Bressler Risk Blog

Cassie Hanson, conflicts and ethics counsel at Fredrikson & Byron, P.A., produced this excellent analysis: “Quandaries & Quagmires: Advance waivers: Lessons from Paul Hastings vs. Coca Cola” —

• “This summer, ethics took center stage in a conflict-of-interest row between Big Law and corporate behemoth Coca-Cola. As ethics counsel, I followed the developments with curiosity as the drama played out in unusually public fashion and was widely covered in legal news. The dispute highlighted the enforceability of advance waivers.”
• “The court held the advance waiver was enforceable and issued a no-nonsense order that is a useful reminder about best practices for law firms utilizing advance waivers.”
• “How does an advance waiver meet the ‘informed consent’ standard? Rule 1.0(e) defines informed consent as “the agreement by a person to a proposed course of conduct after the lawyer has communicated adequate information and explanation about the material risks of and reasonably available alternatives to the proposed course of conduct.” This means the lawyer must make a full and effective disclosure of all of the relevant facts, including material advantages and disadvantages of the proposed representation, and provide reasonable alternatives, which is usually hiring or consulting with other counsel.”
• “In concluding that Coca-Cola gave informed consent by signing the waiver, the court held that the advance waiver was clearly enforceable; it ticked all of the boxes for informing Coca-Cola about the material risks of signing the waiver and that it should seek advice of independent counsel before agreeing to the waiver. Coca-Cola’s counterargument — that the advance waiver was ‘open-ended boilerplate’ and ‘unenforceable’ — did not move the needle with the court.”
• “What is to be learned from the fallout with Paul Hastings and Coca-Cola? Advance waivers are not a silver bullet, and law firms should not be overconfident in their reliance upon them. Advance waivers are subject to ethical and legal standards that vary by jurisdiction, and their enforceability may depend on a range of factors, including the clarity of the waiver and the specific circumstances of the case. Importantly, there are limits to the enforceability of advance waivers and some jurisdictions have held them to be unenforceable.”
• “Law firms should be more wary of employing advance waivers with individuals or small companies who are not sophisticated actors. Reliance on an advance waiver in direct adversity situations like litigation always brings higher risk.”
• “After understanding the limits and risks involved with advance waivers, there are common sense things a law firm can do to make an advance waiver more likely to stand up to judicial scrutiny:
  • Spend time constructing an advance waiver specific to the client to avoid accusations of using unenforceable, boilerplate terms.
  • Describe any existing or presenting foreseen conflicts that are known at the time of retention and define what will and will not be considered unrelated matters. Make sure that you have other clients’ consent to make such disclosures if it involves identifying the representation of a specific client such as a competitor. A good work-around is to use categories of clients that may be adverse to the specific client.
  • Expressly address potential risks to confidentiality, even if circumstances are such that the material risk of adverse disclosure or use of confidential client information is low.
  • Discuss client specific risks to loyalty such as representation of clients that may have adverse business interests to the client, such as competitors.
  • Do not ask for more than what is required of the client. If you are engaged primarily in transactional matters, including litigation within the scope of the advance waiver makes it more unlikely to be accepted by a client. Some business clients have outside counsel guidelines (“OCGs”) prohibiting acceptance of advance waivers. Including litigation makes it more likely to be rejected by in-house counsel. Interestingly, Coca-Cola had OCGs that prohibited advance waivers and argued its OCGs superseded the advance waiver. The court covered it in a passing footnote and gave it no credence. Despite the court’s lax treatment of this issue, OCGs can present a total bar to a law firm’s use of an advance waiver. Limiting the scope to transactional matters in the future makes it more likely to be signed in these circumstances.
• “Recommend that the client seek the advice of independent counsel and give adequate time for the client’s consideration of the advance waiver prior to signing. “[G]enerally a client or other person who is independently represented by other counsel in giving the consent should be assumed to have given informed consent.” Cmt. 6 to Rule 1.0. Where possible, draft an advance waiver for signature by the client’s in-house counsel as they have an independent obligation to inform the organization of all of the relevant information and risks associated with the waiver.”
• “Elephant in the room? After dissecting all of the media coverage and the court’s order denying disqualification, I am left with a nagging question. Did a premier law firm like Paul Hastings really miss the ball on its lateral screening or did it believe that reliance on its advance waiver would survive a disqualification motion? The latter seems more plausible and presents an off-putting possibility for prospective clients of Paul Hastings. Clients may think twice about hiring a law firm that sets aside its clients with such calculation. The media attention garnered by this spat resulted in unwarranted attention for Paul Hastings and the fallout serves as a due diligence cautionary tale for other law firms to spend adequate time screening for potential conflicts-of-interest, especially active litigation conflicts.”

“Bar associations are stifling innovation and driving up costs, report says” —

• “State courts should strip bar associations of some regulatory functions to spur innovation and lower the cost of legal services, according to a new paper from a Stanford Law center.”
• “State bar associations have a conflict of interest in their oversight of who is allowed to provide legal services, because most of the organizations also represent the professional interests of lawyers, according to the paper, released Monday by Stanford Law’s Deborah L. Rhode Center on the Legal Profession.”
• “Shifting some of their regulatory responsibilities to lawmakers or newly created entities would allow bar associations to focus squarely on the oversight of lawyers and open the door to non-traditional and lower cost legal services providers, according to the paper, authored by Rhode Center Executive Director Lucy Ricca and Thomas Clarke, a former administrator with the National Center for State Courts.”
• “The report offers five different options of how state courts can restructure legal practice regulation to minimize bar associations’ conflicts of interest and bolster innovation.”
• “The least dramatic proposed change involves leaving state bars in charge of regulation but expanding the types of entities allowed to operate to include legal paraprofessionals or legal services entities. A bigger possible change would be to task state lawmakers with the regulation of legal service providers while leaving lawyer regulation to bar associations or creating new entities to oversee any non-lawyer legal services.”
• “‘This is a significant challenge but not an impossible one,’ the paper reads.”

