Risk Update

Disqualification News: Judges & Experts Edition

Posted on

Judge kicks himself off felon voting-rights case after defendant’s ‘deeply troubling’ legal maneuver” —

  • “A federal judge in Florida won’t be hearing a challenge to a restrictive Florida voting law because of a litigant’s choice of counsel.”
    “The consolidated cases before Walker challenged a Florida law creating hurdles for felons who want to vote. Lawmakers passed the law after voters approved a state constitutional amendment to restore voting rights to people convicted of most felonies.”
  • “Walker noted that one of the defendants, the Broward County supervisor of elections, had hired George Meros of Holland & Knight to represent him. Walker’s wife is a partner at Holland & Knight. Walker said the ‘conduct at issue is deeply troubling.’ In a footnote, he referred to a Florida ethics rule that says lawyers should not engage in conduct in connection with law practice that is prejudicial to the administration of justice.”
  • “A spokesperson for the Broward elections supervisor told the Sun-Sentinel and the Tampa Bay Times that Holland & Knight was not hired as a mechanism to get Walker removed from the case. The elections supervisor, Pete Antonacci, has known and worked with Meros since 1997, said spokesperson Steve Vancore.”

Bill Freivogel notes one expert and one judge-related matter of note:

  • Youngevity Int’l v. Smith, 2019 WL 2918161 (S.D. Cal. July 5, 2019). In this Lanham Act case Plaintiff moved to exclude expert testimony of Expert, primarily on Daubert grounds. One basis for the motion was that Expert was an owner of a related company. In denying the motion, the court said whether Expert has a conflict “goes to the weight and credibility” of his testimony, “rather than its admissibility.” [BF: Almost all expert disqualifications turn on the expert’s current or former relationship with the opposing party. In those cases admissibility is the test.]”
  • Abt v. Abt, 2019 ABQB 454 (CanLII)(Ct. Q.B. Alb. June 21, 2019). Matrimonial matter. Lawyer No. 1 represented W for 15 months until he became a judge. Lawyer 1’s legal assistant (“LA”) was with him that entire time. LA worked on that file and communicated with W. LA worked for H’s lawyer, Lawyer No. 2, for three weeks earlier this year and had “direct involvement” with H’s file. W moved to disqualify Lawyer No. 2. In this opinion the court denied the motion. LA swore she remembered nothing about the case from her time with Lawyer No. 1. Lawyer No. 2 declared that he learned nothing about the case from LA.”
If you liked this post, please share it:
Risk Update

Varsity Blues: The Latest Conflicts and Conflict

Posted on

Varsity Blues can be a bit hard to keep up with. But there’s certainly plenty of attention focused on this dramatic story… Here’s the latest:

DOJ Urges ‘Rigorous’ Conflict Inquiry In ‘Varsity Blues’ Case” —

  • “Federal prosecutors have again urged a Boston federal judge overseeing the ‘Varsity Blues’ college admissions cheating case to hold a ‘rigorous inquiry’ into conflicts of interest at BigLaw firms representing parents and the University of Southern California.”
  • “In a Friday filing in Boston, prosecutors said defense lawyers at Ropes & Gray LLP, Nixon Peabody LLP and Latham & Watkins LLP have conceded that some conflict work-arounds would be necessary moving forward for their respective clients, including having co-counsels question any USC witnesses.”
  • “But the potential that serious adversity between the defendants and the school may arise in the case is likely serious enough to require disqualification, the government argued, or at least raise real concerns about lawyers being limited by what they can do for their clients.”
  • “‘Pursuit of such defenses will entail not only cross-examination of U.S.C. witnesses but likely also discovery aimed at U.S.C., and effective presentation of those defenses will necessarily extend beyond witness testimony to opening statements and closing arguments,’ according to the filing. ‘The use of conflict counsel to handle the cross-examination of U.S.C. witnesses does not even purport to address these manifestations of the conflict.'”

