Risk Update

Conflicts Contentions — “Blatant Ethics Breach” Accusation in Arbitration Proceeding

Posted Dan Bressler

“Crowell Denies ‘Blatant’ Ethics Breach as Walgreens Broadens Lawsuit” —

  • “Lawyers for Walgreens on Tuesday filed an amended complaint that asked a District of Columbia Superior Court judge to disqualify Crowell from an arbitration proceeding in which the firm is representing the insurance carrier Humana Inc. against Walgreens. The attorneys also urged the judge, Hiram Puig-Lugo, to strip legal fees ‘that Crowell has received or in the future will receive in connection with actions in which it is acting adversely to Walgreens.'”
  • “The company’s original lawsuit, first published by The National Law Journal, was docketed in March and sought documents related to work the law firm did years ago for Walgreens on a prescription drug benefit program. In 2008, Crowell provided legal services as part of a Walgreens initiative called the ‘prescription savings club,’ or PSC. Crowell, representing major U.S. insurance carriers, last year sued Walgreens in Illinois federal district court in a case that confronts the prescription savings club and accuses Walgreens of fraud.”
  • “‘Law firms cannot advise a client on a legal issue, then turn around and sue that client over the same issue. This represents a clear conflict of interest and a breach of Crowell & Moring’s ethical and fiduciary obligations,’ a spokesperson for Walgreens said in a statement. ‘Walgreens has given Crowell & Moring every opportunity to do the right thing. They refused, leaving Walgreens no alternative but to seek relief in court.'”
  • “Just weeks ago, lawyers at Crowell had resisted disclosing internal law firm documents to Walgreens’ attorneys at Reed Smith, according to court filings. Crowell had maintained the firm had not been counsel to Walgreens at the time legal services were provided on the prescription savings club. Crowell argued it had represented a Walgreens subsidiary that was later sold to a third party.”
  • “That company, however, consented to the disclosure of the Walgreens files, the lawsuit said, and Walgreens recently obtained requested documents from Crowell. Lawyers for Walgreens contend, however, that Crowell still is holding onto relevant documents related to the work the firm did on the prescription savings club.”
  • “Rebecca Carr, a spokesperson for Crowell, said in a statement: ‘Crowell denies the assertions in Walgreens’ amended complaint and looks forward to achieving vindication in court.'”