Bressler Risk Blog

“Louisiana Personal Injury Firm Sanctions Upheld in Conflict Row” —

• “A personal injury law firm in Louisiana convinced a state appeals court to affirm $7,500 in sanctions and attorneys’ fees in connection with a case in which the firm was accused of having a conflict of interest.”
• “Rental equipment company Ahern Rentals Inc. sued former employees including Scott Helms and Chadd Turnage alleging theft of confidential information after they were hired by Ahern’s competitor, EquipmentShare.com Inc. Helms and Turnage were rehired at Ahern after losing their jobs at EquipmentShare, and Ahern moved to disqualify their former counsel at Veron Bice Palermo & Wilson LLC from representing the remaining individuals.”
• “Veron opposed disqualification and sought sanctions, asking why Ahern hadn’t dismissed its employees from the action and raising concerns about confidential strategies in litigation. The trial court rejected the bid for disqualification, and granted the sanctions request in the amount of $7,500 in costs and fees.”
• “The Court of Appeal of Louisiana, Third Circuit, affirmed that ruling Wednesday. The appeals court held that the evidence was sufficient to support the trial court’s ruling that Ahern was delaying the dismissal of Helms and Turnage as defendants in an attempt to gain information about EquipmentShare’s strategy.”
• “‘There is evidence that the motion at issue in this case was filed to cause unnecessary delay and as an abuse of process,’ Judge Elizabeth A. Pickett wrote in the opinion.”

“Sidley Austin Had No Conflict in Boy Scouts’ Bankruptcy Work” —

• “Sidley Austin LLP had no conflict of interest in representing the Boy Scouts of America in its bankruptcy case despite the law firm’s connection to one of BSA’s insurers, the Third Circuit ruled.”
• “Century Indemnity Co., a Chubb subsidiary, sought to have Sidley Austin disqualified from BSA’s bankruptcy case, arguing that the law firm had previously provided legal counsel to Century in certain reinsurance disputes.”
• “The district court had upheld a similar conclusion by the US Bankruptcy Court for the District of Delaware, triggering Century’s appeal to the Third Circuit.”
• “The bankruptcy court ‘looked carefully at the specific facts before it and reasonably approved BSA’s retention of Sidley,’ the Third Circuit said. ‘This is nowhere close to an abuse of discretion.'”
• “The Boy Scouts, which filed for Chapter 11 bankruptcy in February 2020 following former scouts’ claims of sexual abuse, has negotiated with Chubb and other insurers for victim payouts.”
• “Sidley is no longer actively involved in the bankruptcy case because the attorneys who represented the Boy Scouts moved to a new firm in September 2020.”
• “The law firm separated itself from the BSA’s insurance coverage issues and didn’t receive any relevant confidential or privileged information, according to the appeals court’s opinion. Sidley’s work for Century did not affect its ability to work for the Boy Scouts, the court said.”

“Firm Properly Barred for Having Confidential Information” —

• “The Ninth U.S. Circuit Court of Appeals has affirmed an order barring a law firm from continuing to represent the plaintiff based on the firm having received confidential information about the defendants from a disbarred lawyer who gained that information from them while purporting to be their counsel in earlier litigation.”
• “In a memorandum opinion filed Thursday, a three-judge panel found that District Court Judge Percy Anderson of the Central District of California did not abuse his discretion in disqualifying the Mirch Law Firm of San Diego from acting for Seyed Zia Eddin Ahmadi Abhari and others in an action under the Racketeer Influenced and Corrupt Organizations Act against Elias Nakhleh and others.”
• “At a business lunch in 2019—before the RICO lawsuit was filed and while cordial relations existed—Abhari told Nakhleh about his lawyer, Martin Reiner, recommending that Nakhleh utilize his services. Nakhleh took the advice, hiring Reiner and providing him with a $10,000 check for Nakhleh which he regarded as an Nakhleh attorney retainer fee.”
• “Nakhleh eventually developed a suspicion that Reiner was not licensed to practice law and, on March 6, 2020, queried in an email: ‘Is it not true that you have been suspended from practicing law? You have represented being an attorney to me multiple times.'”
• “[The Ruling Noted:] ‘The Court finds The Mirch Law Firm has committed several ethical violations. Based on the evidence provided, Mr. Reiner has falsely represented to Defendants that he was their attorney. The Mirch Law Firm is using Defendants’ privileged information, obtained by Mr. Reiner, to gain a tactical advantage in this case…'”
• “The judge noted that The Mirch Law Firm insisted that Reiner merely acted as a witness for it and “that they have cut off contact with Mr. Reiner following this Motion,” but declared that ‘the damage has already been done’ by giving the firm ‘privileged information which has allowed Plaintiffs to wrongfully acquire an unfair advantage in this case.'”

