Bressler Risk Blog

“Virginia senator who does legal work for skill game industry will help write skill game bill” —

• “A state senator whose law firm has helped the skill game industry fight Virginia’s ban on the slots-like gambling machines is among the handful of senators picked to write legislation behind closed doors that could determine whether the industry remains profitable or ceases to exist in the state.”
• “Many members of the Virginia General Assembly are lawyers, and it’s not uncommon for them to vote on legislation that could conceivably impact a client.”
• “Glancing associations aren’t usually enough to trigger Virginia’s conflict of interest laws, which are meant to prevent elected officials from taking public actions that benefit their private interests.”
• “But the professional connection Sen. Bill Stanley, R-Franklin, has to Georgia-based skill game company Pace-O-Matic is unusually direct, touching on his work as a private attorney, his interest in car racing and the political punditry he offers in podcast form. Pace-O-Matic has lobbied heavily for the bill Stanley will now help finalize in the last week of the session.”
• “In an interview Thursday, Stanley said the Virginia Conflict of Interest and Ethics Advisory Council determined his ties to Pace-O-Matic don’t amount to a legal conflict.”
• “‘They found that there was no conflict because I don’t own Pace-O-Matic,’ Stanley said. ‘I don’t own one of these skill games. And I don’t own a convenience store that has a skill game in it.'”
• “Stanley and his firm worked with Pace-O-Matic on a lawsuit seeking to overturn the previous ban passed by his General Assembly colleagues, a legal challenge that bought skill game companies nearly two years of revenue with no taxation and regulation before the ban was reinstated last year.”
• “Pace-O-Matic also sponsors a racing team partnership between Stanley and former NASCAR driver Hermie Sadler, who has hosted skill games at his Southside Virginia truck stop and served as a plaintiff in the lawsuit trying to keep them legal. The company also sponsors the ‘Leaning Right and Turning Left’ podcast Stanley hosts with Sadler. Fliers promoting that podcast are laid out on the reception desk outside Stanley’s General Assembly Building office and include the phrase ‘Powered by Pace-O-Matic.'”
• “Asked if he remains retained by Pace-O-Matic and Sadler today, Stanley said, ‘Of course.'”
• “Getting the bill passed is critical to Pace-O-Matic’s continued business in Virginia. Its failure would mean the company would have to pack up thousands of skill machines that are currently deactivated due to their illegal status. Its passage would allow the machines to be turned back on and start making money again, but the bill’s specifics could determine exactly how profitable they could be.”
• “The law also says a conflict doesn’t exist if a legislator’s interest in a matter considered by the General Assembly isn’t ‘substantially different’ from that of “the general public” or a broader ‘class or group’ of businesses that could potentially be impacted. In other words, if Stanley only works with one of several skill game companies operating in Virginia, that could be enough to clear him under the “substantially different” rule.”
• “Though the skill game legalization bill affects multiple companies and the public, roughly half the skill machines in Virginia are believed to be Pace-O-Matic machines, according to the limited state data available.”
• “Stanley said he had previously abstained from gambling votes and opposes gambling generally, but was ‘surprised’ to learn that the Ethics Council found he could act freely on skill game legislation because there was no conflict.”

“Sundholm v. Hollywood Foreign Press Assn.” —

• “The case involves Magnus Sundholm, a former member of the Hollywood Foreign Press Association (HFPA), who sued the HFPA for breach of contract and other claims after his expulsion from the organization. The HFPA moved to disqualify Sundholm’s attorneys from the case, asserting that they had reviewed privileged documents that belonged to the HFPA. The trial court granted the motion, leading to Sundholm’s appeal.”
• “The Court of Appeal of the State of California, Second Appellate District, Division Seven, found that while Sundholm’s attorney had improperly refused to produce documents in response to a subpoena from the HFPA, disqualification of the attorney was not the appropriate remedy. This is because disqualification affects a party’s right to counsel of choice and should not be used to punish an attorney for improper conduct. The court further found that there was no evidence that the possession of the HFPA’s documents by Sundholm’s attorney would prejudice the HFPA in the proceeding.”
• “Thus, the court reversed the trial court’s order disqualifying Sundholm’s attorneys.”

