Bressler Risk Blog

“PwC in the firing line and AFP drawn in as Senate asks hard questions about conflict-of-interest drama” —

• “PwC gets paid millions to get companies and governments out of trouble, but it’s in the middle of an international crisis after a former tax partner used confidential Treasury information to make millions for the consulting firm.”
• “‘PwC was brought in as a trusted adviser and expert to help shape [new] laws,’ says columnist and author Tom Ravlic. ‘They’ve taken that knowledge and then used it to undermine them almost immediately.'”
• “Now PwC Australia’s biggest client — the federal government — is seething.”
• “About a decade ago, the government asked PwC tax expert Peter-John Collins to help it design laws to better tax multinational companies. Large companies, particularly tech giants, were shifting profits from higher-taxing countries like Australia to others like The Netherlands and Singapore with lower tax rates.”
• “Mr Collins signed multiple confidentiality agreements, specifying the knowledge could not be disclosed. But he shared the secret knowledge within PwC, helping the firm create a system for those companies to avoid paying the new taxes.”
• “The company used the scheme to make money and win new clients, then gloated about it. The Tax Practitioners Board was damning in its assessment of Mr Collins, saying he ‘did not act with integrity’ and disqualifying him from working in the field for two years.”
• “The board said he signed multiple confidentiality agreements and it was clear the Treasury information was being disclosed on a confidential basis.”
• “But will there be criminal or civil charges? That’s unclear, according to UNSW business law expert Dr Scott Donald. That’s because the allegation so far is that PwC benefited from a breach of a confidentiality agreement. An agreement we haven’t seen.”
• “So far, all we know is that PwC won $2.5 million in fees from new clients when it marketed the arrangements. (There is no suggestion the clients were aware of how the information was obtained).”
• “Dr Donald says that’s underquoting what probably occurred, because the firms create value by having close relationships with government and ‘being able to interpret, anticipate, perhaps even influence the way that government sets up various regimes, whether it’s tax or other sorts of (policy) and then being able to then sell that information that knowledge off to their clients. ‘So the profit that they make isn’t $2.5 million. It’s actually much larger than that, because they have a whole business. This is what they do.'”
• “People working in finance are blown away by the scandal, because there are clear rules about confidentiality and managing conflicts of interest — particularly when you have your hands on other people’s money.”

“Warnings raised as PwC paid $8.7m to collect Australian aged care data while helping to set industry prices” —

• “The Consultancy firm PwC will be paid $8.7m to collect sensitive commercial data from aged care providers while helping the Australian government set new service prices, despite simultaneously charging the industry for advice on pricing.”
• “Senators and unions have warned the contract, which could give PwC access to protected pricing information subject to secrecy provisions, is fraught with potential conflicts of interest that may be difficult to avoid.”
• “PwC will collect ‘cost and activity data’ from facilities across the country and develop a new costing framework for the federal government.”
• “At the same time, another division in PwC is selling consultants to the aged care industry who can ‘benchmark your organisation against others in the industry,’ or ‘assist service providers to remain viable and accountable to their service costs and pricing.'”
• “PwC’s work with government is under renewed scrutiny after the global firm allegedly profited from sharing confidential government tax policy with clients. This $8.7m contract with IHACPA was signed days before those allegations were first published by the Australian Financial Review.”
• “The government spokesperson said PwC was required to immediately disclose any conflicts of interest and failure to do so could result in the contract being terminated. But Rice said relying on PwC to disclose conflicts of interest was not an adequate response given its extensive work with the aged care industry.”
• “A PwC spokesperson would not comment on the IHACPA contract, but stressed the firm had ‘strict conflict and risk management processes’ that were ‘always followed rigorously before an engagement is commenced.'”
• “In a submission to an ongoing inquiry into the government’s use of consultants, PwC’s chief executive, Tom Seymour, apologised for the tax policy breach reported in January. ‘We have taken extensive steps to both raise awareness of the significance of these issues across all partners and staff in the firm and have invested further in policies and training which address these matters to protect against future recurrence,’ Seymour said.”

“Climate Authority Under Fire for Conflict of Interest After PwC Scandal” —

• “The Minister for Climate Change and Energy has been urged to review potential conflicts of interests at Australia’s key climate change agency in light of the integrity scandal at PwC and the consulting services sector.”
• “In a letter to Minister Bowen, the Australia Institute has raised concerns regarding appointments to the Climate Change Authority (CCA) and highlighted legal questions raised by potential conflicts of interest held by CCA board members, including the chair of the agency, Grant King.”
• “Australia Institute research has revealed the extensive overlap between industry and government in Australia, and the risk this puts to independent policymaking. The senate inquiry raises the question of whether scrutiny must go beyond consulting firms being employed by government agencies, to conflicts of interest within government agencies themselves.”
• “‘We believe there are serious integrity questions regarding conflicts of interest at the highest levels of climate policy making in Australia,’ said Polly Hemming, Director of the Climate & Energy Program at the Australia Institute.”
• “‘The PwC scandal and the Inquiry into consulting services has shown us that potential conflicts of interest are not always disclosed, let alone managed… The public should have access to a transparent register of declared interests by statutory officials. Then they could decide whether conflicts were being managed appropriately or not.'”

