Risk Update

Conflicts & Confidentiality — Drug Matter Cleared Conflict Appeal, Risk Concerns Regarding Chinese Law Firm Engagements and Practices

Opioid Defendants Appeal Judge’s ‘Untenable’ Order on Special Master DQ” —

  • “Two companies have appealed a judge’s order refusing to disqualify the special master in the opioid multidistrict litigation after he inadvertently hit ‘reply all’ on an email meant for himself.”
  • “Polster, of the Northern District of Ohio, ruled that the email was protected under judicial deliberative privilege, but the petition says the judge abused his discretion. Cohen, the petition says, never asserted such a privilege.”
  • “The Sixth Circuit petition clarified that it was not seeking to disqualify Cohen in cases involving other defendants, only the pharmacy benefit managers. The petition, filed on Monday, comes after Polster ordered the parties on Oct. 27 to ‘work with Special Master Cohen to address any disagreements’ in the bellwether trial plan.”
  • “‘They should not be forced to participate in proceedings before a special master whose disclosed thoughts—even if disclosed inadvertently—would lead any reasonable person to question his impartiality,’ the petition says.”
  • “Lawyers were in the midst of scheduling bellwether trials when Cohen accidentally hit ‘reply all’ in an Aug. 28 email with notes to himself. He wrote: ‘PBMs’ goal is to complicate and delay (including a request to do nothing and set a status 4 weeks hence). I say Ps add claims against PBMs as mail-order pharmacies. Two reasons: (1) Ps are the master of their own complaint, and (2) claims against PBMs as mail-order pharmacies will show how much PBMs knew (and they knew a lot).'”
  • “‘Under the district court’s rule,’ the petition says, ‘a judicial officer who reveals an improper bias against a litigant could avoid disqualification so long as he claims that he intended for the message to remain private. That is not and should not be the law.'”

Report Raises Security Concerns About Australian Law Firms Acting for Chinese Entities” —

  • “Chinese enterprises pursuing ownership of Australia’s critical infrastructure and critical minerals are using law firms to circumvent Australia’s foreign transparency and interference laws, a recent report claims.”
  • “‘Law firms operating in Australia have been engaged by advanced technology companies that the Five Eyes [intelligence alliance between Australia, Canada, New Zealand, the U.K., and the U.S.] consider high-risk vendors, social media giants that refuse to appear at Australia’s foreign interference inquiries, and PRC state-owned energy leaders that have majority ownership in Australian electricity companies,’ the report states.”
  • “‘Meanwhile these law firms are entrusted with legal engagements involving Australia’s critical infrastructure and Australian Government entities responsible for countering national security risks.’”
  • “Law firms say they are just providing legal advice, but Potter said Internet 2.0 found that firms are promoting the signing of memorandums of understanding with the Chinese government in Hong Kong for its Belt and Road initiative.”
  • “The Belt and Road Initiative is a global infrastructure development strategy adopted by the Chinese government in 2013 to invest in more than 150 countries and international organizations.”
  • “‘That’s not law work, that’s lobbying,’ Potter said.”
  • “The report states that law firms are providing foreign entities with ‘legitimacy and confidentiality’ as they pursue their strategic objectives in Australia, and this risks helping them circumvent the intent of Australia’s foreign transparency and interference laws.”
  • “In particular, he said some law firms have email accounts for lawyers in different countries on the same domain—using a .com.au address for Australian and foreign emails, for instance. This is considered a bad idea because if an organization is hacked in one country it is easier for them to be hacked in another, he said.”
  • “The report singled out Ashurst. Public mail exchange records show that the email accounts of Ashurst employees based in the People’s Republic of China share the same email servers as their Australian counterparts, it said, which results in ‘a lack of infrastructure isolation risking exposing Australian email traffic to PRC’s intelligence laws.’”
  • “The report says that IP Australia, the Australian government agency responsible for administering the country’s intellectual property law, lists Ashurst as Huawei’s firm for legal services for intellectual property filings in Australia. It also quotes a Bloomberg report saying that Huawei delivered a malicious software update to Australian telecommunication networks in 2012, before Australia classified Huawei as a high-risk vendor alongside the Five Eyes.”
  • “Responding to the claims, an Ashurst spokesperson said the firm did not contribute to the Internet 2.0 report and was not contacted by the report researchers to comment on its position.”
  • “‘We are not able to comment on individual clients or security measures, but the report contains inaccuracies, including in relation to our IT systems and the clients that we act for,’ the spokesperson said.”
  • “The report also singles out King & Wood Mallesons, saying that the email accounts of firm employees based in Hong Kong share the same email servers as their Australian counterparts, ‘a lack of infrastructure isolation risking exposing Australian email traffic to PRC’s 2018 Hong Kong National Security Law.’”
  • “The firm’s Swiss verein structure enables it to operate as an international firm while maintaining separate local partnerships—KWM Australia, KWM China and KWM Hong Kong, the spokesperson said.”
  • “KWM maintains separation of IT systems between KWM Australia and other parts of the KWM network, and these systems are subject to rigorous security audits to satisfy internal and client obligations and expectations, she said. ‘We take our legal and fiduciary duties seriously and use robust conflict checking systems and business acceptance protocols.’”