“New opinions from the Ohio Board of Professional Conduct” —

• “The Ohio Board of Professional Conduct has released two advisory opinions concerning in-house counsel and lawyers serving in the dual role of guardian ad litem/lawyer. Each opinion replaces an earlier opinion that analyzed the issue presented under the former Code of Professional Responsibility.”
• “Advisory Opinion 2024-01 addresses the ethical issues that can arise when an in-house lawyer for a corporation privately represents a customer of the corporation. The board advises that the representation should be avoided due to potential issues with conflicts of interest, the impairment of the lawyer’s independent professional judgment, the unauthorized practice of law, and the impermissible sharing of fees with a nonlawyer. This opinion replaces Adv. Op.1992-17.”
• “Advisory Opinion 2024-02 concerns a lawyer’s communication with a represented party when the lawyer serves in the dual role as guardian ad litem and lawyer for a child in juvenile or domestic court matters. The Rules of Professional Conduct generally prohibit communication with represented parties unless the opposing lawyer gives permission, or the conduct is permitted, by law or court order. The board concludes that communication with a represented person, usually the child’s parent, is permitted when the sole purpose of the communication is to obtain information about how to initially contact the child. This opinion replaces Adv. Op. 2006-05.”

“Blackstone Racked Up $165M in Kirkland Fees in Just 3 Years” —

• “Blackstone paid Kirkland & Ellis $164.6 million in legal fees over the past three years, the New York-based private equity giant disclosed in a new regulatory filing.”
• “Blackstone makes the unusual legal fee disclosures to comply with U.S. Securities and Exchange Commission rules on potential conflicts of interest stemming from having an attorney on the board who’s employed by a law firm that receives work from the company.”
• “Those rules came into play for the private equity firm when Reginald ‘Reg’ Brown, a partner in Kirkland’s Washington, D.C., office, joined its board in 2020.”
• “Brown, who earlier in his career was an associate White House counsel under President George W. Bush, came to Kirkland after 15 years as a partner at Wilmer Cutler Pickering Hale and Dorr, where he was chair of its Financial Institutions Group and vice chair of its Crisis Management and Strategic Response Group.”
• “That rule also has come into play at Meta, where Robert Kimmitt, senior internal counsel at Wilmer, joined the board in 2020. Meta paid Wilmer $67 million in 2022. The tech giant has not yet disclosed how much business it did with the law firm in 2023.”

“Opioid Judge Has Concerns About Motley Rice: ‘I Can’t Understand Why You Don’t See That’” —

• “A federal judge is weighing whether to disqualify Motley Rice from dozens of opioid lawsuits because the firm obtained confidential information when representing the state of Hawaii, the District of Columbia and the City of Chicago in separate actions.”
• “At a Feb. 12 hearing, U.S. District Judge Dan Polster, who is overseeing the opioid multidistrict litigation in the Northern District of Ohio, raised several questions to Motley Rice’s Linda Singer about her responsibilities as outside counsel in government lawsuits against the same defendants her firm has sued in the opioid cases—specifically, pharmacy benefit manager OptumRx Inc., owned by United HealthCare.”
• “Brian Boone, of Alston & Bird in Charlotte, North Carolina, has alleged in a disqualification motion that Motley Rice, in the government cases, used its subpoena powers to obtain confidential documents from his client, OptumRx, and some of them pertain to opioids.”
• “At the hearing, Singer insisted Motley Rice never shared the confidential documents with other clients and, in any event, Hawaii’s lawsuit, filed last year, did not even reference opioids. ‘I want to be clear,’ she said. ‘It’s our legal position that, again, none of that matters.'”
• “‘Well, I disagree with that,’ Polster said. ‘I can’t understand why you don’t see that there is a difference between your work for these—your firm’s work for these three entities and your work for all of your other clients, and particularly the four—you know, the four bellwether clients that you’re representing.'”
• “Though the bellwether clients, as cities and counties, also are public entities, Polster drew a distinction because Motley Rice had subpoena powers in the state cases.”
• “The debate addresses a thorny but longstanding issue when private plaintiffs’ firms serve as outside counsel to government entities, particularly state attorneys general. At the hearing, liaison counsel Peter Weinberger, of Cleveland’s Spangenberg, Shibley & Liber, referenced ‘a move afoot’ to ‘curtail the rights of state and cities and counties to retain outside counsel who are prepared to represent them on a contingent fee.'”
• “But OptumRx’s motion says Motley Rice has violated both the American Bar Association’s Rules of Professional Conduct and the Ohio Rule of Professional Conduct 1.11(c), which prohibits a lawyer with confidential government information about a person from representing a private client ‘whose interests are adverse to that person.'”
• “In opposition, the plaintiffs’ executive committee, which includes Motley Rice’s Joe Rice, insisted the firm had no conflict because the government investigations involved allegations of overbilling for insulin and other prescription drugs, not causing the opioid epidemic. As such, the information wasn’t even material, they wrote.”

