Bressler Risk Blog

“Former FirstEnergy lawyer says he was troubled by Randazzo agreement” —

• “A former lawyer for FirstEnergy said he wasn’t sure why the company agreed to pay Sam Randazzo hundreds of thousands of dollars each year for five years. Mark Hayden formerly worked as an attorney at FirstEnergy Services Co., a subsidiary of the Akron-based electric utility, supporting the parent company’s former FirstEnergy Solutions power generation subsidiary.”
• “Hayden testified Feb. 9 that he held ‘a number of concerns’ in the 2010s about an agreement that FirstEnergy Services Company had with Sam Randazzo, who at the time was a prominent attorney in the energy space. Later, in 2019, Randazzo became chair of the Public Utilities Commission of Ohio, a state regulatory agency.”
• “Ex-FirstEnergy Senior Vice President Michael Dowling and former FirstEnergy CEO Chuck Jones are accused of bribing Randazzo in their ongoing criminal trial. Randazzo was a defendant in the case before he died in 2024.”
• “For a time, Hayden said, he approved the monthly FirstEnergy Services payments to Sustainability Funding Alliance of Ohio, a shell company that Randazzo owned and controlled.”
• “Testifying as a witness for the prosecution, Hayden said he, Dowling and others at FirstEnergy who worked with Randazzo knew about what the utility called a consulting agreement with Randazzo.”
• “Hayden, who objected to being photographed or recorded in court, said he had numerous issues with the agreement.”
• “For one, Hayden said Randazzo appeared to have a conflict of interest. The utility paid Randazzo at least $25,000 per month while Randazzo represented energy trade group Industrial Energy Users of Ohio, which purchased electricity and generally had different interests than FirstEnergy, Hayden said.”
• “Additionally, Hayden said, the background and purpose of the agreement was not clear to him. And Hayden said Randazzo would reach out to employees of FirstEnergy Solutions ‘as an attorney, knowing that those individuals were represented by counsel.'”
• “The defense contends that the consulting agreement was a legal settlement between FirstEnergy and Industrial Energy Users of Ohio.”
• “In his opening statement on Feb. 3, Assistant Ohio Attorney General Matthew Meyer called the consulting agreement a ‘magic paper’ that the defendants used to create a distraction and conceal the flow of FirstEnergy funds.”
• “Meyer asked Hayden if he had ever seen a settlement in any other context that’s called a ‘consulting agreement.’ Hayden said no.”
• “In an email exchange between Hayden and Dowling presented as a trial exhibit, Hayden expressed his frustration to Dowling about Randazzo’s involvement in FirstEnergy affairs.”
• “Dowling said in an email to Hayden that ‘this has been a problem for more than a decade and probably longer.'”
• “Stamboulidis asked Hayden if Dowling’s statement was in response to Hayden’s concern about Randazzo being a consultant for FirstEnergy Solutions. Hayden said he was generally concerned about the relationship that Randazzo had with the company.”

“Small Deal Won, Big Deal Lost: Inside Big Law’s Eternal Conflicts Dilemma” —

• “Conflicts of interest are a fact of life in legal practice, but they can bite in the most painful places if a firm finds itself conflicted out of big ticket work. There was initial surprise that Linklaters was absent from the recently abortive £260 billion Glencore and Rio Tinto merger talks; according to insiders, the firm was conflicted out, having had to balance its relationships with other major mining companies such as Anglo American.”
• “Though the exact nature of the conflict is unclear, it got the market talking. Here we had a potential £260 billion M&A transaction—before it was halted, it had the makings of the largest transaction anywhere in the world. Ever. Missing out on such a deal can cost a firm in more ways than one: not just in terms of the current fee opportunity, but future opportunities too, with the relationship possibly passing into the hands of a rival.”
• “As consolidation in the market increases, conflicts will inevitably increase in complexity and magnitude. How firms navigate them could be hugely consequential for specific practices but also for the wider firm.”
• “One partner at a top 20 U.K. firm disclosed that they had three deals cancelled already this year due to conflicts; it was simply a fact they had to accept.”
• “Firms have to take precautions to avoid them—not doing so could be costly.”
  “One of the most high-profile conflicts in living memory occurred in 2004 when Slaughter and May successfully obtained an injunction blocking Freshfields from acting for Phillip Green in his £9 billion bid for Marks & Spencer. Freshfields faced a potential conflict as it had previously worked for M&S; the firm argued that it would be able to use a ‘chinese-wall’ during the takeover, a decision the judges called ‘wholly improbable’. Twenty-two years on, and the matter is still remembered, particularly among long-standing City M&A partners.”
• “At most large firms, every new instruction is routed through a dedicated conflicts team, sources say. Teams at multinational firms run 24/7. In the most complicated cases, the question may be kicked upstairs to the conflicts committee or the general counsel. The conflicts committee differs at each firm but generally includes practice heads and senior lawyers deciding the best route for firms to take.”
• “Different jurisdictions are taken into account; conflict laws in the U.S. for instance are more restrictive than those in the U.K.”
• “One partner told Law.com that the worst-case scenario is if a partner gets an opportunity to do some work on a smaller matter, and then the firm is offered the bigger mandate which they then have to turn down. They pointed to finance agreements as being particularly irksome if a big-ticket deal is blocked by some earlier agreement for which the firm was paid a relatively small fee—as little as $3,000, one partner said.”
• “Another senior partner in London at a leading U.S. firm said: ‘Small matters that you take on that then conflicts you out of some big-ticket M&A can be frustrating.’ The partner suggested that one partner trying to hit their targets can then scupper a much bigger, more profitable deal that would benefit the wider firm. ‘What [the firm] can do is it can encourage discipline and good behaviour from its partners, not just thinking of themselves, but thinking of the firm.'”
• While magic circle firms may be more conservative with a centralised system, one partner at a U.S. firm described as a ‘hub and spoke system’, the partner saw U.S. firms as more individualistic and ‘aggressive’ in taking on matters that may eventually lead to conflict risks down the line.”
• “Every partner is under pressure within their firm to bring in their own business. But not all work is created equal.”
  One partner said: ‘It is important that partners are thinking firm first and not just about what’s on their plate.'”
• “A private equity partner placed emphasis on the fact that you not only had to manage relationships between the firm and its clients when it came to conflicts, but between lawyers too, which could be just as complex.”
• “An alternative to flat refusing a deal is to set out to the client as clearly as possible what the firm is able to guarantee and when the firm may act against them. One partner said: ‘If your engagement letter is clear, then you shouldn’t have any issues.'”
  “Partitioning is also a tactic often used by firms to avoid conflicts. By guaranteeing to the client that one team will never see the work that conflicts with the matter, this can serve as a method to ensure the firm can deliver the work. However, this must be established from the start and have client approval from the engagement letter.”