“EY Dumping Audit Business Is Bad News for Law Firms” —

• “News that Big Four accounting firm EY is considering spinning off its global audit business should sound a warning bell to law firms, as the big consultancies continue to encroach on the legal services business, according to industry observers.”
• “While the development seems aimed at dodging the increasing regulatory scrutiny that audit businesses appear to be facing, it also solves the conflict of interest barriers that EY faces in providing legal services. And there’s speculation that, if EY succeeds in jumping through the substantial hurdles necessary to separate the units, its Big Four peers will follow.”
• “James Jones, a senior fellow at the Center for the Study of the Legal Profession at Georgetown University Law Center, said accounting firms with audit businesses currently face a genuine constraint in moving seriously to legal because they cannot provide legal services for corporations that they audit.”
• “But while law firm managing partners may believe that the Big Four will never go head to head with them on litigation or legal advice, Jankowski [director of the Pacesetter Research team at ALM Intelligence] said they are still an existential threat to law firms. Jankowski explained that the Big Four use their legal service offerings as a way to become stickier with their clients.”
• “‘They approach clients when the client has a key event, such as M&A restructuring, an IPO, change management, or digital transformation projects,’ said Jankowski. ‘Being able to provide the legal services for these events is central to a law firm, but it’s a value add to an accounting or consulting firm.'”
• “‘If I were a big global law firm, I would view this with a little bit of alarm. I think it’s removing the last major obstacle to these firms providing legal services,’ said Jones, explaining that the definition of ‘legal services’ introduces a gray area. For instance, in some practice areas, like tax, nonlawyers—CPAs, for example—draft documents all the time, and therefore compete with lawyers already.”

“Sonos cites ‘vexing’ Google ties but won’t seek new judge in patent fight” —

• “Sonos Inc will not seek to disqualify San Francisco U.S. District Judge William Alsup or one of his law clerks in its patent dispute with Google LLC, the company said Friday, despite sounding alarms about the clerk’s ties to Google and its law firm.”
• “Alsup’s disclosure that one of his clerks previously worked for Google and still owns Google stock has created a “vexing situation” for Sonos, the company said in a court filing. It said it also believes the unnamed clerk worked for the law firm that represents Google, Quinn Emanuel Urquhart & Sullivan, while the dispute was pending.”
• “But since the judge has determined the clerk can be impartial, Sonos will not pursue a recusal bid, its lawyers wrote.”
• “Alsup last week rejected Sonos’ request for more information about the clerk. He also told the parties that the clerk placed his Google stock in a blind trust.”
• “In the case now before Alsup, Sonos sued Google in 2020, alleging its Chromecast streamers, Home speakers, Pixel phones, and other devices infringe its patents.”
• [Ed: A few days later, the clerk was removed from the case by the judge.]