“At Oral Argument, Law Firm Says It Didn’t Violate Client’s Privacy With Press Release Announcing Med Mal Verdict” —

• “At oral arguments Thursday, the Illinois Supreme Court mulled whether a Chicago plaintiffs law firm’s press release announcing a $4.2 million jury award in a medical malpractice suit violated the Mental Health and Developmental Disabilities Confidentiality Act by disclosing the details of its now-former client’s mental health diagnoses.”
• “The Illinois high court is now set to decide whether the appellate court was correct in finding that attorney Elizabeth A. Kaveny and her former firm Burke Wise Morrissey & Kaveny violated the act by redisclosing information pertaining to the plaintiff, identified in the current matter as John Doe, that was protected by Health Insurance Portability and Accountability Act of 1996 (HIPAA).”
• “‘Once plaintiff put his entire mental health history into the record at that medical malpractice trial, it ceased to be confidential information,’ Kimberly A. Jansen, a partner at Hinshaw & Culbertson in Chicago, argued on behalf the law firm Thursday. ‘We all know trials are public. Nothing in that medical malpractice case was sealed.'”
• “But Doe challenged the use of and information of his diagnoses, the suicide attempt, and the effects of his injuries and that the ‘redisclosure of that information to the press’ violated confidentiality. He claims that the defendants went “well beyond simply confirming” the outcome of the medical malpractice litigation, but also included ‘highly personal medical and mental health care information,’ according to the plaintiff’s brief by counsel, Thomas M. Paris, a solo practitioner.”

“Yelp wants Google’s lawyers tossed from US antitrust case” —

• “Yelp and a coalition of news organizations have asked a U.S. judge to disqualify a prominent U.S. law firm from defending Google (GOOGL.O) in the Justice Department’s ad tech lawsuit, saying the firm has a conflict of interest because it previously was their advocate on matters related to the case.”
• “Yelp and News/Media Alliance, which are not defendants in the litigation but are targets of Google’s subpoenas, argue that law firm Paul, Weiss, Rifkind, Wharton & Garrison should be disqualified.”
• “Google has subpoenaed service-recommendation site Yelp and the alliance for information to challenge claims it has abused its market dominance for web advertising.”
• “‘This case involves a major law firm switching sides against former clients’ to represent an alleged monopolist, attorneys for Yelp and the media group told U.S. District Judge Leonie Brinkema on Friday.”
• “A spokesperson for Paul Weiss said the ‘firm’s representation of Google is appropriate in all respects.'”
• “Yelp said it hired Paul Weiss in 2016 for counsel on antitrust issues. The Justice Department’s antitrust head, Jonathan Kanter, was on the Paul Weiss team representing Yelp.”
• “Google is also seeking information about Yelp’s engagement letters, invoices and bills related to its Paul Weiss ties.”
• “This month, Brinkema refused a request from Google to block Kanter from leading the case. Google argued Kanter should be barred based on his work in private practice for Yelp and other Google critics.”

“Judge assigned to US antitrust case against Amazon recuses himself” —

• “The judge assigned to the US Federal Trade Commission’s antitrust lawsuit against Amazon.com has recused himself from the case, according to a court document filed on Wednesday.”
• “Senior Judge John Coughenour was assigned to the case on Tuesday, when the antitrust lawsuit was filed against Amazon in federal court in Seattle. Coughenour, an appointee of Republican former President Ronald Reagan, did not cite a reason for dropping off the case in the court filing.”
• “The FTC in its lawsuit accused Amazon of abusing its power in the retail market as an ecommerce giant by unfairly giving preference to its own products and punishing merchants that want to sell products for lower prices on other platforms.”

“Convera Denies Western Union’s Claims Of Atty Conflict” —

• “Convera Bidco Ltd. is urging a Delaware vice chancellor to reject Western Union’s attempt to block Convera’s in-house attorneys and counsel from Skadden Arps Meagher & Flom LLP from representing it in litigation over its purchase of Western Union’s business-to-business global payments services, arguing the financial services giant hasn’t shown there’s a disqualifying conflict.”
• “In a filing Monday [9/18], Convera told Vice Chancellor Nathan A. Cook that The Western Union Co.’s request to have Convera’s Chief Legal Officer Brendan Clegg, other in-house attorneys and attorneys from Skadden disqualified from representing the company in the Chancery Court case “falls short” of the standard to warrant such action.”
• “Western Union has failed to ‘offer clear and convincing evidence that this litigation is sufficiently related to Mr. Clegg’s prior work for WU such that Mr. Clegg is conflicted,’ the company says.”
• “Clegg ‘expressly denies having any confidential WU information that would be relevant here (or disclosing any confidential WU information of any kind to anyone),’ the filing says.”
• “Convera says it’s ‘no surprise,’ as the “substantive issues in dispute in this case” arose after Clegg became its chief legal officer.”
• “Last month, Western Union motioned to have Clegg, other Convera in-house attorneys and Skadden be disqualified from representing Convera in a contractual dispute over capital reserve payments connected with its $910 million purchase of Western Union’s business-to-business global payments services in 2021.”
• “Western Union’s motion asserted that there is a conflict of interest involving Clegg, who was formerly its in-house counsel and led its efforts in ‘developing, negotiating and drafting the provisions at the center of this litigation.'”
• “‘Eight months later he switched sides, becoming Convera’s chief legal officer,’ Western Union said. ‘Clegg is directing Convera’s effort, including its outside counsel, in challenging WU’s interpretation of the very provisions he helped negotiate.'”
• “‘Notwithstanding WU’s repeated requests, Convera has refused to screen Clegg, causing his conflict to infect and taint the rest of Convera’s legal team as well as its outside counsel at Skadden Arps Slate Meagher & Flom LLP,’ Western Union says. ‘Their disqualification is likewise required.'”
• “But in its opposition Monday, Convera argues the work Clegg did before he left Western Union related to the purchase agreement at issue didn’t involve advising on its ‘salient provisions,’ nor did that work ‘expose him to any relevant confidential information.'”