“In pitch-rigging case, Guardians pitcher seeks to shift more blame onto teammate” —

• “In a sign of a growing fissure between two Cleveland Guardians pitchers facing charges tied to a pitch-rigging scheme that benefited gamblers, a lawyer for Luis Ortiz said his client was among those duped by teammate and co-defendant Emmanuel Clase.”
• “In a legal filing unsealed on Monday, in which Ortiz’s representatives asked a federal judge to sever the cases so they could proceed separately, attorney Christos N. Georgalis emphasized the difference in scale between the two pitchers’ alleged participation in the operation. Georgalis characterized Ortiz as ‘a victim of Clase’s scheme, rather than a knowing and willing participant.'”
• “Though the November indictment that brought four federal charges against Clase described nine suspicious pitches he allegedly threw as part of the gambling scheme, prosecutors have opened the possibility that there are more. Attorneys for the government told a federal judge last month they still may identify other pitches and that their investigation is still ongoing. By contrast, Ortiz was accused of rigging two pitches in the indictment and prosecutors said that number has not changed.”
• “Georgalis also cited a potential conflict of interest as justification for severing the cases. The filings detail Clase’s attorneys interviewing witnesses who denied the existence of a betting scheme, but at least one of whom is expected to testify otherwise, according to prosecutors. Even after he was made aware by a judge that the potential conflict of interest could limit how his attorneys question the witnesses they had previously interviewed, Clase elected to stay with his lawyers.”
• “Ortiz’s attorney raised the possibility of serving as a ‘second prosecutor’ and calling Clase’s lawyers to the stand in defense of his client — which he said is an option only if the cases are separated.”
• “One of Ortiz’s ‘likely defenses,’ Georgalis wrote in the filing, is that Clase supplied Ortiz’s pitching strategy to the bettors without his teammate’s knowledge. That approach, Georgalis wrote, ‘is mutually antagonistic to Mr. Clase’s claim of innocence.'”
• “The scheme involved pitchers allegedly predetermining the results of prop bets, as outlined in a 23-page indictment unsealed in November. According to that filing, the ploy netted gamblers winnings of $460,000.”
• “Martin S. Bell, an attorney at Simpson Thatcher and a former federal prosecutor, said there are several reasons why Ortiz could want to sever his case from Clase. Doing so might help Ortiz avoid being prejudiced by the evidence against Clase. The move would also give Ortiz a chance to litigate his case after the government presents their case against Clase at trial, which could be an advantage.”
• “But Bell also noted that, while Ortiz and Clase could still cooperate together in their defense, Ortiz shifting blame to his former teammate also indicates that the parties may be at odds.”
• “‘It’s an interesting posture to be in where you’ve got defendants who are still, in a very important way, sort of on the same boat, but for purposes of this motion, and very possibly for purposes of the practical conduct of a trial, now find themselves, at the very least, on opposite ends with that same boat,’ Bell said. ‘And the question is going to be, is is that boat shaped in such a way that the judge is going to say, ‘Hey, an actual unwarranted injustice would result for making them both go through the trial in that same boat?’'”