Latham & Watkins Fighting To Stay On Aunt Becky’s Case Amid Conflicts Concerns

  • “The Varsity Blues scandal has already sunk a Biglaw managing partner and may end up sinking a whole law firm’s role in the case based on the most recent flurry of documents in the Lori Loughlin and Mossimo Giannulli criminal case.”
  • “When you have over 2500 attorneys, there’s bound to be a conflict or two. That’s what prosecutors claim is afoot with Latham & Watkins, which are representing Loughlin and Giannulli in their admissions bribery case.”
  • “Regardless of whether or not USC had a reputation to compromise, the threat of a lawsuit has got prosecutors on the move because Latham & Watkins has also represented USC and the government smells a potential conflict.”
  • “Latham, for its part, doesn’t see a problem: ‘USC is not a party to this case, and its status as an alleged victim does not automatically trigger a conflict of interest requiring Latham’s withdrawal. Latham will avoid any direct adversity with USC by relying on co-counsel to handle any cross-examination of USC witnesses and any restitution proceeding in which USC’s financial interests are directly at stake.”

Hooper Lundy OK To Rep Husband & Wife In ‘Varsity Blues‘” —

  • “A California couple charged in the nationwide college admissions case known as “Varsity Blues” told a Massachusetts federal judge they are comfortable having Hooper Lundy & Bookman PC represent them both, despite several concerns raised by prosecutors during a hearing Friday.”
  • “Gregory and Amy Colburn told U.S. Magistrate Judge M. Page Kelley they would like to proceed in the case with the same attorneys, even after both the judge and the prosecutors warned them about some of the problems that might cause. The Colburns are among several potential conflicts the government flagged in the case, in which dozens of parents are charged with bribing their children’s way into elite colleges through fake academic or athletic credentials.”
  • “Defense attorneys want to split up the cases of more than a dozen parents currently charged in connection with the alleged scheme, which could resolve some of the conflicts posed by multiple representation. But Judge Kelley noted that would not help the married Colburns. ‘In your specific case, even if that motion is successful, you will almost certainly be tried together as being in the same conspiracy,’ “the judge said. ‘No matter what happens with that motion, you’re still in the same boat you are today.'”
If you liked this post, please share it:
Risk Update

Future Risk: A Look at Emerging Issues (Part 2: Data Ownership, Data Governance ‘Weaponization’)

Posted on

Okay, we’ll get back to conflicts and disqualification news tomorrow, I promise. But here’s another 15 minutes into the future topic also worth noting. And it comes with a direct mapping to the legal sphere. Let’s talk about data. Data ownership, data privacy, data risk and the emerging landscape ahead.

Let’s start with the very interesting question about ownership of and access to client data. Sounds like a simple topic. But there are new twists noted by MyShingle: “Whose Legal Data Is It Anyway?” —

  • “Lawyer and legal business consultant Mark Cohen observes that the legal profession is essentially a data wasteland in the digital era , ranking behind all other private industries in utilizing big data and its uptown cousin, artificial intelligence to make decisions and serve clients. Still, both nature – and today’s clients – abhor a vacuum and more enterprising companies from outside legal are targeting the legal void.”
  • “Looking across its anonymized data set of contracts, Atrium can recommend the best clauses and most common set ups, like four-year vesting with one-year cliffs. You can see the status of the contracts every step of the way, from drafting and finalizing to getting employees to accept. [Kan says] that Atrium’s goal is to continue building on its archive of more than 100,000 legal documents to develop aggregated pools of data clients could opt into. If they’re willing to share their salary data, vendor contract pricing and more, they’ll get access to that of Atrium’s other clients.”
  • “Here’s the thing. We lawyers come into contact with lots of proprietary and personal data in the course of representing clients. In its role representing startups, Atrium is privy to an array of data from vendor costs, executive compensation, companies’ source and supply for different products and all kinds of other information.”
  • “To be clear, I’m not suggesting that Atrium is acting improperly or unethically by collecting and sharing client business data which is anonymized and shared only with their consent. What concerns me is that as attorneys and trusted advisors, we have the kind of special relationship with our clients that invites them to let down their guard and share proprietary and personal information because they know it will never be revealed. Sharing proprietary information gathered during the course of legal representation for purposes other than advising on the law and in a manner that can place clients at a disadvantage, or leveraging that information to market a law firm (“Unlike other firms, we have access to thousands of pieces of proprietary data on startups) makes me uncomfortable.”

