“Charles Oakley wants Deputy Mayor Randy Mastro off MSG ejection case, claims ‘conflict of interest’” —

• “Knicks legend Charles Oakley wants First Deputy Mayor Randy Mastro bounced from his legal spat over his infamous 2017 ejection from Madison Square Garden – claiming the lawyer’s bid to stay on the case is a ‘conflict of interest.'”
• “The veteran litigator would be breaching Big Apple ethics rules by continuing to rep the arena, which receives lucrative city tax breaks, while serving as a top honcho in the mayor’s office, Oakley’s lawyer alleges.”
• “‘Courts have consistently doubted that any public servant – let alone a high-ranking official – can simultaneously serve the public while running a private law practice,’ reads a letter filed Wednesday in Manhattan federal court.”
• “Mastro has withdrawn in recent days from matters relevant to the city, like his work on New Jersey’s bid to kill New York’s congestion pricing plan, court records show. But the attorney, who has represented the arena and its billionaire chairman James Dolan in various matters for two decades, is still helping his long-time clients defend Oakley’s suit.”
• “Mastro has agreed to rep the Midtown arena for free, will appear in court in his personal capacity and not as a representative of the city, and has vowed to recuse himself from MSG-related matters while serving as first deputy mayor, a City Hall spokesperson said.”
• “The city’s independent ethics board approved the unusual setup, according to the mayor’s office, after Mastro said that he has very little work left on the case – a claim that Oakley’s lawyer contests – and that he’d request further advice if that situation changed.”
• “But Mastro has not been granted a ‘waiver’ that city employees are required to obtain before moonlighting in private jobs, Oakley attorney Valdi Licul wrote to the court on Wednesday.”
• “The mayor’s office maintains that the board found that, for now, no waiver was needed.”
• “‘New York City’s independent Conflicts of Interest Board evaluated the circumstances of First Deputy Mayor Mastro’s limited continued involvement in the Oakley litigation and advised he could stay on the case during this dispositive phase so long as he recuses himself from any issue involving his client during his city government tenure,’ spokesperson Kayla Mamelak Altus told The Post.”
• “Mayor Eric Adams announced plans to tap Mastro, formerly first deputy mayor under Mayor Rudy Giuliani, to the lofty post in his administration last month.”
• “An earlier bid to appoint him as the city’s Corporation Counsel, or top lawyer, failed after City Counsel members blasted his work representing landlords, anti-congestion pricing groups and other parties during his decades-long legal career.”

“Bar seeks comment on amendment to conflict of interest rule” —

• The Virginia State Bar is seeking public comment on a proposed amendment to Rule 1.9(c) of the Virginia Rules of Professional Conduct.”
• “The proposed amendment to the rule, which governs conflict of interest, would allow a lawyer to use information gained while representing a former client to that former client’s disadvantage ‘when the information consists solely of criminal history information that can be obtained from law enforcement databases or court records.'”
• “In a March 27 release from the VSB, the bar states that the proposal would ‘reduce the number of conflicts faced by criminal defense lawyers,’ as under the current rule, an attorney who learned of a former client’s criminal history during representation would have a conflict when representing a new client if that former client were an adverse witness.”
• “The VSB release also states that the information covered by the amendment is ‘typically provided by the prosecution to any lawyer representing the defendant,’ negating any special advantage for the attorney.”
• “Comments on the proposed amendment to Rule 1.9(c) can be submitted via email to VSB Executive Director Cameron M. Rountree at publiccomment@vsb.org. Comments must be submitted by May 7.”
• “The proposed amendment can be viewed here.”

