Bressler Risk Blog

“Palantir Investor Says Williams & Connolly’s Conflict of Interest Cost Him $1B in Stock Proceeds” —

• “Investor Marc Abramowitz filed a malpractice suit against Williams & Connolly in District of Columbia Superior Court on Sunday, accusing the firm of advancing its own financial interests rather than securing the best results and settlements for Abramowitz in his years-long dispute with technology company Palantir.”
• “Abramowitz, an early investor in Palantir, claims that the elite litigation firm engaged in a conflict of interest while representing Abramowitz against Palantir, specifically by amending its fee agreement with Abramowitz in one case to allow the firm to take a 15 to 20% stake in any sale of his Palantir stock, depending on if the case was settled before trial.”
• ‘The new compensation structure…created egregiously illegal and nonwaivable conflicts of interest for Williams & Connolly, which gave the firm incentives to improperly advise Abramowitz, negligently or intentionally, to sell his Palantir stock and to settle the Palantir litigation, all in a manner benefitting the firm but causing plaintiffs massive damages,’ the suit, filed by Charles Remus III of Remus, Weddle & Cavenee, alleges.”
• “According to the suit, Abramowitz first hired Williams & Connolly to represent him in 2016 after his first attempted sale of his Palantir stock to a Chinese asset management firm, CDH Investments, fell through. In that attempted transaction, Abramowitz aimed to sell his shares for between $9.25 and $11 per share for a total of $64 million; however, the suit says, Palantir instead reached out to CDH Investments directly and convinced the company to buy shares directly from Palantir instead of Abramowitz.”
• “After Abramowitz’s sale fell through, the sale price of Palantir’s stock fell and, according to the malpractice suit, left Abramowitz unable to secure a comparable deal for his shares. Abramowitz hired Williams & Connolly in 2016, and the firm first filed a books-and-records action in Delaware in March 2017 against Palantir which was summarily dismissed by the Delaware Chancery Court.”
• “After the records action, the malpractice suit says, Williams & Connolly filed a tortious interference claim against Palantir in December 2017. The dispute between Abramowitz and Palantir continued as Palantir later filed an action against Abramowitz in Germany in 2018.”
• “In July 2019, the malpractice suit claims, Williams & Connolly amended its fee agreement with Abramowitz in only the tortious interference case, laying claim to a contingent percentage of any recovery in that case as well as a 15 to 20% stake in any sale of Abramowitz’s Palantir stock. That stake was capped at ‘three times the amount of the firm’s time charges on the tortious interference case,’ according to the suit, adding that the firm also ‘dramatically increased the hourly rates it charged’ Abramowitz at the same time, although Abramowitz did not discover this for a year after the firm failed to send invoices for its services.”
• “Under the new fee agreement, the suit claims, the firm had a financial interest in convincing Abramowitz to sell his Palantir shares for less than $10 per share in order to maximize the firm’s total payment in the tortious interference case. If Abramowitz’s shares sold for more than $10 each, the suit says, he would have had no recoverable damages in the tortious interference case and could abandon the action.”
• “In fact, the suit alleges, Williams & Connolly advised Abramowitz to sell his Palantir shares in August 2020, just before the company was slated to go public. The suit alleges the firm advised Abramowitz of this to ensure that the stock sold for less than $10 each; as such, Abramowitz sold his stock for $6 per share, or a total of $33 million, the suit says, estimating based on Palantir’s November 2025 peak stock price of $207 per share that the 2020 sale cost Abramowitz more than $1 billion.”
• ‘The Engagement Letter Amendment incentivized the Firm to convince Abramowitz to sell his shares below $10 dollars so that the Firm could (i) lock in Abramowitz’s damages, thereby eliminating any chance of Abramowitz dropping the case and guaranteeing both the Firm’s ability to increase the cap and its chance to recover a contingency fee, and (ii) immediately collect a multimillion-dollar bonus rather than face the uncertainty of payment if Abramowitz were to hold the stock well into the future,’ the suit claims.”
• “In yet another conflict of interest, the suit claims, the new fee agreement also incentivized Williams & Connolly to settle the tortious interference case without settling any of the other cases filed against Abramowitz by Palantir, which the firm continued to work on under an hourly fee-arrangement.”
• “‘Settling only the Tortious Interference Case enabled Williams & Connolly both to maximize its contingency fee—because a global settlement in which Palantir’s cases against him were also settled would have resulted in a lower monetary recovery for Abramowitz—and to bill Abramowitz for another $3.2 million in fees over the next five months’ before settling a second case, along with other pieces of litigation, in 2022, the suit claims. ‘In response to Abramowitz’s repeated inquiries about a global settlement, the Firm told him it was ‘too difficult’ and that the legal team was ‘too tired’.'”
• “After the settlement in 2022, the suit claims, Williams & Connolly requested a $3 million retainer from Abramowitz for additional work in an upcoming trial against Palantir, threatening to drop Abramowitz as a client.”
• “In total, Williams & Connolly’s representation of Abramowitz spanned six years and eight separate lawsuits involving Palantir spread across a number of state and district courts, as well as the case in Germany. The malpractice suit alleges other separate incidents of malpractice throughout the course of the representation, including an allegation that partner Barry Simon fell asleep while participating in a hearing via telephone in the German case, which was subsequently referred for criminal review for attempted litigation fraud.”
• “The suit ultimately accuses Williams & Connolly with legal malpractice and breach of fiduciary duty, and seeks compensatory damages, disgorgement of attorneys’ fees paid to Williams & Connolly, attorneys’ fees and costs, and pre- and post-judgment interest.”