As FTC cracks down, data ethics is now a strategic business weapon” —

  • “According to Deloitte, 80% of consumers are more loyal to companies they believe protect their data. Yet far fewer leaders at established, incumbent companies — the respondents of the same survey — believed this to be true. Customers care more about their data than the leaders at incumbent companies think.”
  • “Senior executives at major companies have been publicly interrogated for not taking data governance seriously. Some, like Facebook and Apple, are even claiming to lead with privacy. Ultimately, data privacy risks significantly rise in Third Wave industries where errors can alter access to key basic needs, such as healthcare, housing, and transportation.”

Clearly, this story is about the general business domain. But one might wonder in the world of tactical disqualification motions and aggressive lateral poaching if we’ll see firms more aggressively leveraging data governance and compliance capabilities as competitive weapons, as some of their corporate clients already are…

If you liked this post, please share it:
Risk Update

Future Risk: A Look at Emerging Issues (Part 1: Phishing & Fake Phone Fears)

Posted on

We’ve covered a few stories about phishing and related financial risk. The classic is the email that appears to come from the Managing Partner, demanding a wire transfer. Sounds fishy, but in truth these sorts of scams have been successful with law firms.

With that in mind, this story in the tech press caught my eye and sparked some anxiety: “Fake voices ‘help cyber-crooks steal cash‘” —

  • “A security firm says deepfaked audio is being used to steal millions of pounds. Symantec said it had seen three cases of seemingly deepfaked audio of different chief executives used to trick senior financial controllers into transferring cash.”
  • “The AI system could be trained using the “huge amount” of audio the average chief executive would have innocently made available, Symantec said.”
  • “Dr Alexander Adam, a data scientist at AI specialist Faculty, said it would take a substantial investment of time and money to produce good audio fakes.”

With the implication that this is already happening, how long until we read about a law firm example? And here the risks are not just standard financial thievery, but also pursuing sensitive information, like details suitable for insider trading…

I may have read a bit too much sci-fi in my day, but Jeff-Goldblum-in-Jurrasic-Park like reactions aside, a quick search reveals William Gibson is right once again. He’s the one who said: “The future is already here—It’s just not very evenly distributed.” See: “This AI lets you deepfake your voice to speak like Barack Obama” —

  • “Advances in machine learning will soon make it possible to sound like yourself with a different age or gender—or impersonate someone else.”
  • “Modulate has a demonstration voice skin of Barack Obama on its site, and cofounder and CEO Mike Pappas said it would be possible to generate one for anyone, given enough training data. But he adds that the company won’t make a celebrity voice skin available without the owner’s permission. He also insists that deception isn’t the main point.”

Will we see a future in which all interactions are initiated first with a two-factor authentication handshake among participants communicating in any way other than in the flesh? Or am I getting a bit too creative, which I’ve done before

If you liked this post, please share it:
Risk Update

IP Practice Risks are Everyone’s Risks (KYC, Engagement Terms, Docketing, Dabbling & Subject Matter Conflicts)

Posted on

Michael E. McCabe, Jr. does a great job summarizing key risk issues of note for IP practices. So many of his cautions have generally applicability. Highlights below but the full article is well worth a read: “Avoiding USPTO Discipline: Five Recommendations for IP Practitioners” —

  • Rule 1 – Know Your Client. This seems so self-evident. But it can be tricky when dealing with IP representation. This is because there can be different persons or entities who claim an interest in the intellectual property… Difficulties arise when IP practitioners fail to recognize who is, and who is not, their ‘client.’ Counsel would be wise to memorialize, preferably in the initial engagement agreement, who is the client so they know who they have a duty to communicate with.”
  • Rule 2 – Document the Scope and Duration of Your Representation… Some practitioners prefer to limit the scope of the representation to a discrete task, such as filing a provisional application only but not a non-provisional. Other practitioners wish to exclude from the scope of representation any post-issuance duties, like maintenance fee reminders… Practitioners ordinarily should get the client to agree to any such limitation in the scope of services at the outset of the engagement, preferably in the engagement agreement.”
  • Rule 3 – Implement a Reliable Docketing System… a blown filing date can literally cost a client their IP rights and may be grounds for malpractice as well as an ethics complaint… practitioners who use outdated modes of manual docketing run an exponentially greater risk of missing a date and causing harm to a client. If a bar complaint is filed in the USPTO, you can be sure OED will want to know all the details of the practitioner’s docketing system.”
  • Rule 4 – Check for Subject Matter and Other Conflicts… In addition, ‘subject matter’ conflicts can arise when a patent lawyer is asked to obtain patent rights in an area of technology that substantially overlaps with the claim scope of another client’s patent or pending application. The OED expects IP lawyers to have a ‘robust’ conflict checking system in place that includes checking not just for traditional adverse party type relationships but also for closely related technology subject matter conflicts.Moreover, conflicts may arise unexpectedly after the representation commences. For example, you may be representing a client that gets acquired by your adversary in a litigation. Or you may learn about new relationships that you were not aware of at the start of the representation and that could be potentially adverse to a client. IP practitioners need to maintain an organized system for collecting that new information and renewing conflicts checks during the course of a representation.”
  • Fifth – Don’t Dabble. IP law is complicated and constantly evolving. A non-IP lawyer who occasionally ‘dabbles’ in providing IP services runs the risk of getting in over their head, potentially causing harm to a client.”