“ABA Clarifies Rule on Information Obtained During Public Service” —

• “Attorneys with government jobs can’t represent private clients in cases where confidential information learned about an individual through the attorney’s public work could disadvantage the individual, the American Bar Association said on Wednesday.”
• “The opinion clarified the scope of ABA Model Rule of Professional Conduct 1.11(c). The prohibition extends to both current and former government workers, including attorneys who hold part-time public jobs, the ABA said.”
• “This is the case even though 1.11(c) was once aimed at regulating the ‘revolving door’ of lawyers moving from government to private practice, the ABA explained.”
• “‘We do not perceive any countervailing considerations that would justify exempting current public officers and employees from a disqualification provision designed to prevent that lawyer from misusing confidential government information for a private client,’ the ABA said.”
• “The rule ‘applies irrespective of whether lawyers served in a representational capacity when they acquired’ the information, the ABA said. It’s scope therefore includes legislators and public executives. The ABA cited a 2019 New York State Bar Association ethics committee ruling that applied the rule to a part-time town supervisor who also worked as a private attorney.”
• “The ABA also said it interpreted ‘private client’ to include even public ‘entities and officials whom the lawyer represents in private practices, if those clients are not legally entitled to employ the confidential information.'”

See complete text: “Formal Opinion 509 (February 28, 2024).”

Bill Freivogel has been quite busy, keeping an eye on all decisions and update conflicts and risk related. With his kind permission, and my continuing thanks for that making some days of this blog thing easy, I’m sharing some of his commentary and detail on his latest spotted stories of note:

Gottlieb v. Beckerle, 2024 WL 678007 (N.J. App. Div. Feb. 20, 2024).

• Derivative action on behalf of Company.
• Company’s board hired Lawyer to conduct an investigation on whether the action should continue. Lawyer was of counsel to Law Firm. Lawyer’s principal occupation is law professor. Lawyer submitted a report recommending that the board should seek dismissal of the suit. On Defendants’ motion to dismiss the case, Plaintiff claimed, among other things, that Lawyer’s recommendation should be rejected because Lawyer and Law Firm had conflicts of interest because they had been representing Company “for over thirty years.”
• The trial court dismissed the case. In this opinion the appellate court affirmed. The court said that, without more, the fact that the law firm doing a derivative action investigation has been representing the company on other matters does not mean the board could not rely upon the investigation.
• The court also noted that Lawyer’s own work for Company had been minimal, that his investigation in this case was quite thorough, and that Lawyer and Law Firm had no relationships with individual Defendants. Therefore, Company’s board was reasonable in relying upon it.

AGI Suretrack, LLC v. Farmers Edge Inc., 2024 WL 693971 (D. Neb. Feb. 20, 2024).

• Patent infringement case.
• Defendant proposes to use lawyer Robert Stoll as an expert witness. Stoll is a partner at Faegre.
• Faegre is not handling this infringement case. But, Faegre has represented Plaintiff and Plaintiff’s parent company, including an executive termination matter, arguably involving information relevant to this case.
• Faegre claims it has screened Stoll from any matters related to this case. Nevertheless, the magistrate judge, in this opinion, has granted Plaintiff’s motion to disqualify Stoll as an expert witness.
• The court distinguished the holding in Commonwealth Ins. Co. v. Stone Container Corp., 178 F. Supp.2d 938 (N.D. Ill. 2001) (also a magistrate judge opinion), which was one of the early cases holding that, for conflicts purposes, a lawyer/expert does not have a client.

Original LULAC Council No. 2 v. Rey Feo Scholarship Foundation, Inc., No. SA-23-CV-1307-XR (W.D. Tex. Feb. 14, 2024).