“DeSantis asks that judge be disqualified from Disney’s free speech lawsuit” —

• “Gov. Ron DeSantis is asking that a federal judge be disqualified from the First Amendment lawsuit filed by Disney against the Florida governor and his appointees, claiming the jurist’s prior statements in other cases have raised questions about his impartiality on the state’s efforts to take over Disney World’s governing body.”
• “DeSantis’ motion said Walker referenced the ongoing dispute between his administration and Disney during hearings in two unrelated lawsuits before him dealing with free speech issues and fear of retaliation for violating new laws championed by DeSantis and Republican lawmakers. One of those was a First Amendment lawsuit filed by Florida professors that challenged a new law establishing a survey about ‘intellectual freedom and viewpoint diversity’ on state campuses.”
• “Walker, who was nominated to the federal bench in 2012 by President Barack Obama and is now chief judge of the district, tossed out that lawsuit on the grounds that the professors didn’t have standing to challenge the law championed by DeSantis and Florida lawmakers.”
• “In the first case, Walker said, ‘What’s in the record, for example — is there anything in the record that says we are now going to take away Disney’s special status because they’re woke?'”
• “In the second case, the judge said, ‘And then Disney is going to lose its status because—arguably, because they made a statement that run afoul—ran afoul of state policy of the controlling party,’ according to the DeSantis motion.”
• “Disney filed the First Amendment lawsuit against the Florida governor and the DeSantis-appointed board last month in federal court in Tallahassee, and it landed in Walker’s court. The DeSantis-appointed board earlier this month sued Disney in state court in Orlando seeking to void the deals the company made with the previous board.”

“Prosecutors Push To DQ Jones Walker In $1.2B Fraud Case” —

• “Prosecutors said Friday that Jones Walker LLP cannot represent an asset manager charged with participating in a $1.2 billion scheme to embezzle money from Venezuela’s state-owned oil company, arguing that the firm has shown it cannot be trusted to refrain from using confidential information gleaned during its previous representation of a witness.”
• “In a hearing before U.S. Magistrate Judge Edwin G. Torres, prosecutor Kurt Lunkenheimer told the court that ‘disqualification is really the only adequate remedy’ to ensure fairness, given that Jones Walker partner Edward Shohat — who now represents defendant Luis Fernando Vuteff — previously represented a person described as Witness 1 in the government’s investigation.”
• “During his representation of Witness 1, Shohat was privy to confidential information in a joint defense agreement with Witness 2, now revealed as Alvaro Ledo Nass, who pled guilty earlier this year to taking $11.5 million in bribes.”
• “‘I don’t see how backup counsel would be able to come in without talking to Mr. Shohat,’ he said. ‘The trial strategy has been tainted by Mr. Ledo Nass’ confidential information. We think the joint defense agreement confidential information has permeated the whole case.'”
• “Lunkenheimer pointed out that there has been no waiver of conflict of interest by either Witness 1 or Ledo Nass.”
• “Shohat told the court that he has not spoken with his former client in years and said Witness 1 and the joint defense agreement are irrelevant in this case.”
• “‘What they’re asking you to do is disqualify us on speculation that somehow, someway Witness 1 will become relevant,’ Shohat said, pointing out that Witness 1 has filed an affidavit in this case saying he has no knowledge of it.”
• “David Weinstein, who joined Jones Walker after Shohat’s representation of Witness 1, said this is not a direct conflict and that Ledo Nass’ testimony ‘is only a corner of the criminal case’ and does not even touch on the money laundering allegations.”

“Walgreens fights ‘staggering’ $642 mln arbitration award to Humana” —

• “National retail pharmacy giant Walgreen Co has asked a U.S. judge to vacate an arbitrator’s award of more than $642 million to Humana Health Plan Inc in a drug-pricing dispute, calling the ‘staggering’ sum the result of a ‘miscarriage of justice.'”
• “Deerfield, Illinois-based Walgreens, a subsidiary of Walgreens Boots Alliance (WBA.O), argued in its filing that the arbitrator who issued the award in March “rewrote” its contracts with Humana. It also accused the arbitrator, from the JAMS arbitration forum, of using a flawed model to assess alleged damages.”
• “In addition, Walgreens claimed that law firm Crowell & Moring should not have been allowed to represent Humana after previously advising Walgreens years earlier on drug pricing matters at the heart of Humana’s 2019 arbitration.”
• “‘The result was that the arbitrator awarded a massive windfall to Humana,’ Walgreens’ attorneys at Reed Smith said in the court filing.”
• “Walgreens separately sued Crowell in 2021 in District of Columbia Superior Court seeking, among other things, indemnification from any arbitral award, an injunction against Crowell and disgorgement of the firm’s profits from its work for Humana.”
• “A judge denied Walgreens’ early effort to bar Crowell from representing Humana. Walgreens’ appeal is pending.”
• “Washington, D.C.-based Crowell has denied any conflict of interest in representing Humana against the law firm’s former client Walgreens. A spokesperson for Crowell on Monday in a statement called Walgreens’ ethics claim ‘meritless’ and said the firm was ‘confident that the arbitrator’s thorough and well-reasoned award will be affirmed.'”