“Hedge Funds, Private Equity Quietly Invest in Litigation Finance” —

• “Davidson Kempner Capital Management was identified as the funder behind patent cases against Amazon’s Audible Inc. last month, the first time the $35 billion hedge fund was publicly outed as a player in litigation finance.”
• “It’s a rare spotlight on hedge funds’ role in the outside backing of lawsuits, a now $16.1 billion industry that private equity firms and multi-strategy investment managers have been cashing in on for years. Funders dedicated to the sector actively market their services to law firms, but some asset managers choose to remain below the fray with their presence only revealed in court documents or regulatory filings, if at all. “
• “‘The market for capital and litigation finance is much larger than just the traditional litigation funders that advertise,’ said Rebecca Berrebi, a litigation finance broker.”
• “Asset managers often operate as limited partners investing in dedicated litigation finance funds, but they also directly back law firms and cases. Hedge funds co-invest with funders on deals to bankroll mass tort law firms or use insurance policies as collateral for loans. Berrebi says the private credit space is well suited to invest in litigation finance transactions, particularly portfolios.”
• “BlackRock, Ellington Capital, Cliffwater, and Gramercy Funds Management also invest in court fights and the lawyers behind them.”
• “BlackRock didn’t respond to a request for comment. Davidson Kempner, Ellington Capital, Cliffwater, and Gramercy Funds declined to comment.”
• “Funds’ preference to remain in the background could be because financing litigation is overall a small portion of their portfolios. Or because some funders could be backing litigation against companies in which they separately invest. Davidson Kempner last year added a stake in Audible owner Amazon.com, according to a public filing.”
• “Davidson Kempner is financing Audio Pod IP LLC’s suits against Audible Inc. through an LLC, according to the court filing. Lawyers for Audible outed the company in a countersuit filed in a federal court in Manhattan.”
• “‘Audio Pod deliberately reached out beyond its state of formation in Virginia to exploit New York’s robust financial market and obtain funding for its patent-assertion campaign against Audible,’ they said.”

Matthew Marrone at Goldberg Segalla writes: “Lawyers Beware: Litigation Funding Leads to Malpractice” —

• “As recently reported by Law360, a Pennsylvania lawyer and a litigation funder are facing racketeering and malpractice claims. A Pennsylvania federal judge recently declined to dismiss claims brought by a client accusing his former lawyer of engaging in a conspiracy to improperly charge him inflated legal fees to cover high-interest litigation loans.”
• “In the underlying matter, the client/plaintiff retained the lawyer to represent him in a lawsuit claiming he suffered neurological issues stemming from a titanium medical implant after installing a pole with a cell phone antenna near a train station. The client asserts that the lawyer promised him that he would receive a ‘life-changing amount’ of money from the injury suit and encouraged him not to return to work. The lawyer also allegedly encouraged the client to sign a $33,000 litigation funding agreement with a litigation funder, which came with a two-year repayment plan with a 25-percent interest rate.”
• “The suit dragged on, the client alleged, before the lawyer supposedly pushed him to accept a $475,000 settlement. Out of that settlement, the client received only $141,469 after costs and fees were taken out, despite experts stating he was owed nearly $3 million in damages. The final settlement was so small, because the lawyer allegedly took out his own litigation funding with the same funder and then tacked it, with interest, to the client’s bill, the suit claims.”
• “The litigation funder argued the RICO claim must fail, because providing funding as described in the complaint is its ‘precise business’ model. The judge noted that the client alleged ‘unauthorized, secret funding agreements that the enterprise used to defraud him,’ which is enough to support a racketeering claim as ‘facially plausible.'”
• “The judge found further that, because the client alleged that his lawyer ‘made multiple false misrepresentations and withheld material information from him,’ his claims for fraudulent inducement, malpractice, breach of fiduciary duty and civil conspiracy may survive at this stage.”
• “The lesson here? Litigation funding is fraught with peril for lawyers. If your client chooses to use litigation funding, make all efforts to do the following:”
  • “Confirm the client understands the terms of the funding agreement”
  • “Have the client – not you – sign the agreement with the funder”
  • “Avoid signing the agreement on behalf of yourself or your client”
  • “Ensure the client understands that the decision to sign the agreement is his/hers alone, without influence from you”
  • “Advise the client of the option to consult with other professionals (e.g., other counsel, an accountant, or a financial advisor) about the decision to sign the agreement”
  • “Obtain written/signed acknowledgement from the client of the foregoing”