“Suit Alleges King & Spalding Coerced Ex-Client Into Lit Funding Agreement Amid ‘Massive Overbilling’” —

• “A Chicago business owner is alleging that King & Spalding and several of its lawyers overbilled him and later pressured him to borrow from a litigation funding firm, leading to $4 million in alleged damages.”
• “David Pisor and PSIX LLC, in a lawsuit filed Friday in Illinois state court on Friday, claim he received ‘fraudulent entries, duplicative entries, and entries unrelated to Pisor’s representation.’ Pisor said the firm tied its fee structure to the litigation funder, ‘inflating their hourly rates midstream.'”
• “‘Even though it never went to trial, KS and its partners turned Pisor’s matter into a ‘full-employment-act’ for defendant KS’ Chicago office—32 individuals inefficiently handled Pisor’s matter, often duplicating, triplicating and quadrupling the same work,’ claims the lawsuit, which alleges legal malpractice and breach of fiduciary duty.”
• “Pisor’s lawsuit also alleges that an entity named ‘Defendant SC220163,’ affiliated with litigation funding firm Statera Capital Funding, violated the Illinois Consumer Legal Funding Act.”
• “Representatives at King & Spalding and Statera did not immediately return messages seeking comment on Monday.”
• “Pisor alleges King & Spalding engaged in overbilling through improper timekeeping practices, failed to conduct adequate due diligence and facilitated predatory litigation funding.”
• “‘This action arises out of a culture of greed and a pattern of unlawful activities at defendant KS,’ the suit stated. ‘Pisor retained the firm to protect a business he built from the ground up—valued at over $130 million—but was instead stripped of control, liquidity and clarity through a calculated orchestration of dependency, manipulation and concealment.'”
• “It stated the firm ‘failed to exercise reasonable care in their representation,’ and ‘negligently handled Pisor’s legal needs, engaged in massive overbilling and mismanagement.'”
• “‘But, worst of all, when Pisor was unable to fully pay defendants’ unconscionable fee invoices, defendants coerced Pisor into a statutorily unlawful pre-forward paid litigation funding arrangement solely for defendants’ benefit,’ Pisor’s suit stated.”
• “The suit stems from a 2015 deal between Pisor and former business partner Jim Lasky. After they co-founded Maple & Ash restaurant in Chicago’s historic Gold Coast neighborhood, its success led to the partners establishing a company that launched other restaurant ventures in Chicago, Phoenix and Los Angeles. However, a rift over finances between the partners led Pisor in 2022 to hire King & Spalding and its lawyers named as defendants in the suit, including partners Lazar Raynal, Thomas Ahlering, Mary Liz Brady, Jake Downing and Jonathan Talansky; former partners Thomas E.’Ted’ Keim Jr. and Jade Lambert Routson; and former associate Matthew J. Dixon.”
• “Eight partners, 10 associates, three counsel, seven paralegals and two litigation support members recorded about 3,000 billable hours and charged more than $3.55 million in legal fees over 11 months, Pisor said in the suit, noting the invoices ‘demonstrate the use of partner-level attorneys to do the work of paralegals and associates.'”
• “Pisor ultimately obtained litigation financing through Statera Capital Financing, doing business as ‘Defendant SC220163,’ and the financing ‘imposed significant fees on plaintiff,’ the suit stated. The financing arrangements ‘primarily benefited defendant’s financial interests,’ violated its ethical and professional duties, and created a direct conflict of interest in violation of Rule 1.8 of the Illinois Rules of Professional Conduct, it stated.”
• “‘King & Spalding directed Pisor toward litigation financing—then tied their fee structure to it, inflating their hourly rates midstream,’ the suit stated.”

“Former Home Depot attorney can’t help sue it” —

• “A federal court in California granted Home Depot’s motion to disqualify an attorney and law firm as counsel of record for the customer who is suing the retail giant over an injury; the skid-steer loader he rented pitched forward and his seatbelt failed, so he hit his head against the vehicle.”
• “The attorney used to represent Home Depot in personal injury lawsuits, and she was privy to confidential information in a case similar to the current one.”
• Decision: here.

“Counselling Two Clients in the Same Matter: Trump/Blanche” —

• “President Donald Trump, obviously expecting loyalty—actually, obeisance—appointed several of his personal attorneys to high Justice Department positions… And, directly pertinent here, Todd Blanche, his former chief criminal attorney as Deputy Attorney General at the Justice Department. There can be little doubt as to why Trump would choose them for these particular roles.”
• “Blanche, however, holds the second highest Justice Department position and has presided over the Jeffrey Epstein investigation after serving as Trump’s criminal attorney in private practice. He, therefore, is the single Trump former attorney who has literally been presented directly with a direct conflict. That is, he has (undoubtedly) conferred with Trump about the Jeffrey Epstein matter as Trump’s private lawyer. And he has been the attorney responsible for the Epstein investigation on behalf of the Justice Department in which he, oddly, interviewed Ghislaine Maxwell.”
• “That said, Blanche’s relationship with Trump has been extremely unique. In private practice, Donald Trump was literally Blanche’s only client. And even if Trump hadn’t been Blanche’s only client, Blanche would have had a duty of undivided loyalty to him—a duty that would surely exist in futuro. Blanche would be required to demonstrate that ‘loyalty’—i.e., maintain any confidences that Mr. Trump had imparted to him, even after his representation of Mr. Trump as a private citizen was long ended—and particularly when later serving in a governmental capacity.”
• “So, where would Blanche stand concerning his attorney-client responsibilities if, during the Trump presidency, Trump, as one might easily suspect, has continued to confidentially discuss with the Deputy Attorney General conduct that Trump initially revealed to Blanche pre-presidency—say, for example, about any relationship he may have had with Jeffrey Epstein?”
• “Stated otherwise, suppose the president wants, now, to discuss with Blanche a personal subject unrelated to his presidency, what ethical obligation does Blanche have either to citizen (or president) Trump to alert him to the possible perils of discussing it with him? Meaning, the potential danger of Blanche being later compelled to disclose the confidence, inasmuch as Blanche cannot technically act in the capacity of citizen Trump’s lawyer any longer.”
• “Simply put, it would clearly be improper for Blanche to talk substantively about it to Trump while he, as the Justice Department’s lead attorney, is conducting a formal government investigation that potentially involves Trump’s prior conduct. However, if Blanche chose to do so (especially inasmuch as Trump, a layman, not truly knowledgeable about privilege restrictions), what would Blanche’s obligations be? At the very least, wouldn’t Blanche be obligated to give Trump so-called Upjohn Warnings?”
• “And what does that mean? Under the Supreme Court’s decision in Upjohn Co. v. United States, 449 U. S. 383 (1981) an Upjohn Warning is a statement that a corporate counsel (here, Blanche, as an attorney for the United States), would give to the employee of the ‘corporation’ (here, the president)—clarifying that the attorney-client privilege belongs to the company, not to the individual employee. It ensures that the employee understands that his statements can actually be disclosed to the company and potentially to third parties even without the employee’s consent.”
• “It basically tells the employee (here, Trump), that (1) the attorney represents the company, not the employee; (2) the attorney-client privilege belongs to the company, not the employee; (3) the company can waive the privilege and disclose the employee’s statements to others without the employee’s consent; and (4) that the employee may wish to seek other counsel.”
• “Now, given Trump’s inordinately close relationship with the Justice Department—and here, in particular, given that Mr Blanche was Trump’s single-client criminal lawyer—it seems highly unlikely that Blanche would even consider the rigamarole of Upjohn Warnings if Trump were on the verge of imparting his concerns about Epstein when and if the heat got hot.”
• “One would certainly have wanted to be a fly on the wall when/if Trump proposed talking to Deputy Attorney General Blanche about his relationship with Jeffrey Epstein. One might imagine that Blanche would have discouraged any such conversation. But, as we know, Trump doesn’t typically take ‘no’ for an answer lightly (and likely wouldn’t be especially concerned if Blanche even urgently tried to describe his ethical obligations when encouraging the President to simply keep his mouth shut).”
• “We may never know whether Trump himself demanded that Blanche himself conduct the infamous Ghislaine Maxwell interview in which she basically ‘acquitted’ Trump of any wrongdoing relating to Epstein. Either way, it’s hard to believe that Blanche conducted that interview without having in advance heard directly from Trump his side of the Epstein/Trump story (and, by the way, from Maxwell’s lawyer exactly what she would say, and wouldn’t say, about the President’s conduct when questioned).”
• “That said, what words of comfort—or were any really necessary?—did the ‘all in’ Blanche give Trump to make him comfortable that anything he told Blanche would remain confidential? We’ll probably have to wait for Trump’s book for at least his version. At bottom, can one possibly imagine a greater conflict than that which confronted Blanche—agreeing to head a spectacular government investigation focused in part on the president, after having separately represented him as an individual?”

