Bressler Risk Blog

“Boies Schiller tripped up in apparent conflict in FirstEnergy derivative suit” —

• “The weirdest shareholder litigation saga I’ve ever encountered has snagged Boies Schiller Flexner in what appears to be a conflicts kerfuffle.”
• “On July 26, David Boies filed an application before U.S. District Judge John Adams of Akron, asking Adams to appoint Boies Schiller to represent shareholders pursuing derivative claims against directors of the Ohio utility FirstEnergy Corp, which has admitted to paying millions of dollars in bribes to Ohio lawmakers in exchange for favorable legislation. In the application, Boies emphasized his firm’s stellar record in complex litigation and pledged that Boies Schiller would expend whatever time and money is needed to hold the company’s officers and board members to account.”
• “What Boies did not mention in the July 26 filing with Adams is that Boies Schiller is actually defending a former FirstEnergy vice president, Eileen Mikkelsen, in parallel derivative litigation before a different Ohio federal judge, U.S. District Judge Algenon Marbley of Columbus.”
• “Boies Schiller, in other words, sought appointment to launch a big new discovery push for shareholders in a case it had already settled on behalf of a defendant.”
• “That is, um, not something you see every day.”
• “Adams said in the Aug. 15 order that one applicant had withdrawn its bid ‘following the discovery of a possible conflict of interest.’ He did not name the possibly conflicted firm, but it was presumably Boies Schiller.”
• “It would have been interesting to see how Bernstein Litowitz, Saxena and Cohen Milstein would have reacted if Boies had been appointed. As veterans of countless lead counsel battles, shareholder firms like these are great at impugning competitors. I can only imagine the sputtering indignation that would have greeted Boies’ appointment as shareholder counsel after the firm signed a global settlement releasing the very claims being investigated.”

“Walmart Gets Plaintiff’s Lawyer Disqualified in Negligence Suit” —

• “Walmart Inc. convinced a federal judge in Wisconsin to disqualify the law firm of a plaintiff suing over a slip and fall at a Walmart store, due to a conflict of interest.”
• “Jennifer Gnaciski sued Walmart and subsidiaries in January, saying their negligence caused the plaintiff to slip and fall at a store in Fond du Lac, Wisconsin. The suit was removed to federal court, and the defendants moved to disqualify Eric L. Andrews of Dunk Law Firm due to his previous employment with MHW Law Group LLP, which represents Walmart in that action.”
• “Judge Pamela Pepper of the US District Court for the Eastern District of Wisconsin granted that disqualification bid on Tuesday, noting that Andrews had been employed with MWH Law Group as recently as December 2021.”
• “The court highlighted the fact that Andrews regularly represented Walmart in slip-and-fall cases, many of them with similar fact patterns as this one.”
• “‘There is a substantial risk that Andrews obtained information about the defendants’ confidential litigation strategies obtained through his representation of the defendants that would materially advance the plaintiff’s position in this case,’ Pepper wrote in the court’s opinion. ‘He has had access to the defendants’ settlement pay ranges, payment thresholds, internal interests and motives and nonpublic information about store operations.'”

“District Court Must Reconsider Legal Mal Suit Against Cozen O’Connor Over $20M Deal, Third Circuit Says” —