“Mich. Program Wants Miller Canfield DQ’d From Zoning Suit” —

• “The Michigan Township Participating Plan pushed for the disqualification of Miller Canfield Paddock & Stone PLC attorneys representing wineries in a zoning suit against Peninsula Township, arguing on Tuesday that the law firm previously represented the municipal insurance program.”
• “In a filing made in Michigan federal court, the Michigan Township Participating Plan claimed that Miller Canfield was its general counsel when the municipal insurance program was founded in 1985.”
• “But their relationship allegedly ended in February after the insurance program asked the law firm about the conflict of interest between it representing the wineries and the insurance program being involved in insurance coverage for Michigan townships like Peninsula Township.”
• “‘Plaintiffs’ claims for damages in this matter appear to date back to June 5, 1972, when Peninsula Township adopted its original zoning ordinance,’ the Michigan Township Participating Plan argued. ‘As such, Miller Canfield acted as general counsel to MTPP for 38 of the 51-year damages period that plaintiffs claim.'”
• “‘If plaintiffs are awarded damages for this period, MTPP will be responsible to pay a portion of such damages on Peninsula Township’s behalf,’ the municipal insurance program continued. ‘Therefore, MTPP’s interests are directly in conflict with plaintiffs’ (and therefore Miller Canfield’s) and Miller Canfield has then engaged in representation of plaintiffs in direct conflict with [Michigan law].'”
• “Peninsula Township told Miller Canfield about the potential conflict of interest, but the law firm responded in a ‘perplexing’ way by asking MTPP if there was a conflict of interest, the municipal insurer alleged.”
• “MTTP claimed that Miller Canfield sent a ‘cryptic’ message about the situation and let go of the municipal insurance program as a client after the law firm was asked for clarification and guidance. The law firm allegedly stated that the relationship ended due to a conflict that happened after it was hired by MTTP, but the municipal insurer described this statement as ‘patently false.’ Similarly, MTTP alleged that Miller Canfield falsely stated that it never represented the municipal insurance program.”
• “According to MTTP, Miller Canfield violated state law by not consulting with its longtime client after the law firm decided to represent the wineries in their zoning suit. MTTP further argued that an ‘objective disinterested lawyer’ would know that its decision to represent the wineries would impact its representation of the municipal insurance program.”
• “‘The courts universally hold that a law firm will not be allowed to drop a client in order to resolve a direct conflict of interest, thereby turning a present client into a former client,’ MTTP argued, citing multiple court decisions such as Picker Int’l, Inc. v. Varian Assoc., Inc. from the Federal Circuit. ‘Pursuant to this universal rule, the status of the attorney/client relationship is assessed at the time the conflict arises, not at the time the motion to disqualify is presented to the court.'”

“City seeks outside counsel to handle Cincinnati Southern Railway board ouster demand” —

• “Cincinnati’s top lawyer is in the midst of hiring law firms ‒ at taxpayer expense – to figure out how to handle a request that Cincinnati City Council remove the five board members who oversee the Cincinnati Southern Railway.”
• “Former Republican state Rep. Tom Brinkman, acting as a city taxpayer, sent a letter alleging the board failed to protect taxpayer interests when negotiating the proposed $1.6 billion sale of the city-owned railroad to Norfolk Southern Corp. The deal needs voter approval sometime in the next year and a half.”
• “The city’s municipal code gives the city solicitor the power to ask City Council to remove board members if he or she believes there’s an issue. But the city solicitor’s office also represents the board in legal matters.”
• “City Solicitor Emily Smart Woerner told the lawyer for the citizen in a letter dated May 3 she wanted to get an outside opinion. She wrote that she wanted to ‘ensure that I am providing the best advice and counsel to the city, and to avoid an appearance of any conflict of interest.'”
• “She said she plans to hire two firms to handle the matter. Taft Stettinius & Hollister would represent the city, with the contract stating no more than $40,000 would be spent on this matter and an unrelated matter. Squire Patton Boggs would represent the rail board, with no more than $35,000 spent on this matter. The latter must be approved by the rail board.”
• “Brinkman, who lives in the city’s Mount Lookout neighborhood, last month requested Woerner remove board members after it came to light the board accepted $500,000 less than first promised as part of the deal’s upfront transaction fee, which was first reported by The Enquirer.”
• “Members of the Cincinnati Southern Railway Board − former Cincinnati mayors Charlie Luken and Mark Mallory, former Councilwoman Amy Murray, CPA Paul Sylvester, and Muething, an attorney − voted in November to sell the city-owned railroad to Norfolk Southern for $1.6 billion instead of leasing the railroad to the company as it has for years. The plan is to create a trust with the money and then give the city of Cincinnati money from the trust’s investments to repair infrastructure.”