Lucian Pera published in the South Carolina Law Review: “Ethics, Lawyering, and Regulation in a Time of Great Change: Field Notes from the (R)evolution” —

• “Observing these changes at close range in representing clients and working on ethics issues as a bar volunteer has led me to understand that we live in the midst of the greatest period of change in the business and practice and regulation of law in more than a century.”
• “Much more important has been the way technology and the forces of regionalization, nationalization, and globalization have changed the lives and work of clients. Lawyers exist to serve clients, and changes in their lives and businesses drive changes in ours.”
• “By far, the most important concern for lawyers in this mixed environment is what law applies to their conduct. This includes lawyers located or licensed in jurisdictions with new or different rules. But it also includes clients, whose expectations—and, to the extent consistent with good regulatory policy— consent should be honored. The rules on choice of law in this context can and should be clarified and made as uniform as possible.”
• “To be clear, the questions implicated by the choice of law conversation include not only nonlawyer ownership and fee-sharing but also more mundane (but important) issues like conflict of interest rules, rules governing fee agreements, and where trust accounts for client and third-party funds must be established.”
• “While some potential choice of law issues concerning lawyer conduct implicate concerns beyond the interests of one consenting client, the regulatory interests concerning many choice of law issues primarily concern the interests of one client who is in a position to consent. In those situations, the consent of the client should be honored.”
• “Indeed, even this year, the ABA has taken a significant positive step with the issuance of a new Formal Ethics Opinion that takes a fresh look at the application of the ABA’s widely-adopted Model Rule on choice of law.”
• “The Opinion also opens the way to greater client autonomy in agreeing to engagement terms by which the attorney-client relationship may be governed by ethics rules of the lawyer’s home jurisdiction, potentially including jurisdictions where regulatory reforms have been adopted that might be at odds with rules in other jurisdictions. These are rational, forward-looking applications of accepted choice of law principles.”

Bloomberg survey: “ANALYSIS: Lawyers Worry Most About the Profession’s Reputation” —

• “Lawyers have undergone some soul-searching in the wake of election fraud cases and the Jan. 6 raid on the US Capitol. So it stands to reason that they chose ‘maintaining the integrity of the profession’ as the legal ethics category most in need of revision, according to a recent Bloomberg Law survey.”
• “In Bloomberg Law’s second 2023 State of Practice survey, conducted in June and July, attorneys who said they believe the ABA’s model rule categories need revising overwhelmingly selected ‘maintaining integrity of the profession’ as the leading target for change.”
• “But although the survey results show a clear direction from lawyers on what changes they’d like to see, another interesting survey statistic shows some ambivalence about whether lawyers really want change at all.”
• “Of the 447 lawyers who answered a question about whether the ABA’s model rules should be revised in the first place, a plurality (43%) selected ‘not sure/prefer not to answer.’ Only 38% said ‘yes.'”

Jessica Bednarz with Institute for the Advancement of the American Legal System (IAALS), notes:

• “The ABA Standing Committee on Delivery of Legal Services is seeking your feedback! They’d like you to share your opinions on any (or all) of these topics: AI, ownership of law firms by people who aren’t lawyers, and training and certifying people who aren’t lawyers to advocate for parties in lower courts. It’s a quick and easy survey.”
• Survey link: https://americanbar.qualtrics.com/jfe/form/SV_8cAoqqbzrTUdNxc

“Georgia’s GOP Secretary of State Brad Raffensperger Waives Attorney Conflicts for Pro-Trump Lawyer: Court Doc” —

• “Georgia Secretary of State Brad Raffensperger has disavowed any conflicts of interest from his former attorney, who is now representing pro-Trump attorney Kenneth Chesebro in the sprawling election-racketeering case, a new court filing indicates.”
• “On Thursday, Fulton County District Attorney Fani Willis told a judge that six attorneys representing former President Donald Trump’s associates have possible conflicts of interest that could compromise their client’s rights at trial.”
• “At least two of those attorneys — Chesebro and Anulewicz — previously represented Raffensperger, the Georgia Republican whom Trump tried to pressure to ‘find 11,780 votes’ in a phone call seeking to overturn Joe Biden’s 2020 electoral victory. Trump appeared to threaten Raffensperger with criminal liability for failing to do his bidding, making Raffensperger a key figure in the former president’s alleged racketeering scheme in Georgia.”
• “Recruiting Raffensperger as a central witness in her case, DA Willis warned Judge Scott McAfee of the possibility that the Georgia secretary of state may be cross-examined by his former lawyers.”
• “Grubman’s alleged conflict relates to his former representation of the Georgia secretary of state and wife Tricia Raffensperger, whom Grubman represented during the DA’s special grand jury investigation that preceded the RICO indictment.”
• “Acknowledging that he did represent the Raffenspergers ‘in their personal capacities,’ Grubman noted that the DA has known that fact ‘for longer than a year.'”
• “Denying any conflicts of interest, Grubman added that he has ‘signed, written ‘ from the Raffenspergers and Chesebro that he offered to submit privately to the court.”