On the topic of subject management conflicts, one of the organizations I work with has previously shared its insights on the practical details of using technology to tackle subject matter conflict management.

If you liked this post, please share it:
Risk Update

Event: ABA National Legal Malpractice Conference (September 11-13)

Posted on

A colleague sent word of the ABA National Legal Malpractice Conference, set for September 11-13 in San Diego, California. I’m told that this even attracts about 400 risk leaders and insurers, offering: “the profession’s best programming on legal malpractice issues, developments and trending topics. We also have unparalleled networking opportunities with legal practitioners from across the United States.”

Event details on their conference web site, with a breakout of their full program agenda now available, highlights:

  • Cutting Edge Conflicts: Recent Developments in Perilous Times (Ethics)
    This session will examine recent developments, breaking issues, and recurring challenges posed by conflicts of interest in the context of lawyers’ professional liability, including the difficulties that conflicts present when defending LPL claims. A conflict allegation can turn a simple malpractice case into a serious matter, aggravating compensatory damage exposure and potentially implicating punitive damages. In addition to discussing several common sources of conflicts, our panel of ethics experts will consider the defensive options that are available when a conflict arguably exists, and loss prevention strategies for avoiding or mitigating conflicts in the first place. This session will include a discussion of relevant Model Rules of Professional Conduct relating to conflicts of interest, including Rules 1.7, 1.8, 1.9, and 1.10.
  • Planning for the Unexpected Firm Crisis (Ethics)
    An unexpected crisis within a law firm, such as illness, accident or death, the sudden departure of key attorneys and personnel, a malpractice claim or data breach, or other adverse event can cause massive disruption to the everyday life within a law firm. This session will explore ways law firms can prepare for the unexpected and create a plan of action to follow in the midst of chaos to help guide firms through a tumultuous time without leaving clients in the lurch. This session will address succession planning issues, ethical considerations, and relevant Model Rules of Professional Conduct, including Rule 1.1 (competency); Rule 1.1, comment [8] (technological competency); Rule 1.3, comment [5] (diligence in the event of death or disability); Rule 1.4 (client communication); and Rule 1.6 (confidentiality).
  • To Arbitrate or Not: From Arbitration Provisions in Engagement Letters to Arbitrating a Legal Malpractice Case
    As the costs and publicity of defending legal malpractice claims in court continue to mount, law firms and carriers are increasingly considering arbitrating such claims. Should you include an arbitration provision in your engagement letter? Will it be enforceable? This program will discuss the potential benefits and pitfalls of arbitration, tips for drafting arbitration provisions in view of recent case law developments, and the ins and outs of litigating malpractice cases in arbitration.
  • Evolving Risks and Coverages (Ethics)
    Major cybersecurity attacks are increasingly common and sophisticated, affecting large and small firms alike. Law firms are particularly prized targets for cybercriminals. The potential impact of a coordinated attack on a firm, its brand, and its clients’ trust is significant, regardless of whether an attack results in data breaches or data theft. Cybersecurity against today’s threats requires full attention and engagement across the firm, including its affiliates, suppliers/ vendors, and professional companies, such as law firms, extending well beyond the realm of IT. This panel will address key cyber risks for law firms; how cyber insurance coverage is emerging to cover those risks; and the attorneys’ duties to control these risks pursuant to Rule 1.1 (competency), Rule 1.6 (confidentiality), and Rule 1.4 (communication). The ABA LPL Publication, Protecting Against Cyber Threats, A Lawyers’ Guide to Choosing a Cyber Liability Insurance Policy, updated to address the fast-paced changes in cyber liability coverage for law firms, can be purchased in tandem with this session.