“Saul Ewing Must Conduct Ethics Screen In Superfund Suit” —

• “A Pennsylvania federal judge on Tuesday said that because of ‘an appearance of impropriety,’ Saul Ewing Arnstein & Lehr LLP must conduct an ethics screen in Superfund litigation to ensure that the firm’s work on a similar matter for clients now on the opposite side doesn’t present a conflict.”
• “U.S. District Judge Gene Pratter said there’s no evidence of inappropriate conduct by Saul Ewing attorneys, but the fact that there is one who worked decades ago on litigation involving some of the same parties and the same site creates a situation that needs a remedy. Saul Ewing is currently representing heating and cooling company Fritch Inc. and industrial manufacturer O.F. Zurn Co., which have been sued by another group of potentially responsible parties — which raised the conflicts issue — over cleanup costs at the Metro Container Superfund cleanup site in Trainer, Pennsylvania.”
• “‘Here, regardless of whether there is an actual conflict, there is arguably an appearance of impropriety,’ Judge Pratter said in an order. ‘Without a doubt, counsel from Saul Ewing could, and should, have identified and raised this issue preemptively to avoid the appearance of impropriety, or at least, the important sideshow that has ensued.'”
• “The judge ordered Saul Ewing to implement a ‘comprehensive ethics screen’ of attorneys from the 1989 litigation.”
• “Metro Container Group said Saul Ewing should be disqualified from representing Fritch and O.F. Zurn because the firm’s representation is adverse to its former clients and will necessitate the disclosure of confidential information from the prior representation.”
• “Fritch and O.F. Zurn said Saul Ewing’s representation is not a conflict because the group that Saul Ewing represented in the prior action no longer exists, and that Metro Container Group waived its right to raise the issue because it waited years after Saul Ewing joined the present litigation to bring it up.”
• “‘Even assuming that certain members of the current Metro Container Group are former clients, Metro has not met its burden as the moving party to ‘prove that [its former lawyer] has actually revealed information relating to the representation of’ them,’ the judge said. ‘It is unfair to require Fritch and Zurn to find new counsel four years into this litigation while discovery is underway and most of the parties have settled or requested a settlement conference.'”

“SEC Probe Looms Over Auditors’ Fastest-Growing Businesses” —

• “When the two top executives of a hot electric-vehicle startup made share purchases that later drew scrutiny, they were helped by accounting firm BDO USA, according to the auto company. BDO was also the auditor of the company they ran.”
• “The dual roles that BDO played at Electric Last Mile Solutions Inc. are typical of potential conflicts of interest faced by auditors. Relationships like this one are under scrutiny by the Securities and Exchange Commission, people close to the inquiry said.”
• “The car maker said it took an internal probe to figure out that BDO was advising its chairman, Jason Luo, and Chief Executive Officer James Taylor. Both executives resigned and their deals for company stock are being investigated by the SEC, the company said in March.”
• “BDO is one of several midtier accounting firms caught in a sweeping probe by the SEC into conflicts of interest by auditors, one of the people close to the investigation said. The probe also includes the Big Four accounting firms Deloitte, Ernst & Young, KPMG and PricewaterhouseCoopers, The Wall Street Journal has previously reported.”
• “BDO resigned as auditor of Electric Last Mile Solutions in February, citing concerns that an illegal act might have occurred. The company decided after its internal investigation that it needed to restate earlier financial statements that were audited by BDO, in the light of the share deals the accounting firm had allegedly advised on.”
• “The SEC investigation reflects concerns about the increasing reliance by the big accounting firms on sales of consulting and tax services, which offer higher margins and greater growth potential than their core audit business.”
• “A Deloitte spokesman said the firm’s multidisciplinary approach ‘enables us to deliver high quality audits for the benefit of the investing public.’ A PwC spokesman said ‘independence is core to the delivery of quality audits, at the heart of PwC’s culture and fundamental to everything we do.’ Representatives of KPMG and EY declined to comment.”
• “In the U.S., senior SEC officials have in recent months publicly warned accounting firms not to ‘creatively apply the [independence] rules,’ and said sanctions may need to increase to deter rule breaking.”
• “The agency’s ongoing conflicts-of-interest investigation is looking for breaches of rules banning accounting firms from selling specified services to audit clients, people close to the probe said.”