“Conflict of interest reportedly cited by Chesterfield’s top prosecutor in cases involving former Va. Beach delegate, but to what extent?” —

• “Former Virginia State Delegate Tim Anderson is speaking out after a reported conflict of interest was raised in Chesterfield General District Court Thursday with the county’s top prosecutor.”
• “In a social media post, Anderson said that Chesterfield County Commonwealth’s Attorney Stacey Davenport had ‘declared a permanent ethical conflict and that no prosecutor in Chesterfield can be involved in any case I have because of my public criticism of her in the John Blanchard case.'”
• “Although Thursday’s court appearance was not related to the solicitation of prostitution case against Virginia Beach Pastor John Blanchard, Anderson said that Blanchard’s case was the source of the conflict that was mentioned. It was reportedly raised because Anderson, an attorney, was working as defense counsel for a suspect appearing in Chesterfield General District Court when a representative from Davenport’s office shared the concern about a conflict of interest before presiding Judge Keith Hurley.”
• “Anderson told 8News on Monday that he was handling two cases out of Chesterfield County last week. ‘The Commonwealth’s Attorney refused to handle either and said they needed special prosecutors for both cases,’ he said. ‘Because I have publicly criticized Stacey Davenport in the performance of her office involving the John Blanchard case, that I’m penalized now, that I can’t work with any prosecutor in her office forever, that a permanent conflict exists.'”
• “Anderson said that the prosecutor in court Thursday did not explicitly list Blanchard’s case as a reason for the conflict of interest, but instead referenced Anderson’s criticism of Davenport and a previous instance of saying that she had lied.”

While Montana just banned tik tok (and some may have ‘client OCG bans firm installation/use of tik tok app on their risk bingo cards): “Big Law Lawyers Are on TikTok. Their Firms Are Conflicted” —

• “Priscilla Hamilton, an associate at Simpson Thacher & Bartlett who posts content to TikTok under the name ‘legallypriscilla,’ was approached by a brand to do a paid post, she said in a series of now deleted videos. Hamilton said her firm, which she did not name in her videos, told her that doing so was a conflict of interest. Hamilton also said she was also told that any paid partnerships she submits would be rejected ‘even if there’s no conflict of interest.'”
• “‘Simpson Thacher does not permit employees to get paid to promote products or brands, in order to avoid potential business or legal conflicts with our current and future clients, in accordance with applicable law,’ the firm said in a statement. It added that it does not comment on any specific personnel matters.”
• “Tirtasaputra said she’s connected with potential clients through the TikTok app, and some of her videos have influenced people to apply for Fox Rothschild’s fellowship program. At a recent recruitment event at UCLA, she was recognized by some law students who said they were expressly interested in the firm because of her account.”
• “Fox Rothschild doesn’t discourage the use of social media, said its chief business officer Holly Lentz Kleeman, but any brand advocacy or sponsorship opportunities go through formal conflicts review process through its general counsel.”

“Patent Probe Can Proceed Despite Judge’s Cisco Stock Ownership” —

• “Cybersecurity firm Centripetal Networks LLC can’t halt a US Patent and Trademark Office tribunal’s validity review of a patent that was part of a wiped-out $1.9 billion verdict against Cisco Systems Inc., the Federal Circuit ruled Tuesday.”
• “Although the verdict in the high-profile patent-infringement case was vacated due to Cisco stock owned by the presiding judge’s wife, the Federal Circuit said a parallel challenge to the patent’s validity lodged against Centripetal can proceed in the face of an administrative patent judge owning a small amount of Cisco stock.”
• “Centripetal’s petition, filed in March, sought to wipe out all the decisions in the administrative case and to have a brand new panel of administrative judges take up the threshold decision of whether to institute an inter partes review of the patent.”
• “Centripetal told the Federal Circuit the board’s actions thus far should be undone because Brian J. McNamara, one of the three administrative patent judges who originally agreed to hear the patent challenge, owned between $1,001 and $15,000 in Cisco stock and received retirement income from a law firm that did lobbying work for the company.”
• “McNamara and another judge ultimately left the panel, and the PTAB refused to shut down the case or abandon its decisions, including one allowing Cisco to join in the challenge. The board determined that McNamara’s Cisco stock holdings fell below a federal recusal threshold for executive branch employees, and it said Centripetal took McNamara’s former firm’s work out of context.”
• “The Federal Circuit said Centripetal hasn’t been harmed thus far in the process, especially in light of Cisco’s secondary role in the proceeding, which has yet to actually reach whether the challenged claims are invalid.”