• “A Pennsylvania appeals court improperly dismissed a legal malpractice suit against Cozen O’Connor, the U.S. Court of Appeals for the Third Circuit has ruled in a precedential decision that sheds new light on standing principles in shareholder litigation.”
• “Wading into an open question of law, the appellate court ruled Wednesday in Potter v. Cozen O’Connor that the U.S. District Court for the Eastern District of Pennsylvania improperly analyzed and dismissed the case on jurisdictional grounds, when in fact it should have viewed the defendants’ challenge as a merits-related standing issue.”
• “In remanding the case for further review, Judge Cheryl Ann Krause, who wrote the court’s 18-page opinion, drew a distinction between ‘Article III standing and ‘prudential’ standing for shareholders.”
• “The dispute stems from allegations that an alleged conflict of interest by Cozen O’Connor attorneys during a $20 million deal led to significant losses for shareholders of the company that was sold. Specifically, the plaintiff Adam Potter alleged that attorneys Anne Blume and Anne Madonia were involved in the sale, and that, unbeknownst to him and the only other shareholder, Moxie HC LLC, Cozen O’Connor had represented the company called The Institutes LLC, which ended up making the purchase.”
• “Potter further alleged that, when he asked Blume directly if there was a conflict, the lawyer ‘brushed aside the question and continued to provide legal advice.'”
• “However, after the close, the shareholders allegedly learned their company had been sold substantially below market value, and that confidential information Blume learned while working with Potter had been used to aid the purchaser.”
• “Focusing on that discrepancy, Cozen O’Connor sought to dismiss the case, arguing that under the “shareholder standing rule” the shareholders did not have the legal right to bring the corporate entity’s claims in their own names. Potter, however, countered, arguing that Cozen O’Connor was attacking their Article II standing to be in federal court.”
• “Krause said the district court took elements of both arguments, and ultimately determined that, because only the corporate entity suffered the harm, the shareholders lacked Article III standing. On appeal, Krause, who was joined by Judges Kent Jordan and David Porter, looked to whether the shareholder standing rule can actually deprive a party of Article III jurisdiction.”

“Which Top Law Firms are Turning Down Clients on Ethical Grounds?” —

• “Law firms have traditionally been reluctant to draw ethical lines in the sand. The profession prides itself on the premise that everyone is entitled to legal representation. But recent events have forced them to start taking an ethical stance where they might not have previously. Now, research by Law.com International reveals just how seriously they are taking it—and why.”
• “Russia’s invasion of Ukraine sped up a debate that was already starting to take place. Most Big Law firms cut ties with Russian clients because they were “not consistent with our values”. Nevertheless, there is strong evidence of law firms acting for clients that have been strongly censured for their involvement in controversies such as environmental disasters, human rights abuses, contraventions of the rule of law, and forced labour.”
• “But driven by a rising chorus among younger lawyers, an enhanced focus on environmental, social and governance issues, as well as the reputational fallout from acting for certain clients, firms are now increasingly considering other areas where they may want to take an ethical stand, and perhaps even deny counsel. Many have started drawing up more robust ‘ethical’ policies, and, coupled with increasing public scrutiny, this is prompting firms to take a more critical eye to sectors such as gambling and defence, to mandates that could pose a risk to human rights, and child or animal welfare.”
• “Now, a Law.com International survey of more than 30 major law firms finds that many are declining taking instructions for purely ethical reasons. So what types of work are law firms most likely to turn down, and what sectors are being scrutinised by law firm leaders most closely?”
• “However, none of the respondents said they are ruling out entire sectors, nor would they automatically refuse work, but instead assess every mandate on a case-by-case basis. Many respondents stated that they have specific committees, boards and teams dedicated to reviewing and accepting responsible business.”
• “A common understanding among law firms, which are structured in a variety of different ways, is made particularly complex for those with a particularly international network. Dentons highlighted this, claiming that as it has no global headquarters, each jurisdiction has different laws and standards.”

“Fox Rothschild Booted From Athlete Startup Case For Conflict” —

• “A New York federal judge on Tuesday disqualified Fox Rothschild LLP from representing investors in a $1 million fraud lawsuit against a startup, finding that the firm represented the startup’s parent company in a “substantially related” matter and likely had access to relevant privileged information.”
• “U.S. District Judge Lorna G. Schofield granted a disqualification motion filed by startup SportBLX’s parent company GlassBridge Enterprises, noting that Fox Rothschild has conceded that it represented GlassBridge in negotiations about a pension plan and that the work involved looking into GlassBridge’s assets — including SportBLX. That means Fox Rothschild can’t represent named plaintiff Cypress Holdings III LP, according to the order.”
• “‘Cypress’s claims are not limited to discrete issues that can be neatly separated from Fox’s prior representation,’ the judge said.”
• “In its April disqualification bid, GlassBridge said Fox Rothschild represented it ‘before and during the time period at-issue in this litigation on substantially related matters,’ including the company’s directors and officers liability insurance policy. GlassBridge said it paid Fox Rothschild $847,285 in legal fees before the firm ended the representation in early November 2021, two months before Cypress filed its lawsuit, according to a letter filed in Manhattan federal court. The next month, SportBLX founders George Hall and Joseph DePerio asked to join the disqualification bid, telling the court that Fox Rothschild attorneys repeatedly reassured them in emails throughout 2019 that the firm and attorney Marc Gross were not also representing Cypress.”
• “In Tuesday’s order, Judge Schofield noted that the firm’s representations of its work for GlassBridge weren’t inconsistent with GlassBridge’s description of that work. Still, she rejected the firm’s argument that it didn’t possess any privileged information because it was just a conduit of information, calling that argument ‘extremely conclusory with no supporting details or documents.'”

