Risk Update

Law Firm Conflicts Contentions — Broadcast Deal Conflicts Allegations, Texas “Drive By” Disqualification Rule Review

Mission Broadcasting Demands Adell Return $250,000 Deposit From Terminated WADL Deal” —

  • “Lawyers for Mission Broadcasting have sent a letter to Adell Broadcasting demanding that Adell immediately return a $250,000 deposit that was part of the payment for Mission’s purchase of WADL, which was terminated last month.”
  • “In response, Adell said their were inaccuracies in the letter from Mission. Adell also raised a conflict-of-interest issue because Mission’s law firm, Wiley Rein, has also represented Adell for years.”
  • “‘In fact, Wiley sent an invoice yesterday for legal work it recently performed for Adell Broadcasting. As such, Wiley has a conflict with respect to this matter,’ said Robert Huth Jr. of Kirk, Huth, Lange & Badalamenti, who described himself in the response letter as Adell’s litigation counsel.”
  • “‘Once new counsel is available to represent Mission Broadcasting, I will review the facts raised in your June 13, 2024, correspondence,’ Huth wrote to Mission. ‘Until then, Adell Broadcasting is raising this conflict issue and requests that the Wiley firm refrain from any further involvement in this matter.'”
  • “Kevin Adell, founder and CEO of Adell Broadcasting, told Broadcasting+Cable he has no intention of returning Mission’s deposit.”
  • “Adell said that he spent considerable time and money trying to consummate the $75 million sale of WADL to Mission, which works with Nexstar Media Group and would have turned WADL into an affiliate of Nexstar’s The CW network.”
  • “Nexstar is also a Wiley client.”

Proposed Rule Will Prevent Clients From Strategically Disqualifying Lawyers” —

  • “Among the dozen proposed disciplinary rules approved by voting members of the State Bar of Texas is a conflict-of-interest rule the members hope will put a stop to drive-by disqualifications.”
  • “The rule, titled Duties to a Prospective Client, is modeled after an American Bar Association counterpart that most other states have adopted in some form. ‘“I think Texas is one of three states that doesn’t have a version,’ said Lewis Kinard, chair of the Committee on Disciplinary Rules and Referenda, a jointly appointed standing committee of the bar and the Texas Supreme Court.”
  • “‘It’s intended to prevent what some people call a drive-by disqualification or a bad faith effort to conflict out a law firm from a matter, whether it’s a case or transaction… One of the classic situations is you go in and drop off a box of files and say hey this is the stuff I want to talk to you about. I’m going to call and schedule an appointment next week, and you never go back.’ Kinard said.”
  • “The attorney may or may not open the box, but he may not be able to prove he didn’t look at the files, Kinnard said. The adversarial party then contacts the attorney but under the current ethics rule he has to refuse representation because he has consulted with the first party.”
  • “In the most egregious situations, domestic violence perpetrators intentionally abuse that as a way of preventing their victims from getting representation in the same community,’ Kinard said. This type of abuse also occurs in real estate and construction project transactions, with one party trying to conflict out the available formidable firms and keeping the best one for their self, he said.”
  • “‘The rule says if you caution a prospective client to not reveal anything until you agree to accept representation, and they are acting in bad faith, then it won’t effectively taint you with that information,’ Kinard said. ‘This is as important to clients as it is to lawyers. It draws a line on the good faith versus bad faith disqualification efforts.'”
  • “Frederick Moss, a professor emeritus of law at Southern Methodist University, said, ‘I can foresee that if passed, lawyers will present every prospective client with a boilerplate a consent/waiver to sign. The consent would have the prospective client agree that he or she will not relate any information that is ‘substantially harmful’ to the matter, (and) that the lawyer has undertaken reasonable precautions to avoid gathering any substantially harmful information.'”