• The parties are fighting over who has the rights to certain trademarks. Plaintiff moved to disqualify the defendant’s lawyer (“Lawyer”) on former-client (Rule 1.9) grounds. There were two primary issues: (1) whether Lawyer previously represented Plaintiff, and (2) whether the earlier matter was substantially related to this case.
• In this opinion the court denied the motion, on both grounds. The analyses were too routine and fact-specific to be of precedential value.
• The most interesting aspect was that Lawyer had represented a predecessor company to Plaintiff. The court found that the predecessor was too defunct, and predecessor’s relationship to Plaintiff too attenuated, for Plaintiff to claim that Plaintiff had been Lawyer’s client.

Bold, Ltd. v. Rocket Resume, Inc., 2024 WL 589116 (N.D. Cal. Feb. 13, 2024).

• Copyright infringement case. Bold moved to disqualify Resume’s law firm (“Law Firm”). In this opinion the court granted the motion. Lots of lawyers with various affiliations moving around, some of whom had done work for Bold and were later with Law Firm.
• The key issue was substantial relationship under Rule 1.9. Routine analysis of questionable precedential value. Very California-centric.

In re The Norwich Roman Catholic Diocesan Corp., 2024 WL 535120 (D. Conn. Bankr. Feb. 9, 2024).

• The Bankruptcy Court appointed the Unknown Claims Representative (“UCR”) in 2022. This opinion responds to UCR’s application to employ Law Firm as its counsel.
• The problem is that Law Firm as been serving as Debtors’ counsel in a number of other church sexual abuse cases. In denying the application, the bankruptcy judge said that representing the UCR here seems “at odds” with serving “as parish counsel in several other pending bankruptcies.”
• The court discussed the application of Section 327 of the Bankruptcy Act and the distinction between “actual conflicts” and “potential conflicts,” but clearing all that away, this application simply did not pass the “straight-face” test (our phrase, not the court’s).

“‘One Firm’ or Separate Entities? Vereins’ Growth Bumps Into Conflicts, Liability Concerns” —

• “A venue dispute in a malpractice case against global firm Baker McKenzie has put the structure of Swiss vereins in the spotlight, with many commentators highlighting the existence of unanswered questions about the liability of these entities when a member firm faces malpractice allegations.”
• “Last week’s ruling from an Illinois appeals court defied Baker McKenzie’s request that a case levied by a former client should be relocated overseas where, as the firm stated, ‘witnesses and evidence reside.’ The judges found the plaintiffs supported their allegations regarding the ‘legal unity of liability of defendants’ sufficiently to allow the case to be heard in the state where the firm was founded in 1949.”
• “The case recalls Dentons’ litigation with former client RevoLaze in 2020, when the firm was accused of malpractice for representing the plaintiff in a patent infringement case despite an alleged client-related conflict of interest. At the time, the firm argued that under its verein structure, its U.S. and Canadian offices were separate entities, though, the argument was rejected, with the judge noting that the firm ‘holds itself out to the public as a single firm.'”
• “In Baker McKenzie’s case, the firm is accused of failing to ‘disclose several conflicts of interest’ to a client. Among its defenses is that the client, investment firm Lehram Capital, engaged the firm’s Russian entity Baker & McKenzie CIS-Limited and not the wider firm. Since the suit was filed in 2018, Baker McKenzie’s Russian operations have relaunched as an independent firm in the wake of Russia’s invasion of Ukraine.”
• “In Baker McKenzie’s case, the firm is accused of failing to “disclose several conflicts of interest” to a client. Among its defenses is that the client, investment firm Lehram Capital, engaged the firm’s Russian entity Baker & McKenzie CIS-Limited and not the wider firm. Since the suit was filed in 2018, Baker McKenzie’s Russian operations have relaunched as an independent firm in the wake of Russia’s invasion of Ukraine.”
• “In times of conflict, like the malpractice claim, this model has proven to be ‘a smart way of navigating conflict while keeping work under one roof,’ according to Fort Stratford Partners co-founder Jonathan Fort. ‘A conflict is a huge problem for any international firm regardless of the structure and some clients aren’t going to like that but in a structural way vereins are a smart move,’ Fort said.”
• “Michael McCabe, a D.C.-based managing partner of McCabe Ali and expert witness in malpractice cases, said he doesn’t see a disproportionate number of verein lawyers accused of malpractice or conflicts. In fact, he said vereins ‘bring something to the table’ with talent and global reach.”
• “Yet the Baker McKenzie case suggests a maturation of the verein structure for law firms, as questions about whether liability can be imputed to a parent company have frequently surfaced in corporate law but not in global law firms, at least not prior to emergence of law firms’ use of the verein structure, Robertson [Cassandra Burke Robertson, a law professor at Case Western Reserve School of Law] said”
• “Marketing speak can make the issue a little more fraught, often undermining the divided structure of these entities. Commentators, as well as courts, have noted some vereins send conflicting messages to the market. ‘This is because they present themselves as one unit while legally acting as separate entities,’ explained consultant Tony Williams, a principal with Jomati Consultants.”
• “Baker McKenzie defended against its former client’s claim of legal malpractice, which emerged out of a deal in Russia in 2013, by contending that the client engaged the firm’s Russia-based entity, not the LLP as a whole and the claim had no merit in the U.S. because none its attorneys “in Chicago or anywhere else in the U.S. participated in the Russian litigation regarding the mine.”
• “‘You still see courts that are struggling with the concept of one law firm versus multiple law firms,” McCabe said. ‘Is Baker McKenzie, for example, one gigantic law firm, or is it a dozen or so smaller geographically centric separately created entities that are all within the same overarching family within the Baker & McKenzie brand?'”
• “‘You can’t be a global law firm and say you have 4,000 global lawyers on one hand, but on the other hand [say], ‘We’re not so global and we operate separately even though we are under the same umbrella,’’ McCabe said. ‘There aren’t many cases that talk about this matter.'”
• “A firm’s growth in scale is attended by the higher risk of conflicts, McCabe said, since every client engagement is a potential source of a conflict. This problem is magnified by the global nature of the clients served by global firms, often with complex structures of subsidiaries and joint ventures of their own.”
  “McCabe said vereins need to have a robust conflict checking system because they are ‘convenient targets’ for malpractice claims brought by dissatisfied clients.”
• “‘The benefits of being a Swiss verein or LLP are far more limited these days. I think it won’t be long before people say they are complicated and become limited companies. This would of course come with its own challenges but forward-looking firms might look to move to a different structure,’ said one head of a professional services firm.”