“Technical Conflicts of Interest Are Not the Mayor’s Problem. It’s the Oath.” —

• “As you know, shortly after Eric Johnson took a job as mayor of Dallas, he took another job as an attorney with the Locke Lord law firm. He said he could do both jobs at the same time, no problem, and that he would keep a sharp eye out for any possible conflicts of interest.”
• “Judging by yesterday’s City Council briefing, he is doing just that. When the council went into an ‘executive’ closed-door session to hear from the city attorney about litigation matters, Johnson recused himself and did not go into the session because he said the second item on the list of matters to be considered presented him with a conflict of interest.”
• “The matter in question was a federal lawsuit in which the city is asking a judge to sort out conflicting claims between airlines and the Federal Aviation Administration regarding gates at the city-owned Love Field Airport. In that case, American Airlines is represented by Locke Lord.”
• “The mayor is a smart guy and a well-trained lawyer, and he will know how to keep himself out of legal conflicts in those specific matters. But public finance also is a very small world with a few key players at the top, and it’s an inherently political world, because, well… public.”
• “The really consequential conflicts in Johnson’s dual role will not be technical or even legal. They are more likely to involve social and business relationships than law. And it is those conflicts that point to the core question: Whose man is this anyway?”

I’m issuing “last call” to participate in the BRB Risk Staffing Compensation Survey.

With strong interest and healthy participation, the present summary report shows detail on about 300 staff positions. 

The survey will remain open through the end of this week. Come Monday, we’ll export the data and dig into analysis.

REMEMBER: There’s still time to participate
I’d like to encourage those of you who are or manage risk staff to take the survey. (Remember, the one way assure you’ll receive a copy of the eventual summary report is to participate by contributing your/your team data…)

As I noted previously, some of you have reached out with questions about privacy. Understanding the sensitivities involved, information is being treated with the strictest confidence. And, to be clear, the report will not be identifying firms or individuals.

But if you’re itching to participate but have concerns about privacy, please feel free to drop me a direct note. I’ve worked with a few firms on creative approaches here.

Click here to take the survey!

Not quite yet back attending ILTACON (I hope to attend next year and connect live with many of you), I’ve been following updates from the event virtually, with interest. This article caught my eye: “Firm Turns To Tech To Manage Outside Counsel Guidelines” —

• “As law firms grapple with complicated outside counsel guidelines, some are turning to technology to manage the protocols with increased accuracy and transparency, according to experts.””The 2022 International Legal Technology Association Conference, or ILTACON, hosted a panel discussion on Wednesday featuring law firm leaders and technology providers discussing the struggles with and solutions for effectively managing client outside counsel guidelines, or OCGs.”
• “Mark J. Agin, the senior manager of global new business intake and information management at Shearman & Sterling LLP, described his law firm’s management of OCGs as a ‘journey in progress.'”
• “He said during the panel session that the firm previously did not do a great job of monitoring OCGs, resulting in confusion in the conflict resolution process. Agin said the firm’s conflict attorneys were ‘resolving conflicts one way while not knowing that we have outside counsel guidelines in place’ that may stipulate other obligations that the attorneys were not aware of.”
• “Seeing the problems associated with collecting and understanding client commitments, Agin said the firm recently implemented the risk and compliance platform Terms from the software company Intapp. By using technology, Shearman & Sterling hopes to create a workflow for managing outside client guidelines.”
• “Shearman & Sterling will also use the tool to track updated versions of guidelines, access data on agreements and integrate with other systems such as billing and conflicts. Agin added that the firm will leverage machine learning to review the exact clauses in guidelines. He said that it would be impossible to manage these guidelines without the use of technology.”
• “Scott Springer, a vice president at HBR Consulting, said that the rise of e-billing and specific outside counsel requirements for areas such as diversity, equity and inclusion are making it more difficult to manage these relationships. He added that even though most law firms have a formal process to review and summarize OCGs, many lack the tools to automate the process.”

