Bressler Risk Blog

“Paul Weiss Stays on Google Suit After Surviving Yelp Motion” —

• “The law firm Paul Weiss Rifkind Wharton & Garrison can continue representing Alphabet Inc.‘s Google in the Justice Department’s advertising technology monopoly case against the company, a federal judge ruled.”
• “In a Friday bench ruling in the US District Court for the Eastern District of Virginia, Judge Leonie M. Brinkema denied a motion by Yelp Inc. and the News/Media Alliance trade group to disqualify the firm over previous work it did for the two groups. The motion—based on allegations that Paul Weiss was conflicted between its current work representing Google and prior work for Yelp and NMA—fails to show any real risk of prejudice, Brinkema said.”
• “Friday’s ruling shows the high bar for alleging ethics violations for lawyers from the same firm who may represent opposing sides in similar cases.”
• “‘Under this approach most large law firms would be disqualified from similar matters,’ Brinkema noted on Friday. As a result, there can’t be a finding of prejudice against either Yelp or NMA, she said.”
• “Most states’ ethics rules for lawyers bar them from switching sides in a case without permission from their prior clients. But the situation in the Google case is less straightforward. Paul Weiss had presented Yelp and the News/Media Alliance—a trade group for 200 newspapers in the US and Canada—in prior antitrust work involving the tech giant.”
• “It’s not enough for parties to be ‘potentially’ affected by the outcome of the ad tech case to show that they’re adverse to Google—an important hurdle in the ethics claim, Brinkema said.”
• “Google may not submit any evidence pertaining to the two groups going forward, however. And an attorney who previously represented NMA and Yelp for Paul Weiss and has advised on the Google case can’t be involved in the future, Brinkema said. If any details from the firm’s previous work for NMA and Yelp ‘leak over’ to the attorneys working for Google, the leak must stop immediately and be reported to the court, she said.”

“Houston bankruptcy judge David Jones resigns after misconduct complaint regarding his relationship with an attorney” —

• “A prominent Houston bankruptcy judge resigned Monday amidst allegations he did not disclose a years-long romantic relationship with an attorney whose law firm regularly appeared in his court, even after he was asked to recuse himself from a case over the relationship.”
• “The New Orleans-based appellate court is investigating the allegations and filed a formal misconduct complaint against Jones on Friday, citing multiple potential violations of the code of conduct for federal judges.”
  “The allegations against Jones surfaced in a federal civil rights lawsuit filed against him earlier this month, by a shareholder for a company that had a bankruptcy case in Jones’ court, and stem from his relationship with a former attorney for Jackson Walker LLP. The Texas law firm said in a statement that the attorney in question joined the firm as a partner in 2018 and left in December of last year.”
• “Richman wrote in the formal complaint that the lawyer began living with Jones before 2018 and, although she did not personally appear in Jones’ court after that point or serve as the attorney of record for any cases in his court, she worked on some of those cases and was paid accordingly, with Jones approving those attorney fees. Richman wrote that the fees in question were ‘substantial.'”
• “She also wrote that Jones’ relationship with the attorney was the subject of a motion to recuse the judge from a case involving Jackson Walker, but Jones allegedly did not disclose the relationship to two other judges who subsequently denied the motion for recusal. Jones ended up presiding over the case and approved Jackson Walker’s attorney fees, Richman wrote.”
• “‘There is a reasonable probability that if Judge Jones had disclosed the facts concerning his relationship … the motion to recuse would have been granted,’ Richman wrote.”
• “Jim Wilkinson, a spokesperson for Jackson Walker, said it learned of the attorney’s ‘potential relationship’ with Jones in March 2021 and subsequently instructed her to “stop working and billing on any case that had been assigned to Judge Jones.” Wilkinson said the law firm also sought guidance about the matter from outside ethics counsel. ‘We are confident that we acted responsibly,’ Wilkinson said.”

“California lawyers must report ‘treason’ under newly-signed law” —

• “California Gov. Gavin Newsom has signed into law a bill requiring attorneys to inform the state bar if they suspect other lawyers of treason. Newsom signed Senate Bill 40 into law on Tuesday [October 11]. A spokesperson for the governor said his ‘signature speaks for itself.'”
• “The new rule requires lawyers to inform the bar if they know of attorneys in the state who engaged or conspired to engage in seditious conspiracy, treason, rebellion or insurrection, as defined by federal law.”
• “The rule would not apply to information protected by attorney-client privilege, and it would be considered professional misconduct for a lawyer to use the provision to harass others.”
• “Senate Bill 40 also places more legislative oversight on the State Bar. The California Senate will now have to sign off on the appointment of the State Bar of California’s executive director and general counsel.”
• “In August the California Supreme Court began requiring lawyers to report fraud, misappropriation of funds and other criminal acts or conduct that raise ‘a substantial question’ about another lawyer’s ‘honesty, trustworthiness, or fitness as a lawyer.'”