“US court says Baker & McKenzie LLP can face malpractice suit in Chicago” —

• “The lawsuit, amounting to US$200 million, was filed by overseas clients attempting to reclaim ownership of a Siberian coal mine, challenging the firm’s handling of the case. By a majority of 2-1, the appellate court rejected the motion to dismiss the case based on the doctrine of forum non conveniens, allowing courts to decline cases that might be more appropriately or conveniently tried elsewhere. Although the alleged misconduct occurred in Russia, the court determined that legal proceedings could not be conducted there, making Chicago – a major operational base for Baker & McKenzie LLP – a suitable venue for the trial.”
• “At the heart of the dispute is whether Baker & McKenzie LLP, headquartered in Chicago, can be held accountable for the actions of its Moscow branch, Baker & McKenzie CIS-Limited. The plaintiffs argue that the firm’s organizational structure – a Swiss verein comprising legally independent entities sharing a brand and certain management functions – does not exempt the Chicago office from liability for the Moscow office’s alleged malpractice.”
• “The claimants, Lehram Capital Investments and its principal shareholder, Daniel Rodriguez, had sought Baker & McKenzie’s services following the detention of a Lehram official by Russian authorities in 2013, shortly after acquiring the coal mine. The lawsuit contends that Baker & McKenzie CIS-Limited’s mishandling of the legal proceedings, including filing in an inappropriate court with a shorter statute of limitations and exposing Rodriguez to dangerous negotiations, led to the loss of the mine.”
• “Baker & McKenzie LLP had proposed London as a more appropriate venue for the case, given the involvement of its London office in the initial review and referral of the coal mine case. However, the plaintiffs maintain that all entities under the Baker & McKenzie brand operate as a single unit, making the Chicago office equally responsible.”