“Stinson’s Murdock: Tech use, cybersecurity permeate firms’ work (and budgets)” —

• “For an easy gauge of how vital technology has become for law firms, simply look at their spending.”
  “‘The budget for technology certainly has increased over the years to where it’s now one of the top costs that a law firm sees,’ said Allison Murdock, managing partner of Kansas City-based Stinson LLP.”
• “Clients drive some of that expense. Their outside counsel guidelines, engagement letters and requests for proposals set out requirements regarding privacy and security for the technology Stinson uses, Murdock said.”
• “‘So there are a lot of requirements we follow, whether it’s related to the secure transfer and storage of information and only giving privileges to those people who it is necessary to complete the task,’ she said. ‘Those types of requirements from clients really drive our technology budget, as well as having all the resources necessary to efficiently handle matters for our clients, whether that’s matter management, document review, due diligence capabilities or whatever.'”
• “Now that its prevalence shows no signs of diminishing, technology spending is shifting a bit more toward ensuring security and privacy. Law firms must navigate myriad cyber threats, with the danger elevated considering they typically control a lot of sensitive client information.”
• “‘We’ve established a fortified risk assurance program that focuses on mitigation of risk to the business and their clients,’ Murdock said. ‘That includes incident response plans, training to address real-world scenarios and to teach people to identify cyber threats, know who to notify and how to document an incident. We do a lot of cyber awareness training, including random tests such as phishing emails to people in the firm to ensure they’re identifying the threat correctly and reporting it. So in addition to embracing the use of technology, we’re really training and educating people to ensure we’re meeting our firm’s standards and our clients’ standards for risk that come with using so much technology.'”

Finally, looks like ILTA’s tech survey is out. For those like me, who aren’t members of participating law firms (and have to pony up for a copy, alas), this writeup from the Orange Rag included a stat on law firm cloud conflicts adoption that caught my eye:

(This update also highlights the value in participating in these types of industry surveys in order to get the full report…)

Updates for those like me who are intrigued by the evolving conflicts discussion unfolding on this side of the landscape: “Big Four Firms Test Audit Safeguards as Consultancy Booms” —

• “The Big Four accounting firms increasingly rely on consulting and advising to drive their profits and boost partner paychecks, but it comes at a cost.”
• “That resurgence of consulting—now the biggest slice of Big Four revenue—comes packaged with potential conflicts of interest that could threaten what was once their core business: the audit.”
• “US regulators, alarmed that the outsized influence of that advisory work could undermine the job of auditors, are closely monitoring firms’ business deals. Ernst & Young has been exploring a possible split of its operations in part to fend off such ethics crackdowns, including a record $100 million settlement with the Securities and Exchange Commission for ethics violations.”
• “‘What happens when we essentially have a consulting firm who also does audit work—what does that do to say the firm culture?’ said Stephen Rowe, associate accounting professor at the University of Arkansas and a former Big Four auditor. ‘It is problematic and the culture itself could deteriorate to the point where we could see large scale frauds again.'”
• “The Big Four have built up extensive systems to track clients and their affiliates around the world to prevent the sale of restricted services to audit clients. Those systems also track the personal finances of their global workforces to comply with SEC and international ethics requirements.”
• “Managing independence requirements for the firm’s 327,000 staff requires a ‘huge investment but it is an investment worth making, as we believe the multidisciplinary model is the best one to deliver quality audits for our stakeholders and the best experience for our people,’ PwC’s global arm said in a recent statement to Bloomberg Tax.”
• “New ethics rules with new categories of prohibited services could be coming as independence rules also have not kept pace with the market growth or expanding lineup of consulting services the firms offer, he said.”
• “SEC Chairman Gary Gensler said in late July that he wanted the PCAOB to bolster its independence standards and the board has added a project to update its requirements to its rule-writing agenda.”