“McKinsey & Co. worked with Russian weapons maker even as it advised Pentagon” —

• “Russia has fired more than 2,000 missiles on Ukraine since invading in February. The engines for many of these missiles were manufactured by a massive state-owned enterprise called Rostec, and executives for that company hired the global consulting giant McKinsey & Co. in recent years for advice.”
• “At the same time McKinsey was advising the Russian defense conglomerate, though not on any work directly involving weapons, the firm was carrying out sensitive national security contracts for the Defense Department and the U.S. intelligence community, according to an NBC News investigation.”
• “McKinsey has come under scrutiny in Congress for its work with state-owned companies in China, with lawmakers questioning if the company should be awarded national security-related contracts given its extensive presence in China. McKinsey also faces accusations of ignoring possible conflicts of interest when it advised both opioid manufacturers and officials regulating opioids at the U.S. Food and Drug Administration.”
• “By carrying out consulting work with a company like Rostec, McKinsey placed itself in a potentially risky position, given its work with the U.S. government, according to Scott Blacklin, a former head of the U.S. Chamber of Commerce in Russia and president of the consultancy Blacklin and Associates.”
• “‘It’s really hard to understand how an American consulting firm … would want to be involved in sensitive areas of the Russian defense or intelligence or scientific establishment. And when you talk about Rostec, you’re talking about all of those mixtures,’ Blacklin said.”
• “Sen. Maggie Hassan, D-N.H., told NBC News that McKinsey has displayed a ‘pattern of behavior’ in its consulting abroad and in Washington that raised ‘grave concerns about conflicts of interest.'”
• “‘Whether it be the substance misuse crisis or work for state-owned enterprises in places like Russia and China, I am deeply concerned by McKinsey’s choices and by the fact that the U.S. government continues to contract with McKinsey despite those potential conflicts,’ the senator said.”
• “But the company, which has its headquarters in New York, says it does not see its recent work in Russia as posing a conflict with its consulting for the Pentagon and other federal agencies. When asked by NBC News, a company spokesperson, Neil Grace, said McKinsey has strict rules and firewalls to safeguard against conflicts of interest, and that its work abroad is walled off from its work in Washington.”
• “‘As we have stated previously, McKinsey complies with all applicable U.S. contracting laws, including those regarding conflicts of interest,’ Grace said. ‘When we serve the U.S. government, we do so through a separate legal entity with separate operational structures and separate information technology where required.'”

“NCAA Wants Firm Removed From Race Bias Suit Over Conflict” —

• “The NCAA urged an Indiana federal court to disqualify Fegan Scott LLC from a proposed discrimination class action, saying one of the firm’s lawyers simultaneously worked for the collegiate organization’s document-review vendor.”
• “The NCAA said in a Monday filing that Ravi Sakthivel’s conduct ‘violates the duty of loyalty owed to clients’ and poses a ‘substantial risk’ that factual confidential information from a client could be used by an adversary.”
• “The lawsuit by former collegiate basketball player Troyce Manassa alleged the NCAA’s Academic Performance Program discriminates against student-athletes at historically Black colleges and universities.”
• “Fegan Scott hired Sakthivel as a full-time attorney in September 2020, two months before Manassa’s lawsuit, the NCAA said. Sakthivel’s work as a document review attorney on the Manassa case began March 2 this year, when he was hired by the NCAA’s e-discovery vendor, Proteus, according to the NCAA.”
• “The collegiate organization said it found out in late April that Sakthivel was also employed by Fegan Scott. The NCAA wrote to Elizabeth Fegan, the plaintiff’s lead co-counsel, to deliver the news on April 26. And in a response the same day, Elizabeth Fegan said Sakthivel had been placed on administrative leave.”
• “In a May 2 letter to NCAA counsel Brian Casey, Elizabeth Fegan said she ‘unequivocally’ condemned Sakthivel’s actions. ‘To that end, I personally filed an attorney misconduct complaint regarding Ravi’s actions with the State Bar of California on April 27, 2022, and terminated his employment,’ Fegan said in the letter to Casey, included in the NCAA’s filing.”
• “When he applied with Proteus, Sakthivel removed all references to Fegan Scott in his materials and said he was actually with another firm at the time, the NCAA said. He also attested in writing that he had no conflict of interest before starting work, according to the NCAA.”