“Cadwalader Trial Leaders Resign After Hogan Conflicts Review” —

• “Cadwalader litigation practice leaders Nicholas Gravante and Phil Iovieno resigned on Friday due to conflicts of interest with clients of the firm’s partner in a planned merger, Hogan Lovells.”
• “Litigators Sean O’Shea, Michael Petrella and Matthew Karlan are also leaving, along with corporate partner Nick Ramphal, according to internal emails reviewed by Bloomberg Law. Friday was also their last day, and there’s no word on the six lawyers’ next moves. They didn’t answer comment requests.”
• “Cadwalader said in a statement that the firm expected a few conflicts of interest ‘would be inevitable in the process of creating a global firm with more than 3,100 lawyers.’ It added that ‘we are disappointed that our colleagues will not be a part of the combined firm, but the interests of the clients come first.’ Hogan Lovells declined to comment.”
• “The departures solidify Cadwalader’s shift in focus to complex finance work from litigation as a result of the coming merger. The firms in December announced their plan to create Hogan Lovells Cadwalader, a giant that will generate enough revenue to likely place it among the five largest US firms.”
• “Gravante and some colleagues understood they wouldn’t be able to stay at the firm after a Hogan Lovells merger because of conflicts, according to a person familiar with the matter, who requested anonymity to discuss the departures. Gravante and Iovieno have represented meat buyers in price fixing litigation against meat industry companies that include Hogan clients, the person said.”
• “Hogan CEO Miguel Zaldivar cited Cadwalader’s ‘top of the market finance capabilities’ and growing in New York as his motivation for pursuing the Cadwalader merger. In an interview with the American Lawyer, Zaldivar said partners who Hogan identified as key to the merger, like those who control the bank relationships and sources of revenue, are staying.”

“Judicial Ethics Opinion 25-130” —

• “A judge who receives an insurance reserve balance payment from the judge’s former law firm is disqualified for two years from all cases involving the firm. The two-year period commences from the date of payment. The disqualification is subject to remittal.”

“Judicial Ethics Opinion 25-131” —

• “A judge need not disqualify from a case involving child endangerment charges merely because (a) the judge’s child knows the subject child, (b) the judge’s close friend is engaged to a witness in the case, and (c) the judge recently disqualified him/herself in a different case on other grounds.”

“NY judge took vacations with lawyers, was in text thread filled with ‘off-color jokes,’ ‘sexually graphic images’: officials” —

• “A New York judge took Caribbean vacations with a group of attorneys and engaged in a text message chain featuring ‘off-color jokes’ and ‘sexually graphic images’ with them — helping fuel her hasty retirement, court officials said.”
• “Rockland County Supreme Court Justice Sherri Eisenpress agreed to step down on April 28 over multiple alleged conflicts of interest, the state Commission of Judicial Conduct said Monday.”
• “The CJC said Eisenpress failed to disclose her close personal relationships with the group of attorneys, even as she heard their cases in her courtroom, violating laws that judges must be impartial.”
• “The half dozen lawyers argued in front of Eisenpress between 2019 and 2024 — when they all also traveled to the Dominican Republic, Mexico and the Jersey Shore together at various times, according to the commission.”
  he women were also on a text chain at various times titled ‘Punta Cana Partiers,’ Bougie B*tches’ and ‘Queen Dara and Her Loyal Subjects,’ in reference to the court’s principal attorney, who conducts research, analysis and drafts opinion for judges.”
• “‘[Eisenpress] and the members of the group text message chain … shared confidences and discussed and shared social and travel plans and invitations, gossip, photos, off-color jokes, and sexually graphic images,’ the CJC wrote, outlining its misconduct allegations.”
• “The alleged conflicts didn’t stop there for Eisenpress, who went from family court to state Supreme Court justice during her 15 years on the bench.”
• “Eisenpress was accused of presiding over 41 cases involving the law firm of her principal law clerk’s spouse, while declining to acknowledge the ties or to limit the top aide’s work on those cases, the commission said.”
• “She also handled a matrimonial case in which the lawyer for one of the spouses was co-hosting a fundraiser for Eisenpress’ election campaign — and only recused herself after the opposing counsel called her out, according to the commission.”
• “In 2024, Eisenpress allegedly refused to immediately recuse herself from a case in which her law clerk’s husband represented one of the parties, the CJC said. She later stepped aside for unrelated reasons.”
• “Eisenpress lauded her time on the bench in her resignation letter to Chief Administrative Judge Joseph Zayas on Jan. 29.”
• “‘During my tenure, I was mindful of the responsibility that comes with expanding access to justice and strengthening public trust in the court,’ she said.”