“Big Four Firms, AICPA Report Lobbying on Federal Contractor Conflicts Bill” —

• “A bill to implement new conflict-of-interest safeguards for federal contracting drew the attention of lobbyists at the AICPA and three Big Four firms in the second quarter of 2022, according to quarterly lobbying disclosures filed with Congress in July.”
• “The main accounting industry trade group, along with Ernst & Young LLP, KPMG LLP, and Deloitte LLP, listed the Preventing Organizational Conflicts of Interest in Federal Acquisition Act on their lobbying activity for the months of April, May, and June.”
• “The bill was at least in part a response to a controversy surrounding management consulting firm McKinsey & Company’s previous overlapping work as a contractor to the Food and Drug Administration (FDA) and as a consultant to opioid manufacturers, prompting an Oversight Committee investigation.”
• “The Preventing Organizational Conflicts of Interest in Federal Acquisition Act would direct the Federal Acquisition Regulatory Council to revise the Federal Acquisition Regulation to, among other things, provide executive agencies with solicitation provisions and contract clauses for avoiding conflicts ‘that require contractors to disclose information relevant to potential organizational conflicts of interest and limit future contracting with respect to potential conflicts of interest with the work to be performed under awarded contracts.’ The bill would also direct executive agencies to update their anti-conflict procedures to implement the changes.”

Deborah A. Winokur, counsel at Cozen O’Connor has an excellent article out which reminds us: “Attys Should Note Judges’ Financial Conflicts Of Interest” —

• “Given these recent developments, what steps should attorneys practicing in the federal courts consider?”
• “First, be proactive in your Rule 7.1 disclosures, so that a judge has a clear understanding of the corporate structure of your client, including its immediate parent, and the ultimate parent corporation. As Judge Erickson wrote in his email to the policymakers, ‘[i]t seems to me that more information rather than less is prudent in today’s environment.'”
• “Second, do not assume that a judge’s order against the party with which the judge has the financial interest removes the risk of prejudice. Centripetal unsuccessfully argued that Judge Morgan should not be disqualified because he ruled against Cisco, thereby demonstrating his impartiality.”
• “But the appeals court found that ‘[w]here a judge becomes aware of a possible appearance of impropriety, there is a substantial risk that he or she might bend over backwards to rule against that party to try to prove that there is no bias.'”
• “Third, remember that use of a blind trust is not the same as a divestment under the Disqualification Statute. Per Subsection (f), if a judge presiding over a matter for a substantial amount of time later learns that either the judge or a member of the judge’s household has a financial interest in a party, the conflict may be cured if the judge divests himself or herself of that interest.”
• “A lawyer relying on a judge’s representation that the conflict has been resolved because the judge put the contested security in a blind trust may find that the judge will be removed on appeal, and any findings or judgment may be remanded and relitigated.”
• “Fourth, run the names of your client and the other parties involved in the litigation through the publicly available databases at the outset, to independently determine if the judge may have a financial conflict of interest. Promptly bring any issues you identify to the attention of the judge and the other litigants.

“Polsinelli Fights Littler TRO Bid In Trade Secrets Case” —

• “Polsinelli PC is fighting back against Littler Mendelson PC’s bid to bar Polsinelli from using 30,000 client files the firm obtained when it poached a Littler attorney last year, calling the request a thinly veiled anti-competitive ploy in the pair’s ongoing feud over home health care business.”
• “In a 32-page brief filed Friday, Polsinelli said that not only are the overwhelming majority of the 30,000 files in question simply routine client files and not trade secrets, as Littler has asserted, but also that Littler knew about Polsinelli’s possession of the documents for more than a year before filing its temporary restraining order request roughly two weeks ago.”
• “Polsinelli said Littler’s motion is clearly aimed at undercutting POSH, or the Polsinelli Online Solution for Homecare, an online document platform similar to a competing product offered by Littler, and which lies at the heart of the two firms’ dispute.”
• “Littler’s recent TRO motion centers on 30,000 client documents that were transferred to Polsinelli after Spinola joined the firm. Polsinelli claims the overwhelming majority of those documents are simply routine client files, but Littler claims Spinola intentionally downloaded Toolkit templates and other sensitive documents and then improperly squirreled them away in his client files.”
• “Polsinelli said it did identify a handful of documents, like a Toolkit subscriber database, that could be considered proprietary information. But Polsinelli said it promptly notified Littler of those documents and vowed not to read or use their contents.”
• “Polsinelli said the fact that it’s been in communication with Littler about those files for more than a year puts the lie to Littler’s claims of impending harm.”