If you liked this post, please share it:
Risk Update

Conflicts Allegations: Judicial and Prosecutorial

Posted on

We covered this matter in May, and now an update: “As writers battle their agents, finding a judge becomes a challenge” —

  • “It’s a judicial dilemma that could only happen in Los Angeles. As Hollywood writers take their fight against talent agents to court, the two sides are contending with an unforeseen challenge: finding a judge who doesn’t have personal ties to the entertainment industry.”
  • “In the month since writers sued Hollywood’s four biggest agencies, challenging the legality of packaging fees, two Los Angeles Superior Court judges have removed themselves from the case after it was revealed both had personal connections to the TV and movie businesses, which the Writers Guild of America argued would constitute a conflict of interest.”
  • “While judicial recusals are common in entertainment cases, experts say that the personal nature of the WGA’s objections is unusual. Litigators typically seek to remove judges from a case based on past rulings, not personal ties.”
  • “The writers’ lawsuit focuses on packaging, a lucrative, decades-old practice in which studios pay agencies money for putting together talent on a show. Writers allege that packaging fees violate state fiduciary law, which requires agents to represent clients with undivided loyalty. They claim agents have prioritized packaging over traditional client representation.”
  • “L.A Superior Court Judge Marc D. Gross withdrew from the case last month after the Writers Guild of America filed a peremptory challenge, noting that his wife once worked for Endeavor Talent Agency, now a part of WME. The agency is one of the four firms named as defendants in the case.”
  • “The case was then assigned to Judge Craig D. Karlan. But the guild lodged another objection, saying that Karlan himself has worked in Hollywood as a writer. In addition, the guild wrote that the judge has been in discussions with CAA about potential projects.”
    “Some legal experts have questioned the ability of lawyers to get judges thrown off cases, saying that it amounts to judge shopping. Some say a personal connection to an industry shouldn’t be an automatic disqualifier.”

And we noted this one, earlier in June, and now: “Judge Removes Lead Prosecutor In Navy SEAL War-Crime Case” —

  • “A military judge has removed the lead prosecutor in the high-profile case of a decorated Navy SEAL accused of war crimes in Iraq. The rare ruling comes a week before the trial is scheduled to begin and after President Trump said he is considering pardons for members of the military who are charged with war crimes.”
  • “Lawyers defending Special Operations Chief Edward Gallagher accused prosecutors of spying. They uncovered a digital tracking device that was sent in an email to defense attorneys and a journalist covering the case.”
  • “The lead prosecutor, Navy Cmdr. Christopher Czaplak, admitted in court to emailing the hidden software. He said the code simply tracked the location and time of messages as recipients opened their emails.”
  • “Prosecutors said they were trying to uncover the source of leaked court documents, which persisted despite a gag order. They enlisted the Naval Criminal Investigative Service to look into the leaks.”
  • “But the judge, Navy Capt. Aaron Rugh, said he had not been made aware of the prosecutor’s plan to use trackers on the defense’s emails. The judge ordered Czaplak to step away from the case on Monday because of a potential conflict of interest.”
  • “Rugh said in a motion that he could not conclude whether the prosecutor had violated rules, but that ‘the danger of investigation is sufficiently real,’ according to Navy Times.”
If you liked this post, please share it:
Risk Update

Information Risk: Protective Orders & Inadvertent Disclosure, Client Files & Lateral Lawyers Taking Trade Secrets

Posted on

Boston Firm Gets $1.2M In Trade Secret Dispute With Ex-Attys” —

  • “A Massachusetts law firm specializing in asbestos and toxic tort litigation has won nearly $1.2 million in its suit alleging that several former attorneys stole its trade secrets and started a rival firm, after a state jury returned a verdict in its favor.”
  • “…the jury generally concluded that CMBG3 Law LLC — another Boston-based law firm — and certain accused attorneys had conspired to steal electronic databases from Governo Law, converted files and documents the firm owned, and breached their duty of loyalty by misusing confidential information.”
  • “Governo Law had alleged in its December 2016 complaint that six attorneys stole proprietary databases, information collections and other files after they failed to negotiate a purchase of the assets from David Governo. The attorneys then resigned en masse after David Governo declined a ‘lowball’ offer for the assets, and converted the stolen electronic data to help them start CMBG3, the suit claimed.”
  • “But CMBG3 and the attorneys argued in a pretrial brief that though they had initially hoped to purchase the assets so they could continue operating Governo Law if David Governo retired, they eventually realized that the risk of staying at the firm likely outweighed the benefits of leaving. The attorneys contended that they only took certain files so that they would have access to client materials if necessary once they departed from the firm, saying that they couldn’t ‘risk harm to client interests.'”