“When Communications Concerning a Client Can Be Withheld From the Client” —

• “Sometimes conflicts arise between law firms and their clients that require lawyers within the firms to seek legal advice. Such situations may include instances where firm lawyers become concerned about potential legal malpractice claims. In such situations, firm lawyers may seek advice from another lawyer within their firm about how to handle the issue. In subsequent litigation with the client, however, such communications may not be protected from discovery, particularly where the firm lawyer whose advice is sought has been involved in the representation of the client.”
• “Magistrate Judge Barbara Moses of the Southern District of New York recently addressed this issue in Bonde v. Wexler & Kaufman, 2023 WL 8756986 (S.D.N.Y. Dec. 8, 2023).”
• “Wexler & Kaufman PLLC (W&K), a law firm, sought to withhold as privileged communications exchanged among W&K personnel and an outside IT consultant after the firm was sued by a former client, Carl Ulfsson Bonde, for legal malpractice.”
• “The case arose out of a spoofing incident where a cybercriminal duped a W&K lawyer into sending the cybercriminal money that belonged to Bonde. In advancing their privilege claim, defendants argued that the withheld communications were made by W&K attorneys acting as general counsel to the firm for the purpose of providing legal advice to the firm and its lawyers in the wake of the spoofing incident. One of the W&K attorneys, however, was simultaneously acting as Bonde’s lawyer.”
• “Moses ultimately concluded that defendants had not sustained their burden to demonstrate that the firm lawyers whose advice allegedly was sought were acting as general counsel to the firm in connection with the communications, and she ordered the communications produced.”
• “After plaintiff moved to compel, Wexler and Kaufman sought to defend the privilege claims on the ground that in connection with these communications, they had ‘assumed the role of general counsel’ and the communications reflected their advising the firm on possible malpractice exposure, preparing a defense to potential claims by Bonde, and reporting the matter to the firm’s insurance carrier. The parties submitted 10 of the challenged communications for in camera review.”
• “Bonde argued that the withheld communications should be produced for two reasons: (1) defendants had not substantiated their claim that the withheld communications involved the provision of legal advice to the firm (as opposed to actions undertaken on Bonde’s behalf to seek the return of the stolen funds), and (2) defendants were barred from invoking the privilege because ethically Wexler could not act as general counsel to the firm on a matter involving Bonde while simultaneously representing Bonde.”
• “Bonde argued that the withheld communications should be produced for two reasons: (1) defendants had not substantiated their claim that the withheld communications involved the provision of legal advice to the firm (as opposed to actions undertaken on Bonde’s behalf to seek the return of the stolen funds), and (2) defendants were barred from invoking the privilege because ethically Wexler could not act as general counsel to the firm on a matter involving Bonde while simultaneously representing Bonde.”
• “Aside from the ethical conflict, which Moses recognized ‘does not, standing alone, vitiate an otherwise available evidentiary privilege,’ she concluded that Wexler and Kaufman had failed to present sufficient evidence to substantiate that either of them had assumed the role of in-house counsel in connection with the challenged communications.”

“Lewis Brisbois Faces DQ Bid In Scooter Injury Suit” —

• “The plaintiffs in a lawsuit over a defunct scooter-sharing service in Pittsburgh want to disqualify Lewis Brisbois from representing scooter maker Segway in the suit because the firm is also seeking to represent service operator Spin in its parent company’s bankruptcy proceedings in Florida.”
• “In their disqualification bid, two people who were injured in accidents involving Spin scooters and the family of one rider who was killed cited an apparent conflict of interest. Their issue is with Lewis Brisbois representing Segway-Ninebot in the Pennsylvania state court case against Spin, Segway and the city of Pittsburgh at the same time a different attorney from the same firm is seeking to become ‘special counsel’ to Spin’s parent company, Bird Global Inc., in its Chapter 11 case for claims filed over similar injuries in Los Angeles, Chicago and other cities.”
• “The plaintiffs asked the Allegheny County Court of Common Pleas to bar Lewis Brisbois Bisgaard & Smith from continuing to represent Segway in their suit, which was still awaiting rulings on whether it could sever the claims against Spin so the rest of the case could move forward amid the bankruptcy court’s automatic stay.”
• “Alesia Truxell, as the representative of the estate of Lawrence Chertik Jr., along with Jacob Speller and Jennifer Vining, had sued Pittsburgh, Spin and Segway in September, claiming that the scooters were unsafe for the bumps and potholes of Pittsburgh’s roadways, especially at night when other cities restricted the scooters’ usage.”
• “The Pittsburgh plaintiffs said the firm could not represent Segway in a state court lawsuit including Spin at the same time that it represented Spin in its federal bankruptcy, claiming the parties could have adverse interests in the Pennsylvania case or could give Segway access to information about the plaintiffs that Spin held.”
• “They pointed to the factors in assessing potential conflict of interest that Pennsylvania’s Eastern District federal court had established in 1995’s Dworkin v. General Motors Corp. , which calls for a ‘wall’ between attorneys in the same firm who might represent conflicting clients.”
• “‘There is no indication of a ‘wall’ or ‘screen’ between counsel in the Los Angeles office… representing debtor Spin and counsel for the defendants, herein, Segway Inc. and Segway Discovery, Inc., nor is there any indication of a joint-defense agreement between defendants Segway, Inc. and Segway Discovery, Inc. and debtor Spin,’ the motion said.”