“Holding Client Money Could Face Increased Regulatory Scrutiny” —

• “Law firms holding client money could come under increased scrutiny from U.K. regulator the Solicitors Regulation Authority given the cash that could now be earned from higher interest rates, one lawyer has warned.”
• “With the base interest rate in the U.K. rising from 0.1% in 2021 to 5.25% as of August 2023, law firms handling any client money could be set to earn substantial sums of interest. If they don’t account for that to clients in a ‘fair manner’, they could be likely to face increased scrutiny from the SRA, according to RPC partner Graham Reid.”
• “As it stands, firms are bound by the SRA to pay a ‘fair’ sum of interest on client funds, meaning that they don’t have to pay the full value of interest earned. But, with some law firms paying out less than 1% of interest on client accounts, the extra may be significantly boosting profits, says Reid.”
• “Reid continued: ‘With new enhanced powers to fine firms and a vigorous approach to rule enforcement, the SRA can be expected to take a very dim view of those that do not pay fair interest and thereby cause client detriment. The key messages are: Is it fair? Is it properly explained? Can you fully justify your decision-making to the regulator?'”
• “In recent years, handling client payments has become rarer and rarer for law firms. Last year, Travers Smith managing partner Edmund Reed explained that the service had been ‘going out of fashion’ for many years, with the pandemic accelerating the move away from client accounts.”

“Legal profession proactively mitigating money laundering risks” —

• “A new report released today shows the Australian legal profession is proactively working to mitigate the risk of being a party to money laundering and that where vulnerabilities exist, those not already being addressed can be addressed through augmentation of existing controls to which the profession is already subject.”
• “‘The Government is currently considering how best to achieve the existing anti money laundering and terrorism financing (AML/CTF) regime objectives in relation to the legal profession,’ Law Council of Australia President, Mr Luke Murphy said.”
• “‘The Law Council has always believed that due to the strict rules and regulations under which the Australian profession operates, the potential for lawyers being used to facilitate AML/CTF is small. To test the validity of that belief, we engaged Russ + Associates to undertake an independent review of the profession’s vulnerability to being an unwitting party to money laundering and terrorism financing. Russ + Associates is a specialist tax and AML law practice who are recognised experts in AML/CTF advice.'”
• “‘To our knowledge, the examination of vulnerabilities Russ + Associates were engaged to undertake is a world first. We believe this highlights the commitment the Australian legal profession brings to understanding and minimising AML/CTF risks and provides a strong evidence base upon which effective decisions and changes can be made.'”
• “‘What the report found is that beyond the regulations and professional requirements lawyers are subject to, they have taken additional steps to reduce risks. These include limited receipt of cash, particularly when it comes to funds from overseas, not holding assets for clients, and ensuring they meet all reporting obligations.'”
• “‘That is not to say that no vulnerabilities exist, and we thank the firms who participated in this study for being frank about the risks they have identified in their practices.'”
• “Vulnerabilities identified included lawyers not routinely making enquiries about a client’s source of wealth and difficulty in confirming the provenance of funds, with differences in risk between jurisdictions.”
• “‘The report highlights the positive attitudes and behaviours among the legal profession towards integrity, risk awareness and aversion, and to fulfilling statutory and professional obligations. It shows vulnerabilities are present, but they can be managed through augmentation of existing controls.'”

“Cautionary tale: Defrauded law firm loses insurance suit” —

• “A Boston law firm’s business policy did not cover losses stemming from its processing of a fake cashier’s check that it received from a “new client” who had retained the firm under a false identity, a U.S. District Court judge has ruled in dismissing a lawsuit against the insurance carrier.”
• “Wells Fargo notified Brooks & DeRensis on Nov. 4, 2021, that the bank had dishonored a cashier’s check for nearly $90,000 that the law firm had deposited into its IOLTA account just days earlier.”
• “The firm had accepted the check as settlement of an employment matter brought by a new client claiming to be ‘Brian Rodriguez.’ The firm promptly wired $88,385 of the deposited amount to the bank account of the client, but it turned out later that the ‘client’ was using a false identity.”
• “‘Taking the factual allegations in the complaint as true, B&D received a forged cashier’s check from a third-party purporting to be Rodriguez’s employer,’ Casper wrote. ‘As a cashier’s check, it was purportedly made or drawn by and drawn upon Wells Fargo, N.A. B&D was the payee or the bearer in this circumstance, not the maker, drawer or drawee.'”
• “While Casper found coverage existed under an endorsement providing ‘Counterfeit Currency and Money Orders Coverage,’ the judge went on to conclude the insurance contract’s ‘false pretenses’ exclusion applied. ‘This exclusion addresses a scenario where the insured willingly transfers funds to a third-party based on some false representation or receipt of a false check,’ Casper wrote.”
• “Nina E. Kallen, an insurance coverage litigator in Roslindale, said she has had colleagues who have been taken in by similar scams. That includes lawyers who thought they were taking adequate precautions.”

