“Judge Blasts Liberty Mutual in Declaring He Will Not Disqualify Because He’s an Insured” —

• “A federal judge in New Jersey, in a blistering opinion, has refused to disqualify himself from a case involving his insurer, Liberty Mutual, and accused the insurer of seeking his recusal and attacking his integrity because it did not like the substance or tenor of one of his rulings.”
• “­Senior Judge Stanley R. Chesler of the U.S. District Court for New Jersey said Liberty Mutual offered no evidence to support its claim that the judge’s history with the company or a ruling he issued raised the perception of bias.”
• “In a recent motion for disqualification, Liberty Mutual asserted that given the totality of the circumstances involving Chesler and the insurer, it was reasonable to conclude that the judge’s involvement in the case raised questions about bias and impartiality that the law is meant to prevent.”
• “The insurer further maintained that the judge’s failure to disclose his ties with Liberty at the outset heightens the perception of bias.”
• “Chesley found that Liberty Mutual had information about his relationship with the insurer in its possession and could have acted on it at any time but only did so after he denied a summary judgment motion sought by the insurer. Chesley maintains that this matter raises ‘serious questions’ about the conduct of a major national insurer and repeat litigant before the federal courts.”
• “‘Even a cursory reading of Liberty Mutual’s moving papers reveal that the motion and the assertions contained therein in fact constitute a carefully choreographed effort to attack the integrity and ethics of this Court both directly and by innuendo,’ Chesler wrote.”
• “The judge criticized what he termed the ‘untenable proposition’ that any judge who is a policyholder of an insurer must disclose that status and recuse from cases where the insurer is a party. Chesler wrote that that argument ‘would render hundreds, if not thousands, of judges incapable of presiding over large swaths of their dockets’ and thus it cannot be the standard envisioned by the framers of the law.”
• “In its motion for disqualification, Liberty Mutual took the position that the burden of disclosure of potential conflict rested with the judge and he should have disclosed his status as an insured and claimant at the outset of the case. But the judge cited a case noting that if a party’s attorney is aware of the grounds supporting recusal but fails to act until the judge issues an adverse ruling, the recusal motion is not timely.”
• “The judge also said he agreed with Liberty Mutual that a court should disclose when it has knowledge in its possession which could arguably form the grounds for a recusal motion. But, he concluded, none of the reasons offered by Liberty Mutual in fact constitutes grounds for disqualification and, therefore, none of these facts required disclosure.”
• “The insurer cited Chesler’s long tenure as a customer and, in particular, four claims filed while the case was before the court. Liberty Mutual also alleged it had pursued an investigation into jewelry claims filed by the judge and his wife.”
• “The judge dismissed suggestions that his claims history is an issue. He criticized Liberty Mutual for not supplying factual evidence or documents about his claims. He reported he has had 14 claims in his 44 years as an insured of Liberty Mutual and there has never been a dispute. Regarding the four recent claims cited by Liberty Mutual, he said none coincided with his actual involvement in the case, all were settled without dispute, and several were brought by third parties.”
• “He also took issue with Liberty Mutual’s claim that he was investigated. He said he and his wife were never informed about the insurer’s concerns over jewelry claims and thus he could not have been affected by that if it were true.”
• “The insurer further claimed that the judge committed errors and was highly critical and negative in tone towards the insurer in a summary judgment order, which the insurer said raised questions about whether he was being impartial.”
• “In closing his 25-page opinion, Chesler took aim at what he characterized as the insurer’s position that ‘every judge who has an insurance policy with an insurer defendant and presides over a case involving that insurer defendant is required to disclose that policy’s existence, the claims history, and other personal information relating to the judge’s insurance and potentially recuse himself or herself.'”

“Changes Wanted on Law Firm Supervisor Role and Prohibited Client Transaction Rules” —

• “Two of the twelve proposed disciplinary rule changes pending approval by the Texas Supreme Court address the supervisory responsibilities of law firms and prohibited transactions with clients.”
• “Rule 1.08: Conflict of Interest – Prohibited Transactions. The proposed rule replaces the current rule and specifies the requirements with which a lawyer must comply before acquiring ownership or a business interest in property belonging to a client.”
• “Committee Chair Lewis Kinard said a revision was considered necessary because there is often unequal bargaining power during representation between an attorney and the client.”
• “Using the example of a client that wants to write a book about his life but cannot afford to get it published, Kinard said the client’s attorney may want to invest in the book for a share of royalties.”
• “The rule would ban oral agreements, require the agreement be in writing, and states the client get legal advice on the agreement from an independent attorney.”
• “The committee took heed of suggestions from Andrea Lowe, a rules attorney speaking for the Office of Chief Disciplinary Counsel, which raised issues with language in the rule that appeared to create a conflict in certain types of fee agreements.”
• “‘For example, a fee agreement that includes stock in a start-up company to pay for the lawyer’s services requires compliance with Rule 1.08(a). Is such an arrangement adverse to a client who has no other means to afford legal services?’ Lowe said.”
• “Lowe also told the committee to clarify that the rule would not apply to renegotiated fee agreements.”