Risk Update

New Year, Continuing Risks — Judicial Conflicts Allegation Costs, Holiday Party Warnings (Casual Conflicts, Attorney Dabbling)

Be Cautious During Holiday Parties, Lawyers Warn” —

  • “While it is certainly a time to be merry, the holiday season also poses unique risks to lawyers. Being mindful of these issues will help ensure that the New Year starts off on the right foot.”
  • “First, there is a risk that lawyers providing advice, even in a casual setting, can be found to have created an implied attorney-client relationship with the person seeking the advice… Therefore, there can be a risk that even a lawyer providing casual advice at a party has created an attorney-client relationship, which could give rise to a legal malpractice claim, albeit a weak one. Even if there is no implied attorney-client relationship, these casual party situations can implicate potential conflict-of-interest issues.”
  • “Consider this example: A partygoer meets a lawyer at a party and asks the lawyer’s advice on the partygoer’s struggles with his landlord. The lawyer tells the partygoer that local statute entitles the partygoer to withhold rent or to file a suit against the landlord. Upon returning to work after the holidays, the lawyer receives an irate call from another partner, noting that a valued client of the firm (a property management company) is in a dispute with a tenant based on advice provided by the client’s law firm to withhold rent. Even if there is no attorney-client relationship between the lawyer and the partygoer, the lawyer may have created a conflict of interest and a problematic client management issue.”
  • “Another risk for lawyers at holiday parties is that they might be asked for an opinion on a subject that goes beyond their level of expertise. Most family members or friends seek casual advice on common family law, tax, estate or real estate issues. A lawyer may be creating unnecessary risk by answering questions that are outside the lawyer’s expertise, even when speaking casually. Such areas of practice are often highly specialized. And, coincidentally or not, these areas of law are among those that see the highest rates of legal malpractice claims, year after year.”

An Amazon Suit Encounters a Snag: a Judge With a Conflict of Interest” —

  • “For nearly two years, U.S. District Judge Liam O’Grady has handed Amazon.com Inc. a string of court victories in a continuing suit in which it accuses two former employees of taking kickbacks from a real-estate developer and violating Amazon’s conflict-of-interest policies.”
  • “All that time, Judge O’Grady had a conflict of his own: a financial interest that under federal law barred him from hearing the case in the first place.”
  • “Throughout the case, Judge O’Grady’s wife owned Amazon stock. Judges are forbidden by a Watergate-era law to hear cases involving companies in which they or their spouses have a financial interest, however small.”
  • “After The Wall Street Journal contacted Judge O’Grady about the conflict, his wife’s investment adviser earlier this month sold the Amazon shares, valued at more than $20,000.”
  • “‘I should have disqualified myself,’ Judge O’Grady said in a Dec. 1 email. He said he would remove himself from the case if asked to. After learning of the conflict, the defendants—the two ex-Amazon employees and a Colorado real-estate developer—asked the judge to step aside in a Dec. 21 court filing, on which he hasn’t yet ruled. A hearing is scheduled for Jan. 6.”
  • “Judge O’Grady is by all accounts a skilled and accomplished lawyer who has sat on the federal bench since 2007, handling major espionage, drug and government-leak cases, as well as complex patent litigation. Yet by his own admission he misunderstood how federal law applied to his situation. He said he mistakenly believed his wife’s account was a mutual fund, which doesn’t require judges to disqualify themselves.”
  • “A recusal by Judge O’Grady from the Amazon case would create duplication of work and compounded costs as a new judge gets up to speed. The case already has featured about a half-dozen hearings and has nearly 500 docket entries with more than 4,000 pages of court filings.”
  • “A Journal review found 65 additional cases Judge O’Grady has heard in the Alexandria, Va., federal courthouse while his wife was invested in plaintiffs or defendants, among them Bank of America Corp., International Business Machines Corp. and Verizon Communications Inc.”