“Many Businesses Blindsided by New Anti-Money-Laundering Law” —

• “A new law aimed at ending the United States’ notorious reputation as a haven for ‘shell’ companies created to obscure crimes will require tens of millions of businesses to report ownership information for the first time, starting Jan. 1.”
• “But there’s a big problem, according to a newly released survey: Awareness among businesses that will have to comply, and even advisers such as certified public accountants and lawyers, is extremely low, raising the specter that business owners will be hammered with hefty fines, potentially even prison time.”
• “The information services company Wolters Kluwer surveyed 700 business, half of which will have to comply with the law. Of that half, 74% were oblivious to it.”
• “The requirements will apply to 32.6 million businesses, including the vast majority of private businesses and many small businesses. Generally excluded are heavily regulated businesses and large operating companies. (Find details on who must comply here.)”
• “Aronowitz said many businesses may not be able to count on their professional advisers to assist. In the Wolters Kluwers survey, just 54% of law firms and CPAs were aware of the CTA.”

The ABA notes: “The Corporate Transparency Act: Deniers Beware” —

• “The Corporate Transparency Act (“CTA”), effective January 1, 2024, requires certain businesses to report certain information to the Financial Crimes Enforcement Network for persons with “substantial control” over the business or 25 percent or more of the equity in the business.”
• “The CTA’s intent is to end the position of the U.S. as a haven for “shell” companies used in the commission of certain crimes. There are steep, escalating fines and possible jail time for noncompliance with the CTA’s requirements.”
• “Many people are CTA deniers, saying they’ve never heard of it, it doesn’t apply to small businesses, their lobby wouldn’t allow it, it can’t be constitutional, they won’t report, they’ll just pay the fine, or fiduciary duties are not implicated.”
• “Whether you like it, hate it, or are indifferent, the CTA has been thoroughly vetted and is here to stay. Compliance is both mandatory and advisable.”
• “The CTA marks a seismic shift in the legal landscape for businesses operating in the United States. Prior to the CTA, entity beneficial owner disclosure was solely (if at all) the purview of state or tribal law. Now it is a focus and purview of federal law enforcement agencies.”
• “Many professional advisers and business professionals have been caught off guard by this fundamental change in business entity law, now taking on a federal facet for the first time. Those that are aware have, by and large, taken a wait-and-see approach to either advising their clients and business associates or evaluating their own compliance profile. This is because much of the mechanics of compliance remains elusive. The ability for businesses to begin directly interfacing with FinCEN on filing and compliance continues to be in the future, giving those persons “in the know” little to offer as current action items—causing many to defer sounding the alarm bell until more is known from FinCEN. However, the wait must end, as there is limited and dwindling time remaining to take action before the window of opportunity closes at the end of 2023.”

“Law firm Paul Weiss fights to remain on Google’s ad tech antitrust defense” —

• “Law firm Paul, Weiss, Rifkind, Wharton & Garrison has asked a U.S. judge to deny a bid from Yelp (YELP.N) and another former client to bar the law firm from representing Alphabet’s Google (GOOGL.O) in litigation over its digital advertising business practices.”
• “Attorneys for Paul Weiss in a filing in Alexandria, Virginia, federal court accused Yelp and News/Media Alliance on Friday of ‘gamesmanship’ in their effort to disqualify the firm from serving as Google’s lead defense counsel.”
• “The U.S. Justice Department and a group of states sued Google in January. Yelp and the news media coalition are not parties, but they claimed in a filing that Paul Weiss was ‘switching sides’ to represent Google on matters that the firm had once counseled them on.”
• “Paul Weiss’s lawyers at Wilmer Cutler Pickering Hale and Dorr denied that the Justice Department’s case was ‘substantially related’ to any of the work that the firm provided to Yelp and the news alliance.”
• “In its filing, Paul Weiss said it has provided no legal work to Yelp or the news alliance since late 2020. The two clients left the firm then when their former Paul Weiss attorneys, Jonathan Kanter and Brandon Kressin, departed and opened a boutique law firm.”
• “The disqualification of Paul Weiss ‘at this late date would cause severe prejudice to Google,’ WilmerHale attorneys told the court. Paul Weiss said it has spent more than 10,000 hours so far on Google’s defense.”
• “Google tried unsuccessfully in September to force Kanter off the ad tech case, based on his prior work in private practice for critics of Google.”