“7th Circuit affirms insurance co. must pay USA Gymnastics ‘reasonable and necessary’ fees incurred from Nassar-related claims” —

• “An insurance company that balked at representing USA Gymnastics against lawsuits stemming from Larry Nassar’s sexual abuse of hundreds of female athletes has failed in its challenge to an order that it pay significant fees to the Indianapolis-based athletic organization.”
• “‘It is undisputed that USAG paid nearly 70 percent of the attorneys’ fees for which it now seeks reimbursement,’ Brennan continued. ‘That is compelling evidence of a market test. This element of the (Thomson Inc. v. Ins. Co. of N. Am., 11 N.E.3d 982 (Ind. Ct. App. 2014)) presumption supports, rather than contradicts, the bankruptcy and district courts’ conclusions that the fees USAG claimed are presumed to be reasonable and necessary.'”
• “Discussing three special circumstances that Liberty argued rendered Thomson inapplicable, the 7th Circuit began with an alleged conflict of interest with USAG’s chief legal officer, C.J. Schneider, who was also an attorney with a law firm that served as outside counsel for USAG.”
• “‘Despite Liberty’s contentions, the governing case law does not hold or suggest that the presumption is inapplicable when there is an apparent conflict of interest,’ it wrote. ‘To the contrary, an insurer’s objections to a policyholder’s selection of defense counsel lose force when the insurer disclaims its duty to defend and turns out to be wrong on the law.'”
• “It also noted that the lower court was aware of Schneider’s dual role and concluded USAG’s practices were nevertheless sufficient to support the Thomson presumption’s application.”
• “It further pointed to the bankruptcy court’s conclusion that the entire amount USAG claimed for Gibson Dunn & Crutcher LLP’s work was reasonable and necessary. That factual finding, the appellate court concluded, posed a ‘high hurdle’ for Liberty in seeking to overturn it.”

“Ex-Boyfriend Of Biglaw Associate Arrested For Insider Trading… Wonder Where He Allegedly Got All That Nonpublic Info?” —

• “Seth Markin, a former FBI trainee, and his friend Brandon Wong were arrested on insider trading charges (there’s also a parallel civil complaint filed by the Securities and Exchange Commission)…”
• “According to the indictment, the pair made ~$1.4 million by improperly trading on nonpublic information, specifically that Pandion was set to be acquired by pharmaceutical company Merck.”
  How’d they come across this insider information? The indictment indicated Markin was dating a Biglaw associate staffed on the M&A deal, and he ‘abused his relationship of trust and confidence’ to gain access to the information.”
• “The law firm associate girlfriend was working from home as she worked on the Merck deal, trusting that Markin would ‘maintain her confidences and keep information she shared with him confidential,’ according to the indictment.”
• “The associate took confidential work calls from her apartment, sometimes on speakerphone, and kept work documents such as binders, notes, and legal pads ‘out in the open in her apartment,’ where Markin sometimes stayed for days at a time, the DOJ said.”
• “‘Because she trusted Seth Markin … she left him alone in her apartment and gave him a key fob to access her building,” the indictment states. ‘[She] trusted that Markin would not look through her confidential work materials, and if he overheard or saw anything confidential, he would keep it secret.'”

