More recent conflicts decisions of note from Bill Freivogel:

• Pinnacle in Home Care, LLC v. 1 Source Senior Care, LLC, 2025 Ark. 193 (Ark. Dec. 4, 2025).
  • Both parties “are licensed to provide targeted case-management and personal-care services.” 1 Source is suing Pinnacle and certain former employees of 1 Source for certain abuses arising out of Pinnacle’s having hired those employees. Law Firm began representing Pinnacle and the former 1 Source employees.
  • As those employees left Pinnacle, Law Firm withdrew from representing the employees. 1 Source moved to disqualify Law Firm from representing Pinnacle because it appeared Pinnacle would defend by blaming those employees, being former clients of Law Firm. The trial court granted the motion to disqualify.
  • In this opinion the court affirmed, finding a Rule 1.9 violation. The opinion did not mention a standing issue. The court continued clinging onto an “appearance of impropriety” standard although admitting the Arkansas rules excluded it.
• Maddicks v. 106-108 Convent BCR, LLC, No. 656345/2016 (N.Y. Sup. Ct. N.Y. County Nov. 17, 2025).
  • This is a rent overcharge class action. Defendants moved to disqualify Plaintiffs’ law firm (“Law Firm”), because Law Firm had represented some Defendants in rent overcharge cases involving, in some cases, the same units involved in this case.
  • The court found this was a former-client conflict, but, because Defendants waited for many months before making the motion, Defendants waived the conflict.
• Option Consommateurs & Gagnon v. Samsung Elecs. Canada Inc., 2025 QCCS 4209 (CanLII) (Super. Ct. Que. Nov. 20, 2025).
  • This class action is against Samsung for manufacturing defective washing machines. In this opinion the court held it was proper for members of plaintiffs’ legal team to be class members.
  • There was an issues about those lawyers having contacted certain Samsung employees; however, the court excused those contacts because the employees were not of “a decision-making role.” The court warned the lawyers to be careful about that.
• Nocita v. Housing Auth. of Grays Harbor Cnty., No. 3:24-cv-05771-TMC (W.D. Wash. Nov. 12, 2025).
  • Plaintiff is suing Authority for wrongful eviction and related claims. Lawyer is representing Authority. Plaintiff moved to disqualify Lawyer because Lawyer had previously represented another state agency regarding the dependency of Plaintiff’s children.
  • In this opinion the court denied the motion to disqualify. In construing Rules 1.9 and 1.11, the court said although such successive representation of different government agencies “has the potential to implicate” ethics rules, such was not the case here.

“Why the SEC’s top accountant is weighing changes to audit inspections, conflict-of-interest rules” —

• “The Securities and Exchange Commission is evaluating whether to change rules around conflicts of interest for auditors and their clients, how its audit watchdog handles inspections of accounting firms and the cost for companies of complying with requirements.”
• “Accounting standard setters need to more closely scrutinize the costs of disclosures for companies applying new rules, SEC Chief Accountant Kurt Hohl said Monday at a conference in Washington, D.C. ‘What we don’t want to happen is essentially a high compliance cost to dissuade companies from accessing the public market,’ Hohl said.”
• “Hohl, who has served as chief accountant since July, advises the commission on accounting and auditing issues and oversees interpretation of accounting rules. Hohl spent 26 years as a partner at Ernst & Young, rising to global deputy vice-chair of the Big Four firm’s global assurance professional practice and retiring in 2023. He also previously worked at the SEC from 1989 to 1997.”
• “What do you want to see change with the SEC’s auditor independence rules? The regulator last eased these rules in 2020.”
  • “The independence rules are fairly clear. You can’t have direct business relationships with audit clients. Where it gets complex is where you basically are partnering with a nonaudit client and that nonaudit client uses an audit client as part of their service delivery. That’s what adds complications to the situation. Looking and seeing how pervasive that is, looking and making sure and talking with firms to understand how that affects how they monitor and enforce their independence requirements is something that’s top of mind.”
• Is that a greater issue amid companies’ AI partnerships and private-equity money pouring into accounting firms?”
  • “There are complications that AI adds to the business development relationship required under the auditor independence rules. Also private equity is buying some of these smaller accounting firms and making the decision that we don’t want to serve in the public company market anymore because it’s too expensive for us to operate in that space. Auditor choice is a priority. We want to make sure that companies accessing the public markets—we’re trying to encourage companies to come to the marketplace—have a choice of audit firms in which to pick from.”
    “There’s nothing in the works to loosen the independence rule. But we want to take a look at how the changing business environment affects our independence rules to make sure that they continue to be fit for purpose in the environment. We’ll work closely with the commission in terms of our observations and how they apply to the current rules, and we’ll decide what to do at that time.”
• “What would a potential change to auditor independence rules look like?”
  • “I talk to the private-equity firms all the time. Some of the things that I did in retirement was actually consult for PE firms. The focus was, hey, look, if you’re going to do this, there’s a cost to basically build a high-quality audit practice that serves the public markets. You have a lot more rules that you have to comply with and the expectation is the work that’s going to be done is going to be the highest quality standard.”
  • “That’s one of the things that I talk to PE firms about. If you’re going to do this, you’ve got to go all in in order to make the investments that are necessary to serve that marketplace and encourage them to stay in because we want competitive options available.”
• “You’ve said you want the PCAOB to add more context to their inspection reports on audit firms. What would that look like?”
  • “I mean, wouldn’t you like to know what the particular market share is and what types of clients that your auditors were serving? If I basically said here’s an auditor who’s not doing so well in quality and they basically do like these types of audits, that’s some level of context. I have no predisposed notion on what goes into the inspection report. If the PCAOB shifts to a quality control or quality management process, that adds complications because the statute limits what they can say immediately. But I think that’s probably a better way to go because the true accountability for a firm’s quality rests with their organization structure, with their system of quality management and ultimately with the firm’s leader, not the particular engagement team who’s getting inspected.”
• “Should the PCAOB be folded into the SEC and do you expect lawmakers to revive that push?”
  • “Audit regulation is incredibly important. We need basically high-quality auditing standards so that we have a robust capital market in the United States. Whether it’s part of the SEC or part of the SEC’s oversight of the PCAOB, it’s critically important to our ecosystem. I don’t follow Capitol Hill very closely, but based on the fact that we were closed for 43 days and we couldn’t even get a simple vote on a continuing resolution, I doubt if we’re going to basically see PCAOB elimination and folding into the SEC anytime soon.”