“NYC lawyer Joe Tacopina can represent Trump in hush money case despite past dealings with Stormy Daniels, judge says” —

• “New York City lawyer Joe Tacopina convinced the judge presiding over Donald Trump’s hush money case that his prior dealings with porn star Stormy Daniels wouldn’t pose a conflict representing the former president, according to a filing reviewed by the Daily News Monday.”‘
• “Prosecutors flagged Tacopina’s prior communications with Daniels after he joined Trump’s team in the case centering on an illegal payment to the adult film star ahead of the 2016 election. Daniels’ lawyer, Clark Brewster, filed a complaint with a grievance committee after finding out Tacopina was on the case.”
• “At Trump’s April arraignment, Tacopina told Judge Juan Merchan that Daniels had called his firm in 2018 when she was looking for a lawyer and spoke with one of his associates and a paralegal. At the time, he suggested he would represent her in a television interview.”
• “‘We refused the case. I did not offer her representation. Didn’t speak to her. Didn’t meet with her,’ Tacopina said at the hearing where Trump told Merchan he understood his right to conflict-free representation.”
• “After meeting with Tacopina and conferring with an ethics expert, Merchan, in a Sept. 1 letter, said he would accept there is no conflict.”
• “‘court will revisit this issue with Mr. Trump when he next appears virtually on February 15, 2024,’ Merchan wrote. ‘[The] court accepts your suggestion that you do not participate in the examination of Ms. Daniels if she is called as a witness at trial.'”

“Lawyers for ‘orgasmic meditation’ company founder refute prosecutors’ ethics concerns” —

• “Attorneys at law firm Steptoe & Johnson on Wednesday defended their work for the indicted founder of the sexuality-focused wellness company OneTaste, as they asked a judge to reject U.S. prosecutors’ concerns about a potential conflict of interest.”
• “In a filing, defense lawyers for OneTaste founder Nicole Daedone responded to a request from the U.S. Attorney’s Office in Brooklyn for a hearing to explore what the government called the possibility for divided loyalties among defense lawyers.”
• “Steptoe represents both Daedone and Institute of OM, which the government said is a OneTaste-affiliated entity. Institute of OM is not a defendant. Cherwitz is represented by law firm Alston & Bird.”
• “Prosecutors said they were concerned about two things: Daedone’s legal strategy — for instance, if she were to plead guilty — could ‘tarnish the OneTaste brand’ and be ‘adverse’ to Institute of OM, prosecutors said.”
• “In addition, they said OneTaste’s payment of fees to Cherwitz’s lawyers could affect what legal advice they provide to her in any scenario in which she takes a stance adverse to OneTaste.”
• “Steptoe ‘owes a duty of loyalty’ to the Institute of OM and could be limited in sharing information with Daedone, prosecutors told U.S. District Judge Diane Gujarati.”
• “In their court filing, Daedone’s attorneys called the government’s concerns ‘speculative’ and ‘implausible.'”
  “‘The dual representations have not, and have no potential of, creating a conflict of interest for Steptoe,’ Steptoe’s Reid Weingarten and Julia Gatto said.”
• “Cherwitz’s attorneys denied there was any conflict in her fee arrangement, saying ‘companies routinely agree to advance the legal fees of current and former employees.’ They said there was not ‘a single shred of evidence that Ms. Cherwitz engaged in a forced-labor conspiracy.'”

“Opioid Special Master Facing Disqualification Motion After Hitting ‘Reply All’ on Email” —

• “The special master in the opioid multidistrict litigation is under pressure to disqualify himself after he hit ‘reply all’ on an email that was meant for himself but, instead, went to lawyers in dozens of cases.”
• “David Cohen, who has served as special master since 2018, intended to forward an Aug. 28 email with notes to himself on the bellwether trial process in the opioid cases against pharmacy benefit managers. But, according to an affidavit, he accidentally replied to all the lawyers in the cases.”
• “Now, lawyers at Alston & Bird and Quinn Emanuel Urquhart & Sullivan, representing two pharmacy benefit managers, have moved to disqualify Cohen on the basis of the email, which ‘would lead any reasonable observer to question his impartiality.’
  Cohen, a prominent special master in mass torts, immediately emailed lawyers to apologize, asking them to disregard his earlier email, which was ‘meant to be to my own files.’ But on Sept. 1, lawyers for the pharmacy benefit managers requested in an email that he disqualify himself.”
• “In a Sept. 7 email responding to them, Cohen said he found no reason to recuse himself. ‘To this day,’ he wrote in an attached affidavit, ‘I have never had any disqualifying personal bias or prejudice concerning any party, nor any disqualifying personal knowledge of disputed evidentiary facts concerning any proceeding, in any case where I served as special master.'”
• “Cohen sent his email two days before an Aug. 30 hearing. In his email, he wrote: ‘PBMs’ goal is to complicate and delay (including a request to do nothing and set a status 4 weeks hence). I say Ps add claims against PBMs as mail-order pharmacies. Two reasons: (1) Ps are the master of their own complaint, and (2) claims against PBMs as mail-order pharmacies will show how much PBMs knew (and they knew a lot). And then let PBMs respond as they wish. If that complicates the case, so be it. We are used to that.'”
• “The disqualification motion cites that portion of the email, and Cohen’s decision to allow each side to pick four bellwether cases, not two, because ‘it is too easy for Ds to buy off 2 Ps, avoiding any global resolution.'”
• “‘Special Master Cohen’s email shows that he has prejudged merits issues before any evidence has come in and before OptumRx or Express Scripts have had any opportunity to brief and be heard on the question of their purported knowledge,’ the motion says. ‘That alone requires disqualification.'”
• “At the Aug. 30 hearing, U.S. District Judge Dan Polster, who is overseeing the opioid multidistrict litigation in the Northern District of Ohio, was quick to shut down any possibility that he would disqualify Cohen.”
• “‘Well, that isn’t going to happen,’ he told Boone, according to a transcript. ‘You know, he sent something that – it showed – may have shown his thought at the moment, doesn’t in any way, shape, or form indicate that he’s biased or prejudged anything. All right? No one has a clue what the evidence is. All right? I don’t.'”