“Sam Bankman-Fried to stick with new lawyers despite possible conflict” —

• “Sam Bankman-Fried, the jailed founder of bankrupt cryptocurrency exchange FTX, appeared in court on Wednesday for the first time since his November fraud conviction and confirmed he wanted to stick with new lawyers despite a possible conflict of interest.”
• “Bankman-Fried, 31, in January hired defense lawyers Marc Mukasey and Torrey Young to represent him through his March 28 sentencing. He could face decades in prison after a Manhattan federal court jury found the former billionaire guilty of stealing billions of dollars from FTX customers.”
• “At a brief hearing before U.S. District Judge Lewis Kaplan in Manhattan, Bankman-Fried said he was comfortable hiring Mukasey and Young even though they also represent the founder of bankrupt cryptocurrency lender Celsius Networks, Alex Mashinsky, who has pleaded not guilty to separate fraud charges.”
• “Kaplan asked Bankman-Fried, who wore a tan jail shirt and chains around his ankles, to describe the possible conflict in his own words. ‘At a high level, they also represent Alex Mashinsky,’ said a clean-shaven Bankman-Fried, whose curly hair has grown longer since his monthlong trial last year.”
• “Bankman-Fried described Celsius as ‘a firm that the firms I ran had business interactions with.'”
• “Bankman-Fried told Kaplan he had consulted with lawyers Mark Cohen and Christian Everdell, who represented him during his trial, about Mukasey’s potential conflict. Bankman-Fried said he also had discussed it with Alexandra Shapiro, another lawyer who will handle his eventual appeal.”
• “Mashinsky, 59, waived his right to a lawyer without any potential conflicts at a hearing on Tuesday before U.S. District Judge John Koeltl. Mukasey and Young said at that hearing that they could fairly represent both Bankman-Fried and Mashinsky.”

“Beasley Allen’s Andy Birchfield Faces Evidentiary Hearing on Disqualification” —

• “Plaintiffs attorney Andy Birchfield will face an evidentiary hearing next month on whether to disqualify him and his firm from the talcum powder litigation.”
• “Judges in both state and federal courts in New Jersey found that more evidence was needed to determine whether Birchfield and Beasley Allen, based in Montgomery, Alabama, should be disqualified based on an alleged conflict of interest.”
• “‘Based on the conflicting factual information provided by all parties, this court finds that it cannot confidently decide this issue on the basis of the information contained in the papers,’ he [Atlantic County Superior Court Judge John Porto] ruled in a Jan. 31 order. ‘Therefore, the court finds that an evidentiary hearing is necessary to determine witness credibility and if the defendants met their burden regarding disqualification of Beasley Allen.'”
• “Porto’s order said both James Conlan, a former partner at Faegre Drinker Biddle & Reath, and Birchfield must testify at the hearing. On Feb. 14, he told lawyers he needed to hold the hearing to determine the credibility of the witnesses, which could also include Johnson & Johnson’s worldwide vice president of litigation, Erik Haas, and one of its key attorneys, Barnes & Thornburg partner James Murdica, in Los Angeles.”
• “‘I’m looking at, really, narrowing down, zoning in with a microscope, saying, I’m looking at what happened; what went on; why does Johnson & Johnson have these thoughts; what actually happened; what do we have in terms of documentation or is it just testimony; and then I need credibility,’ he said, according to a transcript.”
• “On Feb. 9, following oral argument on the disqualification motion, U.S. Magistrate Judge Rukhsanah Singh, in the District of New Jersey, agreed that ‘more information is required to determine the issue of disqualification here… Additional information, including credibility determinations, would aid the court in determining whether such a severe remedy of disqualification is appropriate,’ he held.”
• “The evidentiary hearing would involve both judges and take place in Atlantic City, New Jersey, where Porto is overseeing the talc multicounty litigation in New Jersey state courts.”
• “The motions alleged that Birchfield struck a partnership with Conlan, a former lawyer with Johnson & Johnson. Conlan now runs Legacy Liability Solutions LLC, which, along with Birchfield, proposed a $19 billion deal to resolve the talc lawsuits against Johnson & Johnson.”