Avoiding Inadvertent Disclosures of Privileged Information” —

  • “Difficult privilege issues often arise in litigation, including evaluating whether a party has impliedly waived privilege through its litigation conduct, and the extent to which a party can use a privileged document that has been inadvertently produced. Southern District Judge Nelson Roman and Magistrate Judge Henry Pitman recently addressed two such issues in Barbini v. First Niagara Bank, N.A., 2019 WL 1922041 (April 29, 2019), and In re Keurig Green Mountain Single Serve Coffee Antitrust Litigation, 2019 WL 2003959 (May 7, 2019).”
  • “In Barbini, Judge Roman addressed whether a party had impliedly waived its attorney-client privilege by making statements during discovery that implicated its counsel’s advice. In Keurig, Judge Pitman addressed whether a party to whom an allegedly privileged document was inadvertently produced could refer to the contents of the document for the limited purpose of challenging the claim of privilege. Roman found that a privilege waiver had occurred and Pitman found that the recipient of the allegedly privileged document could refer to its contents in challenging the claim of privilege.”
  • “‘Although a close call,’ Roman concluded that the HR rep’s testimony coupled with the bank’s above-described defense impliedly waived the privilege, as ‘the bank indirectly assert[ed] reliance on [in-house counsel’s] legal advice as a defense to plaintiffs’ employment discrimination claims.'”
  • “In Keurig, defendant inadvertently produced a privileged document to plaintiffs and then clawed it back pursuant to the protective order governing the case. Thereafter, plaintiffs sought to use the contents of the putatively privileged document for the limited purpose of challenging defendant’s assertion of privilege.”
  • “In resolving the parties’ dispute, Judge Pitman observed that in several prior Southern District cases, courts have allowed parties who reviewed inadvertently disclosed documents before they were clawed back to use what they learned prior to claw back to challenge the asserted claim of privilege.”
  • “Against this backdrop, and notwithstanding the tension between the above-quoted sentences in the protective order, Judge Pitman concluded that the protective order permitted plaintiffs to use the contents of the putatively privileged document to challenge defendant’s claim of privilege, ‘to the extent that [plaintiffs] learned of the contents of the document…prior to the… assertion of privilege.'”

Kelley Drye Attys’ ‘Bad Decisions’ Don’t Merit DQ, Judge Says” —

  • “A Florida federal judge on Friday recommended denying a bid to disqualify Kelley Drye & Warren LLP for passing confidential discovery information to its client, calling the firm’s conduct ‘disappointing’ but suggesting in a strongly worded report that it should instead face sanctions and pay the legal fees stemming from the scuffle.”
  • “U.S. Magistrate Judge Thomas B. Smith took the Kelley Drye attorneys to task for the breach, and the firm’s failure to report the breach to the opposing party, Local Access LLC — chiding their ‘sloppiness’ and ‘bad decisions.’ But he ultimately found that there was “no monster under the bed” and that the actions can be solved through sanctions rather than a disqualification.”
  • “Its second violation — the firm’s failure to follow the order’s prohibition against sharing highly confidential information with unauthorized employees — is ‘more problematic,’ Judge Smith said.”
  • “The firm argued that the information in question — call detail records — is inherently not confidential and that Local Access was wrong to label it as such. ‘This argument would have more teeth if Kelley Drye had bothered to open and review the information produced before transmitting it to Peerless,” the judge said. “I don’t know how the lawyers at Kelley Drye could form a reasonable belief that information was mis-designated when they were unaware of the designation in the first place.'”
  • “In a prior but related case, one of the Kelley Drye attorneys had written that ‘playing fast and loose might have worked well for William Shakespeare, but in this court, it should not be tolerated.'”
  • “The third violation — the firm’s failure to promptly disclose its violations and take steps to remedy them — is ‘most troubling,’ the judge said… ‘Kelley Drye had an affirmative duty to promptly disclose what it knew to Local Access and the court and its failure to do so until well over a month had passed from discovery of the violation is an intentional violation of the protective order.'”
If you liked this post, please share it:
Risk Update