“Fla. Firm Fundraiser For Trial Judge Doesn’t Trigger DQ” —

• “A law firm that hosts a fundraiser for judge’s reelection campaign while one of its lawyers is in active litigation in the judge’s court is engaged in ‘ordinary’ election activity, a Florida appeals court ruled Wednesday.”
• “In a ruling backing a Miami judge’s decision not to recuse himself from a real estate dispute, a three-judge Third District panel drew a distinction between ‘limited’ lawyer involvement in judicial campaigns and more extensive activities — as when a lawyer acts as a judge’s campaign treasurer — that might require the judge to step aside.”
• “The December fundraiser for Judge Mark Blumstein, a circuit judge in Miami-Dade County, occurred long before he issued adverse rulings raised by defendants in an April disqualification motion, according to the appellate court. Also, there were no ‘individualized allegations’ regarding the plaintiffs’ counsel in the case, Joshua E. Rasco of Barakat & Bossa in Coral Gables.”
• “In a disqualification motion, they [the plaintiffs] argued that the court’s bias against them had been evident from the outset of the case, including during a deposition scheduling dispute and a remark the judge made intimating that their claim on the funds was improper.”
• “Only later did the couple’s lawyers learn that on the same day, Barakat & Bossa was helping host a fundraiser at a Coral Gables restaurant for Judge Blumstein’s re-election campaign. A flyer attached to the motion lists the firm first among 16 law firm hosts.”
• “The Barakat firm is ‘big on supporting good judges, helping them with their campaigns, and we do fundraisers for a lot of judges,’ he said. Requiring disqualification any time a lawyer from a firm supports a judge’s campaign ‘would defeat the purpose of supporting the judge,’ he [Rasco] said.”

“For Big Law in Florida, Balancing Client Interests and Politics Is Treacherous” —

• “As corporations and asset managers increasingly focus on diversity and ESG, Big Law and its corporate clients face growing challenges in Florida to stay off the governor’s enemy list.”
• “Being canceled by Gov. Ron DeSantis has real consequences, and the governor’s penchant for retribution is causing others to think twice before speaking out. Since DeSantis in April banned core tenants of DEI training at large Florida employers, Florida law firm managing partners with numerous DEI initiatives have declined to discuss the impact of the ban on their own firms’ diversity and inclusion programming.”
• “Requesting anonymity to discuss the chilling effect of the ban, one Miami firm leader said he and his colleagues feared retribution from state government overall—particularly after the Texas legislature’s threats to Sidley Austin.”
• “DeSantis has a history of exerting influence on law firms. Former Holland & Knight partner Sanford Bohrer was instructed to drop a 2020 lawsuit he was preparing to file for a longtime client, the Miami Herald, after the state’s general counsel received Bohrer’s demand letter.”
• “In a recent interview, Bohrer said he doesn’t know whether DeSantis would try to pressure law firms to drop clients larger than his or retaliate against perceived political slights in the way of the Texas legislature. But having felt the influence of Tallahassee from his office in Miami, Bohrer said that any firm that wants to lobby the Florida legislature or represent state agencies will have to make accommodations.”
• “Bohrer had represented the Miami Herald in records lawsuits against Florida state agencies dating back to the 1990s, but the planned April 2020 lawsuit (which demanded that the state produce records on COVID outbreaks at Florida elder care facilities) was the first time he felt the governor’s influence in his practice. After DeSantis’ general counsel placed a call to George Meros, the state’s outside counsel at Holland & Knight, Bohrer was told not to file the lawsuit. “
• “Holland & Knight declined to comment on its relationship with the governor or Bohrer’s statements. At the time, the firm issued a statement citing a possible conflict of interest as the reason for siding with DeSantis, while the governor’s office denied pressuring the firm.”
• “Without knowing how Meros’ ongoing representation of DeSantis (in a lawsuit involving felon voting rights) impacted the firm’s ability to represent the Miami Herald (in a lawsuit about elder care COVID cases), Alfieri said the firm’s simultaneous representation of the newspaper and the state may or may not have presented a concurrent client conflict.”
• “But a sophisticated government client would be reluctant to consent to a law firm’s representation of another client it deems hostile, Alfieri said, adding that such a government client would likely try to avoid disclosing the reason for withholding its consent and opt to leave the decision to its legal counsel.”
• “‘In this way, the law firm withdrawal may be perceived as an ethically dictated result consistent with the rule of law, rather than a politically motivated outcome driven by a partisan calculation,’ Alfieri said. ‘Doubtless, Florida citizens would prefer a less shrewd and a more open and accountable government decision-making process.'”
• “Bohrer, who has since retired from Holland & Knight, said he doesn’t envy the position of managing partners who have to prioritize client relationships based on economics and politics.”