“Law Firm Accused of Waiting More Than a Year to Inform Affected Parties About Data Breach” —

• “Los Angeles-based law firm Hill, Farrer & Burrill was slapped with a data breach class action over allegations it detected a data breach in March 2022 but waited over a year to inform affected individuals their personal information had been leaked.”
  “Booker alleges that the data breach was a result of Hill Farrer’s inadequately protected computer network, and that it was completely preventable.”
• “According to the complaint, Hill Farrer determined that cybercriminals gained unauthorized access to its systems between March 14 and March 18, 2022. The hackers are alleged to have accessed and stole sensitive personal information, including names, dates of birth, Social Security numbers, and medical treatment information of Booker and other victims.”
• “Booker claims she was notified of the breach on Sept. 5, 2023, over a year after it was discovered that an unauthorized user had gained access to the firm’s electronic systems. The letter informed her that her name, date of birth, Social Security number, and medical treatment information was stored in a system that had been accessed by hackers.”
• “According to the complaint, the Los Angeles firm’s lack of urgency to inform victims that their information had been leaked allowed cyber criminals ‘free reign to surveil and defraud their unsuspecting victims.'”

“Plaintiff in DWP Overbilling Suit Loses Follow-Up Battle” —

• “The Ninth U.S. Circuit Court of Appeals has affirmed a summary judgment in favor of the City of Los Angeles in a suit for damages brought by a man alleging that the city’s cover-up of the fact that then-New York lawyer Paul O. Paradis, representing him as named plaintiff in a class action over the Department of Water & Power’s massive overbilling of customers in 2013, was also working at the time for the city.”
• “Affirmance came in a memorandum opinion by a three-judge panel, filed Tuesday, saying that any cover-up did not preclude an action against Paradis because once plaintiff Antwon Jones learned of the perfidy, there was still time to sue before the relevant statute of limitations expired.”
• “Paradis—now disbarred and awaiting sentencing on a federal bribery count in connection with the DWP debacle—in 2015 represented the city, along with Beverly Hills practitioner Paul Kiesel, in pressing claims against the consulting firm of PricewaterhouseCoopers, maintaining that it was responsible for the faulty billing system that resulted in exorbitant amounts being exacted from rate-payers. It was liable, the city contended, for any refunds that the city might be compelled to make.”
• “Jones sued the city and others on Dec. 21, 2020, claiming that because the city had covered-up Paradis’s conflict of interest, an action by him against Paradis became time-barred.”
• “‘[B]ecause the four-year limitation period did not expire before the one-year limitation period had run, Jones had until June 2020 to sue Paradis. Because Jones decided not to sue Paradis and instead waited until December 2020 to file this action against the City, the City was not responsible for Jones losing his ability to sue Paradis within the limitation period.’ The case is Jones v. City of Los Angeles, 22-55612.”

Bill Freivogel notes:

• Hamed v. Diaz, No. 514433/2019 (N.Y. Sup. Ct. Kings County Sept. 6, 2023).
• “In this medical malpractice case, involving a State of N.Y. facility, the Attorney General’s Office (‘OAG’is defending a doctor. In another case, involving the same events, Plaintiff is suing the State of New York. OAG is defending that case, as well. Plaintiff moved to disqualify OAG in this case, claiming both representations are in conflict.”
• “In this opinion the court denied the motion, holding that the doctor’s and State’s interests are aligned. A complication is that the doctor is suing the State for wrongful termination. The OAG is not in that case, however. Plus, the grounds for termination did not involve the alleged malpractice in this case.”

“Kaneland school board votes against approving waiver with law firm involved in Crown development project” —

• “The Kaneland [Illinois] School District board voted unanimously against approving a waiver of conflict of interest with the law firm Ottosen DiNolfo Hasenbalg & Castaldo, Ltd. regarding Crown Community Development’s request for a TIF district for a proposed development at the Interstate 88 and Route 47 interchange.”
• “It is believed that the village of Sugar Grove will be utilizing the law firm for the development of a new tax increment financing district (TIF) for The Grove, a 760-acre master-planned community at the I-88 and Route 47 interchange. Since such representation presents a conflict of interest between Ottosen DiNolfo Hasenbalg & Castaldo, Ltd., the village of Sugar Grove and the Kaneland School District, all board members voted against the waiver of conflict of interest.”
• “‘My biggest concern is it’s a major conflict of interest,’ board member Aaron McCauley said. ‘I’d rather have somebody that’s going to focus on Kaneland, on our school district and they’re going to work with us. If we have to spend an extra couple of bucks, that’s fine. I love my wife [who is a lawyer], I’m taking her advice and going with that.'”