“City firm was in ‘intractable conflict of interest’ with client” —

• “City law firm RPC has been ordered to pay a former client damages of £192,500 after it put itself in an “intractable conflict of interest and duty” during its work for her.”
• “Mr Justice Fancourt found that RPC – which is well known for acting for solicitors facing claims – preferred its own interests and those of a funder to whom it introduced the client over those of the client herself.”
• “He rejected the firm’s contention that the terms of the conditional fee agreement (CFA) it signed with Deborah Forster allowed it to put its interests before hers.”
• “RPC acted for her in a dispute with investors in her company who removed her. The case settled during trial in March 2011 with a Tomlin order that they would pay Ms Forster £350,000 and 80% of her costs, with £400,000 on account; the £750,000 was to be paid six months later.”
• “However, only £50,000 was paid and nothing more was recovered. She claimed for loss of the opportunity to enforce the Tomlin order in October 2011 – RPC did not follow her instructions to do so, preferring instead to negotiate – and thereby recover more.”
• “In February 2011, RPC persuaded her to sign a funding agreement with a John Deacon to help pay for disbursements but did not disclose to her that it had an existing relationship with Mr Deacon and his company, Giltspur Capital, in which it was invested.”
• “The firm also failed to disclose that it started to act for Mr Deacon soon after the agreement was signed. The various agreements meant that Mr Deacon would be paid first from any recoveries, followed by RPC and counsel, with Ms Forster receiving anything left.”
• “However, the judge found that, in persuading a reluctant Ms Forster to accept the settlement, RPC gave her ‘a clear assurance’ that she would receive £350,000 out of the £750,000 that was to be paid on 30 September 2011. As a result, the firm was estopped from contending that, because of the terms of the CFA, she lost nothing of value as a result of any breach of duty.”
• Mr Justice Fancourt found:
  • “In relation to the Deacon agreement, ‘RPC had a clear conflict of interests in advising Ms Forster to borrow money from Mr Deacon and then advising and acting for (or in the name of) Mr Deacon in preventing Ms Forster from enforcing the first Tomlin order [without consent, which it did not have]…'”
  • “‘The conflict went further than acting for two clients whose interests in a transaction conflicted because RPC had its own interest in the business of Giltspur and in working with Mr Deacon, which it did not disclose to Ms Forster at any time…'”
  • “‘As a result of the enormous costs incurred on Ms Forster’s claim and the modest settlement in her favour, there was an intractable conflict of interest and duty on the part of RPC once the [other side] defaulted.'”

The ALM/Law Journey Editorial Board writes: “In Support of ABA Proposal on Lawyer Due Diligence” —

• “At its mid-year meeting in February, the American Bar Association passed a resolution that brought ABA policy current in light of the enactment of the Corporate Transparency Act (CTA) in 2021, which addressed anti-money laundering. At the heart of the law, and efforts to fight not just money laundering, but terrorist financing, human trafficking and other such crimes, is disclosure of beneficial ownership. Beneficial owners are those who are the actual, behind the scenes owners of business entities.”
• “The filing obligations under the CTA will start to become effective Jan. 1, 2024. Subject to certain exemptions, domestic business entities and foreign entities registered to do business in the United States that meet certain employee and revenue thresholds are required to report certain information relating to beneficial ownership.”
• “Nonetheless, the issue of whether lawyers have responsibility to ask appropriate questions and otherwise be obligated to engage in a certain level of due diligence remains a matter of public concern, as well as a legitimate concern to the profession as to how lawyers are perceived.”
• “Those who remember the Sixty Minutes program some years ago, where lawyers appeared to have been caught on film discussing potential representation of a fraudster seeking to park illicit money in the U.S., will recall the negative reaction of the public to lawyers seen as aiding and abetting money laundering.”
• “The ABA proposal would add the prefatory language to the overall rule regarding representation to state that “a lawyer shall assess the facts and circumstances of each representation to determine whether the lawyer may accept or continue the representation.” It also adds to the mandatory conditions for refusal to represent or to withdraw the provision that ‘the client or prospective client insists on using the lawyer’s services to commit or further a crime or fraud.'”
• “Nonetheless, the proposal is a necessary addition to address not only the appearance of lawyers to the public, but the substantive obligations of lawyers. If lawyers do not regulate themselves, other measures loom on the horizon, such as the ENABLBERS Act, passed last year by the U.S. House of Representatives but killed by the Senate, or new rulemaking by U.S. Treasury Department under the Bank Secrecy Act.”
• “It is anticipated that the proposal to amend the Model Rules, or a proposal substantially like it, will be considered by the ABA at its annual meeting in August. The proposal has undergone substantial public comment. If adopted, then of course it does not become binding until and unless the respective jurisdictions adopt it. We add our voice to support this proposal.”