“New Disclosure Site Slow to Post Judicial Stock Trading Reports” —

• “Delays in posting stock transactions and other financial disclosures by US judges to a new database are limiting the utility of a tool designed to improve public transparency of the court system, watchdogs said.”
• “The most recent mandatory securities transaction report available was submitted by a judge in April, according to an analysis by the nonpartisan judicial watchdog Fix the Court and a review of postings through Oct. 9 by Bloomberg Law.”
• “Annual disclosures are due to be published within 90 days of submission, while interim reports must be filed within 45 days of the transaction, under a law that took effect last year.”
• “The information is coming in, but the judiciary’s administrative arm tasked with operating the searchable database has struggled to process and post the annual and periodic disclosures by an estimated 2,500 judges. Things are moving far more slowly than a similar database maintained by Congress.”
• “A backlogged database ‘defeats the purpose of transparency’ as financial interest information ‘loses relevance’ the more time has passed, said Kedric Payne, senior director of ethics at the Campaign Legal Center and former deputy chief counsel of the Office of Congressional Ethics.”
• “The Courthouse Ethics and Transparency Act (P.L. 117-125), signed into law in May 2022, required the judiciary to establish an online database of publicly accessible financial disclosures submitted by life-tenured judges, including Supreme Court justices, as well as bankruptcy and magistrate judges. The law also made those judges subject to a 2012 law requiring federal officials to disclose periodic securities transactions worth more than $1,000 (PL-112-105).”
• “Sen. John Cornyn (R-Texas), a member of the Judiciary Committee and sponsor of the bill, said after passage that the measure ‘will help bring potential conflicts of interest to light and bolster public trust in our judicial system.'”

“Ex-ArentFox client claims law firm secretly prepared to sue it on rival’s behalf” —

• “A government contractor has sued its former counsel at U.S. law firm ArentFox Schiff, alleging the firm failed to disclose that it was preparing a lawsuit against it on behalf of one of the contractor’s business rivals.”
• “Peraton, a contractor owned by private-equity firm Veritas Capital, alleged that ArentFox secretly fed information about it to CACI International, another ArentFox client. ArentFox used that information to help prepare a lawsuit against Peraton on behalf of CACI, Peraton alleged.”
• “The law firm shot back against Peraton’s claims in a statement, saying the government contractor ‘knowingly consented to the firm pursuing litigation against it.'”
• “It added, ‘Peraton is a sophisticated company whose own general counsel signed the consent on its behalf.'”
• “ArentFox and Brand represented Peraton in licensing and sponsorship deals, netting the firm nearly $500,000 fees. Meanwhile, ArentFox was representing CACI in a trade secrets lawsuit in Virginia state court against two of CACI’s former employees, the Peraton lawsuit alleged.”
• “Peraton alleged that ArentFox came to it with a conflict waiver under the pretense that the law firm was being served with a subpoena.”
• “‘Had Peraton known that Arent Fox wanted permission to investigate legal claims against Peraton, sue Peraton, disclose its confidential information to CACI, or participate in a government inquiry against Peraton, then Peraton never would have consented to such a waiver,’ the lawsuit said.”
• “Peraton signed off on the waiver in July 2022 and obtained a protective order that would limit the disclosure of its sensitive business information to ArentFox lawyers, not CACI. The lawsuit alleged that ArentFox had the order modified so that a pair of CACI executives could see the information from Peraton. ArentFox in its statement said it ‘certainly did not misuse any confidential Peraton information.'”

Follow up on this story: “Opioid Special Master Who Hit ‘Reply All’ Protected by Judicial Deliberative Privilege, Judge Rules” —

• “A federal judge, invoking a judicial privilege to freely deliberate on matters, refused to disqualify the special master in the opioid multidistrict litigation.”
• “In a Tuesday order, U.S. District Judge Dan Polster rejected a motion filed last month by two pharmacy benefit managers to disqualify David Cohen after the special master inadvertently sent an email to lawyers in the case. Cohen, who meant to send the email to himself, has been a special master in the opioid multidistrict litigation since 2018.”
• “Polster sided with the plaintiffs’ executive committee in concluding that the email falls under the judicial deliberative privilege, which protects confidential communications among judges and their staff.”
• “‘Special Master Cohen’s email, which consisted entirely of his own mental impressions, personal notes, and private musings about the submitted status reports, was unquestionably a privileged judicial deliberative memorandum to himself,’ Polster, who sits in the Northern District of Ohio, ruled.”
• “He added, ‘For the judicial system to function, judges must view the arguments presented to them with an appropriate degree of skepticism. If judges were subject to accusations of bias and potential disqualification based solely on private, skeptical thought about a party’s position, there could be no judges.'”
• “Polster questioned the motivations behind the disqualification motion, in which the pharmacy benefit managers ‘repeatedly and misleadingly attempt to convert the Special Master’s private thoughts into public comments.’ Such actions, he wrote, did not follow the standards of professional conduct outlined in his protective order.”
• “In a footnote, he added: ‘The court also notes that, were the email from opposing counsel rather than the Special Master, and the PBMs responded that not only would they not allow counsel to claw back their inadvertent disclosure but intended to use it to attempt to gain some tactical advantage in litigation, such conduct could be the subject of a motion for sanctions.'”