“PwC to curtail consulting work for US audit clients to reduce conflict risk” —

• “PwC is planning to give up tens of millions of dollars of consulting work for its US audit clients to reduce the risk of conflicts of interest, challenging its rival Big Four firms to follow suit.”
• “The accounting firm has begun to tell clients it will stop offering them some advisory services, even though they are permitted under US rules, as part of a wider revamp of its audit work.”
• “The move comes amid a worldwide debate over how to ensure accounting firms remain independent of the companies they audit, after scandals such as the collapse of Carillion in the UK. It follows an abortive attempt by PwC’s Big Four rival EY to spin off its consulting arm. The UK accounting regulator has already pushed the biggest accounting firms to make their audit operations in the country more independent of their consulting arms.”
• “PwC’s US leaders have agreed a package of reforms that also include the introduction of clawback provisions in their executive pay and the promise of new disclosures about how the firm manages conflicts of interest.”
• “The moves are designed to head off concern among clients, whose directors and shareholders are increasingly scrutinizing potential conflicts, and to improve the reputation of a profession that has found it harder to attract young people.”
• “The US drastically curtailed the consulting work accounting firms can do for audit clients in the Sarbanes-Oxley Act, passed in 2002 after the Enron scandal. However, the rules still allow for more non-audit services than allowed in other parts of the world, particularly Europe.”
• “Non-audit work accounts for a smaller proportion of the fees PwC gets from its US audit clients than it does at Deloitte and EY, according to public disclosures collated by Ideagen Audit Analytics.”
• “The Big Four sold $1.5bn of tax and miscellaneous consulting services to their US-listed audit clients last year, on top of $13.5bn of audit and audit-related fees, the figures show. The proportion has been trending down for most of the past two decades.”
• “The move by PwC US is limited to miscellaneous consulting and would not affect tax work, it said. It could affect its consulting revenues outside the country, if its local member firms work for overseas subsidiaries of US audit clients. The work would be phased out by 2025, PwC said.”
• “Details were due to be announced in May but the launch was pushed back while the firm dealt with a scandal in Australia in which partners were revealed to have misused confidential information about the government’s tax plans, according to people familiar with the situation.”
• “PwC US will also next year introduce new audit procedures to improve the detection of fraud and to broaden the range of factors staff must consider when ruling on whether a client is at risk of bankruptcy.”
• “Other measures include expanding the audit report that is published with its US clients’ annual report, which will from 2025 be modeled on the UK, where additional disclosures are required about contentious issues an audit has raised.”

“Ethical Considerations for In-House Lawyers” —

• “Although the Rules of Professional Conduct have many provisions targeted to lawyers who are in private practice, in-house lawyers, who are dedicated solely to representing their corporate client’s—and employer’s—interests, are still subject to those rules.”
• “Notably, the nature of the in-house counsel role can pose some unique ethical considerations for attorneys whose clients also serve as their employers.”
  “Among other things, in-house counsel may wear different hats in the course of their work, acting as both legal adviser and business adviser at times, which can lead to complicated ethics questions.”
• “There may be circumstances, however, in which an in-house lawyer is providing legal support to individual employees of the company. For example, Rule 1.13 allows lawyers to represent an organization and ‘any of its directors, officers, employees, members, shareholders or other constituents, subject to the provisions of Rule 1.7.'”
• “This may come up in a situation in which an in-house lawyer provides guidance to an employee who is about to be deposed in a case involving the organization. The in-house lawyer is permitted to provide advice to the employee, but the lawyer should be wary of any situations that could create a conflict, such as when the individual employee’s interests and the corporate client’s interests are adverse.”
• “In accordance with Rule 1.13(f), in-house counsel will often advise the employee that they represent the company, not the employee as an individual, and that the lawyer is permitted to tell the company anything the employee divulges. Sometimes, for this reason, companies will elect to use outside counsel to conduct sensitive internal investigations, which, among other things, can help avoid any misunderstandings about an in-house lawyer’s role (and any potential awkwardness around the Upjohn warning that an employee’s conversations with in-house counsel are not private from their employer).”
• “As noted above, there may be circumstances in which an in-house lawyer can represent an individual employee in an event like a deposition. However, if the employee is adverse to the company, the conflicts-of-interest rules advise that in-house counsel cannot represent both parties.”

Claire Brown, Partner, Commercial Litigation at JMW Solicitors explains: “How do we regulate conflicts of interests arising out of directorships in competing businesses?” —

