Risk Update

Law Firm Conflicts Clashes — Lululemon v Nike Fight Unfolds, DQ Granted in Malpractice Matter

Decision of the Day: Court Finds for Herrick, Feinstein in DQ Bid for Firm in Federal Legal Malpractice Case” —

  • “Herrick, Feinstein filed a motion for disqualification of the Pennsylvania-based Alan L. Frank Associates from representing a party in a legal malpractice suit originated in the U.S. District Court for the Southern District of New York that is now in pending arbitration.”
  • “The Frank firm allegedly worked as counsel for respondents whose interests are adverse to each other—one sued the other for malpractice in the past and the other was a former law partner of the petitioner.”
  • “The firm alleged that such representation was an unethical conflict of interest and, therefore, respondent’s counsel should be disqualified from representing one of the respondents.”
  • “Special Referee Diego Santiago found that the attorney in question, while their representation at issue may have been well-intentioned, placed petitioner in an untenable situation where their confidences could be in jeopardy.”

Lululemon Attys Deride Nike DQ Bid As ‘Tactical Maneuver‘” —

  • “Attorneys from Knobbe Martens representing Lululemon in a textiles patent suit brought by Nike said Tuesday the shoe behemoth’s attempt to disqualify the firm from the case was only a courtroom tactic and did not present an actual conflict of interest.”
  • “The law firm responded to Nike’s Feb. 23 letter claiming that Knobbe had represented the company in more than 100 legal matters that collectively generated almost $1 million in legal fees and allegedly involved advising Nike on “a wide range of patent procurement,” including on matters related to the Flyknit shoe series at issue in the case.”
  • “Nike said Knobbe partner Craig Summers obtained confidential information about Nike while working on those patents and could use that information to Lululemon’s advantage in this case.”
  • “But Knobbe partner and ethics committee chair Paul Stewart said in Tuesday’s response that Nike’s claims were false and that none of the Knobbe partners who worked for Nike in the past were familiar with the patents involved in the present suit.”
  • “‘When Knobbe represented Nike from 2014 to 2019, Lululemon was not even in the business of making shoes and there would have been no conceivable Nike claim for infringement against Lululemon,’ Stewart wrote. ‘Moreover, during the latter part of that time period, Knobbe already had been representing Lululemon and thus could not have been providing Nike with advice adverse to Lululemon absent a waiver from each.'”
  • “Knobbe ran a ‘conflict check’ when it became aware of the suit and did not find any work that was related to the patents or technology mentioned in the suit, according to the letter.”
  • “‘In an abundance of caution, Knobbe took two precautionary steps. First, Knobbe created an ethical wall precluding the Lululemon attorneys from accessing Knobbe’s old Nike files, and precluding the former Nike attorneys from speaking with the Lululemon attorneys about the Nike litigation,’ the letter reads. ‘Second, Knobbe removed Mr. Summers from the Lululemon litigation team to eliminate even the appearance of impropriety.'”