“Citing Conflicts as Merger Looms, Former SDNY Judge Leaves Stroock for Boies Schiller” —

• “While Stroock & Stroock & Lavan plots a potential merger with Pillsbury Winthrop Shaw Pittman, a former New York federal judge of 22 years isn’t hanging around to find out how the tie-up might affect her practice.”
• “Boies Schiller Flexner on Friday morning announced the hiring of former U.S. District Court Judge Shira Scheindlin, who arrives at the firm’s New York office as of counsel after seven years at Stroock.”
• “Since moving to private practice, Scheindlin has practiced as a neutral in mediations and arbitrations as well as a court-appointed special master, mock trial and appellate judge, and expert witness.”
• “In an interview, Scheindlin said she had been ‘very happy’ at Stroock, but was already having to decline nearly a third of incoming inquiries due to conflicts with the Big Law firm’s numerous institutional clients. “I know their intention is to merge with a bigger firm, so that would just increase the number of institutional clients and the number of conflicts, which would not be good for me,” she said.”
• “In contrast, Boies Schiller’s exclusive focus on litigation presented fewer conflicts and an opportunity to contribute to investigations, mock trial work and criminal defense work, Scheindlin said. ‘It was an opportunity that couldn’t be missed,’ said Scheindlin. ‘That means this is the right firm for me at the right time.'”
• ‘The pandemic has only accelerated the growth of alternative dispute resolution, Scheindlin said. ‘Parties often put arbitration clauses in their agreements, in those clauses they have to mediate before they arbitrate,’ she said. ‘I know it’s an expanding field at all times, especially in the commercial context, and I do mostly commercial arbitrations and mediations.'”

“US SEC sues auditor Prager Metis over alleged independence violations” —

• “The U.S. Securities and Exchange Commission on Friday sued accounting firm Prager Metis for alleged auditor independence violations related to a template it used when signing on clients.”
• “Between December 2017 and October 2020, Prager Metis improperly added indemnification provisions to engagement letters to clients for more than 200 audits and other work, the SEC said. This prevented the firm from having the independence required by law, it said.”
• “‘These allegations arise solely from template indemnification language used several years ago that was never enforced or sought to be enforced, and the SEC does not allege this language affected the quality of our audits,’ the [Prager] statement said. ‘Prager takes its independence obligations seriously.'”
• “Prager Metis continued to sign engagement letters with those provisions even after firm staff were aware of the issue, the SEC said.”
• “Prager Metis was one of the auditors for the FTX Group, according to a court filing. The SEC’s allegations do not relate to the FTX matter”

“Judge Boosts Damages, Sanctions Quinn Emanuel In Patent Case” —

• “NortonLifeLock Inc. must pay Columbia University $481 million and cover some of the university’s attorneys’ fees after a Virginia federal judge more than doubled a jury’s award for patent infringement damages and held in civil contempt Norton’s lawyers at Quinn Emanuel Urquhart & Sullivan LLP.”
• “Judge M. Hannah Lauck of the US District Court for the Eastern District of Virginia ordered the attorneys’ fees as a sanction after the law firm allegedly failed to follow her order regarding a perceived conflict of interest in the firm’s representation of both Norton and a key witness.”
• “Lauck sealed opinions explaining her orders until Oct. 12 to give both sides a chance to redact confidential information. She also gave them 30 days to reach a stipulation on the attorneys’ fees award.”
• “In May 2022, a jury determined that NortonLifeLock—formerly known as Symantec Corp. and currently doing business as Gen Digital Inc.—willfully infringed patented technology involving computer security and intrusion detection software developed by researchers at Columbia University in New York City.”
• “Before trial, Lauck ordered Quinn Emanuel to provide written descriptions of information it obtained from French researcher Marc Dacier, a former top Symantec executive, during the time the law firm represented both Dacier and Norton from 2017 through 2020, according to court documents.”
• “In court filings, the lawyers explained they arranged for Dacier to give a deposition in Europe that wouldn’t have otherwise taken place because he’d already left the company. But Norton and its lawyers stressed they didn’t control Dacier, who they claimed was unwilling to travel from his current home in Saudi Arabia to testify at the US trial.”
• “Quinn Emanuel initially cited attorney-client privilege in refusing to comply with Lauck’s order to disclose Dacier’s communications. But the firm subsequently provided a summary of information Dacier shared, and jurors were shown Dacier’s videotaped deposition.”
• “Columbia accused Norton and Quinn Emanuel of preventing Dacier from testifying live and lying that he was ‘unavailable,’ arguing they knew his views hurt Norton’s case, according to a filing by the university. Lauck agreed and called Quinn Emanuel’s simultaneous representation of Norton and a key adverse witness an ‘appalling’ conflict of interest, according to court records. She gave jurors a ‘missing witness’ instruction, which let them assume Dacier’s testimony would’ve harmed Norton’s defense.”
• “‘Quinn Emanuel respectfully disagrees with the district court’s finding and will be making our legal response in due course,’ the firm said in a statement.”