“Abu Dhabi Fund Blocks $800 Million Private-Equity Asset Shuffle” —

• “A Houston-based private equity firm was stopped in its tracks when an investor cried foul as it tried to sell one of its assets to itself, one of the first times such a dispute has spilled into public view.”
• “Energy & Minerals Group had already lined up investors for a continuation fund of at least $800 million when Abu Dhabi Investment Council sued over the maneuver and halted the process, according to people with knowledge of the matter.”
• “The sovereign wealth fund — an independently run unit of Mubadala Investment Co. — last week sued to stop the private equity firm from shuffling natural gas producer Ascent Resources LLC into a different vehicle, court papers show.”
• “The fight is a rare public rebuke in the the world of private equity, where investor disputes are more often cordial and private. But as buyout shops increasingly turn to offbeat maneuvers like continuation funds to return capital, investor frustration is growing. Middle Eastern allocators in particular are becoming unhappy with some of the tactics used to prolong asset sales or delay distributions.”
• “The continuation fund would have allowed some Energy & Minerals Group investors to cash out of their stakes in Ascent Resources while bringing fresh money in. But ADIC’s lawsuit alleges the process was tainted by conflicts of interest and governance missteps.”
• “‘Defendants have made multiple material misstatements and omissions about the proposed transaction and employed a variety of coercive tactics,’ lawyers for ADIC wrote in court papers. ‘In so doing, EMG has placed its own self-interest above the interests of its investors,’ they added.”
• “Energy & Minerals Group has backed Ascent, the biggest natural gas producer in Ohio, for more than a decade. It has invested in the company through at least two funds along with a secondary fund it established in 2017, filings show.”
• “The continuation fund would have seen Energy & Minerals Group take a bigger stake in Ascent at a depressed valuation, lawyers for ADIC allege. The private equity firm dismissed exit alternatives like an initial public offering or a merger without fully exploring them, they argue.”
• “The case is Abu Dhabi Investment Council Company PJSC et. al. v. The Energy and Minerals Group, 25-1389, Delaware Chancery Court (Wilmington).”

“Musk wins fight to keep lawyer Alex Spiro in Twitter trial” —

• “Elon Musk has persuaded a judge that his longtime [Quinn Emanuel] lawyer Alex Spiro can represent him in a shareholder lawsuit over the billionaire’s 2022 Twitter acquisition even though he may be a trial witness in the case.”
• “San Francisco-based U.S. District Judge Charles Breyer in a ruling on Monday rejected the plaintiffs’ objections that allowing Spiro to act as both advocate and witness would confuse jurors. The shareholders had argued that Spiro was ‘at the epicenter of virtually every important decision’ during Musk’s pursuit of Twitter and later efforts to walk away from the deal.”
• “Musk’s interest in keeping his chosen counsel, Breyer said, weighed against disqualification.”
• “The lawsuit claims Musk used misleading social media posts to drive down Twitter’s stock price to escape his $44 billion deal or negotiate a lower price for the platform, now renamed X. Musk has denied any wrongdoing.”
• “Musk’s lawyers called the effort to disqualify Spiro a ‘Hail Mary’ before a February 2026 trial, saying the investors waited too long to object to Spiro’s role. Musk on Tuesday asked the court to push the trial back until March. His lawyers said Musk ‘has a highly confidential and personal pre-existing and immovable commitment’ in late February that will not allow him to attend the trial and testify. The filing said the undisclosed matter was ‘sensitive’ and can’t be disclosed publicly.”
• “The judge said Musk gave written consent for Spiro to serve as both attorney and witness and concluded that the plaintiffs failed to show how his dual role would harm them.”
• “Breyer called concerns about jury confusion ‘generic’ and said courts can manage risks with instructions and limits on questioning. He noted that other witnesses could cover most of the topics plaintiffs identified and questioned whether Spiro’s testimony was ‘genuinely needed.'”
• “Spiro, with hourly rates of at least $3,000, has represented Musk in many cases and counts actor Alec Baldwin and New York Mayor Eric Adams among his other clients.”