“Attorney Disqualified in Amber Heard Coverage Battle” —

• “A California federal judge’s tentative ruling has delivered a surprising twist in the heated battle between insurers New York Marine and General Insurance Co. and Travelers. The two insurance giants are embroiled in a fierce dispute over coverage in a defamation lawsuit involving actress Amber Heard and her ex-husband, Johnny Depp. In a surprising development, the judge has granted New York Marine’s bid to disqualify Maynard Nexsen from representing Travelers, shaking up the legal landscape and heightening the drama surrounding this high-profile case.”
• “The judge’s decision is based on the fact that one of Maynard Nexsen’s associates, Matthew A. Chipman, previously worked for McCormick Barstow Sheppard Wayte & Carruth LLP, the firm representing New York Marine in the lawsuit. This revelation creates an intriguing legal conflict, raising questions about potential conflicts of interest and adding a layer of complexity to the case.”
• “The involvement of Amber Heard and Johnny Depp in the underlying defamation lawsuit forms the backdrop of this insurance coverage dispute. Travelers accused New York Marine of failing to fulfill its obligation to provide coverage to Heard, who was a co-insured party.”
• “As the legal battle between New York Marine and Travelers intensifies, the disqualification of Maynard Nexsen adds a new layer of intrigue to an already captivating case. The implications of this ruling are significant for both insurers and the high-profile individuals involved. The disqualification not only disrupts Travelers’ legal representation but also underscores the complexity and intensity of the dispute surrounding Amber Heard and Johnny Depp’s defamation lawsuit.”
• “Moving forward, the focus will shift to the actions and strategies of the parties involved. It remains to be seen how Travelers will regroup and respond to the disqualification, as well as how New York Marine will leverage this development in their pursuit of a favorable outcome. The case’s outcome could potentially reshape the landscape of insurance coverage disputes, setting precedents for future cases involving co-insured parties and complex legal conflicts.”
• For more detail and background, see: “Amber Heard Defense Cost Drama: Insurer Fights to Disqualify Law Firm Over Conflict of Interest“

(I’m curious to see if they start going to bank and payment processors to get this data, or even “recruiting laterals.”) “SEC, Covington dig in their heels as judge weighs US demand for client names” —

• “A federal judge on Wednesday urged the U.S. Securities and Exchange Commission to resolve its dispute with law firm Covington & Burling over the agency’s demand for the names of 300 clients affected by a cyberattack on the firm.”
• “The SEC sued Covington in January to force the prominent Washington-based firm to identify public company clients whose information was accessed or stolen in the breach. The hack was carried out by the Chinese-linked Hafnium cyber-espionage group, according to court filings, and the SEC said it needed the client names to probe for securities law violations associated with the attack.”
• “Covington, represented by law firm Gibson, Dunn & Crutcher, has resisted the subpoena, arguing that its clients are confidential and identifying them would run afoul of legal ethics standards and constitutional privacy protections.”
• “U.S. District Judge Amit Mehta called the SEC’s request “concerning” at Wednesday’s hearing, but also appeared skeptical that he had the legal authority to block the agency’s demand.”
• “Mehta told an SEC lawyer that the subpoena puts Covington in the “very awkward position” of having to identify its clients to an enforcement agency without evidence of wrongdoing.”
• “The SEC has said the client identities are necessary to investigate potential insider trading associated with the hack and to ensure that the companies affected made required disclosures.”
• “The judge appeared to search for a resolution short of a court order, asking Hansen if the SEC could narrow its demand to only clients that had private information material to investors accessed during the cyberattack.”

(Curious, I tried to identify the brother and his oeuvre. IMDB reported about 30 individuals with the surname.) “AMC Shareholder Case Judge Refutes Special Master Bias Concerns” —

• “A lawyer deputized to assist in shareholder litigation over preferred equity units issued by AMC Entertainment Holdings Inc. doesn’t appear to have any conflicts of interest, a Delaware judge said Wednesday.”
  “Amato is reviewing a tidal wave of letters from AMC retail investors writing to oppose a legal settlement allegedly worth more than $100 million.”
• “Zurn, writing for Delaware’s Chancery Court, said the risk of retaliation by Hollywood elites against Amato’s brother, who allegedly works as a film editor, is too remote to justify removing her from the case. “I can envision no set of circumstances” in which her recommendations “could so anger Hollywood’s entertainment industry that it would blacklist” him, the judge said.”
• “Nor does Amato appear to have any conflicts of interest stemming from her past work as co-counsel with one of the lawyers for the investors leading the litigation, Zurn found. But the judge said she would wait to formally reject that argument until Amato submits an affidavit stating that she’s unbiased.”
• “The motions didn’t fully back up the assertions about Amato’s brother or say where the information came from—they simply flagged film industry work by someone sharing a last name with her—but Zurn said she had taken the claims at face value.”
• “The settlement—worth more than $100 million at current trading prices, according to recent court filings—would resolve claims that the APE conversion reflects a complex corporate engineering scheme aimed at unfairly sidelining ordinary shareholders. AMC would get to move ahead with its recapitalization plan, while each owner of common stock would receive an additional share for every 7.5 they hold.”