“Johnson & Johnson’s Win Boots Beasley Allen from Talc Suits” —

• “Litigation firm Beasley Allen must stop representing plaintiffs suing Johnson & Johnson over exposure to talc products, a New Jersey state court ruled Friday in a landmark ethics decision.”
• “The ‘prolonged access to J&J’s privileged information, followed by collaborative efforts with its most prominent adversary, leaves us with clear concern for the preservation of trust intrinsic to the attorney-client relationship,’ Superior Court Appellate Division Judge Mark K. Chase wrote Friday.”
• “The ruling validates the pharma giant’s multi-year push to exclude one of the top firms bringing cases in a $22 billion fight over claims that asbestos in talc products contributed to plaintiffs’ vaginal cancer. The parties are awaiting a similar ruling on this issue in the US District Court for the District of New Jersey, and an appeal to the New Jersey Supreme Court is expected.”
• “‘‘Switching sides’ against a former client does not present a close call—but rather a bright-line ethical prohibition recognized by every court, every ethics authority, and, frankly, every first-year law student,’ Erik Haas, Johnson & Johnson’s worldwide vice president of litigation, said in a statement.”
• “The appeals court ruled that former Sidley Austin attorney James Conlan ‘associated’ with the Beasley Allen during a mediation over J&J’s bankruptcy plans. Despite Conlan was acting as a nonlawyer on behalf of his mass tort consulting business Legacy Liability Solutions, there was a clear conflict warranting kicking Beasley Allen out of the litigation where it’s one of the top players.”
• “‘It is clear Conlan and Beasley Allen worked together over several months by ‘join[ing] or unit[ing]’ with Conlan for the same common purpose, to have the matter resolved by structural optimization,’ Chase said. ‘Thus, Beasley Allen associated with Legacy and Conlan for purposes’ of New Jersey ethics standards.”
• “Beasley Allen’s lawyer Jeffrey Pollock promised an appeal. Since this is a published opinion, the New Jersey Supreme Court is rule-bound to review the decision.”
• “‘We respectfully but vehemently disagree with the Court’s analysis and its conclusions,’ Pollock, managing member of Pollock Law LLC, said in an email. ‘This Opinion re-writes the Rules of Professional Conduct and cannot stand.'”
• “At oral argument in January, J&J said keeping Beasley Allen in the mix would send a broader message to the legal community that there are loopholes: lawyers like Conlan—who had insider information central to J&J’s defense—could somehow find ways to work with the very firms now suing his former client.”
• “Even though the rules aren’t as strict for non-attorneys, the court said this behavior would interfere with clients ability to retain the lawyer of their choosing and entrust them with confidential information.”
• “‘Beasley Allen knowingly collaborated with Conlan on the same issue and in the same litigation that Conlan represented its adversary—J&J. ‘The rules of professional behavior are not branches which bend and sway in the winds of the job market’ but are instead ‘the bedrock of professional conduct,’’ Chase said, quoting state high court precedent.”

“Huitron v. Toby (Ga. 2026): Potential Appellate-Counsel Office Conflicts Require Proof of a Specific, Adversely Affected Appellate Decision” —

• “Huitron v. Toby, Warden arises from Alexandro Huitron’s habeas challenge to his convictions for felony murder and related offenses connected to the death of his three-year-old daughter, Esmerelda Gomez. After the Supreme Court of Georgia affirmed the convictions on direct appeal in Gomez v. State, 301 Ga. 445 (2017), Huitron filed a habeas petition alleging, among other things, that his appellate counsel (John Kraus) labored under a conflict of interest.”
• “The claimed conflict stemmed from office affiliation: Kraus worked in the Clayton County Public Defender’s Office, and that same office represented Huitron’s co-defendant and wife, Margarita Gomez, at their joint trial. Huitron contended that this relationship prevented Kraus from investigating and litigating a more forceful ‘Gomez-did-it’ theory via an ineffective-assistance claim against trial counsel, including by calling Gomez to testify at the motion-for-new-trial stage.”
• “The central legal issue was not whether the office relationship created any professional tension, but whether Huitron proved an actual conflict of interest that significantly and adversely affected appellate counsel’s performance—entitling him to a new, conflict-free direct appeal.”
• “The Supreme Court of Georgia affirmed the denial of habeas relief. Even assuming a potential conflict existed, the Court held the habeas record supported the finding that the alleged conflict did not significantly and adversely affect Kraus’s appellate representation. Critically, Huitron failed to connect the alleged conflict to a concrete, foregone, potentially meritorious appellate action—such as a specific ineffective-assistance theory that Kraus declined to raise because of divided loyalties.”
• “The Court emphasized that Georgia conflict-of-interest ineffectiveness claims turn on whether the conflict palpably affected performance, not on abstract office relationships or speculative assertions that counsel felt ‘hamstrung.'”

David Kluft asks: “Do I have a duty to Google the opposing party?” —

• “A NJ/MI attorney admitted pro hac vice in E.D. PA brought a 1983 Civil Rights Action against Valley Forge Military Academy on behalf of a student who was expelled following an alleged sexual assault. The problem was that the defendant is obviously not a government actor, so a 1983 action was not appropriate.”
• “Even after the defendant informed him of this, he waited months before amending it into a Title IX claim, in the meantime forcing the defendant to file a motion to dismiss a claim everyone knew was frivolous.”
• “The attorney claimed that the error was not his fault but was the result of his staff checking the wrong box on the intake form. He relied entirely on the intake form rather than doing any research or apparently even meeting with his own client.”
• “The Court held that ‘basic due diligence’ requires at a minimum, ‘having direct contact with the client and conducting a simple Google search’ on the defendant.”
• “Unhappy that the lawyer ‘could not even be bothered to Google search the Defendant,’ the Court further explained how easy it would have been, noting that ‘upon launching Defendant’s website, it becomes immediately apparent that Defendant is a private institution. Indeed, one need not even open their website, as Google’s website preview says as much.'”
• “The Court sanctioned the lawyer over $5k in attorneys’ fees and ordered CLE classes for him and his staff (the sanction was for this misconduct as well as for not sufficiently anonymizing the sexual assault victim’s name). The Court honored his request to sanction him under its inherent authority and not Rule 11 because the lawyer did one thing right – he accepted all the blame and exonerated local counsel.”
• Order: here.

