“Reddit Accuses Former Law Firm of Switching Sides to Defend Perplexity AI” —

• “Reddit is fighting to prevent its former law firm, Proskauer Rose, from representing Perplexity AI in a federal data-scraping lawsuit, alleging that the firm dropped the social media company to take on its courtroom opponent despite an earlier promise to stay out of the case. In competing filings submitted October 9, 2026, to U.S. District Judge Paul A. Engelmayer in Manhattan, Reddit and Proskauer disputed whether the firm’s earlier work on a separate whistleblower lawsuit creates a conflict that prevents it from defending Perplexity in the data-scraping case.”
• “The separate whistleblower lawsuit was brought by former Reddit employee Jutta Williams, who alleged she was fired after raising concerns about the company’s data privacy and licensing practices. Proskauer represented Reddit in that case, which involved its licensing arrangements with Google and OpenAI.”
• “That earlier work allegedly exposed Proskauer to confidential information about Reddit’s agreements with Google and OpenAI, including practices now at issue in its lawsuit accusing Perplexity of improperly collecting content through Google search results.”
• “After Perplexity approached Proskauer about taking over its defense, the firm sought Reddit’s consent and was refused. It subsequently moved to withdraw from the whistleblower proceedings, prompting objections over ongoing discovery and the difficulty of finding replacement counsel.”
• “The social media company eventually agreed to the withdrawal in November 2025 after allegedly receiving assurances that Proskauer would stay out of the Perplexity litigation. The firm disputes that any binding restriction was imposed, setting up the current fight over whether it can represent Reddit’s courtroom opponent.”
• “In its defense, Proskauer characterizes the earlier representation as an employment dispute involving retaliation and discrimination allegations, distinct from the data-scraping claims against Perplexity. Attorneys assigned to the new case have also been screened from confidential information obtained while representing Reddit, according to the firm.”
• “The challenge also invokes the ‘hot potato doctrine,’ which can prevent lawyers from dropping an existing client to represent another with conflicting interests. Reddit argues that Proskauer withdrew to pursue Perplexity’s business and should face the stricter rules governing conflicts involving current clients.”
• “Under the rules governing former-client conflicts, Proskauer argues that disqualification generally requires a substantial relationship between the two matters, a connection the firm disputes in this case.”

In Massachusetts: “Insurance – Defense counsel – Conflict of interest” —

• “Where a plaintiff has claimed that the defendant insurance company has no right to control the defense of asbestos lawsuits against the plaintiff that the insurer has an obligation to defend, the insurer should be awarded summary judgment because the plaintiff has not shown that there is any actual or meaningful potential conflict of interest that would justify rejecting the insurer’s selection of counsel and control of the defense as to those claims for which it has relinquished or not asserted a reservation of rights.”
• “‘The fundamental dispute between the parties out of which all of Watts’ claims arise revolves around who gets to control the defense of the Asbestos Lawsuits against Watts that FFIC has an obligation to defend on and after October 1, 2024. …”
• “‘The first issue here is whether FFIC has withdrawn its reservation of rights with respect to the Asbestos Lawsuits against Watts Regulator that it has an obligation to defend as of October 1, 2024. …”
  “‘In July 2024, FFIC formally notified Watts that it ‘fully withdraws’ its reservations of rights with respect to claims that FFIC is or will be defending on or after October 1, 2024, and it has continued to do so for all new claims against Watts Regulator since October 1, 2024 which assert a possible exposure during the FFIC Policy period. At oral argument, FFIC reaffirmed its position that it has withdrawn its reservation of rights with respect to these claims. … Such admissions to the court are binding on FFIC. …”
• “‘Watts argues that, even if FFIC has withdrawn its reservations of rights, a conflict bars FFIC from assuming control of Watts’ defense, at least in many of the Asbestos Lawsuits. Specifically, Watts argues that FFIC has a conflict because (a) it seeks to defend claims for which (i) Watts potentially bears significant uninsured indemnity responsibility; (ii) FFIC disclaims any liability obligation whatsoever; and (iii) indemnity depends on evidence to be gathered during the underlying case; (b) because certain of the Non-Party Insurers have agreed to defend subject to a reservation of rights, Watts has the right to control the defense as to those insurers, and FFIC’s selected counsel will be subject to conflicting instructions; and (c) FFIC has required Watts to give up its right to defend with respect to the Non-Party Insurers as a condition of FFIC providing a defense. …”
• “‘In short, Watts has not shown that there is any actual or meaningful potential conflict of interest that would justify Watts rejecting FFIC’s selection of counsel and control of the defense as to those claims for which it has relinquished or not asserted a reservation of rights. …”
• “‘FFIC has abided by the terms of the FFIC Policy. By withdrawing their reservation of rights, FFIC is entitled to control the defense in the absence of a conflict of interest with Watts. Watts should not have reasonably expected to control the defense merely because other insurers have ceded control to Watts. Watts has no factual basis for a claim for breach of the implied covenant of good faith and fair dealing. …”
• “‘Watts also brings a claim against FFIC for violation of G.Lc. 93A (Count III). … ‘Here, Watts’ claim under Chapter 93A arises from the same set of facts as Watts’ breach of contract and breach of implied covenant of good faith and fair dealing claim. Watts alleges that by claiming a right to control the defense while reserving certain rights, FFIC has violated Watts’ reasonable expectations under the FFIC Policy, breached the implied covenant of good faith and fair dealing, and committed an unfair and deceptive act. I have already found that FFIC has withdrawn its reservations of rights. Without a conflict of interest, the claim for breach of implied covenant of good faith and fair dealing fails and with it the Chapter 93A claim fails as well.'”
  “Watts Regulator Company, et al. v. Fireman’s Fund Insurance Company (Lawyers Weekly No. 09-081-26) (18 pages) (Krupp, J.) (Suffolk Superior Court) (Civil No. 24-2530-BLS1) (Aug. 20, 2026). “
• Decision: here.