Further, from the ruling: “RE: In re AMC Entertainment Holdings, Inc. Stockholder Litigation” —

• “The second motion alleges Special Master Amato may not be impartial with regard to Mark Lebovitch, Esq., of Bernstein Litowitz Berger & Grossmann LLP, who has entered his appearance on behalf of plaintiffs in this case. The motion asserts Special Master Amato and Mr. Lebovitch worked together on In re Globe Specialty Metals, Inc. Stockholders Litigation, C.A. No. 10865-VCG (Del. Ch.).”
• “A review of that docket indicates that indeed, Special Master Amato’s firm and Mr. Lebovitch’s firm served as co-lead  counsel for the plaintiffs in that case, and both Special Master Amato and Mr. Lebovitch entered appearances.”
• “The motion states that Special Master Amato’s co-representation of lead plaintiffs with Mr. Lebovitch in that matter, which concluded nearly seven years ago, “raises reasonable questions regarding her impartiality.”
• “I interpret the motion as seeking disqualification under Rule 2.11(A)(1).”
• “Special Master Amato’s past representation in In re Globe Specialty Metals does not give rise to an objective appearance of bias in favor of Mr. Lebovitch or his clients. Serving as co-lead counsel in a case nearly seven years ago creates no logical concern that Special Master Amato would favor Mr. Lebovitch or his clients in her recommendations in this matter.”
• “The fact that the movant ‘has no way of knowing if both parties have been communicating outside this court’ does
  not change that result. One could say this of any judicial officer and any other person, but absent any reason to think such communications exist and that such communications are of such a nature that would create or reflect a bias, this unknown does not contribute to the objective appearance of bias.”

Last week: “Baker McKenzie Should Drop Tucker Carlson, Ex-Fox Producer Says” —

• “Tucker Carlson risks being dumped by the lawyers defending him in a suit by a former Fox News producer, thanks to his recent firing, an attorney for the producer says.”
• “Baker McKenzie lawyers are currently representing Carlson and Fox News in the civil suit filed by Abby Grossberg, the former head of booking for Fox’s ‘Tucker Carlson Tonight’ program. Grossberg’s lawyer says that presents a conflict, now that Carlson has accused Fox of fraud and breach of contract stemming from his April 24 firing.”
• “‘It is our belief that Mr. Carlson may need to obtain independent legal counsel, given the conflictual nature of his relationship with his now former employer Fox News Network,’ Parisis Filippatos said in a May 9 letter to Judge Jesse Furman.”
• “Grossberg alleges in her lawsuit that Carlson and others at Fox fostered an ‘overtly misogynistic work environment’ and that she suffered ‘countless’ examples of sexism and antisemitism while employed by the news network.”
• “Filippatos, a White Plains, N.Y. employment lawyer, said Baker McKenzie ‘seems to be engaged in a likely conflict’ that could harm his client by delaying the case.”
• “Filippatos in a May 5 letter to Evans and Katzenstein, cited separate leaks of racist statements by Carlson, which Filippatos said ‘presumably’ came from the network. The leaks ‘clearly indicate the existence of an inherent and unwaivable conflict of interest between Fox News and Mr. Carlson, which would make your joint representation of those two parties highly problematic for various reasons.'”

And then, on Sunday: “Baker McKenzie Drops Tucker Carlson in Fox Discrimination Suit” —

• “Baker McKenzie is dropping former Fox News star Tucker Carlson as a client after a former producer argued the firm had engaged in a conflict by also representing Fox.”
• “‘Mr. Carlson will be represented by separate counsel in this matter, who will enter an appearance reflecting as much,’ New York-based Baker partner Paul Evans wrote to US District Court Judge Jesse Furman on Friday.”

“Judge rejects bid to disqualify JPMorgan’s law firm in Epstein litigation” —

• “A federal judge on Thursday rejected an effort to disqualify the law firm defending JPMorgan Chase & Co (JPM.N) against a lawsuit by women who claim they were abused by Jeffrey Epstein and that the bank aided in the late financier’s sex trafficking.”
• “U.S. District Judge Jed Rakoff in Manhattan said the firm WilmerHale did not have a conflict of interest because it once represented an anti-sex trafficking group that supported Courtney Wild, one of Epstein’s accusers.”
• “Rakoff also found no proof Wild gave WilmerHale confidential information that was material to the JPMorgan case, and said the bank would suffer “great prejudice” from being disqualified “so late in this litigation,” five months before the Oct. 23 trial.”

Previously: “Law firm for JPMorgan in Epstein case fights disqualification bid” —

• “Law firm Wilmer Cutler Pickering Hale and Dorr pushed back on Monday against an effort to bar the firm from defending JPMorgan Chase & Co (JPM.N) in a lawsuit accusing the bank of helping to facilitate late financier Jeffrey Epstein’s abuse of women and girls.”
• “WilmerHale lawyers said in a court filing that the firm’s past work for an anti-sex trafficking organization that supported an alleged Epstein victim, Courtney Wild, was ‘unrelated to and had nothing to do’ with the case against JPMorgan, which was brought by a different Epstein accuser in U.S. District Court for the Southern District of New York.”
• “WilmerHale lawyers authored a friend-of-the-court brief in 2021 on behalf of the anti-trafficking organization ECPAT-USA urging the U.S. Supreme Court to take up an appeal by Wild, who had sued to invalidate a 2007 non-prosecution deal between Epstein and U.S. prosecutors.”
• “WilmerHale said in Monday’s filing that it did not represent Wild and that its work with ECPAT-USA was limited to filing the Supreme Court brief on a legal issue unrelated to the JPMorgan case. The firm argued that ECPAT-USA as an outside organization was not directly involved in Wild’s case.”
• “WilmerHale attorneys accused the plaintiff of ‘gamesmanship’ in attempting to disqualify JPMorgan’s preferred law firm.”