“Kirkland Resignation Highlights Potential Business Conflicts in Big Law Between PE, Company Representations” —

• “Kirkland & Ellis has parted ways with client Optimum Communications after the telecommunications company sued a group of major leveraged finance players for alleged antitrust violations. It’s at least the second time since 2020 that Kirkland has split with a client that was in a feud with the law firm’s larger, more profitable clients in private capital.”
• “The developments highlight the potential business conflicts that any firm can encounter between its company-side representation and private equity representation.”
• “But for Kirkland especially, the stakes are high, with its PE clients providing significant business for the firm and supporting the firm’s rapid growth in the past two decades, helping Kirkland become the largest firm in the world by revenue. At the same time, Kirkland has a large company-side representation practice in restructuring matters, and it’s one of the top firms in representing Chapter 11 debtors.”
• “Kirkland & Ellis didn’t represent Optimum in the antitrust litigation against the leverage finance clients—lawyers at Kellogg, Hansen, Todd, Figel & Frederick did. Kirkland represented Optimum in a transactional matter last year.”
• “However, some members of the creditor group had privately accused Kirkland of being involved in the antitrust lawsuit, according to media reports.”
• “One source familiar with the matter said that accusation may have stemmed from Kirkland debt finance partner David Nemecek’s comments at Bloomberg’s Global Credit Forum last year, where Nemecek raised antitrust concerns over credit market cooperation agreements. Nemecek didn’t immediately return a message seeking comment.”
• “The split with Optimum Communications was reported by the Wall Street Journal on Monday. Sources confirmed Kirkland was the party to initiate the split.”
• “In a statement to Law.com, Optimum said: ‘We do not expect this change to affect our ability to engage with our creditors. We remain focused on taking steps to ensure we have a capital structure that supports the long-term health of the business and intend to retain new legal counsel in the near-term.'”
• “While a Kirkland representative didn’t immediately reply to a message seeking comment, a firm representative told the Journal that the firm ‘does not sue clients and did not here’ and had no role in preparing the lawsuit, ‘which was underway before the firm started working for the company.”
• “Rather, the firm ‘did this to dissociate from the lawsuit.’ It also alluded to an increased emphasis on discipline in its liability management practice, which will continue ‘in ways consistent with market practices, in contrast to hyper-aggressive tactics.'”

For more, see: “Star Kirkland & Ellis partner’s future in doubt as firm sides with PE in legal tactics dispute.“

“Double duty by attorney fails to void settlement” —

• “A defendant employer could not extricate itself from an otherwise fair global settlement on the basis that the plaintiffs’ counsel should not have been allowed to represent both a class and individual plaintiffs in litigation against it, the 1st U.S. Circuit Court of Appeals has affirmed.”
• “The challenge inherent in simultaneously representing a class and individual plaintiffs is a ‘matter pertinent to counsel’s ability to fairly and adequately represent the interests of the class’ that Rule 23(g) of the Federal Rules of Civil Procedure allows courts to consider, noted Judge William J. Kayatta Jr., writing for the panel.”
• “The defendant employer argued that the trial judge should have withheld approval of the class action settlement due to what it viewed as the plaintiffs’ counsel’s disqualifying conflict: his duty to maximize recovery for members of the class as well as the three individual plaintiffs.”
• “‘Leading treatises appear to be split on the question of whether counsel may concurrently represent individual plaintiffs and a class against the same defendants,’ Kayatta wrote, adding that the panel had found ‘no on-point case law in this circuit or in others’ addressing such an arrangement.”
• “However, the panel said it was significant that it was not reviewing the decision to appoint class counsel in the first instance under Rule 23(g) but rather whether a class action settlement was properly approved under Rule 23(e)(2).”
• “The inquiry under Rule 23(e)(2) called for a ‘retrospective assessment of counsel’s representation,’ and there was no evidence that the class members had been prejudiced by their attorney pulling double duty, the panel determined.”
• “‘As the district court explained, class counsel’s actual performance offers not a hint of any conflict-induced shortfall in the adequacy of his representation of the class,’ Kayatta wrote.”
• “Not only did the lawyer secure recoveries for each class member that exceeded the total damages they had suffered, but the excess over the actual damages they stood to receive compared favorably to the average excess received by the three individual plaintiffs, the panel pointed out.”
• “The plaintiffs’ attorney had also highlighted his representation of the three individual plaintiffs in the written notice of the settlement that he sent to the 43 class members, and none opted out or voiced any objection, the panel said.”
• “If the settlement were unwound, there was no reason to think the class members would be better off, according to the panel”
• “‘Like the district court, we see no reason why this actual result must be cast aside — at the behest of [the defendants] and without a hint of dissatisfaction from the class itself — merely because there was the potential for a different result that was never realized,’ Kayatta wrote.”
• “The 32-page decision is Mongue v. The Wheatleigh Corporation, et al., Lawyers Weekly No. 01-011-26.”