“Insurance Defense Counsel a New Target of Legal Malpractice Claims” —

• “The size of payouts for legal malpractice claims reached an all-time high last year, and for the first time some of those claims were made by insurers against the defense attorneys they hire to represent their insureds, according to a new report [PDF here] by the Ames & Gough brokerage.”
• “The growing claim severity in the legal professional liability line continues a years-long trend, but malpractice claims made by insurers against their own counsel are something new. Ames & Gough found no concern about claims in the insurance defense area of practice in its annual survey of insurers from 2010 to 2020, but found that 18% of responding insurers reported claims against defense counsel in 2021.”
• “Ames & Gough said it surveyed 11 legal liability insurance companies that together insure 80% percent of the top 100 law firms. It found that 10 of those insurers participated in a claim payout that topped $50 million in the past two years, three paid a claim between $150 million to $300,000 million and four paid a claim of over $300 million.”
• “The experience of the insurers surveyed only tells part of the story, Garczynski said. ‘Anecdotally, we know of five claims that settled north of nine figures, including one over $400 million.'”
• “Conflict-of-interest complaints remained the leading cause of malpractice claims, with seven of the 11 carriers surveyed ranking such errors as the first or second most common cause of claims. Clerical errors ranked first or second by four insurers.”
• “Garczynski said remote work assignments may be one source of errors. She said young attorneys working from home are not getting direct supervision and miss out on regular communication with more experienced lawyers.”
• “The bulk of the legal malpractice claims stem for three practice areas: 73% of insurers reported claims in the area of trust and estates, 63% reported claims in the area of business transactions and 45% reported claims from the corporate and securities field. Taxation came in fourth, with 27% of insurers reporting claims in that area.”

One could make the case for an internal “New Speaking Intake” workflow/clearance process: “Martin Rogers of US law firm Davis Polk withdraws from Hong Kong national security law forum following criticism” —

• “The Asia chairperson of US-based law firm Davis Polk & Wardwell has withdrawn from a Hong Kong forum on the national security law following criticism that it was a ‘propaganda event.'”
• “Partner Martin Rogers said in a LinkedIn post on Saturday that his agreement to participate did not reflect support for any topics discussed: ‘I was invited to speak, and accepted the invitation, in my individual capacity alongside other independent experts on specific matters including procedural challenges that could arise related to the national security law and laws in other jurisdictions.'”
• “‘My agreement to participate did not reflect an endorsement or support of any topics discussed or individuals or organisations involved,’ he added. However, Rogers has openly expressed support for the security law at a previous government forum.”
• “In a LinkedIn post last week, he tagged his law firm and said it was his honour to take part in the event to commemorate the second anniversary of the security law.”
• “Samuel Bickett, a US lawyer who was forced to leave Hong Kong after serving a jail sentence over the 2019 protests, questioned how Davis Polk had approved the event.”
• “‘Lawyers can and should provide commentary on the [security law] at professional and academic conferences, but that’s not what this event is. It’s a propaganda event intended to validate the NSL as ‘just another law,’ and [Davis Polk] is being used as a tool in service of that goal,’ he said on Twitter last Friday.”
• “He later tweeted: ‘I hope int’l law firms will take a hard look at their human rights oversight procedures across the world. What are your lawyers doing in your firm’s name that you don’t know about?'”

The Law Society’s Gazette brings us commentary from Jonathan Goldsmith, Law Society Council member for EU & international and a former secretary general of the Council of Bars and Law Societies of Europe: “AML laws have failed: it is time to start again” —

