“States Hiring Outside Lawyers Need to Ask Who Else They Represent” —

• “O.H. Skinner, former solicitor general of Arizona, lays out best practices state and local governments should implement to stop outside counsel from unethically profiting by representing other governments and private plaintiffs.”
• “A federal opioid case in Ohio involving a law firm and the City of Chicago has drawn needed attention to a problem that arises when government lawyers outsource enforcement to outside trial lawyers: ethics and conflicts of interest.”
• “My former office—the Arizona Attorney General’s Office—offers a clear and easily implementable way forward that can protect against the problems in Ohio.”
• “The core problem being addressed in Ohio is that, in interrelated opioid litigation, trial lawyers at law firm Motley Rice are simultaneously representing not only various state attorneys general, but also city prosecutors in places like Chicago, as well as various private clients.”
• “This led OptumRx, one of the defendants in the high-profile Ohio opioid matter, to file a motion formally seeking to disqualify lawyers from Motley Rice from the case. Citing Motley Rice representation of the D.C. Attorney General, the Hawaii Attorney General, and the City of Chicago, the motion claims Motley Rice attorneys obtained confidential information from OptumRx in connection with various government subpoenas, then ‘weaponized that knowledge against the same companies in separate private litigation for other clients and for their own financial gain.'”
• “On the surface, the attorneys at Motley Rice, who were given titles as special government attorneys and signed various confidentiality agreements in that role, appear to be in a position where they are simultaneously receiving confidential government information about defendants in the Ohio opioid matter, and representing private clients against the same defendants in an adversarial posture where the private interests are adverse to the defendants.”
• “At a minimum, Motley Rice seems to have a problem on their hands and some explaining to do. And it could be much worse if they have no magic bullet defense and end up being disqualified by the judge in the case.”
• “Regardless of the motion for disqualification’s outcome, the conflict of interest issue is a broad concern. I saw this firsthand in the Arizona Attorney General’s Office. In that role, more than once, outside counsel seemed to see representation of a state as a gateway to increasing their return on investment in a related private action against the same defendants.”
• “This was a problem we saw as so important that we found a structural solution. The office changed its standard outside counsel contract for consumer contingency cases to have clear limits on dual representations. Under the new contractual language, potential outside counsel had to notify the office if counsel was serving as counsel in a private class action. And, we made such a notification the basis for termination “for cause,” as in termination without entitlement ‘to compensation or reimbursement of any kind under this Agreement.'”
• “The approach the office put in place under Arizona Attorney General Mark Brnovich sets a path others can follow. It moves beyond background application of various ethical canons and imposes a clear contractual limit on representing private parties at the same time and on the same topic as a representation of the state.”
• “Knowing what I know now, I would go further than we did originally. I would make dual representation a mandatory termination situation, rather than simply have it serve as an allowable basis for terminating a contract ‘for cause.’ And I would expand the list of potential conflicts to cover representation of local governments, as the conflicts that have come to light between cities, counties, and states over various pools of settlement money in recent years really underline the importance of avoiding conflicting loyalties for outside counsel in those situations.”

“Third Circuit Orders Independent Examiner in FTX Bankruptcy” —

• “An outside investigation into FTX Group is mandatory under the US bankruptcy code, a federal appeals court ruled Friday, reversing a Delaware judge’s original order denying an independent examiner.”
• “The Third Circuit ordered US Bankruptcy Judge John Dorsey to appoint an examiner to investigate the collapse of the FTX crypto exchange. FTX commenced Chapter 11 bankruptcy in November 2022 amid widespread fraud allegations.”
• “‘In addition to providing much-needed elucidation,’ the panel wrote, ‘the investigation and examiner’s report ensure that the bankruptcy court will have the opportunity to consider the greater public interest when approving the FTX Group’s reorganization plan.'”
• “The independence of an examiner is relevant, the circuit panel said, given the law firm Sullivan & Cromwell’s work for FTX prior to the bankruptcy and the conflict of interest issues that have been raised over it. The US Trustee has also pushed for an outside investigation to determine whether any employees or officers of FTX who engaged in wrongdoing are still with the company.”

“EY Oceania accused of potential conflict of interest over government contracts on climate policy” —

• “Consultancy firm EY Oceania was supporting the oil and gas industry’s lobbying efforts while being paid by the federal government for independent advice on its signature climate policy and gas emissions.”
• “The firm, which is a member of the oil and gas lobby and audits Santos, insists there was no conflict of interest between its work for industry and government. But a bipartisan group of politicians and transparency advocates is not convinced and has demanded more information.”
• “In late October, EY Oceania was hired by Australian Energy Producers (AEP) to publish a report on the future of the gas industry…EY Oceania was also hired to support AEP – formerly known as the Australian Petroleum Production & Exploration Association – and prepare a submission outlining concerns about the government’s future gas strategy, which was being developed by the industry department. The submission, also submitted on 27 November, frequently cited EY’s analysis and conclusions.”
• “While EY was working for AEP, it was also contracted by the Department of Climate Change, Energy, the Environment and Water (DCCEEW) to provide “analysis and advice on emission outputs for oil and gas facilities”, “analysis and advice under the safeguard mechanism” and “professional advice on market modelling services electricity”. These contracts were worth $510,000, according to government records.”
• “EY did not tell the government it was a member of the AEP. ‘There is no overlap of subject matter nor is there a risk of one EY team reviewing the work of another EY team,’ the spokesperson said. ‘When a conflict of interest exists, or arises during an engagement, we will disclose this to the client, which may result in EY declining to act, as required by professional standards.'”
• “Despite claiming there was no conflict of interest, EY was required to sign a non-disclosure agreement while working on the safeguard mechanism and to submit written assurances about how internal conflicts would be managed with regard to staff and other engagements.”
• “‘It’s not a good look to have the government paying hundreds of thousands of dollars to a consultancy firm for independent advice on the oil and gas industry while the same firm is also on the payroll of the oil and gas industry,’ [chief executive of Transparency International] Moore said.”