“Thomson Geer to sell stake in Labor lobby shop TG Public over conflict fears” —

• “[Australia’s Seventh Largest Law Firm] Thomson Geer has decided to sell its stake in a major Labor-aligned lobby group to soothe fears that the pair’s current relationship could endanger the lucrative flow of government work that the national law firm has recently added to its books.”
• “However, the law firm and lobby group will continue to co-operate under a ‘strategic agreement’, a move Thomson Geer hopes will reduce the potential for conflicts of interest when its lawyers represent the Commonwealth, a work stream worth tens of millions to Thomson Geer annually.”
• “‘There are some conflict sensitivities which have caused us reluctantly to divest our stake in TG Public. We’ll continue to collaborate with TG Public but outside those areas,’ Thomson Geer chief executive partner Adrian Tembel said.”
• “The divestment comes after Thomson Geer absorbed the entire Canberra office of rival firm Ashurst last year, adding seven partners who specialise in acting for the federal government and who have transplanted their Commonwealth matters and billings to Thomson Geer.”
• “‘Unfortunately, due to entering the Commonwealth law market very significantly last year through the Ashurst acquisition, we’ve had to reassess our priorities and our conflict position,’ Tembel said. ‘We’ve prioritised the Commonwealth, obviously.'”
• “According to AusTender, a public record of government contracts, Thomson Geer’s most valuable Commonwealth client is the Department of Defence, worth over $10 million in billings for the 2025-26 financial year to date. The firm has also won work from the Australian Submarine Agency, for which it is charging some $2.5 million for legal services.”
• “A slew of Thomson Geer’s ex-Ashurst partners, including Steve McKinney, Sarah Ross-Smith and Angela Summersby, are longtime Canberra favourites in public sector procurement and acquisition matters. TG Public Affairs, meanwhile, has a major roster of defence-sector clients, including German shipbuilder TKMS, US defence firm Northrop Grumman and Swedish contractor Saab.”
• “Representatives of Thomson Geer and TG Public Affairs would not comment on what kinds of conflict sensitivity animated the law firm’s decision to divest.”
  “Thomson Geer’s other major Commonwealth clients include the Department of Finance, which it billed at least $6 million in 2025-26, and the Department of Employment, which is paying the firm $2.5 million. In total, Thomson Geer has signed more than 110 legal services contracts with the Commonwealth in 2025-26 so far, for billings of at least $27 million.”

“New Postmark Rule = New Malpractice Exposure” —

• “For years a postmark would reliably document the date you mailed something, but not anymore. As of December 24, 2025, those glory days have passed due to recent USPS operational changes, and the USPS has formally acknowledged this. These changes create real malpractice exposure anywhere a statute, rule, or agency treats a postmark as proof of timely filing. In response, you should now assume that a postmark may be one or more days late, especially in rural areas, and adjust your internal practices accordingly.”
• “Since 2021, USPS has been consolidating nearly 200 local processing centers into about 60 large regional hubs, while also reducing the number of daily dispatches from local post offices. USPS has now codified in its Domestic Mail Manual that a postmark ‘does not inherently or necessarily align’ with the date a piece of mail was deposited. This is not a small operational tweak; it fundamentally breaks the decades‑long assumption that a postmark is reliable evidence of mailing.”
• “Mail used to be processed locally, often the same day it was dropped off. Now mail from many communities will travel hundreds of miles to a regional processing center before receiving a postmark. In fact, ten states will now have 100% of their mail processed out of state. (e.g., Vermont, West Virginia, Wyoming, and Mississippi)”
• “Under the new Regional Transportation Optimization (RTO) schedule, post offices more than 50 miles from a processing center now send outgoing mail once per day, typically early morning. Anything dropped off after that cutoff may not begin its journey until the next day.”
• “Taken together, these changes mean a letter dropped off on a Monday afternoon may not be postmarked until Tuesday or Wednesday despite being timely mailed and the postal service acknowledges that this is to now be an expected outcome, not an anomaly.”
• “If a lawyer mails something on time but receives a late postmark, they may still be held responsible for an untimely filing, which means the malpractice exposure from a missed deadline is very real. Making matters worse: rural lawyers and clients are going to be disproportionately affected. Fortunately, there are steps you can take to reduce the risk:”
• “First, make sure that everyone at your firm understands that ‘mailed today’ does not mean ‘postmarked today.'”
• “Second, use electronic filing whenever possible. If something must be sent through the mail, go to the counter and request a hand‑stamped postmark; and never cut it close without first making sure the local post office is going to be open.”
• “Third, consider using a priority mail service that provides tracking and timestamped acceptance.”
• “And finally, if you’d like to know more about the changes USPS has made and the impact on lawyers, I strongly encourage you to read what Brookings has reported at https://www.brookings.edu/articles/when-a-postmark-no-longer-tracks-mailing/ “