“FTX’s law firm is back in the cross-hairs as Bankman-Fried kicks off defense” —

• “Indicted FTX founder Sam Bankman-Fried has renewed his attacks on the bankrupt cryptocurrency exchange’s law firm as he mounts his defense against a raft of fraud, money laundering and campaign finance charges.”
• “Bankman-Fried late Monday asked a judge to designate FTX’s current leadership and the exchange’s attorneys at law firm Sullivan & Cromwell as part of the ‘prosecution team’ in the criminal case against him.”
• “FTX and Sullivan & Cromwell provided such extensive cooperation to the government that prosecutors had ‘effectively deputized the company to aid the prosecution,’ Bankman-Fried argued.”
• “Sullivan & Cromwell, a prominent Wall Street law firm with about 900 lawyers, represented FTX on transactions and regulatory matters before its collapse last year. The firm secured court approval in January to advise FTX in its bankruptcy, overcoming objections from some FTX creditors and U.S. lawmakers that its past work created a conflict of interest.”
• “Bankman-Fried publicly assailed Sullivan & Cromwell following the exchange’s collapse, claiming the firm rushed FTX into bankruptcy and downplayed its prior work for the exchange. The firm has denied the claims.”
• “Monday’s filing in Manhattan federal court indicated that the one-time crypto billionaire would target Sullivan & Cromwell and current FTX CEO John Ray in his criminal defense as well.”
• “If the judge grants Bankman-Fried’s request to designate them as part of the prosecution, they would be required to turn over any documents relevant to the case, including evidence that potentially bolsters Bankman-Fried’s defense. Normally only prosecutors face that obligation.”

“Proskauer Goes Even Harder After Former Firm Executive With Amended Complaint” —

• “The explosive lawsuit between Biglaw firm Proskauer and its former chief operating officer, Jonathan O’Brien, continues to be filled with eye-popping rancor.”
• “You’ll recall, the firm alleged in its initial complaint, filed in December, that the now-former COO downloaded 34 gigabytes of internal data to a USB drive before announcing he was leaving the firm to work for a competitor. O’Brien was poised to join Paul Hastings, but that deal blew up when the lawsuit was filed.”
• “Now Proskauer has filed an amended complaint, adding a lot more color to the dispute between the two parties. As reported by Bloomberg Law, the new complaint accuses O’Brien of a scheme to recruit a number of Proskauer executives to Paul Hastings:
  • Jonathan O’Brien conspired with “key executives,” including Proskauer’s former chief financial officer, Leigh Anne Whyte, in the effort to bring senior officials and staff with them in a move to Paul Hastings, Proskauer said Monday. The new allegations came in an amended complaint filed in a Manhattan federal court.
  • The firm also accused O’Brien of sharing recruiting information with the “chair of the competing law firm,” a reference to Frank Lopez, the Paul Hastings chair and a Proskauer alum. The two law firms are among the largest in the US, with each eclipsing over $1.2 billion in gross revenue in 2022.”
• “Proskauer also notes in the amended complaint that, after the first complaint was filed, O’Brien deleted communications.”
• “In a statement, Paul Hastings said the firm ‘neither solicited nor received any confidential or proprietary information,’ and that, ‘This continues to be another firm’s personnel dispute and we do not comment on other firms’ personnel matters.'”
• “O’Brien’s attorney, Russell Beck, said in a statement the amended complaint was ‘drafted with an eye towards using the media.'”

“Cannabis License Conflict Draws Sanction” —

• “A conflict of interest and related violations drew a six-month suspension followed by eighteen months of probation from the Arkansas Committee on Professional Conduct Panel D.”
• “The conflict involved a client who had retained Respondent regarding a medical marijuana cultivation license. The client had created an entity (“Courageous Ann”) to pursue a license to establish an Arkansas medical marijuana cultivation company.”
• “Respondent had access to a client-created dropbox and maintained such access after leaving his firm. The firm and the Respondent continued as counsel after his departure. The Arkansas Democrat-Gazette reported on the sharing of dropbox documents:
  • “An Arkansas Democrat-Gazette review of public records found that large portions of Delta Medical Cannabis Co.’s successful cultivation license application had the same wording — verbatim in some cases and slightly tweaked in others — as the language used in 46th-ranked Courageous Ann’s application.”
  • “Electronic fingerprints on Delta Medical’s internal documents and company emails — provided by sources — show how the contents of Courageous Ann’s application funneled into Delta Medical’s hands through accounts linked to its previous attorney, Michael Langley.”
  • “Langley is the former director of the Arkansas Alcoholic Beverage Control Division, the agency that now oversees the state’s burgeoning medical marijuana industry. Langley was not involved with medical-marijuana issues during his time at the agency, having left several years before voters approved the constitutional amendment on the drug in 2016.”
• “The order finds a violation of the duty of confidentiality as well as a conflict of interest by representing Delta in competition with Courageous Ann.”