• “In law, there is no limit upon the number of companies that any one individual may be a director of. However, where an individual has multiple directorships, particularly where one of those company directorships competes with another, there are several considerations to be mindful of. The consequences for a director who disregards these considerations can be severe.”
• “A company’s Articles of Association will often dictate how directors’ conflicts of interests should be managed. Where the Articles of Association are followed in a situation of conflict, no infringement will be deemed to arise under the Companies Act 2006.”
• “Under the Companies Act 2006, it is possible for the directors to authorise a conflict, in the case of a private company, where nothing within the company’s constitution invalidates such authorisation and, in the case of a public company, where its constitution provides for such authorisation and any prescribed process for obtaining such authorisation is followed. In either case, the authorisation will only be effective if any constitutional voting or quorum requirements are met without counting the director in question (or any other interested director).”
• “In resolving whether or not to approve a conflict of interest, whether in relation to a director’s involvement in a competing business or otherwise, the directors must act in accordance with their general duties and, in particular, their duty to promote the success of the company. Where an industry specialist is brought on board to assist with the growth of a company, for example, the existing board may reasonably determine that any potential risk associated with the conflict is outweighed by the expertise that the incoming director can bring (particularly if conditions are attached to such approval). However, more generally, it will likely be difficult to lawfully sanction such competing interests.”
• “In the inevitable event that the director’s competing directorship gives rise to a breach of the statutory duties above, or any contractual obligations owed to the company, and the breach causes harm to the company in question, the company will be able to bring a claim against the director in respect of such breach.”
• “Where the competing director controls the board of directors in the original company and does not support action being taken against them by the company, it is possible for a shareholder to seek to bring a claim against the director ‘derivatively’ on the company’s behalf.”

Getting close to closing the window on this one. But I wanted to make sure anyone who wants to participate (or is on the fence and wants to connect directly on questions or an extension) has the opportunity. So the window remains open for another ~week, until Wednesday, September 27.

My survey summary report reveals that we now have 110+ participants, sharing data on 350+ positions! Interestingly, we’ve well exceeded 2022 levels in terms of individual contributors (last year we had 80+), but have not quite surpassed data point the mark set last year. My hope is we’ll cross that threshold shortly, we’re very close.

So if you’re an individual contribution looking to understand how your comp compares to your peers, or you’re a risk manager looking to keep your team (and potential new hires) on par with changing market standards, you don’t want to miss out.

And, in case you missed my earlier update, we’re also capturing data on “risk director” level positions as well this year.

SURVEY DETAILS:

• Participation open to law firm risk professionals only
• All responses will be treated confidentially
• Manager/Director participants sharing data on their/their team’s roles and compensation will receive a report summarizing key findings and analysis
  • (The report may be shared internally within your firm, but not redistributed externally. So if you want the results, your best path is to participate!)
• Individual contributor participants sharing personal compensation data will be receive a personal benchmark compensation summary relevant to their specific role and firm demographics.

The survey will be open for at least another week, but the end is nigh, so access it here: 2023 Risk Staffing Compensation Survey.

Feel free to share the link with law firm peers and colleagues — directly via email, via social media, or however you like.

And if anyone has questions, 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.)

Thanks for reading. More risk news and updates tomorrow. Thanks!

“Keith-Agaran to retire from Senate as law firm pursues fire lawsuits” —

• “Central Maui’s longtime state Sen. Gil Keith-Agaran announced he will retire Oct. 31, saying he didn’t want questions over conflicts of interest to be a “distraction” as his law firm prepares to represent clients in lawsuits over the Lahaina fire.”
• “Keith-Agaran’s position as a lawmaker and an attorney could have put him in a questionable spot if his law firm had represented residents or businesses suing the state over the fires. Keith-Agaran’s firm, Takitani, Agaran, Jorgensen and Wildman, is among three firms that filed a lawsuit on Aug. 17 alleging that the Lahaina fire started when Hawaiian Electric’s power lines came in contact with brush. The three firms hosted a presentation and sign-up on Sunday for residents and business owners impacted by the fire.”
• “Keith-Agaran, who faced questions from local media about the potential conflict of interest before announcing his retirement Wednesday, said he spoke to the staff of the state Ethics Commission ‘to get a feel on whether or not there was going to be issues.’ He said based on conversations with the commission staff, he felt he would have had to choose between his family and community and protecting the state.”
• “‘Right now it’s theoretical. But I think they were sort of suggesting that even the appearance of a conflict is enough to raise a violation or create a violation. To me that’s a distraction from the real pain and the real issues that people are going through,’ Keith-Agaran said Wednesday afternoon.”
• “When asked if he stepped down to avoid a potential conflict of interest, Keith-Agaran said, ‘Yeah … Given what we’re all going through right now, that’s just not something that’s worthwhile in the larger scheme of things for my family and for my law partners.'”
• “Colin Moore, director of the University of Hawai’i Public Policy Center, said he wasn’t “terribly surprised” by Keith-Agaran’s decision. ‘I think it’s a pretty clear calculation here where you’re a plaintiffs attorney. This is potentially the case of a lifetime,’ Moore said Wednesday afternoon. ‘There’s just going to be millions and millions of dollars at stake. I’m sure that he doesn’t feel that he can represent his clients and be in the Legislature without questions of the ethical implications of that and just being dogged by reporters. I can’t say I’m terribly surprised.'”