“Google Challenges Motion to Disqualify Judge Over Friendship in Ongoing Antitrust Litigation” —

• “Google is contesting Unlockd Media’s motion to disqualify U.S. District Judge Haywood S. Gilliam Jr. from presiding over an antitrust lawsuit in the Northern District of California. Unlockd’s request is based on Judge Gilliam’s friendship with Cassandra Knight, Google’s Vice President for Litigation and Discovery.”
• “Google argues that this relationship does not necessitate recusal, emphasizing that Knight has not participated in the case and that mere friendship between a judge and a lawyer does not require disqualification.”
• “Unlockd filed its lawsuit in September 2021, alleging that Google’s actions, including banning the company from its app store and AdMob, led to its demise. Judge Gilliam dismissed Unlockd’s case in February 2025, deeming it based on ‘unsupported conclusions.'”
• “In a related matter, Rumble, a video-sharing platform, has also sought Judge Gilliam’s recusal in its antitrust case against Google, citing the same relationship with Knight. Google has opposed this motion as well, maintaining that the friendship does not warrant disqualification.”

“‘Our Colleague Has Been Vindicated’: Court Won’t Remove Lawyer From Case” —

• “The Texas First Court of Appeals rejected an attempt to disqualify Ahmad, Zavitsanos & Mensing from representing Transocean and other defendants in consolidated Hurricane Zeta litigation, finding that plaintiffs failed to establish a disqualifying conflict of interest.”
• “The two-page opinion allows Houston-based AZA to continue defending Transocean Offshore Deepwater Drilling Inc., Triton Voyager Asset Leasing GmbH, and Triton Voyager Asset Leasing GmbH in litigation involving crew member injuries aboard the Deepwater Asgard drilling rig during the October 2020 storm.”
• “The 23 plaintiffs claimed AZA attorney Karina Sanchez-Perlata created a conflict of interest because she previously worked on a case involving Dr. Henry Small, one of the treating physicians in the litigation. She previously worked as a law clerk at Arnold Itkin, the firm representing plaintiffs. The plaintiffs claimed Sanchez-Perlata had access to confidential information about Dr. Small after she joined AZA, and that she could use it against them.”
• “But the appellate court didn’t agree. ‘Any pending motions are dismissed as moot. We lift the stay of trial court proceedings,’ according to the opinion by the three-judge panel, which consisted of Justices Amparo ‘Amy’ Guerra, Kristin Guiney and Andrew Johnson.”
• “The opinion affirmed the trial court’s ruling from December 2024, in which it denied the motion to remove AZA because the Judge wrote, ‘Plaintiffs had failed to show a ‘substantial relationship’ between the prior representation and this litigation, as well as prejudice.'”
• ‘Today’s ruling not only speaks to the merits of the underlying allegations but also to the strategy deployed to attack a former summer associate,’ said Shahmeer Halepota, co-lead attorney on the case with AZA Law. ‘We are thrilled that our colleague has been vindicated.'”

“OLPR seeks discipline of lawyer in conflict-of-interest case” —

• “The Minnesota Office of Lawyers Professional Responsibility has announced it is seeking discipline of attorney John Richards III for providing representation for both a man accused of felony criminal sexual conduct and the mother of the alleged victim.”
• “Richards was retained to defend A.T. on felony charges of alleged criminal sexual conduct. The alleged victim was A.T.’s minor stepdaughter, K.L., who alleged that A.T. abused her repeatedly in their home.”
• “Richards also gave legal advice to J.T., mother of K.L. and A.T.’s wife, about K.L. Specifically, he provided guidance about the girl’s participation in interviews about the alleged abuse.”
• “The OLPR petition states that ‘the interests of the alleged perpetrator and the alleged victim were directly adverse.’ This became clearer as the matter unfolded. Richards also did not ask for or obtain informed consent regarding this conflict.”
• “J.T. was contacted by law enforcement regarding the investigation in her daughter’s allegations. She contacted Richards, who told her not to speak to anyone about her husband’s alleged conduct or allow her daughter to speak about it without Richards’ approval.”
• “The daughter was scheduled for a forensic protocol interview. Richards told the mother to not allow her daughter to talk to anyone unless the person wanting to schedule the interview contacted Richards first.”
• “The mother subsequently refused to allow her daughter to attend the interview. She informed law enforcement and social services that Richards was the ‘family attorney.’ Police informed the mother that Richards could not represent her daughter due to a conflict of interest. Ultimately, J.T. agreed to the interview.”
• “‘While the forensic protocol interview could further K.L.’s (and therefore J.T.’s as her caregiver) interest in obtaining support services, the interview could also lead to the disclosure of facts damaging to the step-father’s interest in defending against K.L.’s allegations,’ the petition asserts.”
• “Richards is accused of violating Rules 1.7(a)(1), 1.7(a)(2), 1.5(b)(1), 1.15(c)(5), 3.3(a)(1), 3.4(d), 4.4(a), 8.4(c), and 8.4(d). “

David Kluft writes: “Can multiple prospective clients bring a class action against ambulance chasers for illegal solicitation?” —

• “After a minor car accident, a TX woman received an unsolicited phone call from a “case runner” who claimed he got her contact information from her insurer, and who offered her $10K to ‘sign up’ for legal representation with a particular law firm.”
• “The woman later alleged that this call violated the Texas barratry law and Texas ethics Rule 7.03 (prohibition on solicitation). She filed a putative class action against the firm on behalf of ‘all Texas citizens whose vehicles were involved in motor vehicle crashes and were subsequently contacted by [the firm]’ during a certain date range.”
• “However, the Court dismissed the case due to ‘no ascertainable class.’ This was because determining whether any particular communication was a prohibited ‘solicitation’ would require individualized inquiry into whether the communication qualified as a solicitation under 7.03 ( e.g., was it ‘substantially motivated pecuniary gain,’ did the prospective client reach out first, etc.); whether one of the exemptions to Rule 7.03 applied (e.g., was the prospective client a lawyer, a family member or close friend, or an ‘experienced user’ of legal services); and whether the case runner was acting as the firm’s agent.”
• Decision: here.

David Kluft asks: “Can I mediate a dispute about ownership of a company and then appear as counsel in a related dispute about the same company?” —

• “A TX lawyer mediated a dispute between a sister and brother over part ownership of an investment company. Later, an Investor sued the sister in a separate litigation, claiming that the terms of the settlement with the brother in the first litigation constituted a misuse of company assets.”
• “The mediator’s law firm appeared in the second case for the Investor, and the sister moved to disqualify the mediator under Rule 1.12 (neutral can’t represent party in same matter).”
• “Apparently, the mediator’s firm ran a conflict check before taking the case, but the sister had gotten married and changed her name in the interim, so they didn’t notice the conflict.”
• “The mediator’s firm argued they should not be disqualified anyway because it was not the same ‘matter’ (i.e., it was a different litigation), but the TX Court of Appeals disagreed, holding that what qualifies as a ‘matter’ under the rule depends on the facts and circumstances, and here it was the same matter because it involves the same company and even some of the same payments.”
• “The Court also found that the firm’s screening was inadequate, so the whole firm was disqualified. However, another firm that that had already appeared as co-counsel for the Investor alongside the mediator’s firm was not disqualified by imputation absent specific evidence it received information from the mediator.”
• Decision: here.