“L.A. Firm, Attorney Subject of Malpractice, Breach of Fiduciary Duty Suit for ‘King Fury 2’ Movie” —

• “A film production company is seeking over $60 million in damages and alleges a Los Angeles law firm and its attorney committed legal malpractice and breached their fiduciary duty while involved in an overseas film production.”
• “Shanghai-based Creasun Entertainment USA Inc., filed suit against Loeb & Loeb and attorney, Michael Helfant, who is of counsel to the firm, in Los Angeles County Superior Court last week. Creasun claims the defendants failed to diligently represent its interests when the company retained the firm and Helfant to negotiate its financing for the film ‘King Fury 2,’ set to star Arnold Schwarzenegger and Michael Fassbender, among others.”
• “Creasun became involved with the production after film producer Alex Lebovici approached Minglu Ma, the company’s chairman, about an investment opportunity in the film. The suit claims Lebovici and the defendants also ‘secretly developed an attorney-client relationship’ which created a conflict of interest when they represented Creasun in negotiations with Lebovici and his business partners.”
• “When Ma visited Bulgaria for the movie’s production, she claims she learned of alleged fraudulent activity with the film’s budget. Despite only investing $3 million at the time, the film had over $4 million in its account, and producers told Ma it ‘was a simple accounting error,’ the complaint said.”
• “Creasun’s denied access to real time bank statements for the movie production led it to attempt to obtain an audit of the film’s finances, but the company learned there was no contractual mechanism to enforce its right to access the records, the complaint said.”
• “After Creasun refused to put more money into the film’s production and faced pressure from Helfant to continue its investment, Creasun and Ma were then sued in a civil action for damages by a German producer. Creasun then filed a cross-complaint against the German producer, Lebovici, and others which resulted in considerable attorney fees as a consequence of negligent legal services from the defendants, the complaint said.”

“Investor Wants Fla. CBD Co.’s Atty DQ’d In Fraud Suit” —

• “An investor in a Florida health goods company asked a federal judge Wednesday to disqualify an attorney from representing a company principal, saying the attorney should instead testify at trial because he knows about relevant contract negotiations.”
• “Aaron Silberman and his investment firm AMJ Misil AB LLC submitted a motion to disqualify attorney Felipe Rubio from representing defendant Florencia Hane after he failed to appear on her behalf just two weeks before trial. Silberman included Rubio in his witness list for trial because defendants shared his name in an initial disclosure document, saying he had knowledge regarding Silberman’s fraud claims and the drafting of a membership interest purchase agreement in question.”
• “‘Defendants may not now withhold this evidence at trial under the pretense of attorney-client privilege,’ Silberman argued, adding, ‘here, defendants, the holders of any attorney-client privilege between them and attorney Rubio, have put attorney Rubio’s knowledge at issue as discoverable information through their Rule 26 initial disclosures, thereby waiving the attorney-client privilege as to all related privileged matters on the same subject.'”
• “In his suit filed in May 2020, Silberman claims he was lied to about Premier Beauty and Health LLC’s CBD products and prospects when its principals, Florencia Hane and Silberman’s uncle Jorge Hane, courted him for his investment and promised him a job.”
• “Based on the record of evidence, Silberman believed Rubio would testify that he first drafted a member interest purchase agreement between Premier and AMJ that would have allowed Florencia Hane to deposit $100,000 of the investment funds in an account of her choice, according to his memorandum.”
• “‘Plaintiff AMJ never agreed to that and never signed that initial membership interest purchase agreement drafted by attorney Rubio, but defendant Florencia proceeded to transfer … $100,000.00 of plaintiff AMJ’s investment funds to ‘an account of her choice’ anyway, thereby misappropriating … AMJ’s investment funds,’ Silberman said.”
• “Because Rubio’s testimony at trial would be adverse to Florencia Hane, Silberman said his disqualification as her counsel is necessary.”
• “‘Indeed, attorney Rubio’s testimony will, among other things, be adverse to defendant Florencia’s claims that … she did not misappropriate plaintiff AMJ’s investment funds. Consequently, plaintiffs respectfully request that this honorable court disqualify attorney Rubio as defendant Florencia’s counsel,’ Silberman said.”