Conflicts Waivers: Advanced Waivers and Wiggle Words

Posted on

Future Conflict Waivers – Simultaneous Adverse Representation of Current Clients” —

  • Southern Visions, LLP v. Red Diamond, Inc., 2:18-cv-02039-RDP (N.D. Ala. 2018)
  • “Can a law firm convert a current client into a former client in order to take on a new client adverse to the now former client without falling foul of the “hot potato” rule?”
  • “At the outset of most of these matters, Red Diamond signed an engagement letter which purported to provide consent to Law Firm for the undertaking of future representations of other clients. This consent applied to “any matter that is not substantially related” to Law Firm’s work for Red Diamond, ‘even if the interests of such clients in those other matters are directly adverse’ to Red Diamond, and ‘even if such representations would be simultaneous.’ Law Firm did not advise Red Diamond to seek, and Red Diamond did not retain, independent legal counsel with respect to these advance conflict waivers.”
  • “In 2018, Southern Visions, LLP, a competitor of Red Diamond, filed a patent infringement action against Red Diamond. On December 18, 2018, Southern Visions’ owner contacted Law Firm, seeking to have it represent Southern Visions in the suit against Red Diamond. At that time, certain debt collection matters remained pending in which Law Firm represented Red Diamond. Red Diamond learned Law Firm was considering representing Southern Visions in the suit on December 19, 2018.”
  • “On December 21, 2018, Red Diamond informed Law Firm that Red Diamond did not consider itself to have waived any conflict created by Law Firm’s representation of Southern Visions and, regardless, Red Diamond revoked any alleged consent, effective immediately.”
  • “In granting Red Diamond’s motion to disqualify, the court determined the following: Law Firm represented two clients directly opposed to one another in pending litigation for three days; Red Diamond did not consent to Law Firm’s representation of Southern Visions; and despite the broad language, the advance waivers did not permit Law Firm to undertake the representation of Southern Visions because there was no consent “after consultation” and Red Diamond unequivocally revoked any alleged consent before Law Firm began representing Southern Visions; and Law Firm could not have reasonably believed suing Red Diamond on behalf of its competitor, Southern Visions, would not adversely affect its relationship with Red Diamond.”

While not directed at the legal profession, still relevant and worth noting: “When disclosing conflicts of interest, wiggle words like ‘may’ may not be good enough” —

  • “The Securities and Exchange Commission and journalists have something in common. Both are leery of wiggle words like “may.”
  • “The SEC’s problem with ‘may’ revolves around disclosures of conflicts of interest. If the conflict is there, investment advisers better say so, rather than describing the potential conflict as something that “may” affect their recommendations to clients.”
  • “A case pending in the U.S. Court of Appeals for the D.C. Circuit focuses on this situation. The Robare Group, a registered investment adviser, has appealed an SEC administrative decision to sanction the firm for failing to disclose conflicts connected to a revenue sharing arrangement it had with Fidelity Investments for the sale of certain mutual funds.”
  • “‘[I]t appears many firms used the word ‘may’ in good faith, believing the term was consistent with industry practice and regulatory guidance,’ the law firm Eversheds & Sutherland said in a legal alert on the Robare case. ‘Regardless of how the Circuit Court decides this case, its decision will likely affect how firms draft disclosure documents in the future.'”
If you liked this post, please share it:
Risk Update

Professional Rules: Ethics, Client Confidentiality, Advertising, Fees, Litigation Funding, and the Texas Bar