“Bradley Arant Facing Convicted CEO’s Malpractice Claims, Bid for Removal From Case” —

• “Bradley Arant Boult Cummings is facing charges of legal malpractice in Alabama from a disgraced former health care CEO who alleges the firm dually represented him and his former company while it worked to oust him and then ‘concealed the conflict for more than two decades.'”
• “Richard Scrushy, founder and former CEO of HealthSouth—a company now called Encompass Health—also wants Bradley removed as his counsel in a separate civil case dating from the early 2000s because of the alleged conflict. The move could lead to overturning a $3.2 billion verdict against him.”
• “Scrushy’s attorney, Johnathan Austin of Austin Law in Birmingham said in an interview Bradley was not involved in mere ‘concurrent representation’ of both parties. ‘This was Bradley Arant representing Richard Scrushy and then going and representing HealthSouth directly adverse to Richard Scrushy,’ Austin said.”
• “The malpractice case followed Scrushy’s filing of new motions in a civil case dating from the early 2000s in which Scrushy was found liable for $3.2 billion in damages related to a high-profile accounting fraud and bribery scheme that led to his ouster from his job and ultimate prison time.”
• “Scrushy wants Bradley removed as his attorney in the civil case, titled Wade Tucker v. Richard M. Scrushy, because he did not know the firm was representing him and HealthSouth until he discovered documents earlier this year that a now-deceased company official had in his possession, Austin said.”
• “Austin said Scrushy believes the firm knew about the conflict even as the firm was representing both him and HealthSouth while the company was accusing him of fraud, filing false corporate reports and making false statements in court.”
• “In 2003, Scrushy was accused of filing false corporate reports and making false statements in Alabama state court related to a multi-billion-dollar accounting fraud scheme at HealthSouth—which included an FBI raid of his office.”
• “He was later acquitted of fraud but then was charged in federal court with money laundering, extortion, racketeering, bribery and obstruction of justice related to charges he bribed then-Gov. Don Siegelman. Scrushy was found guilty of bribery and conspiracy to commit wire fraud in 2007, sentenced to prison, and released in 2012.”
• “However, while in prison, a civil case related to the HealthSouth accounting fraud led to him being found liable for $3.2 billion in damages—a case in which Scrushy now is wanting Bradley disqualified from representing him so the verdict could be overturned and the case reopened.”
• “In the Wade Tucker case, Judge Elisebeth French heard arguments in the disqualification case Nov. 13. Scrushy made motions to disqualify Bradley under Bar rules 1.7, 1.9 and 1.10 dealing with current and former clients and imputation of conflicts of interest, as well as rule 3.7 concerning attorneys not representing Bradley in the Nov. 13 hearing because they were necessary witnesses in the case, Austin said. The judge denied the rule 3.7 motion from the bench and has not ruled on the others, he said.”
• “In the malpractice case, Scrushy names as defendants the Bradley firm and firm partner Chris Glenos, retired partner Meade Whitaker, and ‘John/Jane Doe Partners 1-10’ who were ‘decision-making partners’ and ‘responsible for authorizing of concealing the conflicted representation.'”
• “Bradley was scheduled to file its answer Friday but convinced the judge to delay filing because the firm’s new lawyer in the case, Tabor Novak III of Starnes Davis Florie in Birmingham, needed more time to learn about it, Austin said.”
• “Scrushy alleges that Bradley lawyers in 1998 were hired to represent him and his interests but later began representing HealthSouth in 2002 ‘first on corporate matters, then in positions increasingly adverse to Mr. Scrushy.'”
  ‘Bradley never notified Mr. Scrushy of this dual allegiance,’ the complaint states. ‘Instead, it suppressed and concealed this conflict while benefiting from privileged access to [Scrushy’s] strategy and decision-making.'”
• “But an affidavit by the firm’s former partner, Whitaker, that was filed in the Wade Tucker case in August stated that he represented the firm in Scrushy’s personal real estate and trademark matters but said he was not part of the firm’s representation of HealthSouth as part of the fraud investigation.”

“Rule on Multidistrict Litigation’s First Steps Goes Into Effect” —

• “A new federal rule governing the first steps for multidistrict litigation is set to take effect Monday [12/1], the result of years of debate over the measure and what it should include.”
• “Multidistrict litigation now makes up well over half of all federal civil cases, with lawsuits that address product liability and other topics consolidated before one judge to avoid them being filed in different courts and resulting in potentially different pretrial rulings. The new rule, 16.1 under the Federal Rules of Civil Procedure, is meant to give judges and parties a framework to get those cases off the ground, while still giving them the chance to modify them as needed for each case.”
• “Those opening steps include an initial management conference to figure out pretrial proceedings. The rule also says parties should provide a report ahead of that conference to lay out their views on whether leadership counsel should be appointed in the case, and if so, what their roles should be.”
• “Parties should also tell the court their initial views on discovery in the litigation, how parties will share information about the factual bases behind their arguments, and the main factual and legal issues that are likely to come up, the rule says.”
• “Some lawyers told Bloomberg Law they had concerns about earlier drafts of the rule, saying too much rigidity would hurt the MDL process by forcing courts to follow steps that don’t fit all cases. The Judicial Conference’s Committee on Rules of Practice and Procedure unanimously approved a version that its authors said was meant to be adaptable.”
• “Some plaintiffs’ lawyers also testified that they thought too many topics were included in the list of items that could be addressed at the initial hearing. The advisory committee drafting the rule said it’s not meant to serve as a mandatory agenda that requires a view on each listed issue.”
• “Class action lawyers also told Bloomberg Law the rule seemed focused more on mass tort MDLs rather than their cases, which commonly involve data breaches, privacy, and antitrust issues.”
• “The rule has its supporters. Implementing initial steps in the cases gives a pathway for finding and dismissing claims that don’t belong in the litigation, said Alex Dahl, general counsel for the advocacy group Lawyers for Civil Justice, which has pushed for the new MDL rule.”
• “‘This rule should strongly discourage the filing of meritless claims and give courts and parties an effective mechanism for identifying and dismissing them at the early stages of a new MDL,’ Dahl said in a statement.”