“NJ Atty Booted From Pharma Co.’s Herbal Extract TM Row” —

• “A New Jersey magistrate judge has recommended disqualification of counsel for pharmaceutical company HP Ingredients in its trademark suit against rival Sabinsa over a similarly named herbal extract, finding that HP’s counsel had a prior relationship with Sabinsa that poses a conflict of interest.”
• “U.S. Magistrate Judge Rukhsanah Singh said in a Wednesday order that J. Mark Pohl of Pharmaceutical Patent Attorneys LLC can’t represent HP Ingredients Corp. in its infringement litigation against Sabinsa Corp. over the name for a competing anti-inflammation extract. Judge Singh found Pohl’s previous attorney-client relationship with Sabinsa exposed him to confidential information — including revenue and pricing data — that is relevant to HP’s ‘potential monetary recovery.'”
• “‘Because Pohl received confidential information relating to Sabinsa’s intellectual property, litigation, and pricing strategies, it is not unreasonable to believe that such information can be used against Sabinsa in this matter,’ Judge Singh said.”
• “HP Ingredients filed suit in September 2021 and contended that Sabinsa’s ‘Panicin’ extract — which reduces inflammation while also supporting immune and liver health — infringed HP Ingredients’ brand name trademark on rival extract ‘Paractin.'”
• “But Sabinsa said in a March motion that HP Ingredients’ counsel must be disqualified from the litigation, contending that Pohl was conspiring to infringe on trade secrets that’d he’d become privy to when previously representing Sabinsa for about six months in 2009 and 2010.”

“Non-Disclosure Agreement in a Transactional Negotiation Did Not Create a Fiduciary Relationship or Obligation that Could Be Imputed to an Adversary’s Counsel in Future Actions Related to Infringement or Validity of Patents” —

• “A non-disclosure agreement in a financing transaction did not create a conflict of interest stemming from a fiduciary relationship or obligation for a law firm with respect to a party to that non-disclosure agreement that it did not represent.”
• “Centripetal Networks sued Palo Alto Networks for patent infringement. During the litigation, Centripetal Networks moved to disqualify counsel for Palo Alto Networks, Ropes & Gray LLP, in view of its prior involvement in a potential financing transaction between Centripetal Networks and third-party Silver Point Finance. The negotiations between Centripetal Networks with Silver Point Finance dealt with specialized financing to provide Centripetal Networks with general purpose funds and funds to pay an insurance premium on a policy covering a judgment from a prior patent litigation.”
• “After Centripetal Networks sued Palo Alto Networks for patent infringement, the same Ropes & Gray attorneys that represented Silver Point Financial in the earlier transaction appeared on behalf of Palo Alto Networks. Centripetal Networks requested that Ropes & Gray withdraw, but Ropes & Gray refused.”
• “Centripetal Networks then filed a motion to disqualify counsel alleging that Ropes & Gray’s representation of Palo Alto Networks created a conflict of interest.”
• “In its motion to disqualify Ropes & Gray, Centripetal Networks alleged it was either ‘a former client’ based on an ‘implied attorney-client relationship’ theory under Rules 1.7 and 1.9 or ‘a third person’ to whom the Ropes & Gray attorneys would owe responsibilities under Rule 1.7. Under Virginia law, an attorney-client relationship may be implied from the actions of the parties.”
• “In this case, however, the wording of the NDA made it clear that no attorney-client relationship existed between Centripetal Networks and Ropes & Gray. The NDA specifically referenced Ropes & Gray as Silver Point Finance’s attorneys ‘and not the transaction’s attorneys, the joint venture’s attorneys, or any other term or syntax denoting collective representation.'”
• “Having found no violations of Rules 1.7 and 1.9, there were no conflicts of interest to impute onto Ropes & Gray and the court denied Centripetal Networks’s motion to disqualify.”
• “The wording of an NDA in a transactional financial negotiation is relevant to determining implied attorney-client relationships as well as obligations of outside counsel to parties to the agreement. The same is true for confidential information shared during negotiations.”