“Lawsuits Accuse Trio of Am Law 200 Firms of Running Afoul of Conflict Rules” —

• “Recent lawsuits accusing Am Law 200 firms of representing clients despite conflicts of interest highlight the need for both law firms and clients to take steps to avoid conflicts, according to attorneys specializing in legal ethics.”
• “‘Clients are much more offended by conflicts of interest than law firms and judges give them credit for,’ said Frankfurt Kurnit Klein & Selz partner Ronald Minkoff. ‘When they find out that there’s been a conflict of interest that may have affected the outcome of the case, they get pretty upset.'”
• “Another case, brought in New Jersey federal court by Axenfeld Law Group on behalf of car repair company Empire Auto Protect, accuses Dickinson Wright of simultaneously representing a competitor and Empire and of using Empire’s confidential information to file a trademark case against the company.”
• “A third suit, brought by Bruck McInerney on behalf of Susan Glikin in Cook County, Illinois, accuses Kattne Muchin Rosenman of fraudulent concealment and legal malpractice. According to the complaint, the law firm represented both Susan Gilkin and her husband, James, when they revised their estate plans in 2017 and 2018. Susan alleges that she learned after she filed for divorce in 2024 that the revised plan strongly favored James, putting tens of millions of dollars that otherwise would have been marital property beyond her reach.”
• “The ethical responsibility to avoid conflicts lies with the law firm, and the client has to rely on trust to some extent, Minkoff said. ‘There isn’t always all that much that a client can do,’ he said. ‘They can do their own search on Lexis and attempt to see if at some point the law firm represented the other side, but most clients don’t do that.'”
• “Matthew Henderson, a partner at Hinshaw & Culbertson, agreed that avoiding conflicts is ‘mostly on the law firm.'”
• “Henderson added: ‘It needs to be more than just a perfunctory running of the conflicts. If the firm is found to have represented someone adverse to the client in the past, he recommends interviewing the lawyers to learn more.”
• “Sophisticated clients may agree to waive some conflicts in advance, and as long as those waivers are narrowly tailored, courts usually uphold them, Henderson said. But blanket advance waivers of any conflicts are generally unenforceable.”
• “In instances where clients conclude early on that the attorney representing them is conflicted, they can opt to waive the conflict or part ways with the attorney and request their money back.”
• “If the potential conflict spills into court, a party might file a motion to disqualify, which, if successful, might lead it to sue the allegedly conflicted firm to recover their legal costs.”
• “A client can also bring a lawsuit like those flagged by Radar, with claims for malpractice, negligence or breach of fiduciary duty, Henderson said.”

“Pot Co. CFO Says Attys Must Be DQ’d In Embezzling Suit” —

• “The former CFO of four related cannabis companies, who is accused of embezzling from those companies, is urging a California state court to disqualify the plaintiffs’ attorneys, saying there is a conflict of interest between the company plaintiffs and the individual plaintiffs.”
• “In a motion filed Monday, Ramin Benyamini said the Darling & Wilson PC attorneys should be disqualified from the suit against him, as the individual plaintiffs are all officers and shareholders of the entity plaintiffs, and the entity plaintiffs could have claims against them that won’t be pursued if they’re represented by the same attorneys.”
  The individual plaintiffs — Ashkan Motamen, Ali Ghazi, Eric Nomura and Michael Kumar — allege that Benyamini stole and appropriated funds while he was CFO of the entity plaintiffs, Luvbrite Collective, All Dots Connect Media Inc., LB Distro LLC, and Green Mind LLC. The suit also names as defendants a number of other entities and individuals they say helped Benyamini through a scheme involving fictitious loans, reporting false inventory and sales numbers, and other ‘phantom transactions’ to hide the movement of the funds.”
• “In Monday’s motion, Benyamini said that each of the individual plaintiffs had a fiduciary duty to oversee the entities and prevent his alleged misconduct, and as such the entity plaintiffs have potential claims against the individual plaintiffs.”
• “But with Darling & Wilson representing both sets of plaintiffs, those claims will never be brought up, Benyamini told the court, saying California’s appeals courts have recognized that such conflicts are especially problematic in the case of corporations that are owned by a small group of shareholders, such as is the case here.”
• “Where the only shareholders are also the officers and directors involved in such a dispute, allowing them to consent or attempt to waive such a conflict would render rules about conflicts of interest meaningless, Benyamini told the court.”
• “‘The entities’ independent interests in pursuing claims against their own management are being subordinated to the individual plaintiffs’ interest in presenting a united front against defendant Benyamini,’ he wrote. ‘This is precisely the harm that the concurrent conflict rules are designed to prevent.'”
• “This conflict cannot be waived, Benyamini wrote, as court rules prohibit representation even with consent where the attorney can’t provide proper representation to each affected client, and in this case, Darling & Wilson can’t represent the entity plaintiffs while also representing the individuals who those entities may have a claim against.”
• “Benyamini further argued that he has standing to seek disqualification because, as CFO and a substantial shareholder in the four entities, he has a substantial interest in ensuring that they’re properly represented.”