“Hochul Approved Permits That Could Help Clients of Her Husband’s Firm” —

• “Gov. Kathy Hochul created at least the appearance of a conflict of interest when her administration approved permits benefiting two recent clients of a large law firm that employs her husband, environmental activists and two New York State lawmakers said this week.”
• “The criticism stemmed from her administration’s announcement on Monday that it would allow the construction of a contentious natural gas pipeline and issue a permit to a Central New York cryptocurrency mine whose operations have been opposed by the activists.”
• “In separate statements over the past few days, the activists and lawmakers — two Democratic members of the State Assembly who are aligned with Zohran Mamdani, the mayor-elect of New York City — said Ms. Hochul should have at least recused herself from the decisions.”
• “They noted that Ms. Hochul’s husband, William Hochul, works as a lawyer for the firm Davis Polk & Wardwell, which has represented the owner of the pipeline company and a private equity firm that has a large stake in the cryptocurrency mine.”
• “A spokesman for the governor’s office vigorously disputed the claims, calling them ‘ridiculous.'”
• “Mr. Hochul ‘does not take on any clients with any matters before New York State — period,’ said the spokesman, Anthony Hogrebe, who added that Davis Polk was ‘one of the largest law firms in the world.'”
• “The governor’s office said that Ms. Hochul follows a strict recusal policy to avoid conflicts with her husband’s work. But the decisions in question required no recusal, Mr. Hogrebe said, because Davis Polk did not represent either the pipeline or the crypto miner in their efforts to obtain permits.”
• “At Davis Polk, Mr. Hochul ‘advises clients on complex government and internal investigations, crisis management, communications strategy, risk mitigation and other matters,’ according to the firm’s website.”
• “One of the firm’s clients, Tulsa-based Williams Companies, is planning to build a $1 billion underwater gas pipeline off New York City. The pipeline project had previously been rejected three times by New York State regulators over environmental concerns. But on Monday, Ms. Hochul said she would allow it, citing a need to hedge against possible energy shortages.”
• “Another recent client of Davis Polk, Atlas Holdings LLC, was a major investor in the cryptocurrency mining firm, Greenidge Generation, which has faced criticism for using a gas-fired power plant to run computers that mine Bitcoin. Atlas retained Davis Polk from June to August for help with an unrelated matter, the development of a data center in Pennsylvania.”
• “Separately, Davis Polk has provided advice on developing investment products to President Trump’s social media company, Trump Media & Technology Group, after it announced a partnership with a digital asset trading platform called Crypto.com. Neither Trump Media nor Crypto.com has any relationship with Greenidge, a spokesman for Atlas said.”
• “An opponent of both the pipeline and the Greenidge operation, Kim Fraczek, said Mr. Hochul’s work for Davis Polk raised questions regardless of whether he had personally worked on behalf of the projects.”
• “The governor’s ethics disclosures show that Mr. Hochul has earned between $850,000 and $950,000 a year from the firm, but he is not a partner and does not share in its profits.”
• “In a statement, Davis Polk said that it had represented Atlas only on the Pennsylvania matter. The firm said the pipeline owner, Williams, was a ‘longstanding firm client’ but ‘had no involvement in the pipeline project.'”

“Charlie Javice wants fraud conviction tossed — claiming judge’s clerks got jobs at law firm repping JPMorgan” —

• “Charlie Javice, who was convicted for defrauding JPMorgan Chase out of $175 million, is demanding a new trial — claiming the judge’s law clerks got jobs with the banking giant’s law firm after her trial finished.”
• “In a motion filed in Manhattan federal court, the 33-year-old’s lawyers alleged that both of US Judge Alvin K. Hellerstein’s clerks had accepted jobs at Davis Polk & Wardwell, the powerhouse law firm that represents JPMorgan Chase.”
• “‘This commitment … was not disclosed to defense counsel until October 2025 (after trial and sentencing), is an apparent conflict of interest that creates, at a minimum, an appearance of impropriety,’ Javice’s lawyers wrote in the Monday filing.”
• “Javice, 33, was sentenced after a jury found her guilty of conspiracy, wire fraud, bank fraud and securities fraud. Prosecutors said she duped JPMorgan into buying her company for $175 million by falsely claiming her fintech startup Frank had 4.25 million users when it only had about 300,000.”
• “According to the motion, both of Hellerstein’s clerks worked as summer associates at Davis Polk in 2023 and accepted full-time job offers at the end of the summer. They deferred their start dates to September 2025 to complete their clerkships.”
• “The motion cites an instance during the trial when the judge, after conferring with his clerk, allowed a prosecutor to re-ask a question over a defense objection. ‘My law clerk agrees with you. You can ask the question,’ Hellerstein said, according to the transcript.”
• ‘This episode shows that the clerk was participating in real time in decisions concerning the permissible scope of examination on one of the most consequential subjects in the case, and that the clerk’s input aligned with the prosecution in a way that benefitted her future employer Davis Polk and her future client JPMC,’ Javice’s lawyers wrote in the filing.”
• “Javice’s lawyers said they only learned of the conflict after the trial and sentencing, when Davis Polk sent a letter to the court saying it had implemented an ‘ethical screen’ to prevent the clerks from working on the case.”
• “Davis Polk was not a peripheral player in the case, according to Javice’s attorneys. The firm’s lawyers appeared at hearings, litigated discovery issues and attended every day of the six-week trial, the filing alleged.”
• “The legal battle over the clerks’ alleged conflict comes as JPMorgan is fighting to stop paying Javice’s legal bills, which have ballooned to more than $73 million — with another $13 million added after her conviction.”
• “In a separate court filing in Delaware Chancery Court, the bank accused Javice and her lawyers of treating the fee advancement as a ‘blank check,’ billing for personal items like cellulite butter and luxury hotel upgrades.”

