity interest in a client’s cannabis business provided the lawyer follows the appropriate conflict of interest rules.”
    • “The Opinion also reasoned that the lawyer should determine whether her equity interest in the client’s business would give rise to a personal interest conflict under RPC 1.7(a)(2). If so, the lawyer may still proceed with the representation provided “(i) the lawyer reasonably believes she can provide competent and diligent representation despite the conflict and (ii) the lawyer obtains the client’s informed consent, confirmed in writing” as required by RPC 1.7(b).”