“Former FirstEnergy lawyer says he was troubled by Randazzo agreement” —

• “A former lawyer for FirstEnergy said he wasn’t sure why the company agreed to pay Sam Randazzo hundreds of thousands of dollars each year for five years. Mark Hayden formerly worked as an attorney at FirstEnergy Services Co., a subsidiary of the Akron-based electric utility, supporting the parent company’s former FirstEnergy Solutions power generation subsidiary.”
• “Hayden testified Feb. 9 that he held ‘a number of concerns’ in the 2010s about an agreement that FirstEnergy Services Company had with Sam Randazzo, who at the time was a prominent attorney in the energy space. Later, in 2019, Randazzo became chair of the Public Utilities Commission of Ohio, a state regulatory agency.”
• “Ex-FirstEnergy Senior Vice President Michael Dowling and former FirstEnergy CEO Chuck Jones are accused of bribing Randazzo in their ongoing criminal trial. Randazzo was a defendant in the case before he died in 2024.”
• “For a time, Hayden said, he approved the monthly FirstEnergy Services payments to Sustainability Funding Alliance of Ohio, a shell company that Randazzo owned and controlled.”
• “Testifying as a witness for the prosecution, Hayden said he, Dowling and others at FirstEnergy who worked with Randazzo knew about what the utility called a consulting agreement with Randazzo.”
• “Hayden, who objected to being photographed or recorded in court, said he had numerous issues with the agreement.”
• “For one, Hayden said Randazzo appeared to have a conflict of interest. The utility paid Randazzo at least $25,000 per month while Randazzo represented energy trade group Industrial Energy Users of Ohio, which purchased electricity and generally had different interests than FirstEnergy, Hayden said.”
• “Additionally, Hayden said, the background and purpose of the agreement was not clear to him. And Hayden said Randazzo would reach out to employees of FirstEnergy Solutions ‘as an attorney, knowing that those individuals were represented by counsel.'”
• “The defense contends that the consulting agreement was a legal settlement between FirstEnergy and Industrial Energy Users of Ohio.”
• “In his opening statement on Feb. 3, Assistant Ohio Attorney General Matthew Meyer called the consulting agreement a ‘magic paper’ that the defendants used to create a distraction and conceal the flow of FirstEnergy funds.”
• “Meyer asked Hayden if he had ever seen a settlement in any other context that’s called a ‘consulting agreement.’ Hayden said no.”
• “In an email exchange between Hayden and Dowling presented as a trial exhibit, Hayden expressed his frustration to Dowling about Randazzo’s involvement in FirstEnergy affairs.”
• “Dowling said in an email to Hayden that ‘this has been a problem for more than a decade and probably longer.'”
• “Stamboulidis asked Hayden if Dowling’s statement was in response to Hayden’s concern about Randazzo being a consultant for FirstEnergy Solutions. Hayden said he was generally concerned about the relationship that Randazzo had with the company.”

“Small Deal Won, Big Deal Lost: Inside Big Law’s Eternal Conflicts Dilemma” —

• “Conflicts of interest are a fact of life in legal practice, but they can bite in the most painful places if a firm finds itself conflicted out of big ticket work. There was initial surprise that Linklaters was absent from the recently abortive £260 billion Glencore and Rio Tinto merger talks; according to insiders, the firm was conflicted out, having had to balance its relationships with other major mining companies such as Anglo American.”
• “Though the exact nature of the conflict is unclear, it got the market talking. Here we had a potential £260 billion M&A transaction—before it was halted, it had the makings of the largest transaction anywhere in the world. Ever. Missing out on such a deal can cost a firm in more ways than one: not just in terms of the current fee opportunity, but future opportunities too, with the relationship possibly passing into the hands of a rival.”
• “As consolidation in the market increases, conflicts will inevitably increase in complexity and magnitude. How firms navigate them could be hugely consequential for specific practices but also for the wider firm.”
• “One partner at a top 20 U.K. firm disclosed that they had three deals cancelled already this year due to conflicts; it was simply a fact they had to accept.”
• “Firms have to take precautions to avoid them—not doing so could be costly.”
  “One of the most high-profile conflicts in living memory occurred in 2004 when Slaughter and May successfully obtained an injunction blocking Freshfields from acting for Phillip Green in his £9 billion bid for Marks & Spencer. Freshfields faced a potential conflict as it had previously worked for M&S; the firm argued that it would be able to use a ‘chinese-wall’ during the takeover, a decision the judges called ‘wholly improbable’. Twenty-two years on, and the matter is still remembered, particularly among long-standing City M&A partners.”
• “At most large firms, every new instruction is routed through a dedicated conflicts team, sources say. Teams at multinational firms run 24/7. In the most complicated cases, the question may be kicked upstairs to the conflicts committee or the general counsel. The conflicts committee differs at each firm but generally includes practice heads and senior lawyers deciding the best route for firms to take.”
• “Different jurisdictions are taken into account; conflict laws in the U.S. for instance are more restrictive than those in the U.K.”
• “One partner told Law.com that the worst-case scenario is if a partner gets an opportunity to do some work on a smaller matter, and then the firm is offered the bigger mandate which they then have to turn down. They pointed to finance agreements as being particularly irksome if a big-ticket deal is blocked by some earlier agreement for which the firm was paid a relatively small fee—as little as $3,000, one partner said.”
• “Another senior partner in London at a leading U.S. firm said: ‘Small matters that you take on that then conflicts you out of some big-ticket M&A can be frustrating.’ The partner suggested that one partner trying to hit their targets can then scupper a much bigger, more profitable deal that would benefit the wider firm. ‘What [the firm] can do is it can encourage discipline and good behaviour from its partners, not just thinking of themselves, but thinking of the firm.'”
• While magic circle firms may be more conservative with a centralised system, one partner at a U.S. firm described as a ‘hub and spoke system’, the partner saw U.S. firms as more individualistic and ‘aggressive’ in taking on matters that may eventually lead to conflict risks down the line.”
• “Every partner is under pressure within their firm to bring in their own business. But not all work is created equal.”
  One partner said: ‘It is important that partners are thinking firm first and not just about what’s on their plate.'”
• “A private equity partner placed emphasis on the fact that you not only had to manage relationships between the firm and its clients when it came to conflicts, but between lawyers too, which could be just as complex.”
• “An alternative to flat refusing a deal is to set out to the client as clearly as possible what the firm is able to guarantee and when the firm may act against them. One partner said: ‘If your engagement letter is clear, then you shouldn’t have any issues.'”
  “Partitioning is also a tactic often used by firms to avoid conflicts. By guaranteeing to the client that one team will never see the work that conflicts with the matter, this can serve as a method to ensure the firm can deliver the work. However, this must be established from the start and have client approval from the engagement letter.”