Risk Update

Risk Fallout — Dogecoin Confidentiality/Disqualification Dogfight, Client Selection, Engagement Scope and Firm Conflicts

Quinn Emanuel Faces DQ Bid For Musk-Dogecoin Deal Leak” —

  • “Dogecoin investors want Quinn Emanuel Urquhart & Sullivan LLP to be disqualified in their case against Elon Musk and Tesla Inc. because the law firm and its attorneys publicly disclosed a confidential settlement offer in the contentious lawsuit.”
  • “In a document filed in New York federal court Thursday, an attorney for the plaintiffs asked that the firm and its lawyers be disqualified and sanctioned after submitting the letter to the official court docket. Because of Quinn Emanuel’s actions, the plaintiffs are asking for $350,000 in sanctions, damages and legal fees.”
  • “‘By these ethical violations, Alex Spiro, his co-counsel Sarah Concannon and Brenna Nelinson, and Quinn Emanual have demonstrated a willingness to fight dirty that threatens to significantly taint the trial of this case,’ the plaintiffs said.”
  • “In the underlying case, the plaintiffs allege that Musk, Tesla’s CEO, engaged in market manipulation that allowed him and the company to turn a profit on Dogecoin, a meme-themed cryptocurrency.”
  • “The two sides have been slugging it out in court since the plaintiffs filed their initial complaint in June 2022, including previous motions to disqualify each other’s attorneys that U.S. District Judge Alvin K. Hellerstein denied in December.”
  • “Hellerstein disposed of the spat, which has spanned several months and hundreds of pages of back-and-forth legal filings between plaintiff attorney Evan Spencer and his opponents. The judge also granted Musk and Tesla’s request to dismiss the proposed class action complaint while leaving the door open to refiling it after it has received some editing.”
  • “Quinn Emanuel, Musk and Tesla claimed the lawsuit was so riddled with obvious legal and factual errors that it should be thrown out.”
  • “On the other side, Spencer and the investors accused Quinn Emanuel of leaking a letter Spiro, who is representing Tesla and Musk, sent to Spencer — and that harshly criticized the lawsuit — to the New York Post. They later filed an amended complaint to revive the lawsuit.”
  • “‘Mr. Spencer was alerted to the article by one of his clients in this case and needed to perform considerable damage control. Both parties then moved for sanctions, and the Court denied both motions, but stated that it would address the issue again if private materials were made public in the future,’ according to Thursday’s filing.”

‘It’s created an internal shitstorm’: turmoil at UK law firm accused of ‘whitewashing’ Saudi World Cup report” —

  • “When the Saudi crown prince locked nearly 400 of his country’s most powerful people in a luxury hotel in 2017 and stripped them of their fortunes, a UK law firm allegedly played a significant role.”
  • “On the orders of Mohammed bin Salman, Clifford Chance – a ‘magic circle’ legal giant with headquarters in London – was reported to have facilitated the forced transfer of assets from a Saudi TV station to the government. In total, assets worth $100bn were taken from the detainees, who included political rivals of Prince Mohammed. Some were allegedly beaten, deprived of sleep and held in stress positions.”
  • “Seven years on from the infamous purge at the Ritz-Carlton in Riyadh, Clifford Chance – whose global revenues rose 9% to £2.3bn in the last financial year – has expanded in Saudi Arabia to become an ‘unrivalled legal powerhouse’, according to its website. It boasts large government clients, including key ministries and the sovereign public investment fund. In 2023, after a legal change, its Saudi arm, AS&H Clifford Chance – a joint venture with a local firm – became one of the first foreign firms approved to practise law.”
  • “Only last month, it was named Saudi law firm of the year at a glitzy awards ceremony in Dubai.”
  • “Now the firm’s long-running links to the Saudi regime are facing scrutiny after it was commissioned to produce an ‘independent’ assessment of Saudi Arabia’s human rights record as part of the country’s bid to host the 2034 Fifa World Cup – a report that has been roundly condemned as a ‘whitewash’.”
  • “The Observer understands that at least one other law firm approached to conduct the assessment refused because of reputational concerns and fears over conflicts of interest.”
  • “But the Saudi arm of Clifford Chance – whose recent work also includes overseeing a multibillion-pound football stadium deal for two clubs in the Saudi Pro League – agreed. The appointment is understood to have been signed off by Fifa, world football’s governing body.”
  • “Required as part of Fifa’s bidding process, the assessment was supposed to give an independent and unbiased picture of the human rights context in the kingdom. UN guiding principles, which Fifa says it abides by, say such assessments should ‘include all internationally recognised human rights as a reference point’.”
  • “But documents seen by the Observer show that AS&H Clifford Chance agreed to severely limit the scope of its report after a request from the Saudi Arabian Football Federation (Saff), which again was approved by Fifa.”
  • “The restrictions mean the report only looked at human rights that are recognised in Saudi Arabia – rather than those recognised globally – and were considered relevant by the Saudi football federation.”
  • “Across 39 pages, there is no mention of discrimination against LGBTQ+ people in Saudi Arabia, the criminalisation of same-sex sexual activity, controls on freedom of expression and the prohibition of trade unions or forced evictions, such as during construction of the mega-city Neom. In the methodology notes for the report, AS&H Clifford Chance says the scope was ‘determined by Saff in agreement with Fifa’. The notes also reveal the review was completed after only six weeks of desk work and relied solely on interviews with government ministries. Human rights groups and those affected by alleged abuses, such as migrant workers, were not consulted.”
  • “The firm is known for its pro bono and human rights work, and one of its partners co-chairs the Business and Human Rights Lawyers Association. But according to people familiar with the assessment, key staff with relevant expertise were not consulted. ‘It’s created an internal shitstorm,’ a source said.”
  • “Another said: ‘It’s a shoddy piece of work. It would have been a mistake for anyone credible to take on this task given the parameters were scoped so narrowly. Given the conditions attached, there was no way to do it in an ethical way.'”
    “The revelations also risk undermining the firm’s pledge to champion LGBTQ rights. In 2023, Clifford Chance was ranked as one of the world’s best LGBT employers in Stonewall’s global workplace equality index, which recognises organisations that have ‘taken steps to advance LGBT equality across their global locations’.”
  • “The fallout also raises wider questions for Fifa about the integrity of Saudi Arabia’s World Cup bid as a vote to confirm the kingdom as 2034 host approaches… It declined to comment on the Clifford Chance report but said it planned to publish an evaluation of Saudi Arabia’s bid, including the human rights assessment, before the congress meeting.”