“Beyond Confidentiality: The AI Data War Between Law Firms and Clients” —

• “As generative AI transforms the practice of law, an outstanding question remains around who owns and controls the data that fuels these systems. For decades, law firms and corporate legal departments have operated under well-defined boundaries of client confidentiality and work product protection. But as firms begin using AI tools that rely on data aggregation and fine-tuning, those boundaries blur. The value of legal data has shifted from evidentiary substance to strategic infrastructure. Understanding who can use it, and under what circumstances, is now a defining issue of the modern legal industry. “
• “The Core Tension: Clients Own the Data and Firms Create the Work Product. At its simplest, data powering legal AI falls into two categories: ‘client’ data and law firm-generated data. Clients own their underlying information, such as contracts, discovery documents, communications, transaction details, and case files, and output/deliverables from outside counsel that clients have paid for. Law firms, on the other hand, may own derived work product such as drafts, research notes, and summaries, though those too may be governed by confidentiality and professional conduct rules. “
• “This distinction matters because many law firm AI use cases like contract review, litigation analytics, due diligence, and e-discovery depend on training or otherwise using (e.g., for fine tuning) large language models (LLMs) and/or retrieval augmented generation (RAG) code with a mixture of both deliverables to the client and internal work product. “
• “If a law firm builds or fine-tunes an AI model using client data, it could inadvertently violate client confidentiality or intellectual property rights unless expressly permitted.In contrast, in-house legal departments that sit closer to the data source often view that same dataset as a corporate asset. “
• “They are more likely to want to use their data to train proprietary AI tools that enhance decision-making, risk prediction, or portfolio management. So, the questions emerge: can both the law firm and the client use the same data to train AI models? What happens if they both do? Is enforcement possible? Probable? The answers may depend less on technology and more on contract language. ”
  The Contractual Layer: What Provisions Matter “
• “The key provisions that govern data use in AI are scattered across several types of documents. These typically include engagement letters, outside counsel guidelines (OCGs), vendor and cloud agreements, and AI pilot or development agreements. “
• “Engagement letters and OCGs set baseline terms around confidentiality, data retention, and use of client information. Increasingly, OCGs include explicit prohibitions on uploading client data into AI systems that might use the data to train underlying models. ”
  “Vendor and cloud agreements determine whether data is stored in private environments, whether it leaves a specified jurisdiction, and whether it may be used to train or improve the provider’s services. AI pilot or development agreements typically define who owns derivative outputs and improvements. “
• “Key clauses to watch include data ownership and license-back rights, use restrictions, and confidentiality and anonymization standards.”
• “Law firms often assume that anonymization resolves the data ownership and usage concerns. After stripping identifiers or aggregating data, many believe the resulting dataset can be freely used for internal AI training. In reality, anonymization is a moving target and does not automatically remove client-sensitivity or eliminate contractual restrictions. Even when direct identifiers are removed, matters can remain re-identifiable, particularly when (1) the underlying dispute is public, (2) the dataset is small or unique, or (3) the fact patterns themselves function as identifiers. As a result, anonymized data does not guarantee firm ownership or unrestricted reuse unless the client agreement expressly allows it. “
• “A better lens is data governance, where processing occurs within a firm-controlled or vendor segregated cloud instance under contractual guarantees that client data will not train external foundation models. It is crucial to note that most current enterprise-grade tools do not use inputs to improve their base models and maintain strict data-isolation controls. Firms must leverage security documentation (SOC 2 Type II, ISO 27001, DPAs, DPAs with model-training exclusions, and environment architecture diagrams) from vendors to dispel this persistent confidentiality concern. This distinction separates technical reality from common client fear. The safest path ultimately relies on consent and transparency, moving beyond reliance on de-identification alone. This means clearly documenting: (1) how data will be used, (2) where it is stored and processed, (3) whether it remains in a single-tenant or region-locked environment, and (4) confirming that no third-party model training or cross-matter data blending occurs. This governance-first approach substantially mitigates risk. “
• “Even with clear rules, enforcement is tricky. How can a client verify that its data isn’t being used to train a firm’s internal or vendor model? And how can firms prevent well-intentioned employees from inadvertently breaching these boundaries through tool usage? “
• “Policing this requires a combination of technical controls (segmented instances, audit logs, and data usage dashboards) and contractual accountability (attestations, audit rights, and breach remedies). “
• “Firms should implement governance layers that track which datasets are used to fine-tune models, who authorized their use, and whether consent was obtained. From the client’s side, periodic audits or certifications, such as SOC 2 or ISO 27001 attestations, can provide assurance that their data remains quarantined from model improvement cycles. “

“Law firms in Canada need to collaborate on a vendor-neutral cybersecurity framework” —