“Latham & Watkins Disqualified in Inspire IP Suit Against Nyxoah” —

• “Latham & Watkins LLP was barred from representing Inspire Medical Systems Inc. in a patent dispute over a competitor’s sleep apnea product.”
• “Latham’s ‘continued representation of Inspire in this matter would appear deeply improper,’ given the confidential information Latham obtained in its four-year relationship with Nyxoah SA‘s stock offering underwriters, Magistrate Judge Eleanor G. Tennyson of the US District Court for the District of Delaware said in a Tuesday order.”
• “Inspire sued Belgium-based Nyxoah for allegedly infringing several of its US patents ahead of Nyxoah launching its Genio sleep apnea therapy device in the US. Nyxoah sued Inspire in a separate case in September, asserting Inspire is infringing its own patents related to Inspire’s therapy systems.”
• “Nyxoah went public in 2021 to finance the development of Genio. Nyxoah retained Cantor Fitzgerald LP, and eventually Morgan Stanley, to underwrite several offerings. Both firms were represented by Latham during the due diligence process.”
• “Latham withdrew from representing Morgan Stanley and Cantor Fitzgerald before a stock offering earlier this year due to a business conflict, which was later revealed to be the firm’s representation of Inspire in this case.”
• “Nyxoah moved to disqualify Latham, arguing that based on Latham’s years of access to Nyxoah’s confidential information, including on the accused product, Latham’s representation of Inspire gives the appearance of impropriety.”
• “Although Latham never had any fiduciary or attorney-client relationship with Nyxoah, Latham ‘obtained access to confidential information from Nyxoah that is extremely pertinent to the present dispute,’ Tennyson said.”
• “Latham had access to Nyxoah’s financial information and internal documents detailing the company’s views on competing products, such as Inspire’s. The firm also participated in ‘no fewer than six intellectual property due diligence calls with Nyxoah’ while advising its underwriters, during which Nyxoah would provide its views on its own IP assets and products, including Genio, the magistrate judge said.”
• “To the outside, it appears Latham used confidential information Nyxoah provided to ‘garner business in the form of a patent-infringement suit against Nyxoah’ by its competitor. Whether that’s what happened is irrelevant, Tennyson said, adding that the appearance of impropriety is ‘glaring.'”
• “The magistrate judge rejected Latham’s assertion that Nyxoah can’t point to any case where a court disqualified an underwriter’s counsel for being adverse to the stock issuer in a later case. The character of the relationship between Latham, Nyxoah, and the underwriters isn’t the basis for disqualification. Rather, the record shows Nyxoah provided confidential information to Latham, as the underwriters’ counsel, that is ‘highly relevant’ to use against Nyxoah in this case, Tennyson said.”
• Decision: here.

“US law firm McDermott Will & Schulte weighs sector’s first private equity tie-up” —

• “McDermott Will & Schulte is exploring a restructuring that would allow it to sell a stake to private equity groups, a move that would test ethics rules preventing non-lawyers from owning legal firms.”
• “The reorganisation would involve creating a complex structure giving investors a slice of the law firm’s revenues without breaking traditional ownership rules, according to five people with knowledge of the matter.”
• “Such a move, by one of the world’s largest law firms by revenue, could set a precedent for other large players in an industry that — in the US — has been impervious to outside investment.”
• “Zack Coleman, the son of the firm’s chair Ira Coleman, joined McDermott from private equity and venture capital group Odyssey Investment Partners in July and had been sounding out bankers, advisers and private equity executives about the structure, the people said. However, no agreement had been finalised and no commitments had been made, the people cautioned, with some saying it was at an exploratory stage.”
• “The younger Coleman, who started his career at the investment bank Moelis in 2015 and joined McDermott as senior director of business opportunities, is considering a model in which some of the revenues that lawyers generate will be diverted to buy services from a separate entity in which outside investors could own a stake.”
• “The Chicago-headquartered firm, formed in a merger of McDermott Will & Emery and Schulte Roth & Zabel this year, has $3bn in revenues, it said in August. That would put it in the top 20 firms globally by revenue.”
• “The structure under consideration would split it into two parts: a business giving advice to clients that is fully owned by its lawyers, and a separate ‘managed service organisation’ that the lawyer-owned firm would buy services from. That could include back-office work, licensing its brand and buying IT services. Investors could buy a stake in the MSO, giving them a revenue stream designed to be attractive to private equity investors.”
• “There has been an explosion of interest in the potential use of the structure in law this year, but no large firm has adopted it and opponents believe it could breach professional ethics rules designed to keep commercial considerations out of the provision of legal advice.”
• “Ethics rules set by the American Bar Association that ban non-lawyer ownership of US firms are being questioned after some states, such as Arizona, have explicitly licensed alternative business structures that can include private equity control. The potentially more controversial MSO structure has so far been used by only a handful of small practices or start-up law firms.”

“Swiss Vereins: Lessons from Big Law Breakups” —

• “Swiss vereins may offer the impression of unity, but for global law firms they can resemble long-distance romances—captivating at first, until the strain leads to a messy split.”
• “Norton Rose Fulbright confronted that hard reality when the break-up with its South African partners became public last week. Norton Rose and its Johannesburg, Cape Town and Durban offices framed the separation as a ‘natural evolution’ of their 14-year relationship, the legal world’s equivalent of ‘it’s not you, it’s me’.”
• “Beneath the PR polish, undercurrents of conflict have been simmering for months though, including sniping from the City of Gold and other offices about low client referrals, consternation over declining deal visibility, rising associate departures, and an allegation of discrimination. The split also comes after the South African offices were sidelined during the financial integration of Norton Rose’s Australian practice with the EMEA, and their chairperson was passed over in the global chair rotation.”
• “Sometimes, breakups come down to one question: Are we stronger together or better apart? NRF partners announced their decision jointly: South Africa will go it alone starting April 1, meaning there are months of tricky discussions still ahead, not least delicate matters involving client custody.”
• “This highlights a broader problem with Swiss vereins. While the arrangement binds firms across borders, even the most disciplined structures can’t contain ambition, ego, and competing interests. While financially integrated law firms are the equivalent of a marriage, verein offices are more like a perpetual engagement, which means splits can happen more easily.”
• “The Swiss verein lets firms flaunt a single brand and governance structure while keeping offices financially separate. While they don’t necessarily share profits, they do share the name—and, at times, the drama. Disputes, scandals, and failures in one jurisdiction can seriously impact a firm’s global reputation and even lead to litigation.”
• “In the last few years, Baker McKenzie has experienced uncomfortable headlines from South Africa to the UAE to Belgium. And who can forget the Gary Senior saga? The former London managing partner was accused of trying to kiss and embrace a junior colleague and then improperly influence an internal law firm inquiry. The firm was cleared of mishandling an investigation in 2020 (eight years later) but Senior was fined £55,000 plus £40,000 in costs ($125,000 in all) for what the Solicitors’ Disciplinary Tribunal described as his ‘extraordinary abuse of position’ and a ‘lack of integrity’.”
• “The Senior scandal didn’t rupture the Chicago-headquartered firm’s ties with London, but Big Law’s #MeToo moment made for uncomfortable headlines. Baker McKenzie’s verein model has always drawn attention and it was back in the headlines again last month, when Baker McKenzie failed to strike out a malpractice claim tied to its former Russian affiliate.”
• “Dentons’ 2015 tie-up with China’s Dacheng allowed both firms to boast about their massive headcounts, turning scale into a badge of prestige and a competitive edge. When the partnership fizzled in 2023, Dentons blamed China’s ‘evolving regulatory environment’. But as Asia Editor Jessica Seah pointed out, the rupture may have also been a face-saving tactic to disguise that Dacheng had grown weary of footing Dentons’ franchise fees.”

