Risk Update

Conflicts News — Whistle-blowing Lawyer Denied Reward, Skyscraper Conflict Construction

Posted Dan Bressler

“Freshfields Scrutinised for Perceived Conflict Over Germany’s ‘Elbtower’ Skyscraper” —

  • “A German politician has criticized Freshfields Bruckhaus Deringer over a perceived conflict of interest regarding the problematic construction of Hamburg’s 64-storey Elbtower.”
  • “It is the firm’s role in acting at times for more than one party involved in the tower’s development that has drawn the attention of certain individuals, leading to suspicions of a conflict of interest.”
  • “Freshfields had been advising the Elbtower’s planned main tenant, Hamburg Commercial Bank (HCOB) and has previously advised the property’s main developer, Signa. It has also acted for HafenCity Hamburg GmbH, the municipal company responsible for marketing the up-and-coming Hafencity district. Freshfields has previously announced these relationships.”
  • “The city of Hamburg had initially stated that at least 30% of the building had to be rented out for the construction project to be approved, according to the regional government. Signa had to present rental agreements in order to be awarded the contract for the project by the city.”
  • “The controversy turns on the fact that Freshfields has ties to both the developer Signa and a party that enabled the construction to go ahead, HCOB, and other parties.”
  • “Heike Sudmann, deputy parliamentary group leader of the Left Party in the regional Hamburg parliament, told Law.com: ‘When I mentioned to the regional government in 2022 that Freshfields had represented HCOB and previously the project developer Signa as well as the city, most people’s faces fell apart. If the same lawyer from a law firm advises several parties involved in the project, this cannot be done neutrally.'”

“Attorney Who Tipped SEC About Client Loses Appeal Over Award” —

  • “An attorney who blew the whistle on his client can’t collect an award from the Securities and Exchange Commission because the disclosure wasn’t permitted by state bar rules, a federal appeals court decided.”
  • “Under rules for the SEC’s whistleblower program, an attorney can’t recover an award for disclosing information learned during the representation of a client unless the disclosure was allowed by state bar rules or SEC attorney conduct regulations.”
  • “While Florida bar rules permit an attorney to disclose confidential information if they reasonably believe it’s necessary to ‘serve the client’s interest,’ the attorney in the case at hand blew the whistle intending to subject his own client to an investigation, the US Court of Appeals for the District of Columbia said.”
  • “‘In reporting on the suspected wrongdoing, then, Doe was reporting on his own client,’ the court wrote in an opinion unsealed on Friday. ‘Common sense therefore dictates that Doe could not have reasonably believed that he was acting in his client’s best interest.'”
  • “The appeal is connected to an enforcement action the SEC brought in 2018 against two individuals, alleging securities fraud. The SEC accused the individuals of misappropriating a large chunk of investor funds for their personal use.”
  • “In a sworn declaration he made after tipping off the SEC to the suspected misconduct, the attorney acknowledged his goal was to prevent his client from committing a crime.”
  • “On appeal, however, he argued such statements were made with the benefit of hindsight and should be ignored. His tip to the SEC, when read in isolation, supports the idea that he thought his client was a victim, not a perpetrator, when he blew the whistle, he said.”
  • “Unconvinced, the D.C. Circuit said there was substantial evidence to suggest the attorney suspected that his employer was engaged in wrongdoing when he submitted the tip.”