• “I want to focus here on the elaborate structure which they foisted on us to stop the servicing of corrupt money – the anti-money laundering laws proliferating around the world. These have failed, too. It is not an exaggeration to say that those laws lie in ruins, having failed to stop the penetration of Western economies by corrupt Russian money.”
• “Yet there seems no recognition that the AML regime is fatally flawed. As with all mistakes, its supporters believe that it was just not applied strictly enough, and needs to be reinforced.”
• “To understand the depth of wrongness of the current AML concept, one need only read Catherine Belton’s book, ‘Putin’s People,’ which was published in 2020. This documents in some detail the various criminal dealings which led to the rise of the Russian billionaires whose money flooded the West. She conducted dozens of interviews over many years. Even so, there are large gaps because so much took place behind an impenetrable veil of secrecy, and through multiple layers of shell companies in tax havens which lack transparency.”
• “Yet the OECD, the EU, the UK government and others behind the construction of the AML laws expect every solicitor to conduct his or her own investigation as part of customer due diligence and ‘know-your-client’. The investigation is thus privatised and fragmented, having to be done over and over again by each solicitor or law firm as it is consulted.”
• “Yet the depth of knowledge required – of Russian politics, of the Russian language, of the many varied players, of the multiplying companies and fronts and transactions, of Russian laws, and of historical events – is beyond the resources of a law firm. It is ridiculous to expect law firms to investigate what takes years, many interviews, and much academic knowledge.”
• “It is also a very inefficient way of going about things, because it requires the background to be re-investigated over and over again by separate lawyers and law firms… It so happens that there is now a ‘Putin’s People’ to help with Russian investigations. But that stops in 2020, and has understandable gaps. Is there a ‘Putin’s People’ for Kazakhstan, China and whatever other countries fall within the same category?”
• “A system which privatises and fragments the need to research the most complex events imaginable is both inefficient and unworkable. And we have just seen the results: huge compliance departments failed to stops serious penetration of our economies, with dire results.”
• “The legal profession made a mistake in its opposition to the laws when they were first introduced. We opposed it on the basis that it made us breach lawyer-client confidentiality through reporting suspicious transactions. We got nowhere with these claims, which were rejected by the courts.”
• “We would have been better off by pointing out that the system being set up, with its requirement for solicitors to investigate complexities and historical events which are beyond reasonable reach, is unworkable, and for them to be re-investigated by each player in the chain over and over again is completely inefficient.”

“Alberta Court of Queen’s Bench Finds Conflict of Interest for Class Counsel Also Representing Individual” —

• “In Smith v Lafarge Canada Inc, 2022 ABQB 289 [Smith], the Court of Queen’s Bench considered a preliminary application arising out of a proposed class action which involved claims advanced on behalf of the proposed class as well as individual claims specific to the proposed representative plaintiff.”
• “The Court found that the individual claims should be stayed pending certification and found an inherent conflict in counsel for the proposed class also representing the proposed representative plaintiff with his individual claims. The case demonstrates a strong presumption that class counsel should not act for plaintiffs in pursuing individual claims related to the class action before or after certification.”
• “Smith, a former employee of Lafarge Canada, brought an action on behalf of all current and former Lafarge employees, alleging that Lafarge underpaid amounts due to employees under employment standards and purposely omitted information from pay statements, depriving employees of the information required to ascertain whether their pay was properly calculated.”
• “The plaintiff also advanced an individual claim that he had been terminated on the basis of his age, constituting discrimination on grounds prohibited under the Alberta Human Rights Act.”
• “Justice Eamon found that the inherent nature of a class action creates sufficient risk of a conflict to bar counsel from joint representation of both the proposed class and individual claims.”
• ” Since the class included employees of various ages, age discrimination was not a common fact among all class members. As for issues of law, Justice Eamon found that a claim for age discrimination could only give rise to discrete damages under the Alberta Human Rights Act, which lack any obvious link to the common issues of systematic underpayment or mental distress arising from wrongful termination. The age discrimination claim bore only superficial connection to the class claims, and as such was discrete and severable.”
• “On the basis of this potential for conflict, Justice Eamon ordered that the plaintiff’s counsel of record be removed from either the class action or the discrimination claim, at the plaintiff’s choice.”