Posted on

No Fee If Ethics Breach

  • “The claim to disgorge legal fees was reinstated by the New York Appellate Division for the Second Judicial Department: ‘An attorney who violates a disciplinary rule may be discharged for cause and is not entitled to fees for any services rendered” (Jay Dietz & Assoc. of Nassau County, Ltd. v Breslow & Walker, LLP, 153 AD3d 503, 506; see Matter of Montgomery, 272 NY 323, 326; Saint Annes Dev. Co. v Batista, 165 AD3d 997, 998; Doviak v Finkelstein &Partners, LLP, 90 AD3d 696, 699; Quinn v Walsh, 18 AD3d 638; Brill v Friends World Coll., 133 AD2d 729). A cause of action for forfeiture of legal fees based on an attorney’s discharge for cause due to ethical violations may be maintained independent of a cause of action alleging legal malpractice or breach of fiduciary duty, and does not require proof or allegations of damages (see Jay Dietz & Assoc. of Nassau County, Ltd. v Breslow & Walker, LLP, 153 AD3d at 506; Ulico Cas. Co. v Wilson, Elser, Moskowitz, Edelman & Dicker, 56 AD3d 1).'”

As NYC Bar considers ethics of litigation finance, it will keep secret the comments it received from the public” —

  • “The New York City Bar Association won’t be disclosing comments it solicited as it decides whether to modify ethics rules around third-party litigation finance.”
  • “The New York City Bar, one of the nation’s most influential legal associations, is studying how ethics rules and the law treat the fast-growing legal funding industry, which includes loans to plaintiffs and lawyers. Last year, the New York City Bar issued an ethics opinion prohibiting lawyers from borrowing money under contracts in which the return to the lender was a percentage of fees collected in the underlying litigation.”
  • “The bar association said it “will not be revisiting” Ethics Opinion 2018-5 banning fee-splitting with outside firms, but it is “open to exploring potential revisions to the ethics rules and/or legislation.” The comment period for its Litigation Funding Working Group has been extended to July 31. Eric Friedman, a spokesman for the bar association, said it won’t make comments public.”

Second state adopts ABA model rule barring discrimination and harassment by lawyers” —

  • “Maine has adopted an ABA model rule that bars discrimination and harassment by lawyers. Maine is the second state to adopt Rule 8.4(g) of the ABA Model Rules of Professional Conduct, according to Bloomberg Law. Vermont was the first.”
  • “The ABA rule says it is professional misconduct to ‘engage in conduct that the lawyer knows or reasonably should know is harassment or discrimination on the basis of race, sex, religion, national origin, ethnicity, disability, age, sexual orientation, gender identity, marital status or socio-economic status in conduct related to the practice of law.’ The Maine ethics rule does not bar discrimination based on marital and socio-economic status.”

Texas Attorney General sides with lawyers challenging mandatory bar membership” —

  • “In one way or another, all the lawsuits are claiming that the states’ requirement that attorneys join the state bar association is an unconstitutional violation of attorneys’ First Amendment rights to free speech and association. More specifically, they argue that lawyers shouldn’t be forced to subsidize the state bar’s activities through mandatory membership dues if they don’t agree with those activities for ideological or political reasons.”
  • “For example, in the lawsuit in Texas, the plaintiffs are alleging they do not want to be forced to subsidize the state bar’s diversity initiatives, access to justice programs and programs that help prevent deportations, and that promote legislative drafting and advocacy.”
  • “The most recent development on this topic is that Texas Attorney General Ken Paxton has filed an amicus brief that sides with the plaintiffs in the case in Texas. He is the only AG to have taken this step so far in all the states where lawsuits have been filed.”

When Drafting Online Bio, Beware of Client Confidentiality and Advertising Rules” —

  • “Attorneys often use their online bios as a way to highlight their successes. However, attorneys need to balance that interest with their obligation of confidentiality under Rule 1.6 of the ABA Model Rules of Professional Conduct.”
  • “While most attorneys know not to include privileged information in a public publication, such as an online bio, many attorneys are additionally scrubbing their bios of any confidential information unless the client has specifically consented, particularly in light of a 2018 opinion from the ABA Standing Committee on Ethics and Professional Responsibility. In Formal Opinion 480, the ABA noted that ‘[l]awyers who blog or engage in other public commentary may not reveal information relating to a representation, including information contained in a public record, unless authorized by a provision of the Model Rules.'”
  • “Some attorneys may assume that they are free to write about client representations where the representations are a matter of public record. However, relying on Formal Opinion 480, more attorneys and law firms are not including case details or client names on their bios without express client consent. Indeed, may critics have opined that Formal Opinion 480 is not revolutionary but simply confirms the language of Rule 1.6.”
If you liked this post, please share it: