Bressler Risk Blog

Samuel Estreicher, professor, and Samual Ball, second-year JD candidate, at New York University School of Law, present an interesting analysis of: “Positional Conflicts Under ABA and New York Rule 1.7” —

• “The NYU Center for Labor and Employment Law is in the process of developing initiatives to help address the gap in access to civil counsel for low- and middle-income New Yorkers, particularly those who are ineligible for services through federally funded legal service providers but who still cannot afford to hire an attorney. Through law firm participation in a program providing pro bono representation short of litigation, workers could receive advice, assistance with negotiation, and other services. In conversations with management-side attorneys, as well as some direct services providers, fear of creating positional conflicts among firms representing companies was a reoccurring theme. We believe that it would be highly unlikely that this type of non-litigation representation could create a positional conflict under either the ABA’s Model Rules or New York’s Rules of Professional Conduct.”
• “In the case of the ABA Model Rules, the prohibition against positional conflicts originates in Model Rule 1.7’s general prohibition of concurrent conflicts of interest: ‘A lawyer shall not represent a client if the representation involves a concurrent conflict of interest. A concurrent conflict of interest exists if: (1) the representation of one client will be directly adverse to another client; or (2) there is a significant risk that the representation of one or more clients will be materially limited by the lawyer’s responsibilities to another client, a former client or a third person or by a personal interest of the lawyer.’ Ann. Mod. Rules Prof. Cond. Section 1.7. The annotation to Model Rule 1.7 describes a positional conflict as ‘when a lawyer’s successful advocacy of a client’s legal position in one case could be detrimental to the interests of a different client in another case.’ Ann. Mod. Rules Prof. Cond. Section 1.7. “
• “The ABA elaborated its stance on positional conflicts in Formal Opinion 93-377, where it was asked to opine on positional conflicts in the litigation context. The ABA Committee on Ethics and Professional Responsibility found that:
  • ‘When a lawyer is asked to advocate a position with respect to a substantive legal issue that is directly contrary to the position being urged by the lawyer (or the lawyer’s firm) on behalf of another client in a different and unrelated pending matter which is being litigated in the same jurisdiction, the lawyer, in the absence of consent by both clients after full disclosure, should refuse to accept the second representation if there is a substantial risk that the lawyer’s advocacy on behalf of one client will create a legal precedent which is likely to materially undercut the legal position being urged on behalf of the other client. If the two matters are not being litigated in the same jurisdiction and there is no substantial risk that either representation will be adversely affect by the other, the lawyer may proceed with both representations.’
• “The Committee emphasized the chance of adverse precedent being created, writing, ‘if the two matters are being litigated in the same jurisdiction, and there is a substantial risk that the law firm’s representation of one client will create a legal precedent, even if not binding, which is likely materially to undercut the legal position being urged on behalf of the other client, the lawyer should either refuse … the second representation or … withdraw, unless both clients consent after full disclosure.'”
• “The Committee concluded that ‘even though there is a significant potential for the representation of one client to be limited by the representation of the other, the lawyer nonetheless reasonably believes that the determination in one case will not have a significant impact on the determination of that issue in the second case and that continuing to handle both matters will not cause her, or her firm, to ‘soft-pedal’ the issue or to alter any arguments that otherwise would have been made, the lawyer may proceed with both representations, provided that both clients consent after full disclosure has been made to them of the potential ramifications (including the possibility that the law firm’s adversary in one case might become aware, and be able to make advantageous use, of the briefs filed by the law firm in the other case).'”
• “Even though litigation is the paradigm for thinking through positional conflicts under the ABA and New York rules, other forms of advice, negotiation, and transactional work are not clearly excluded. ABA Model Rule 1.7 highlights this when casting the issue as one where ‘successful advocacy’ (rather than litigation, or formation of precedent) on behalf of one client is potentially detrimental to another client’s interests.”
• “Turning towards the initiatives envisioned by the NYU Center for Labor and Employment Law, the pro bono work, at the initial stage, would not involve litigation. Participating management-side firms would be involved in screening clients, offering advice, and transactional work, but any litigation would be referred out to plaintiff’s attorneys or other organizations. This eliminates the largest risk of a positional conflict, as mentioned by New York and the ABA, both of which focus on the possibility of adverse precedent: (‘Is the issue one of such importance that its determination is likely to affect the ultimate outcome of at least one of the cases?’ [Formal Op. 93-377]).”
• Nor would giving advice pose an issue of a positional conflict. It would be unlikely that ‘a reasonable lawyer would conclude’ (the standard for New York’s Rule 1.7, 22 N.Y.C.R.R Section 1200.7) that the representation of either a pro bono employee or a billed employer would be materially limited by giving advice on an unrelated employment matter.”
• Positional conflicts can be a major barrier to firms participation in pro bono work involving direct delivery of services, but the barrier is one rooted more in perception rather than legal analysis of ethics rules. As noted by the California Bar’s Standing Committee on Professional Responsibility and Conduct, when broadly defined, positional conflicts are ‘prolific in our adversarial system’ and often unnecessarily diminish ‘the pool of available attorneys.'”
• The California Bar’s Committee found: ‘While the facts here are extreme, to find a conflict employing a test which could be imposed uniformly to ‘issues conflicts’ of all stripes threatens the ability of attorneys to carry out their roles in the legal system. In practice areas like family law and in small communities, the practical problems stemming from such an expansive rule would be insurmountable. Indeed, every time an attorney argues a point of law it is probable that other clients will then or later be adversely affected. In accepting an engagement, would the attorney be required to advise the client and seek consent every time an issue arises where the attorney has taken the other side?'”
• When we examine the risks alongside the current legal standards, we see that concerns about many positional conflicts are conjectural at best, keeping firms from helping broaden access to civil justice for low-income and middle-class people in our community.”

“US judges advised to restrict clerks from seeking political jobs” —

• “Federal judges should restrict their law clerks from seeking employment with political organizations while they are still working for the court system to avoid the risk of compromising the judiciary’s independence, according to new ethical guidance.”
• “The U.S. Judicial Conference’s Committee on Codes of Conduct issued the guidance on Thursday in an election-year update to an advisory opinion on what types of political activities are permissible or prohibited by judicial employees.”
• “The code of conduct for judges already advised them to refrain from political activities, and employees were prohibited under prior guidance from taking part in various activities including belonging to partisan political organizations.”
• The new guidance goes a step further by advising judges to restrict their clerks from seeking post-clerkship jobs with political parties, partisan groups or organizations focused on advocating against candidates or parties in elections.”
• “The revised ethical opinion came as the judiciary has been weighing whether to issue new guidance on the ethical duties judges themselves have in the hiring of law clerks.”

“Fla. Judge Faces DQ Bid Over ‘Hostility’ In Ex-Law Prof’s Case” —

• “A former law professor at Florida A&M University wants the federal judge assigned to her retaliation lawsuit against the university to recuse himself, saying he has shown a ‘pattern of hostility’ toward her in multiple court orders, according to a motion filed Tuesday.”
• “Plaintiff Jennifer Smith argued that U.S. District Judge Paul G. Byron’s orders have created an appearance of bias that would cause anyone to question his impartiality.”
• “‘Specifically, the Court has used inflammatory adjectives and fussbudget phrases consistently in its orders, thereby demonstrating a difficulty, in fact, an inability, of the judge to put ‘his previous views and findings aside,” Smith argued.”
• “Smith is embroiled in a retaliation lawsuit against her former university and argued that Florida A&M paid her almost $25,000 less than a male coworker for performing similar duties when Smith had a decade more of legal experience than he did, according to her complaint.”
• “In her motion Tuesday, Smith pointed to a number of incidents that call for Judge Byron to recuse himself, including that he ‘chided’ her for essentially hoping to require the university to keep her on the payroll until the litigation has concluded despite her alleged inability to do her job. Smith said she told the court that she took her teaching position at a significant pay cut.”
• “Smith also said the court intentionally misrepresented the facts of the case and manufactured its own justification for Smith’s firing independent of the university’s actions.”
• “‘The Court asserted: ‘While Plaintiff contests the student’s version of the encounter leading to her termination, the student’s account — corroborated by five witnesses — resulted in FAMU’s decision to terminate Plaintiff for improper conduct.’ This statement is patently false and unsupported by the record,’ Smith said.”
• “‘While adverse rulings alone do not generally warrant recusal, the tone and language used in these orders suggest a level of hostility that would cause any reasonable observer to question whether the judge can rule impartially in this case,’ Smith said.”

“Ed Burke’s law firm once worked for family of judge who sentenced him to prison” —

• “The family of the judge who sentenced former Ald. Edward M. Burke to two years in prison for strong-arming developers to retain his law firm once hired Burke’s firm to help their company fight City Hall and hold onto a lucrative city deal, a Chicago Sun-Times investigation has found.”
• “Land and Lakes Co., a northwest suburban business owned by the family of Chief U.S. District Judge Virginia Kendall, had filed a lawsuit against the city of Chicago in 1994. It was seeking to stop the city from shutting down its landfill on the Southeast Side for violating a moratorium on expanding or opening new landfills that Burke had helped pass.”
• “As part of the company’s clout-heavy legal team, it hired Burke’s firm, Klafter & Burke, court records show.”
  “There’s no record that the longtime powerhouse Chicago City Council member himself was involved in the civil case.”
• “But court records show his wife, now-retired Illinois Supreme Court Justice Anne Burke, was one of the landfill owners’ lawyers. At the time, she was an attorney in private practice, specializing in child-welfare matters.”
• “Responding through an intermediary, Kendall said she had been unaware until contacted by the Sun-Times that her family had hired Burke’s firm as part of the legal team in their court battle with City Hall in the mid-1990s.”
• “The judge — a former federal prosecutor who was appointed to the judiciary in 2006 and recently was elevated to the post of chief judge — said she has no reason to believe that her family’s hiring of Burke’s law firm would have posed a conflict of interest for which she would have needed to recuse herself from hearing Burke’s corruption case.”
• “But, in response to questions from the Sun-Times, she said she sought an opinion from the general counsel for the Administrative Office of the United States Courts — the administrative arm of the federal court system. She said the opinion she received this month, more than two months after sentencing Burke, was that she would not have needed to step aside from the case.”
• “‘Upon receipt of your inquiry, and out of an abundance of caution, Chief Judge Kendall contacted the Office of General Counsel at the Administrative Office of the U.S. Courts and confirmed with the counsel overseeing the Codes of Conduct Committee that she does not, and did not, have an obligation to recuse from the case because there was no conflict (even if she had been aware, which she was not).'”
• “Bruton’s letter also said Kendall ‘has never been employed by Land & Lakes Company, and she is not a director. Like many children, Chief Judge Kendall chose to pursue an entirely separate career path from her parents. Nevertheless, ever since becoming a Judge, Chief Judge Kendall has listed her parents’ businesses on her recusal list.'”

“Rachel Leviss’ Lawyer Doesn’t See Brother Representing Tom Sandoval as ‘A Conflict of Interest’” —

• “Rachel Leviss’ lawsuit against Tom Sandoval gets more and more complicated by the day. For those who missed the last major update, Tom hired someone very close to Rachel’s lawyer to represent him. Yes, the lawyers each representing the individual Vanderpump Rules stars are brothers. Literal familial brothers.”
• “So, will that affect the case in any way? Will that change anything? Apparently not. Kind of odd how the U.S. legal system just allows this sort of thing to happen. But hear it from Rachel’s attorney, Mark Geragos.”
  On the September 10 episode of Rachel’s podcast, her attorney joined her to clear the air. ‘We … had a situation when Mr. Sandoval hired my brother,’ Geragos said. At Rachel’s request, he explained, ‘Matt is my little brother and Sandoval hired him. I can’t blame him because Matt is a hell of a lawyer.'”
• “As far as why Tom hired Matt, Mark had his suspicions. ‘I think he thought Matt was going to whisper in my ear at Thanksgiving or something. Who knows what he thought?’ Even if Tom hired Matt without any knowledge of the familial relationship, surely, that would be a conflict of interest, no? Well, Mark didn’t seem to think so.”
• “Geragos assured listeners that he couldn’t say with certainty why Tom hired Matt. ‘I have no inside information as to what transpired or how that transpired. I will tell you that for [the people asking] if that is a conflict of interest, if Matt worked with me then yes. It would be a conflict of interest.’ He added, ‘If we were partners in a law firm, it would be a conflict of interest.'”
• “Mark then explained, ‘It’s not like we’re at Christmas dinner saying, ‘Okay, I’ll do this on Rachel’s end, and you do this on Tom’s end.’ It’s not a conflict of interest. It’s an interesting choice.’ An interesting choice indeed.”
• “Vanderpump Rules is streaming on Peacock.”

“Mich. Atty Says Brother’s Email Hack Harming Clients, Firm” —

• “A Michigan attorney has accused his brother of improperly accessing his law firm’s email accounts and confidential discussions with clients, forcing the attorney to step down as name partner of his firm, allegedly after the brothers’ joint cannabis venture failed. “
• “Business law attorney Gregory M. Yatooma said in a Friday motion for a preliminary injunction that his firm, Fleming Yatooma & Borowicz PLC, was forced to remove his name from the firm because his brother, Chris Yatooma, had used confidential legal emails in the brothers’ litigation over the payout of a major judgment and refused to restore Greg’s access to his email, putting confidential client information in jeopardy.”
• “The firm now operates as Fleming & Borowicz PLC, and Greg Yatooma isn’t listed as a partner. The State Bar of Michigan’s website does not list the firm on Greg Yatooma’s page in its lawyer search database.”
• “The illegal access to his email account is harmful to attorney-client relationships and puts in jeopardy the privilege clients expect with their attorneys, Greg Yatooma said. His filing also claims violations of federal and state computer privacy laws, such as the Computer Fraud and Abuse Act and common law invasion of privacy.”
• “‘Greg was forced to cease operating as FYB, and Greg and his partners determined that given Chris’ actions, it would be best to remove the name ‘Yatooma’ … from the firm, so Chris could no longer claim ‘ownership’ of FYB,’ Greg Yatooma said. “
• “Greg Yatooma asked the court to bar his brother and alleged conspirators from using or accessing his law firm email and to order the defendants to return his confidential information and emails. He also asked the court to order the defendants to destroy any copies of emails they have and restore access to his law firm email.”
• “Greg Yatooma and his brother used to operate ‘many businesses’ in Michigan’s legalized cannabis industry, according to Friday’s motion. Greg operated his law firm out of the same office building as the brothers’ joint ventures.”
• “The brothers’ relationship soured in 2022, and Chris Yatooma bought Greg out of their joint businesses, the motion said.”
• “Stopczy, the former IT director of Greg Yatooma’s law firm as well as for the brothers’ joint entities, told Greg he would have ‘exclusive access and control’ over his emails after Greg ended his business relationship with his brother, Greg Yatooma alleged in his Friday motion.”
• “‘That was a lie,’ Greg Yatooma said.”
• “Under Chris Yatooma’s direction, Stopczy instead downloaded 160,000 of Greg’s law firm emails for Chris to use in the brothers’ other litigation, Greg Yatooma alleged. Stopczy also lied about later telling Greg he would delete emails from Chris Yatooma’s server, Greg Yatooma said. Chris Yatooma and his assistant still have access to and read Greg Yatooma’s emails, Greg Yatooma said.”
• “‘This litigation has revealed that defendants are actively reviewing Greg’s FYB email and using the contents thereof to litigate this case and related cases,’ Greg Yatooma said.”

“SEC Expands Insider Trading Case Over Covington Stolen Data” —

• “The SEC is going after another individual over an alleged insider trading scheme related to information stolen from a Covington & Burling attorney’s computer.”
• “The agency on Tuesday said Philip Markin bought Pandion Therapeutics Inc. stock before the biotechnology company was acquired by Merck & Co. in a $1.85 billion deal. Markin allegedly traded on information he received from his cousin, Seth Markin, whose romantic partner was working on the transaction as an associate at Covington.”
• “Philip Markin knew or was reckless in not knowing that the information was material and nonpublic, the Securities and Exchange Commission said in a complaint filed in the US District Court for the Southern District of New York.”
• “The unnamed associate was part of a Covington team that represented Merck in the Pandion deal, which was announced in February 2021. She was working from home during the pandemic and Seth Markin often stayed for multiple days at the attorney’s apartment, according to the complaint.”
• “Seth Markin, a former FBI trainee, misappropriated material nonpublic information about Merck’s planned tender offer for Pandion, the SEC said. He also tipped Philip Markin and several other individuals to the deal, the complaint says.”
• “Covington has not been accused of wrongdoing in the alleged scheme. The firm did not respond to a comment request.”
  “Prosecutors alleged that Seth Markin, in February of 2021, secretly looked through his girlfriend’s confidential work documents and learned that Merck had plans to buy Pandion for approximately three times the value of its share price. He and friend Brandon Wong together allegedly made more than $1.4 million in illegal profits with the stolen information.”
• “Seth Markin’s lawyers argued that he learned of the Merck deal after the associate requested he help her organize materials related to her work at the firm.”
• “Philip Markin has ‘reached a civil settlement with the SEC, and the DOJ has declined to pursue criminal charges,’ his lawyer, Todd Spodek, said via email.”

“Phila. Zantac Plaintiffs Move for Judge to Recuse Over Alleged Conflict” —

• “The plaintiffs in Philadelphia’s mass tort over the antacid Zantac are asking the supervising coordinating judge to recuse himself from the case.”
• “The plaintiffs contend that Judge Joshua Roberts of the Philadelphia Court of Common Pleas has ties to a key drugmaker defendant through his wife’s position at an Am Law 200 law firm representing the company in the national litigation.”
• “‘Although these issues in no way call into question counsels’ belief that this honorable court will expend every effort to always proceed ethically with the intention of ruling without bias, the appearance of impropriety and potential for unconscious bias compel plaintiffs’ counsel to move for recusal in order to protect the interest of plaintiffs in this litigation,’ the plaintiffs said in a motion.”
• “The plaintiffs moved for recusal after Roberts disclosed that his wife, Shannon McClure, is a partner at Reed Smith, which represents Zantac manufacturer GlaxoSmithKline in litigation over the drug.”
• “The law firm has performed Zantac-related legal work for GSK in multiple states, according to the motion. Though Reed Smith’s Zantac work for GSK did not extend to Pennsylvania, the plaintiffs asserted, Reed Smith was involved in the Philadelphia mass tort through its representation of a different pharmaceutical company that is no longer actively part of the case.”
• “Plaintiffs in the Zantac litigation generally allege that the over-the-counter heartburn medication, which the U.S. Food and Drug Administration recalled in 2020, caused various forms of cancer.”
• “The plaintiffs do not allege that McClure, who works in Reed Smith’s global commercial disputes group, is directly involved in the Zantac litigation. However, they argue that McClure’s role at her firm means she—and, by extension, her husband—has a stake in the litigation’s outcome.”
• “Before filing the motion for recusal, plaintiffs counsel sought an ethics opinion from retired U.S. District Chief Judge Lawrence Stengel of the Eastern District of Pennsylvania, now a shareholder at Saxton & Stump. In his review of the matter, Stengel determined that Roberts’ connection to GSK could potentially raise concerns about the appearance of impropriety or bias. He found that Reed Smith appears to derive a significant portion of its business from its pharmaceutical practice and that GSK appears to be an important client for the firm. He also noted that several Reed Smith attorneys regularly author posts, many about Zantac, for a pro-defense blog.”
• “‘While I offer no opinion as to whether Judge Roberts harbors any actual bias in favor of pharmaceutical companies, specifically including GSK, there are many reasons why Judge Roberts’ ability to rule impartially in this case may reasonably be questioned,’ Stengel wrote.”

“Judge Reed O’Connor Seems To Own Too Much Tesla To Rule Against CVS, Just Enough To Rule Against Liberal Fact-Checkers” —

• “Because the Northern District of Texas loves indulging forum shopping to benefit its political fellow travelers, Elon Musk loves bringing cases that have a 1 in 1 shot of being assigned to O’Connor. But sometimes that doesn’t work out! Like the recent case Musk brought against CVS, Unilever, Mars, and — for pretty glaring forum shopping reasons — Orsted. Musk alleged that advertisers who don’t give him money are violating his free speech rights and probably doing the RICO to him.”
• “O’Connor quickly recused himself from the case amidst reporting that he owned a sizable amount of Tesla stock. Which makes sense because, while X (Twitter) is a separate entity, Tesla is a meme stock that ebbs and flows with Musk’s personal brand — having nosedived from heights around $360/share before he launched his X misadventure to the low $200s now.”
• “So a lawsuit involving X’s fight for advertising dollars would likely impact Tesla’s share price were a judge to rule on it. Though O’Connor refused to offer the transparency generally sought by basic tenets of legal ethics. While the federal rules do not require disclosure, that’s supposed to protect judges from divulging embarrassing personal issues as opposed to investments, but that doesn’t stop anyone.”
• “And now we might have some insight into why O’Connor didn’t want to go on the record citing Tesla stock as a specific reason for recusal! Media Matters, the liberal media watchdog that Musk sued in O’Connor’s court, also raised Tesla as an interested party to their case in a roundabout bid that could implicate O’Connor’s investments and get a new judge. Last week O’Connor rejected that request because… reasons.”
  • “‘First, there is no evidence that shows Tesla has a direct financial interest in the outcome of this case. Tesla neither directly nor indirectly holds equity in X, Tesla is not a director or advisor, and it does not participate in the affairs of X. In other words, there is no indication that Tesla has any control over X or any financial ties to X, and Defendants do not claim as much.'”
• “Sure. It’s totally normal for an unrelated entity to lose a third of its value based on what happens with another unrelated entity. There are quantum particles less entangled than Tesla and X, though O’Connor shrugs all this off:”
• “To support this contention, Defendants allege that (1) Tesla’s share price dropped because Musk sold Tesla shares to purchase X; (2) Tesla shares fell in response to Musk’s attack on advertisers; and (3) analysts’ predictions that further losses at X could lead to Musk selling Tesla stock. But these assertions are speculative.”
• “Moreover, O’Connor seems to know it happened because that would be the only plausible excuse for recusing himself in the other case based on Tesla investments. But he didn’t state a reason for that decision, which sure feels like hiding the ball to avoid flagging a conflict in a case amongst a bunch of companies holding no partisan interest for him that could hamstring him in this case where he can find himself hammering liberals.”
• “Maybe this isn’t O’Connor’s rationale. Maybe he really believes his Tesla ownership was not the reason to recuse himself in the advertising case and there’s some other conflict. If O’Connor has some other reason to recuse himself from one case and not the other he is welcome to publicly declare it any time he wants.”
• “Indeed, avoiding the appearance of impropriety in the Media Matters case now demands that he give a clear, defensible, and public explanation for his disparate treatment of the recusal issue.”

“Justice Alito’s Stock Portfolio Stands Apart on US Supreme Court” —

• “Justice Samuel Alito is the only US Supreme Court member with a stake in more than two dozen individual companies, a distinction that threatens to sideline him from major business cases. “
• “Alito or his wife own tens of thousands of dollars of stock in companies including Raytheon Co., ConocoPhillips and a subsidiary of Johnson & Johnson. The holdings may force him to recuse as oil companies challenge lawsuits blaming them for climate change and J&J tries to settle talc lawsuits by placing a subsidiary into bankruptcy.”
• “Alito’s 2023 financial disclosure report was publicly released last week and shows he continues to own stock in over two dozen companies. Supreme Court disclosures extend to financial interests of spouses and dependent children. In Alito’s case, the filings don’t clarify whether the stocks are owned by the justice or his wife.”
• “Supreme Court justices are allowed to hold individual stocks, but ethics rules deem they should disqualify from cases involving the companies. In the past, more justices held shares in individual companies, but that has become rare. Meanwhile, scrutiny of the judicial ethics has increased after revelations that Justice Clarence Thomas, and to a lesser degree Alito, accepted undisclosed gifts and travel from billionaire benefactors. “
• “‘It’s a question not of ethics, but of judgment,’ said Steven Lubet, emeritus professor at Northwestern University Pritzker School of Law, who focuses on legal and judicial ethics. ‘Not everything that’s legal is a good idea.'”
• “Alito has recused from 64 cases involving corporations he owns shares of since 2021, according to Fix the Court, an advocacy group that supports court reform, including judicial term limits. During the last term, he recused from 15 cases due to stock ownership, far outstripping the number of recusals from all of his colleagues, according to the group’s data. Justices are not required to say why they disqualified themselves from a particular case but the tally is based on the publicly available information.”
• “Chief Justice John Roberts, who previously owned stocks in many individual companies, has sold all but two. Justice Stephen Breyer owned a multitude of stocks before he stepped down from the bench in 2022. Most of the current justices own mutual funds, which do not create a conflict under the court’s ethics code unless the the justice is involved in the fund’s management.”
• “As a reliably pro-business vote, Alito and his family’s stock holdings could make a difference in major cases over the coming years.”
• “‘He’s got major holdings in consumer products, oil and gas, aviation, beverages, and chemicals,’ said Gabe Roth, executive director of Fix the Court. ‘These are industries where there’s a ton of lawsuits making their way through the lower courts.'”
• “Alito has already recused from a pending bid by oil companies to quash a lawsuit alleging they contributed to global warming, likely because he owns stock in ConocoPhillips and Phillips 66, two of the companies involved in the suit. The case, Sunoco LP v. City and County of Honolulu, centers on whether state and local governments can sue fossil fuel companies for damages over harmful greenhouse gas emissions.”
• “Alito didn’t take part in June when the court asked the Biden administration for input on whether to take up the case.”
• “Alito’s recusal leaves the oil companies without a friendly face on the court. Alito has been a critic of federal environmental regulations for decades, and he has a long history of siding with the Chamber of Commerce, which filed in support of the oil companies in the climate change case. Alito last term agreed with the Chamber of Commerce in 73% of cases where the business group weighed in, according to the left-leaning Constitutional Accountability Center.”
• “Johnson & Johnson said in July it would ask the high court to revive the company’s plan to use a bankruptcy maneuver to settle tens of thousands of talc cancer lawsuits. In the time since, the company has continued to engage in settlement talks. A J&J spokesperson did not respond to a request for comment.”

I’m taking a moment of our your regularly scheduled risk news to update our risk reader community on the 2024 Risk Staffing Compensation Survey.

You’re all doing great! (But I’d love to do even more.)

Two weeks in, we have 100 participants, sharing data on about 350+ individual risk leadership and staff positions. (This trends well against our aspirational goal of exceeding last year’s metrics: 125 and 515 respectively!)

The ration of participants to data points also suggests more individuals sharing personal details vs managers sharing team data. (So, catch up, managers!)

Here’s a bit of interesting inside survey detail — over the past year, I’ve had close to 100 non-participants ask for the report or a personal benchmark. So if everyone who provided data last year or asked for the results, participate this year, I’ll really have my hands full getting everyone the results and reports.

Remember:

• The survey closes end of September. (If timing’s an issue, reach out!)
• We’re collecting detail on a variety of staff roles, as well as on management/director roles, which have been a popular data point
• Participation open to law firm risk professionals only (US and Canada at this time)
• All responses will be treated confidentially.
  • (And if anyone has questions/concerns preventing them form participating, please do reach out to me directly. In particular, if having an “anonymous” path to participation would get you over the line, let’s talk. Email readers can do that by just replying to this note — it’ll reach me. Others can use the contact form as well.)
• NEW: We’re collecting some qualitative feedback from managers on staffing issues and investments. Looks like several have contributed, thank you!
  • If you want to see those questions and/or the survey questions ahead of time, feel free to reach out and I can help.

You can read more background on the survey via this link.

Or if you’re ready to jump in now, you can access it directly via this one.

Thanks for reading. More risk news and updates on the way!

“Troutman Pepper, Locke Lord Merger Conflicts Rattle Lawyers” —

• “Some Locke Lord affordable housing and energy lawyers may be unable to represent longtime clients after a merger with Troutman Pepper Hamilton Sanders, according to three people familiar with the matter.”
• “At least a trio of lawyers have left Locke Lord, citing such potential challenges post-merger, the people said. The firms in a statement declined to comment on client conflicts and said merger talks are ongoing.”
• “The conflicts snag, common in Big Law tie-ups, shows the complexity of patching together two large operations without having the combined firm represent many clients with adverse interests toward one another. Firms can seek conflict waivers, though clients often hesitate to approve them.”
• “Troutman Pepper in the past two years has represented large financial services companies and affiliated entities, including JP Morgan Chase & Co., Wells Fargo & Co., and Bank of America Corp., the firm disclosed June 20 in an application to represent a client in a bankruptcy case.”
• “Those banks have provided financing to Locke Lord clients for housing development and energy deals, according to press releases by the law firm. The firm represented Tampa Electric Co. in two short-term credit facility transactions with financing from JP Morgan and Bank of America, according to a Locke Lord press release in April 2023.”
• “A Troutman Pepper client, electric and gas company Ameren Illinois, challenged a request by Locke Lord for guidance on wind and solar generating equipment, a 2021 filing with the Federal Energy Regulatory Commission shows. The firm didn’t identify a client in the request.”
  Answering Concerns”
• “Locke Lord told lawyers concerned about losing clients due to the merger that work would be made up through new business from Troutman, according to two people familiar with the matter. Some lawyers found that explanation unsatisfactory, the two people said. They spoke on condition of anonymity to protect relationships at the firm.”

“‘Firms Fear the PR Hit, Not the Sanction’: Big Law on Edge After Simpson Thacher AML Prosecution” —

• “Earlier this week, Simpson Thacher & Bartlett became the latest major law firm to find itself on the sharp end of the Solicitors Regulation Authority’s push to ensure compliance with anti-money laundering rules.”
• “Dentons and Clyde & Co have previously come under the gaze of the SRA’s newfound hawkishness on AML frailties in law firms. But it is the news that the regulator has taken action against one of America’s most prestigious firms that has sent ripples across the wider industry.”]
• “Indeed, according to people at another major U.S.-headquartered law firm in London, the story has been widely discussed and set off fears about their own AML practices.”
• “But people with deep knowledge of the SRA and large law firms say that concerns are not so much for the sanction itself, but rather the bad press the news can generate, the effect it can have on Google search results and, consequently, the perception it creates among prospective clients.”
  Harder Line”
• “To briefly recap, the regulator has alleged that Simpson Thacher ‘failed to have in place fully compliant policies, controls or procedures’ relating to money laundering regulations between June 2017 and January 2023. It has referred the firm to the industry’s Solicitors Disciplinary Tribunal.”
• “One partner at a U.K.-based firm, who has deep knowledge of SRA procedures, suggested that the regulator may be choosing to pursue what it perceives as more ‘watertight’ cases, given the initial failure of its case against Dentons.”
• “The partner believes that firms live in fear of SRA action on AML rules—but not necessarily due to fear of financial penalties. “
• “‘It’s not so much the sanction, it’s the PR hit,’ they said. ‘Some of these firms do a lot of AML work themselves for other organisations. If you google the name of a law firm and ‘AML’, and you see stories about alleged breaches by that firm, rather than the firm’s own AML practice, that’s obviously a concern for management.”
• “‘Therefore any AML failure is bad news, and has the potential to be a problem commercially.'”
• “The news has rattled similarly prestigious U.S. law firms, with people at the London office of another large New York-headquartered law firm expressing concern over the Simpson Thacher news, indicating that many firms will have taken notice.”
• “In a statement following the SRA’s decision on Simpson Thacher earlier this week, a spokesperson from the firm said that the London office was ‘disappointed that the SRA has decided to bring proceedings in the SDT in relation to certain alleged historic AML compliance shortcomings concerning some of our written policies and procedures’, adding that ‘at no point did any money laundering occur nor was there any harm to clients or third parties in connection with the alleged shortcomings’. “

“Troutman Pepper Accused of Inattentive Case Management in $59M Malpractice Suit” —

• “Troutman Pepper Hamilton & Sanders was hit with a malpractice suit Wednesday in New York by a former client, who claims that the firm’s alleged subpar representation, inadequate communications, and a crucial conflict of interest resulted in the client facing a combined $60 million in liability dispersed across two construction cases.”
• “The suit, filed in New York County Supreme Court by Barclay Damon and Rottenstreich Farley Bronstein Fisher Potter Hodas on behalf of client Judlau Contracting, claims that Troutman Pepper and construction litigation partner Frank Cara failed to properly investigate claims against the company and consequently offered ill-informed defenses on its behalf in two cases.”
• “‘Instead of benefiting from [Troutman Pepper and Cara]’s advertised abundance of construction law expertise and litigation acumen, Judlau received a trash basket overflowing with professional incompetence,’ in both underlying suits, the complaint claims.”
• “In the first underlying case, the malpractice complaint asserts, Judlau was facing down a potential class action filed by three of its non-union crossing guards claiming that they were owed ‘prevailing wages’ as a result of performing of union-designated work. Filed in 2017 with the New York Supreme Court and titled Herman v. Judlau Contracting, this underlying case, initially overseen by Judge Andrew Borrok, resulted in a summary judgment ruling against Judlau according to court documents.”
• “‘Judlau does not substantively dispute the plaintiffs’ characterization of their work on the job sites…Instead, Judlau argues that the plaintiffs are not entitled to prevailing wages because any prevailing wage work performed by them was de minimus. The argument fails,’ reads Judge Borrok’s original opinion. ‘Judlau has also offered no defense with respect to its failure to provide the plaintiffs with statutorily required wage notices.'”
• “However, the malpractice complaint alleges, Troutman Pepper and Cara failed to conduct appropriate investigation into the nature of the claims. If they had, the complaint says, the firm ‘would have learned that Judlau never used these non-union workers to perform uncompensated union work.’ “
• “‘Had competent attorneys put any thought into developing Judlau’s defense, they would have explored one or more three separate options,’ ranging from seeking a dismissal or stay while underlying legal issues were addressed by the appropriate administrative agency, to investigating and refuting the facts presented by the plaintiffs, or seeking action against the government project owner, the suit continues. ‘Troutman failed to pursue any one of these available options—and, incredibly, set forth no other viable defense.'”
• “Compounding these elements of alleged malpractice, the overarching malpractice suit claims, is that Cara was serving as outside general counsel and eventually as an executive vice president and general counsel to Iovino Enterprises, one of Judlau’s competitors.”
• “‘Beginning in 2018, Cara served as outside general counsel to Iovino Enterprises. Then, on information and belief, from November 2019 through July 2020—critical periods in both the Herman and SOJV litigations—Cara became Iovino Enterprises’ in-house Executive Vice President and General Counsel while remaining a partner at Troutman,’ the malpractice suit alleges.”
• “‘Incredibly, not only was Cara simultaneously and improperly representing Judlau as a Troutman partner in the Herman and SOJV matters while at the same time serving as Executive Vice President and General Counsel for one of Judlau’s competitors, but during that very time period, Judlau and Iovino Enterprises were directly averse to one another in a contentious arbitration,’ the suit continues. ‘Naturally, these conflicting obligations interfered with Cara’s ability to devote proper time and attention to Judlau and its matters,’ thus resulting in the offloading of work onto inexperienced associates in both underlying matters.”
• “Cara also previously served as Judlau’s general counsel and executive vice president before joining Troutman Pepper, according to profile on the firm’s website.”
• “The malpractice suit accuses Troutman Pepper and Cara of legal malpractice in both underlying cases. It is seeking at least $59 million in damages to cover the verdicts from the two underlying cases and asks that the firm disgorge fees related to those two cases; the complaint further seeks costs, disbursements, pre-judgment interest, and attorney’s fees.”
• “‘While we regret that this lawsuit became necessary, we had no choice but to move forward with this action,’ said Judlau COO Bard Nystrom in a written statement. ‘The courts’ decisions in Herman have had industry-wide effects including multiple lawsuits against other contractors.'”
• “‘We are aware of the complaint and deny the claims. The Friedman Kaplan law firm is representing Troutman Pepper and Mr. Cara in this case. The lawsuit is without merit, and we will present our defenses in court at the appropriate time,’ said a Troutman Pepper spokesperson in an emailed statement.”

“Orrick, Herrington & Sutcliffe LLP Data Breach Litigation: Notice of Class Action Settlement” —

• “A settlement has been proposed (the ‘Settlement’ or ‘Settlement Agreement’) with Orrick, Herrington & Sutcliffe LLP (‘Orrick’) in a class action lawsuit about a security incident impacting Orrick (the ‘Data Breach’). This notice summarizes the proposed Settlement. If you are a Settlement Class Member, there are benefits available to you from the proposed Settlement. The Settlement includes all individuals residing in the United States who were sent notice of the Orrick Data Breach. The easiest way to submit a claim under the Settlement is on this website under File a Claim.”
• “For the precise terms of the settlement agreement, please visit the Case Documents“
• “The Settlement provides payments and other benefits to people who submit valid claims for lost time, certain documented out-of-pocket expenses, and additional credit monitoring services. More specifically, the settlement relief includes:”
  • “Compensation for Lost Time: If you spent time addressing issues relating to the Data Breach, you can make a claim for reimbursement for up to 5 hours of time at a rate of $25.00/hour. To submit a valid claim, you must represent that the time and/or effort spent was incurred as a result of the Data Breach.”
  • “Credit Monitoring: Orrick previously offered 24 months of credit monitoring services with its initial notice of the Data Breach. With this Settlement, you can submit a claim for three additional years of three-bureau credit monitoring services, including $1 million in identity theft insurance.”
  • “Compensation for Out-of-Pocket Expenses: If you have incurred actual, unreimbursed expenses as a result of the Data Breach, you can make a claim for reimbursement for up to $2,500.00. Examples of actual, unreimbursed losses include: (i) costs and expenses spent addressing identity theft or fraud; (ii) preventative costs including purchasing credit monitoring, placing security freezes on credit reports, or requesting copies of credit reports for review; and (iii) other documented losses that were not reimbursed. You must include documentation to support that the out-of-pocket expenses were the result of the Data Breach.”
  • “Compensation for Documented Extraordinary Loss: If you experienced out-of-pocket losses for actual identity theft or fraud and submit documentation to support that such losses are the result of the Data Breach, you can make a claim for up to $7,500.00.”
  • “CCPA Payment: If you are a California resident, you can make a claim for a payment of $150.00 in recognition of your claims under the California Consumer Privacy Act.”
  • “Alternative Cash Payment: In lieu of submitting a claim for lost time, out-of-pocket expenses, or extraordinary loss, you may submit a claim for a $75.00 Alternative Cash Payment.”

“Cyber attacks on law firms jumped by 77% over the past year” —

• “The number of successful cyber attacks against UK law firms rose by 77% in the past year to 954, up from 538 the year before, according to a new study of the threat. Chartered accountants Lubbock Fine said that the wave is driven by criminals seeing law firms as prime targets for ransomware attacks or blackmail. This is due to the sensitive personal and financial information they hold, which hackers can sell on the dark web or threaten to publish on the internet. Earlier this month, a global survey revealed that ransomware attackers have been paid off at least eight times in recent years.”
• “‘The data that law firms hold on behalf of their clients is often highly sensitive – and therefore, valuable if you intend to blackmail a law firm,’ said Lubbock Fine partner Mark Turner. ‘This makes them a very attractive target. Hackers will often demand a blackmail payment from law firms or threaten to post that sensitive data on the internet.'”
• “Ransomware attackers have been paid off at least eight times in recent years”
• “Another tactic is to lock firms out of their own data until a ransom is paid.”
• “Nearly three quarters of the UK’s top 100 law firms have been impacted by cyber-attacks, according to a report by The National Cyber Security Centre.”
• “Turner said that, in the face of such attacks, law firms need stronger cyber defences than most businesses. ‘This might include segregating data across different departments, teams and individual clients,’ he said.”

Retired litigator Marcel Strigberger opines: “Conflicts of interest: Are lawyers held to too high a standard? Let’s talk about baseball.” —

• “Former Blue Jays catcher Danny Janson made major league baseball history this week by being the only major”league player to play for both teams in the same ball game. Yes, you read right.”
• “Janson was up at bat in the second inning against the Boston Red Sox at Fenway Park in Boston back on June 26, 2024, when it started raining and officials decided to suspend the game and resume it on Aug. 26. Meanwhile, Janson got traded to the Red Sox, and on Aug. 26, he was in their lineup playing against his former team. As this game was officially a resumption of the June game, his name was listed on the Jays roster. However, when it came time for him to bat for the Jays, he would have had a bit of difficulty given that he was now wearing a Red Sox uniform. Another Jay, Daulton Varshow, did the official pinch hit for Janson, who now took up his position as the Rex Sox catcher.”
• “As a lawyer, the first thing that jumped into my mind was the issue of conflict of interest. Lawyers have no wiggle room at all in this area.”
• “Is it time for the law to be relaxed somewhat and soften this stringent prohibition? Looking at baseball, I would say the game has many helpful philosophical connotations. It can teach us many lessons. Oodles of baseball expressions have already found their way into the legal vernacular.”
• “Can we allow some conflict of interest in practice? It would certainly be interesting say if a lawyer is a Crown attorney prosecuting a criminal in the earlier stages of the case and this Crown leaves his prosecution job, becomes a defence counsel and meets up with the accused who then retains them to complete the case.”
• “The accused certainly might not have issues with this. Nor might the prosecution. The prosecutors are so busy, do they really care which defence counsel steps up to the plate? And the good thing is the switching lawyer, unlike Danny Janson, come trial time would not even have to get a new uniform. Same robe. Said lawyer would just have to make sure they only complete one counsel slip. Otherwise, they would look like pooh-bah.”
• “Will the system relax the rules a bit? The legal world is a bit conservative. Maybe it’ll think about it for now. Blue sky it. Take a rain check.”

“Revised ethics opinion: Judges should disclose prior prosecutions but assess recusal individually” —

• “A judge is not required to automatically recuse themselves from all cases involving defendants they previously prosecuted. Instead, the judge must assess each case individually to determine if recusal is necessary, taking into account the specific circumstances of the case, according to the [Florida] Judicial Ethics Advisory Committee.”
• “‘Additionally, if a judge is aware of his or her involvement in a prior prosecution, the judge must disclose the relevant facts to the defendant even if the facts do not require automatic recusal,’ the ethics panel said in Opinion Number 2024-12 (Amended).”
• “The amended opinion issued August 27, recedes from the original version issued August 2 that opined that judges must recuse from all cases involving defendants whom the judge previously prosecuted.”
• “‘The test for appearance of impropriety is whether the conduct would create in reasonable minds, with knowledge of all the relevant circumstances that a reasonable inquiry would disclose, a perception that the judge’s ability to carry out judicial responsibilities with integrity, impartiality, and competence is impaired,’ the ethics panel said citing commentary to Canon 2A. ‘Additionally, the Commentary to Canon 3(E)(1) states clearly that, ‘…a judge is disqualified whenever the judge’s impartiality might reasonably be questioned, regardless of whether any of the specific rules in Section 3E(1) apply.'”
• “The panel said the inquiring judge may need to recuse from a case but must evaluate each case individually…The rules require that the inquiring judge disqualify himself or herself where his or her impartiality might reasonably be questioned.”
• “The committee noted that one JEAC member expressed an opposing view and believes that a former prosecution by the judge would always call into question the judge’s impartiality. That committee member prefers the ‘bright line’ position that a judge must recuse from all cases involving a defendant who the judge previously prosecuted.”