“Otter Says No Conflict For Atty In Phone Case Patent Dispute” —

• “Otter Products says a rival’s effort to disqualify Merchant & Gould as its counsel in a patent dispute doesn’t hold up, arguing in Colorado federal court that there’s no real conflict because the law firm represented a different company from the patent holder and plaintiff when it helped write an application for the same patents in the suit.”
• “…Otter Product LLC said its attorney, James W. Beard of Merchant & Gould PC, had represented Otter in patent suits for more than a decade before the lawsuit filed in June by Jefferson Street Holdings LLC, which does business as Cradl Ltd.”
• “Cradl alleged in a motion filed in July to disqualify Merchant & Gould from representing Otter in the case that the law firm worked on the application for the patents for Elizabeth Inc., predecessor in interest to Cradl, with all the patents sharing the same specification that Merchant & Gould attorneys drafted. Cradl said both Elizabeth Inc. and Cradl are owned by Dining.”
• “But the distinction between the companies is key, Otter said in its brief opposing the motion. ‘Fundamentally, Jefferson Street is not and was not a client of Merchant, and therefore there is no protectible ‘attorney-client relationship’ between plaintiff and merchant,’ Otter said in the brief.”
• “Otter argued that the assignment of a patent doesn’t also transfer an attorney-client relationship related to that patent. Otter also argued that the patents had been transferred through a series of entities before ending up with Jefferson Street Holdings, with two of them not being tied to Elizabeth Inc. and not appearing to sell phone cases. Otter also argued that Elizabeth Inc. still exists as its own entity and isn’t the parent company of Jefferson Street Holdings.”
• “Beyond that, Otter said the engagement letter that Elizabeth Inc. signed stated that ‘representation of the company in this matter will not give rise to any conflict of interest in the event other clients of the firm are adverse to any of the company’s affiliates.'”
• “And just because attorneys who worked on prosecuting the patents for Elizabeth Inc. work at the same firm as Beard doesn’t automatically mean there’s a conflict, Otter said, arguing that ‘the record informs no substantial risk that confidential information obtained by’ Merchant attorneys while prosecuting the patents for Elizabeth Inc. would be useful in the Cradl case.”

“3M Lawsuit Investors Ordered to Be Unmasked Amid $6 Billion Deal” —

• “A federal judge wants to know how much of a $6 billion settlement for military veterans injured by faulty 3M Co. earplugs is set to go to outside investors backing the lawsuits.”
• “Rodgers expressed concern about outside funders’ role in the deal. ‘For at least the past decade, settlements of this size and nature have often attracted the attention of third-party litigation funding entities intending to prey on litigants,” she wrote. Rodgers said she wants to ensure that the claimants are not being “exploited by predatory lending practices, such as interest rates well above market rates, which can interfere with their ability to objectively evaluate the fairness of their settlement options.'”
• “The settlement will resolve roughly 260,000 lawsuits alleging defective 3M combat earplugs caused hearing damage to troops. The company agreed to contribute $5 billion in cash and $1 billion in common stock through 2029, under the terms of the deal.”
• “The plaintiffs lawyers are required to disclose all funding agreements made with any claimant before or after the settlement, within 30 days, according to the order. The lawyers and the claimants are also barred from entering new outside funding deals without court approval.”
• “The funding declarations, which Rodgers said will be filed under seal, will include lender names, loan amounts, and interest rates, among other information. Lawyers will be required to produce financing agreements and be prepared to discuss them, Rodgers said.”
• “Disclosure is a contentious topic in the $13.5 billion litigation finance industry, where investment firms pool money into litigation in exchange for a portion of the award. A federal judge in Ohio made a similar move in 2018 in massive opioid litigation, requiring in camera disclosure of litigation finance agreements.”
• “Funders in mass torts cases typically loan money to law firms against their entire docket of cases. The 3M order does not specify whether such “portfolio deals” are required to be disclosed.”

“3M judge issues extraordinary order to shut down ‘predatory’ litigation funding” —

• “She appears to be the first MDL judge to place significant logistical obstacles in the way of post-settlement agreements between plaintiffs and lenders offering them advances on their settlement money, according to several litigation funding experts I consulted. Like many other federal courts, Rodgers also called for the disclosure of pre-settlement litigation funding deals, citing her authority under the Federal Rules of Civil Procedure.”
• “‘It’s a significant leap,’ said Jack Kelly, managing director of the American Legal Finance Association, a trade group for funding companies that offer non-recourse advances to plaintiffs. Charles Agee of Westfleet Advisors, which issues an annual report on the litigation finance market, said Rodgers’ order is ‘unique,’ adding, ‘I worry about the ambiguity surrounding the standards by which the court would approve any such new transactions or, worse, potentially invalidate or void any historical agreements.'”
• “Rodgers, who did not say what prompted her order, certainly has reason for concern about lenders who contend that double-digit interest rates are justified by the risk that a proposed settlement will take years to win approval or won’t be approved at all. (Plaintiffs who take advances against their anticipated settlement payouts — often because they need quick cash to pay bills or medical expenses — don’t have to pay anything back if they don’t recover any money.)”
• “Rodgers cited a December 2022 study from the U.S. Government Accountability Office, which noted that post-settlement funding deals can create conflicts between plaintiffs and their lawyers and can gum up settlement approval when plaintiffs seek extra money to pay back litigation funders.”
• “But Rodgers’ order, however well-intended, raises two important and related questions: Will the restrictions actually deter funders? And does the judge have the power to block plaintiffs from entering into private contracts with litigation funders?”
• “Rodgers does have power over plaintiffs lawyers in the MDL. And barring them from facilitating funding deals, which typically include a letter in which plaintiffs’ lawyers promise to pay funders from the clients’ proceeds, could chill agreements.”
• “But Peter Buckley of Fox Rothschild, who represents a litigation funder from the NFL case, said funders can structure agreements to work around that part of Rodgers’ order. In fact, Buckley said, Rodgers’ order could turn out to be a boon for good-faith funders, as long as the judge gives fair consideration to proposed deals. His reasoning: Advance court approval of funders’ repayment process will reduce the risk of plaintiffs trying to evade contractual obligations after they receive settlement money.”

For that 2022 report, see: United States Government Accountability Office: “THIRD-PARTY LITIGATION FINANCING: Market Characteristics, Data, and Trends.“