• “What am I doing about it? What could we do about it? And who is actually doing anything right now? These were the questions I kept asking myself in the summer of 2025. I was working inside one of the world’s largest law firms, assessing our cybersecurity practices against well-known information security frameworks. The deeper we went, the clearer it became that the legal sector is not where it needs to be. Not because people don’t care or leadership isn’t paying attention, but because almost every firm is trying to solve this problem on its own.”
• “That is the core issue. Cybersecurity in law is still treated as a firm-specific project, when in reality it affects the entire profession.”
• “Firms don’t work in isolation. We work together on matters. We exchange sensitive files with opposing counsel. We rely on shared platforms, vendors, and cloud infrastructure. If one firm is hit, clients don’t say, ‘Oh well, that was just that firm.’ They question how legal data is protected holistically. That is where the real risk lies.”
• “Most firms I’ve spoken to are acting: buying tools, tightening policies, hiring consultants, conducting training, and commissioning assessments. But they are doing all of this in silos. There is no shared baseline. No commonly accepted definition of what ‘good’ looks like for a Canadian law firm – or, frankly, for any law firm.”
• “According to 2024 IBISWorld data, Canada has roughly 35,000 law firms of varying sizes. They hold highly sensitive client data but typically lack cybersecurity teams, threat intelligence functions, and security engineers. They are data-rich and resource-poor – and attackers are aware of this.”
• “The risk is not theoretical. In 2024, a Florida law firm faced a class action after a breach exposed client information. The firm reportedly settled for US$8.5 million, becoming one more example in a growing list of law firms targeted by ransomware and data theft.”
• “Meanwhile, Canadian law firms are increasingly interdependent. We share clients, documents, systems – and, critically, risks. A compromise in one environment can easily spread to another, particularly in a digitized and interconnected ecosystem.”
• “This leads to a simple question: if we are all connected, why are we defending ourselves separately?”
• “We do have organizations in the legal technology space. ILTA exists. The Canadian Bar Association has groups. Provincial law societies publish guidance. But none of these bodies solves the collaboration problem.”
• “ILTA, for example, is excellent but paywalled and primarily serves medium and large firms that can afford the fees. No single group reaches the thousands of small and mid-sized firms that make up the majority of Canada’s legal market. And none provides truly actionable, operational ‘knowledge and skills’ that firms can plug into their day-to-day work.”
• “Instead, we end up with scattered pockets of collaboration, mostly among well-resourced firms, while the majority are left to fend for themselves. That divide is precisely where the collective risk sits – and where bad actors thrive.”
• “Confidentiality is the foundation of the profession. But it does not stop at one firm’s firewall.”
• “If one firm in a multi-firm matter is breached, everyone is exposed. If one firm transmits compromised files through a shared DMS or client portal, everyone is exposed. If a small firm working on a high-stakes matter is compromised, the fallout can affect clients, courts, regulators – even governments.”
• “Clients already understand this. Many in-house legal teams now assess the cybersecurity posture of external counsel before engaging them. Insurers are tightening their requirements, and audits are becoming more frequent. Firms of every size, including solo practitioners, are expected to have reasonable safeguards and a working incident response plan.”
• “The pressure is here. The risk is real. The only question is whether the profession responds collectively or continues to duplicate effort and go it alone.”

“Investors Lament ‘Anti-Foreign’ Litigation Funding Push in US” —

• “Federal legislation targeting foreigners who invest in US lawsuits is raising concerns among international financiers. The bill by Rep. Ben Cline (R-Va.) bans sovereign wealth funds from backing US litigation, potentially disrupting operations of funders such as Fortress Investment Group, Burford Capital, Omni Bridgeway, Ares Management Corp., Ellington Management Group and BlackRock Inc.”
• “Funders that lack sovereign wealth backing would also be affected. The Cline bill requires overseas investors to disclose their roles in US lawsuits, which the funders say could delay court proceedings as defendants seek information about them in discovery.”
• “The emphasis on foreign funders is an approach by the US Chamber of Commerce and other opponents of litigation finance to stymie the nascent industry. The legislation has sparked an intense lobbying campaign in the new year, with a pro-industry lobbying group forming after the House Judiciary Committee voted 15-11 in November to recommend the bill.”
• “The practice of investing in lawsuits with the hope of winning proceeds from successful cases has become popular for financiers, who seek returns uncorrelated to the stock market. The litigation funding market is expected to grow to around $50 billion by the mid-2030s from nearly $21 billion last year, according to a report from boutique asset management firm Katch Investment Group.”
• “The threat of US legislation has forced some foreign fund managers to reassess their growth strategies. ‘This lack of certainty and safety it is not helping anybody to feel happy about investing in the USA,’ said Ignacio Delgado, the general counsel for Loopa Finance, formerly known as Qanlex, which doesn’t currently fund US litigation and primarily operates in Latin America and Europe.”
• “The US Treasury Department’s Office of Foreign Assets Control already restricts investment from countries of concern such as Iran and Russia, ‘so why do you need more law?’ asked Susan Dunn, founder of UK-based Harbour Litigation Funding.”
• “‘There’s so much anti-foreign that’s going on in the US at the moment,’ said Dunn, who also chairs the Association of Litigation Funders of England and Wales. From US lawmakers’ perspective, ‘it’s like if I use the ‘foreign’ word then that’ll get me’ bill passage.”
  Cline’s Momentum”
• “Cline’s proposal is the second version of legislation that singles out foreign funding. After the House panel passage it is the farthest along of three federal bills attempting to regulate litigation finance. The Chamber and other industry opponents have pressed for regulation because they say litigation finance results in frivolous lawsuits that raise the cost of doing business.”