“Ohio Board of Professional Conduct (Opinion 2020-10): Law Firm Concurrent Representation of Adverse Clients in the Same Transaction” —

• “A conflict of interest arises from a lawyer’s concurrent representation of directly adverse clients in the same transaction. A law firm cannot avoid the imputation of a conflict of interest arising from the concurrent representation of two clients in thesame transaction by screening separate lawyers assigned to each client.”
• The steps proposed by the law firm in order to represent the two clients underscore the inherent nature of the conflict of interests that exist in the concurrent representation of two or more firm clients in the same transaction. The key features of the law firm’s proposal to resolve the conflicts, a combination of client consent and the screening of two groups of assigned lawyers, is not provided for in the Rules of Professional Conduct as a method to ameliorate conflicts arising from concurrent representation in the same law firm. The firm’s proposal would require a departure from the rules governing the imputation of conflicts that the Board is reluctant to endorse. For the foregoing reasons, the Board concludes that the law firm’s proposed concurrent representation of the two adverse clients in the same transaction is not permissible.

Which reminds me of the take taken overseas by the SRA in auction scenarios, worth a read for those curious about information barriers, multi-sided walls (and anyone seeking an LSAT-like logic problem involving A, B, C and D): “Conflict of interest (Published: 29 October 2019)” —

• “Your firm is acting for a company (A), which is participating in an auction process to acquire another company (B). The firm pre-emptively obtained informed consent from A, in writing, to the firm acting for other potential bidders, should the firm be approached to do so. Your firm has subsequently been asked to act for a financier (C), who is providing the financing needed by another potential bidder (D) for B should D’s bid be successful. Is your firm able to accept C’s instructions?”
• Nevertheless, it would be best practice, before accepting instructions from C, to make it clear that your firm (a) is free to act (and may already be acting) for other bidders/their financiers, (b) would use a separate legal team to represent C and (c) would put information barriers in place to prevent C’s confidential information being shared with the legal team acting for A and vice versa.

“O’Melveny Can’t Keep $9M From Bankrupt Co., 9th Circ. Told” —

• “Aletheia Research and Management’s bankruptcy trustee asked the Ninth Circuit Tuesday to reverse a judgment allowing O’Melveny & Myers LLP to keep over $9.4 million it was paid for legal services, arguing the trial judge erred in finding his bankruptcy claims had been resolved in an arbitration over malpractice claims.”
• “The appeal is the latest chapter in a hotly contested lawsuit that the liquidating trustee for the defunct Aletheia launched against its former law firm in 2014. The trustee sued O’Melveny after Aletheia was pushed into Chapter 7 bankruptcy in 2012 and alleged O’Melveny violated the firm’s fiduciary duties and the federal Bankruptcy Code, which prohibits fraudulent conveyances.”
• “O’Melveny represented both Aletheia and its former CEO Peter J. Eichler Jr. for years in their legal battles with the company’s former business partner, money management firm Proctor Investment Managers LLC, and the U.S. Securities and Exchange Commission. During that time, two O’Melveny attorneys left the firm and began working as in-house attorneys for Aletheia, before later returning to O’Melveny once the company went bankrupt in 2012, according to court documents.”
• “The trustee claims in his suit that the firm was aware of, and ignored, its conflict of interest in representing both Aletheia and Eichler in a contract dispute with Proctor, and should be forced to cough up the $4 million it was paid for legal services related to the dispute. In total, the trustee sought the recovery of more than $9 million paid to the firm from 2009 through 2012.”
• “… But the trustee urged the Ninth Circuit Tuesday to reverse the ruling and argued that regardless of whether the malpractice claims are viable, the law firm’s services were not reasonably worth the amount of money the firm received. ‘Even had O’Melveny provided perfect and non-conflicted services that provided $500,000 of value to Aletheia, such services were not reasonably equivalent to the more than $9.4 million of fraudulent conveyances that O’Melveny received,’ the brief says.”
• “Golden also argued that leading up to its bankruptcy, O’Melveny was improperly receiving payments and ‘enjoyed the benefit of insider-like status’ at a time when other creditors were going unpaid. The trustee added that O’Melveny’s legal counsel used “sleight of hand wording” and misrepresented its arguments in its efforts to beat the bankruptcy claims before the trial court.”