“Fox Rothschild Faces New DQ Bid In Athlete Startup Case” —

• “A startup seeking to ‘tokenize’ and sell shares of professional athletes said Fox Rothschild LLP should be disqualified from representing investors in a $1 million fraud lawsuit against the company, claiming the firm was ‘preparing to file the current complaint’ while simultaneously representing those now being sued.”
• “Cypress Holdings sued startup SportBLX, parent company GlassBridge Enterprises and the startup’s founders George Hall and Joseph DePerio in February, claiming investors were duped into pouring $1 million into the venture in 2019 based on misrepresentations of a business plan that never materialized.”
• “In a letter Friday to U.S. District Judge Lorna G. Schofield, Hall and DePerio said Fox Rothschild attorneys repeatedly reassured them in emails throughout 2019 that the firm and attorney Marc Gross were not also representing Cypress.”
• “DePerio said he alerted Fox Rothschild partner Pamela Thein to a letter from Gross about ‘certain potential claims of Cypress in connection with its investment,’ prompting Thein to respond that the firm was withdrawing from representing the investor group.”
• “DePerio wrote to Fox Rothschild again several times over the coming months asking why Gross was still being copied on emails from Cypress.”
• “GlassBridge said it paid Fox Rothschild almost $850,000 in legal fees before the firm ended representation in early November 2021, two months before Cypress sued. ‘Essentially, GlassBridge spent nearly a million dollars on Fox Rothschild’s services during the same time the firm was apparently preparing to file the current complaint. GlassBridge was also a significant owner of Sport-BLX,’ Friday’s letter said.”
• “Gross said he was not concerned about the latest letter or the emails. ‘I know what occurred,’ he said. ‘So I suspect that if a motion is filed, the defendants are going to lose and usually defendants do this when they think that changing counsel will impact the way the case is going to develop.'”

“U.S. judge recuses himself from Archegos fraud case, citing wife’s ties to banks” —

• “Archegos Capital Management founder Bill Hwang will get a new judge for his U.S. fraud trial, after the judge assigned to the case recused himself on Thursday due to his wife’s ties to banks that could have been caught in the investment firm’s meltdown.”
• “U.S. District Judge Andrew Carter said in a Manhattan federal court hearing that his wife is a lawyer for Bank of New York Mellon (BK.N) and used to work for JPMorgan Chase (JPM.N), and that he would have a conflict of interest if either bank were a victim of the alleged fraud.”
• “Archegos, which had $36 billion in assets, collapsed last year when it was caught short on highly leveraged trades, leaving global banks with $10 billion in losses. Prosecutors say Hwang lied to banks to increase Archegos’ credit lines. “
• “Carter’s decision came amid heightened attention by lawmakers and court reform advocates to judicial recusals due to conflicts. President Joe Biden last week signed into law a bill subjecting federal judges to tougher disclosure requirements for their financial holdings and stock trades.”

“Miami-Dade Judge Steps Down From Litigation Over Attorney Fees” —

• “Miami-Dade Circuit Judge Beatrice Butchko stepped down from a case over attorney fees and costs, hours after a litigant filed a verified disqualification motion.”
• “Litigant Sarah Lazow claimed in a disqualification motion that her former attorney, Robert Zarco, a partner at Zarco Einhorn Salkowski & Brito in Fort Lauderdale, allegedly pitched his legal services by boasting he had a ‘very close relationship’ with Butchko, who might allegedly ‘role play as angry on the record.'”
• “But Lazow’s opponents describe her as a ‘desperate litigant,’ ready to defame the judge and other side.”
• “Lazow claimed in the motion that Butchko could not be impartial in the litigation, in which one of Lazow’s former attorneys sued for legal fees, stemming from a larger lawsuit involving Setai Hotel Acquisition LLC, the operator of the Setai Hotel in Miami Beach.”
• “‘She hates you,’ Zarco allegedly said to Lazow, according to the motion for disqualification. ‘She asked me why I would get involved in this case when you have already been through six lawyers. She said you were crazy.'”
• “Bob Jarvis, an ethics professor at Nova Southeastern University Shepard Broad College of Law, who is not involved in the litigation, said the Judicial Qualifications Commission might want to examine if the allegations are true.”
• “‘I am not surprised that Judge Butchko granted the recusal motion,’ Jarvis said. ‘I am surprised that she waited until there was a motion. In my opinion, she should have recused herself when she first realized she had developed negative feelings toward the defendant, or, at the very latest, when she spoke with Zarco.'”
• “However, Zarco pushed back Wednesday against what he called ‘fabricated’ allegations Lazow put forth in the motion. He said Lazow has a history of recklessly filing motions for disqualification of judges without legal basis, to forum shop a jurist more sympathetic to her case. Zarco also said he declined to refute each ‘fabricated’ statement in court.”