“Rio Vista council rejects city law firm representing Flannery Associates” —

• “Rio Vista’s [California] City Council voted against consenting to the law firm who represents the city also working for Flannery Associates LLC, the company buying thousands of acres of land in Solano County to build a new city.”
• “The decision comes after the law firm Kronick, Moskovitz, Tiedemann and Girard has worked with the city for a decade, but asked city leaders to also work with Flannery Associates to help arrange and document the water supply for the project.”
• “The controversial group secretly bought up over 50,000 acres of land since 2017 to build a new city in Solano County. The land is mostly in and around Rio Vista and Travis Air Force Base, making Flannery Associates the largest land owner in the county.”
• “Rio Vista residents opposed any sort of arrangements because of the conflict of interest, and not seeing any benefit of giving Flannery Associates influence over the local water supply.”
• “A representative with a law firm says they brought this to city leaders because of conflict of interest in the future. But added this would be a benefit for the city as they have a familiar face to work with when speaking with Flannery Associates.”

For more general background on this one, see: “Who is behind Flannery Associates, the mystery California land buyers?“

“Former lawyer cannot represent his wife in personal injury case, says NS Supreme Court” —

• “The Nova Scotia Supreme Court has refused to allow a former barrister to represent his wife in a personal injury lawsuit.”
• “The defendant in the action, Fenwick Holdings Limited, motioned to remove William as Margaret’s representative. Fenwick argued that William was in a conflict of interest and could not represent Margaret. Fenwick also asserted that as William is the plaintiff’s husband, he has a financial interest in the outcome of the litigation. He was also a fact witness to the plaintiff’s fall, and consequently, he will have made observations relevant to the plaintiff’s damages claim. Fenwick argued that a lawyer cannot be a witness and counsel in the same proceeding.”
• “The plaintiff, Margaret, argued that William was representing her in a personal or private capacity. She contended that discharging him would deprive her of her choice of counsel and would impose time and monetary penalties on her. She argued that it would be difficult and counterproductive to represent her claim without William’s legal training and that hiring outside counsel would be expensive.”
• “The Nova Scotia Supreme Court ultimately ruled that William failed to meet the statutory requirements to be eligible to practise law in the province. The court noted that he resigned from the Society in 2010 and has not been a member since. The court pointed out that even if he was not acting for a fee, he stood to receive indirect compensation, considering that the plaintiff is his wife and any monetary award she might receive would be of joint benefit.”
• “The court further explained that the relationship between William and the plaintiff may give rise to a conflict of interest based on s. 34 of the Code of Conduct, which requires lawyers to avoid conflicts of interest. The Society noted that a conflict may arise when ‘A lawyer has a sexual or close personal relationship with a client. Such a relationship may conflict with the lawyer’s duty to provide objective, disinterested professional advice to the client.'”
• “In addition to the potential conflict based on his relationship with the plaintiff, the court found that Jodan was potentially in a conflict based on his connection to the substantive issues at trial. The court explained that Jordan had recorded observations about the impact of the plaintiff’s injuries on many aspects of her health. He had sworn to those observations in an affidavit and recorded extensive detailed observations in a ‘pain diary.’ The court emphasized the common law prohibition against allowing a lawyer to appear as a witness while acting as counsel.”

