Risk Update

Conflicts Calls — “Side-switching,” Privilege Log-surfaced Conflicts Allegation, “Optical” Investigation Conflicts

Posted Dan Bressler

“NRA Wants Dorsey & Whitney DQ’d From Ad Agency Suit” —

  • “The NRA claimed in a motion Monday that a privilege log recently revealed that Dorsey & Whitney LLP worked briefly with Virginia lawyer Mark Dycio, who had advised the association on matters relevant to the case.”
  • “‘The incurable conflicts arising from Dycio’s misconduct, which also taint Dorsey, could have been dealt with at the outset of this litigation,’ the motion said. ‘But they were not — because defendants concealed evidence of Dycio’s involvement from their initial disclosures and document productions.'”
  • “Dycio began a relationship with both the NRA and NRA Executive Vice President Wayne LaPierre back in 2013, helping LaPierre with personal matters and the NRA with internal issues like executive pay and corporate governance, the motion says. The association claims that Dycio was privy to confidential communication and meetings about efforts the NRA was making to prepare itself for increased regulation in New York, which involved discussions about what information was sought from ad agency Ackerman McQueen.”
  • “But when the NRA sued the ad agency in 2019, Dycio ‘switched sides’ and began representing Ackerman McQueen, the motion says. According to the NRA, Dycio and his firm Dycio & Biggs joined up with partners at Dorsey & Whitney to ‘craft tactical, misleading correspondence, and even affirmative litigation.'”
  • “Although the NRA knew that Dycio was involved in preliminary stages of the litigation, the NRA claims that it did not know that he had been working directly with Dorsey & Whitney during that time.”
  • “‘We don’t blame them for wanting to disqualify us,’ [Dorsey & Whitney partner Mike] Gruber said. ‘We wouldn’t want to try a lawsuit against us either. This is something that they’ve known about for three years, and it’s completely baseless.'”
  • “The NRA filed multiple suits against the ad agency, claiming it refused to provide documents from New York Attorney General Letitia James’ investigation of the association’s status as a tax-exempt nonprofit and had attempted to seize control of the organization by getting LaPierre to resign under threats of a smear campaign.”

Bloomberg Law Columnist Vivia Chen asks: “Microsoft Sets Bar on Investigating Harassment. Who Will Follow?” —

  • “You’d think that the brilliant brains running America’s shiniest institutions would get it right by now. They’re hardly virgins in the arena of sexual harassment, discrimination, bullying, and other unlawful conduct in the workplace.”
  • “Just a few weeks ago, Microsoft did something simple and logical in laying out a road map on how to handle investigations into those thorny issues: It hired a firm (Arent Fox) that’s not its regular counsel to review its prior investigation into harassment allegations against Bill Gates, and benchmark its ‘current practices against ‘best practices’ adopted by other companies.'”
  • “Independent review. Benchmarking. How radical. Microsoft might be leading the way, but are other institutions following this course?”
  • “For instance, in the CNN imbroglio involving former anchor Chris Cuomo and its now ex-president Jeff Zucker, the network turned to longtime counsel Cravath Swaine & Moore to investigate the sexual harassment claims against Cuomo. And speaking of the Brothers Cuomo, the New York Assembly picked Davis Polk & Wardwell last spring to investigate charges of sexual harassment against then Gov. Andrew Cuomo, who had various personal ties to the firm.”
  • “Though there’s no indication that either Cravath or Davis Polk failed to do their job fairly, questions inevitably arise whether there’s a conflict of interest. So why don’t companies and institutions pick a fresh firm?”
  • “‘The optics are certainly better if a company hires a firm with which it has no prior professional relationship,’ says NYU law professor Stephen Gillers. Whether that practice will become the standard, though, is another matter: ‘I think the great majority of shareholders focus on the stock price and dividends,’ adds Gillers. ‘If the use of regular counsel is more likely to protect these, they’ll favor it. If the ensuing negative publicity risks harming profits and share price, they’ll press for an outside review.'”
  • “But using a regular counsel for investigations should not be verboten, argues Bridgit Blinn-Spears, a partner at Nexsen Pruet in Raleigh, N.C. ‘The optics might be better if there’s no existing relationship but the disadvantage is that the firm won’t know the company as well,’ says Blinn-Spears. The key, she explains, is to have one set of regular counsel for investigations and another for litigation that might spring from the investigation. ‘The solution is to have a clean division.'”
  • “Some institutions aren’t even debating this issue because they’re handling investigations internally—and they’re making a mess. That seems to be the situation with Tesla Inc., which got slapped with a $137 million verdict in October in a racial discrimination suit and is now facing a suit by the California Department of Fair Employment and Housing for discrimination and harassment against Black factory workers.”