“Novartis’ DQ Bid Sinks In Gilenya Row” —

• “A federal judge in Delaware has rejected a legal effort to prevent a Washington, D.C., patent lawyer from representing an Indian pharmaceutical company in a patent fight with Novartis over the blockbuster multiple sclerosis drug Gilenya.”
• “The latest word from the Delaware court came Tuesday in Novartis’ bid to disqualify Chidambaram Iyer of Sughrue Mion PLLC from representing Shilpa Pharma Inc., the Pennsylvania arm of a generic drugmaker based in Raichur, India. Shilpa sued Novartis last year, alleging that an active ingredient in the drug the Swiss giant has been approved to sell since 2010 did some of the same things that are described in the language of a patent that Shilpa landed from the U.S. Patent and Trademark office six years later.”
• “The same year Shilpa had secured the patent — in late 2016 — representatives from Shilpa tried to convince Novartis to license the patent but were rebuffed. Since last November, Novartis’ lawyers have been trying to prevent Sughrue Mion’s Iyer from representing Shilpa in the case because Shilpa identified him ‘as the only named Shilpa witness to several 2016 discussions with Novartis about licensing the patent.'”
• “Earlier this month, Robinson came down on the side of Shilpa’s lawyers. She wrote that Iyer’s “personal knowledge is not a basis for the allegations of willful and induced infringement. ‘There is no evidence that Mr. Iyer would so testify,’ she added in her 7-page report.”

“As R. Kelly’s Chicago trial nears, things get testy between defendants” —

• “With less than two months to go until ex-R&B superstar R. Kelly and two of his former associates go on trial in Chicago, the sparks are starting to fly.”
• “On Wednesday, lawyers for former Kelly manager Derrel McDavid blasted claims by the singer’s attorney that there may be a conflict of interest with McDavid’s legal team as ‘either woefully uninformed or purposely mendacious.'”
• “The response also criticized Kelly’s lawyer, Jennifer Bonjean, for what they called a ‘disingenuous’ attempt to link one of McDavid’s current attorneys, Vadim Glozman, to famed Chicago defense attorney Edward Genson, who represented Kelly in his child pornography trial in Cook County in 2008 that ended with an acquittal.”
• “Glozman worked for Genson’s law practice from 2012 to 2017, when it was closed due to Genson’s failing health. Genson died of cancer in 2020.”
• “Bonjean also pointed to an interview Genson gave to a Chicago Sun-Times columnist in 2019, when he was in the advanced stages of terminal cancer, in which Genson said Kelly was ‘guilty as hell’ and that he’d helped keep the singer out of trouble for a decade after his acquittal.”
• “‘Because Glozman arguably owes a duty of loyalty to Kelly because he was a member of the firm that represented Kelly, he is in a conflicted position,’ Bonjean wrote. ‘This potential conflict may be an actual conflict if Glozman possesses privileged information that he may or can use to the benefit of his client or to the detriment of Mr. Kelly at a joint trial.'”
• “In response, McDavid’s legal team called that assertion ‘disingenuous, insulting, and perhaps worse: pointless.'”
• “The Sun-Times column, their motion said, omitted that a heavily medicated Genson was ‘rushed to the hospital shortly after the interview took place and that the interviewer only entered Mr. Genson’s home through false pretenses.'”
• “In an emailed statement Wednesday, Sun-Times interim Editor-in-Chief Steve Warmbir said the newspaper ‘completely stands by its 2019 interview of Ed Genson… The columnist did nothing remotely improper regarding the interview of Mr. Genson, who was quite lucid at the time,’ Warmbir said.”