“The Lawyers Sam Bankman-Fried Once Trusted Are Drawing Criticism” —

• “Mr. Bankman-Fried and his allies have blasted Sullivan & Cromwell, the New York law firm managing FTX’s bankruptcy, for its tangled relationship with the crypto exchange.”
• “Just before FTX collapsed in November, one of its outside lawyers at the law firm Sullivan & Cromwell emailed a colleague at another firm, insisting that the cryptocurrency exchange’s finances were stable.”
• “Four days later, FTX filed for bankruptcy. Mr. Dietderich quickly arranged for Sam Bankman-Fried, the exchange’s founder, to step down so that a new chief executive, John Jay Ray III, a specialist in corporate turnarounds, could lead the company. When Mr. Ray needed lawyers to manage the bankruptcy, a lucrative assignment, he asked a judge to appoint the same ones who had helped get him the job: Sullivan & Cromwell.”
• “Now, with Mr. Bankman-Fried set to go on trial next month on fraud charges stemming from FTX’s failure, Sullivan & Cromwell’s tangled history with the exchange is drawing scrutiny — especially from Mr. Bankman-Fried’s lawyers and family.”
• “For months, Mr. Bankman-Fried has attacked Sullivan & Cromwell in court papers and on social media, arguing that the firm’s lawyers set him up as the fall guy for FTX’s implosion while downplaying their own involvement with the exchange. The dispute became even more personal this week when FTX sued Mr. Bankman-Fried’s parents, seeking to claw back millions of dollars and claiming the exchange had operated like a ‘family business.'”
• “A spokesman for FTX said Mr. Bankman-Fried’s claims were ‘a biased story line’ intended to unfairly blame the professionals trying to recover money. A representative for Sullivan & Cromwell declined to comment. In court, the law firm has said that FTX was never a ‘regular client,’ and that the firm had put in place procedures to guard against conflicts of interest during the bankruptcy.”
• “In January, the U.S. trustee assigned to FTX’s bankruptcy raised the prospect of removing Sullivan & Cromwell from the case, citing its failure to disclose all of its past work for FTX. Around the same time, four U.S. senators released a letter arguing that Sullivan & Cromwell had a conflict of interest because the firm might bear some responsibility for FTX’s failure. But the trustee backed down after the firm made a more detailed disclosure, and a judge allowed the lawyers to continue overseeing the bankruptcy, saying he saw ‘no evidence of any actual conflict.'”
• “Mr. Bankman-Fried has remained fixated on Sullivan & Cromwell. His lawyers have argued that the firm is providing evidence to the prosecutors that reflects poorly on Mr. Bankman-Fried, while withholding material that could help the defense. Prosecutors have denied that claim, writing in court papers that FTX and its lawyers ‘have been responding to the government’s document requests voluntarily.'”
• “Rebecca Roiphe, a former prosecutor and a professor at New York Law School, said it was fair to raise questions about potential conflicts of interest when a law firm represented a company both before and during a government investigation that might involve related work. ‘But this is not uncommon and doesn’t necessarily prove wrongdoing,’ she said.”

“Law Society of Scotland rejects proposals for a single UK-wide anti-money laundering supervisor” —

• “The Law Society of Scotland has rejected proposals for a single UK-wide anti-money laundering (AML) supervisor, saying a one-size fits all approach would be a ‘regressive step’ in efforts to combat economic crime.”
• “The Law Society has said a number of proposals in the HM Treasury consultation on the future of the anti-money laundering and counter-terrorism financing supervisory regime, risk damaging progress already achieved and could also fail to meet its stated aims of increased system effectiveness, system co-ordination and feasibility.”
• “The Society has expressed support for further powers to be given to the Office of Professional Body AML Supervision (OPBAS), if those powers would lead to increased effectiveness, and does not oppose reform consolidating anti-money laundering supervision on a devolved basis.”
• “Graham Mackenzie, Head of AML at the Law Society of Scotland, said: ‘We fully support change that will enhance the current AML regime and support the UK’s economic crime plan. It is, however, crucial that any reform introduced does not interfere with the independence of the legal profession, and also recognises the distinct legal and regulatory frameworks which exist across the devolved nations.'”

“How PwC failed to identify or deal with tax leaks scandal” —

• “Legal inquiries ordered by PwC Australia into its tax leaks scandal found a ‘combination of multiple failings’ by individuals and the firm’s governance, culture and accountability systems.”
• “A summary of reviews by law firms King & Wood Mallesons, Allens and Linklaters concluded that the scandal – which has rocked PwC’s local operation and heightened scrutiny of the multibillion-dollar consulting sector – was due to a litany of shortcomings and missed opportunities to address problems earlier.”
• “The tax leaks issues date back to 2013, when former international tax partner Peter Collins triggered the scandal. Mr Collins shared confidential tax information with PwC personnel who used it to help clients sidestep Multinational Anti Avoidance Laws he was helping Treasury develop.”
• “‘There is no single answer to the question of why the breaches of confidentiality and conflicts occurred and were not discovered and addressed earlier. Rather, it appears to be the result of a combination of multiple failings as well as missed opportunities to address the issues at an earlier point in time,’ it says.”
• “There was a ‘failure of individuals to identify and mitigate potential conflicts of interest’ inherent in the firm providing advice on how to create tax laws while also providing advice to clients on how to respond to the same laws.”
• “‘Fundamentally, the confidentiality breaches occurred due to PwC Australia’s failure to recognise and take steps to mitigate the inherent conflict of interest that existed from PwC Australia advising Treasury on the implementation of tax legislation while, at the same time, assisting clients to structure their business operations to comply with the new laws,’ it states.”
• “Macquarie Business School Emeritus Professor James Guthrie said the report released did not take into account information that was not publicly available. ‘It has taken a decade for PwC Australia to admit its internal failings concerning governance structure and risk management in public,’ he said.”