“A Dominatrix, Cyberstalking, And Sour Grapes: Lawsuit(s) Against Biglaw Partner By Former Firm Is Quite The Journey” —

• “Last week, a lawsuit against Blank Rome finance partner James Cretella was filed by his former firm, Otterbourg P.C., for breach of contract, breach of fiduciary duty, fraudulent concealment, and unjust enrichment. The allegations in the suit are a roller coaster ride that swings between the banal and sensational. For example, Otterbourg alleges Cretella didn’t disclose his impending departure until after he’d collected a seven-figure bonus and that he solicited clients to join him at his new firm. From the complaint: ‘He accepted [the bonus] knowing full well he was leaving and that he had perpetuated a scheme to try to hobble the Firm and bolster a competitor while conspiring with another exiting partner and concealing material facts that would have changed the Board’s decision to give him a bonus.'”
• “Which are interesting, if somewhat expected, allegations following a partner’s lateral move. These things don’t typically come to litigation, but they’re certainly known pain points. But then there are the escort allegations.”
  “According to the complaint, Cretella met up with an escort and other women while traveling on firm business. During a forensic examination of Cretella’s firm-issued and firm-paid phone, it was revealed that he allegedly engaged in ‘highly inappropriate and potentially unlawful personal conduct that Cretella engaged in during Firm-funded travel,’ that included texts messages with an ‘upscale dominatrix’ known as ‘Goddess Kat.'”
• “Then there’s the cyberstalking allegations. There’s a separate federal suit in the U.S. District Court for the District of Connecticut by Otterbourg’s chairman, Richard L. Stehl, and its president, Richard G. Haddad, over those claims, and Cretella has filed a motion to dismiss. The Otterbourg firm leaders allege Cretella engaged in repeated ‘unauthorized surveillance’ of their personal lives. As reported by Law.com:”
• “‘Forensic evidence shows that over a period of years, Cretella repeatedly accessed private, non-client files belonging to both men without their permission or legitimate purpose,’ the most recent suit states. ‘These were not stray clicks or accidental views. The data shows hundreds of deliberate intrusions – often in the dead of night – targeting files that … had nothing to do with firm business.'”
• “Some of this sensitive information allegedly included home security system codes and login credentials for live camera feeds inside and outside the Stehl family residence, personal tax returns and Social Security password files, privileged legal communications relating to ‘deeply personal family matters,’ including divorce proceedings and custody arrangements involving grandchildren, confidential medical records, private financial statements, as well as ‘intimate personal details,’ including children’s employment documents and home renovation plans.”
• “But in Cretella’s motion to dismiss the federal action, he alleges the personal information was saved on the firm’s computer system and accessed through a preview function after performing searches. ‘Although plaintiffs try to hide behind irrelevant allegations about how Otterbourg’s computer system was intended to operate, the complaint confirms a simple fact fatal to plaintiffs’ standing: Using firm-provided credentials, Cretella and other attorneys searched the firm’s computer network and viewed the results of those searches, which allegedly included files plaintiffs saved to the firm-wide network. The only plausible conclusion is that plaintiffs failed to take any measures to prevent their files from being accessed through routine, firmwide network searches.'”

“Copy-paste now exceeds file transfer as top corporate data exfiltration vector” —

• “It is now more common for data to leave companies through copying and paste than through file transfers and uploads, LayerX revealed in its Browser Security Report 2025.”
• “This shift is largely due to generative AI (genAI), with 77% of employees pasting data into AI prompts, and 32% of all copy-pastes from corporate accounts to non-corporate accounts occurring within genAI tools.”
• “‘Traditional governance built for email, file-sharing, and sanctioned SaaS didn’t anticipate that copy/paste into a browser prompt would become the dominant leak vector,’ LayerX CEO Or Eshed wrote in a blog post summarizing the report.”
• “The report highlights data loss blind spots in the browser, from shadow SaaS to browser extension supply chain risks, and provides a checklist for CISOs and other security leaders to gain more control over browser activity.”
  “GenAI now accounts for 11% of enterprise application usage, with adoption rising faster than many data loss protection (DLP) controls can keep up. Overall, 45% of employees actively use AI tools, with 67% of these tools being accessed via personal accounts and ChatGPT making up 92% of all use.”
• “Corporate data makes its way to genAI tools through both copying and pasting — with 82% of these copy-pastes occurring via personal accounts — and through file uploads, with 40% of files uploaded to genAI tools containing either personally identifiable information (PII) or payment card information (PCI).”
• “Tackling the growing use of AI tools in the workplace includes establishing allow- and block lists for AI tools and extensions, monitoring for shadow AI activity and restricting the sharing of sensitive data with AI models, LayerX said.”
• “Monitoring clipboards and AI prompts for PII, and blocking risky copy-pastes and prompting actions, can also address this growing data loss vector beyond just focusing on file uploads and traditional vectors like email.”
• “AI tools are not the only vector through which copied-and-pasted data escapes organizations. LayerX found that copy-pastes containing PII or PCI were most likely to be pasted into chat services, i.e. instant messaging (IM) or SMS apps, where 62% of pastes contained sensitive information. Of this data 87% went to non-corporate accounts.”