For more, see: “How confidential tax information was shared at PwC.“

“Walgreens Fight Against its Former Firm Crowell Gets Early Win” —

• “Walgreens Boots Alliance Inc. earned a victory with an appeals court advancing its claim that a health insurer improperly helped the retailer’s former law firm, Crowell & Moring, break its fiduciary duty.”
• “Walgreens in 2022 claimed that Health Care Services Corp. helped Crowell breach its fiduciary duty by retaining the law firm for a case involving a prescription drug program Crowell once advised Walgreens on.”
• “Health Care Services Corp., represented by lawyers from Crowell, in 2021 sued Walgreens for alleged fraud, claiming that the retailer artificially inflated prices for its members and caused hundreds of millions of dollars in excess reimbursements.”
• “Walgreens argued in a counterclaim that advice Crowell gave to Walgreens more than a decade prior should have precluded the firm from representing the insurer. Health Care Services willfully aided the ethics breach by continuing to retain the firm, Walgreens argued.”
• “A trial court last December dismissed the suit, calling it ‘nothing more than a motion to disqualify’ Crowell from representing the insurer. But the appeals court found Walgreens pled ‘sufficient facts’ regarding Crowell’s alleged conflict for the case to proceed. The case now goes back to a Cook County Circuit Court for further proceedings.”

“Beijing-owned businesses using Australian law firms to advise on takeovers of critical projects” —

• “Chinese state-owned enterprises are using Australian law firms to advise on takeovers of critical local infrastructure and minerals projects according to a new report that exposes potential conflicts with other sensitive work the same companies complete at home.”
• “The research also warns confidential client files held here could be accessed by authorities in Beijing, and controversially calls for Australia’s Foreign Influence Transparency Scheme (FITS) to be adjusted to remove exemptions for ‘legal advice or representation.'”
• “‘Law firms operating in Australia acting for PRC [People’s Republic of China] entities simultaneously fulfil engagements for Australian government entities, including those responsible for national security and foreign policy,’ the report stated.”
• “One of the report’s authors, Canberra-based cyber security expert Robert Potter, said some of the larger law firms they studied are completing sensitive Defence Department work while at the same time advising PRC-controlled companies.”
• “Mr Potter warned firms were advising on things ‘as sensitive as government platform procurement,’ while using the same email servers to handle Chinese state-owned customers, without ‘any of what we would expect in terms of technical separation of their infrastructure.'”
• “‘We’ve looked at the law firms in terms of their level of potential risk for exposing government data from Australia externally through what we can see as less than optimal cyber security practices on their systems,’ he said.”
• “The report also examined risks associated with how quickly Australian law firms were growing their Chinese business and “the degree to which they’re going beyond providing legal services”, including promoting causes such as Beijing’s ‘Belt and Road’ policy and semi-conductor industry.”
• “One of the Australian legal firms documented in the study is global company Ashurst, which completes Defence Department work while also representing Huawei locally, despite the federal government deeming the Chinese telco a ‘high risk’ vendor.”
• “An Ashurst spokesperson told the ABC it wasn’t able to comment on individual clients, but ‘takes compliance with law and client requirements seriously, and has stringent systems and controls in place to assess risk, manage conflicts and safeguard client confidentiality.'”
• “King & Wood Mallesons (KWM) is found to be “the second most represented law firm operating in Australia servicing PRC state-owned enterprises”, with the report highlighting its work with Hong Kong’s ‘Renminbi internationalisation’ and ‘Belt and Road’ initiatives.”
• “‘Our Swiss Verein structure enables us to operate as an international firm while maintaining separate local partnerships (KWM Australia, KWM China and KWM Hong Kong),’ a KWM Australia spokesperson told the ABC. ‘”We have separation of IT systems between KWM Australia and other parts of the KWM network. We take our legal and fiduciary duties seriously and use robust conflict checking systems and business acceptance protocols.'”
• “Shadow Home Affairs and Cyber Security Minister James Patterson said it was a shocking report.”