Risk Update

RIsk Roundup — Lawyer Conflict Advising “Side Business,” Firm’s “Brand Ambassador” Spokesperson Causes Consternation, A Judge’s Alleged Poor Judgement

NJ Atty Can’t Use Own Firm To Advise Side Business” —

  • “The New Jersey Advisory Committee on Professional Ethics on Friday released an opinion finding that a Garden State attorney who owned a business in addition to his legal practice created a conflict of interest impacting his entire firm when he retained his own firm to perform legal work for an entity owned by his business.”
  • “The committee received an inquiry about a law firm that was retained to advise a client entity in a commercial loan refinancing, according to the opinion. The client entity is fully owned by a limited liability company that has two members, each owning equal shares.”
  • “Since the attorney owns an equal part of the parent company, the attorney also owns 50% of the client entity, the committee found. The financial stake created a ‘personal interest’ on behalf of the lawyer, the committee said.”
  • “‘It is well-established that lawyers who have a personal financial interest in a client’s business have a conflict of interest,’ the committee wrote. ‘A lawyer’s professional judgment, when advising a client in a financial transaction, could be influenced by the lawyer’s interest as a stakeholder in the business.'”

U.S. law firm is latest to pull golf sponsorship over Saudi-backed tour” —

  • “U.S. law firm Cozen O’Connor said Thursday that it has dropped its sponsorship of golfer Jason Kokrak after he left the PGA Tour to join the Saudi Arabia-backed LIV Golf Invitational Series.”
  • “The move comes amid a wider rift in the professional golfing world over the new LIV Golf series, which has lured players with the promise of guaranteed, big-money paydays and a reduced schedule.”
  • “Cozen said Thursday that it had ‘mutually agreed’ with Kokrak that he will no longer serve as an ‘ambassador’ for its brand, citing Kokrak’s decision Wednesday to affiliate with the new LIV tour.”
  • “Forbes reported in June that Rocket Mortgage, the Royal Bank of Canada and UPS had dropped players for their involvement with LIV Golf. Accounting firm KPMG ended its sponsorship of Phil Mickelson in February over comments he made about the Saudi backing of the LIV Golf series.”
  • “In addition to concerns over the future of the PGA Tour, critics say LIV Golf, which is bankrolled by Saudi Arabia’s Public Investment Fund, amounts to ‘sportswashing’ by a country trying to counterbalance the reputational effects of human rights abuses.”
  • “Cozen, and its founder and chairman Stephen Cozen, represented families of victims of the Sept. 11, 2001, attacks in litigation against Saudi Arabia, alleging it provided material support to al Qaeda.”

For more on the KPMG sponsor change, see this from February: “Mickelson apologises for ‘reckless’ comments on Saudi-backed league” —

  • “In a November interview that was published on the firepitcollective.com last weekend, Mickelson criticised the government of Saudi Arabia for its ‘horrible record’ on human rights, which he said included the 2018 killing of journalist Jamal Khashoggi and the execution of gay people.”
  • “Despite the government’s ‘scary’ actions, he said he would use the prospect of a new, highly-lucrative tour to gain economic leverage over the PGA Tour, a position that drew the ire of fellow golfers including Rory McIlroy and Justin Thomas.”
  • “‘Although it doesn’t look this way now given my recent comments, my actions throughout this process have always been with the best interest of golf, my peers, sponsors, and fans,’ Mickelson said at the beginning of a lengthy social media post, where he claimed his previously reported comments were ‘off the record,’ a charge the journalist denies.”
  • “‘The bigger issue is that I used words I sincerely regret that do not reflect my true feelings or intentions. It was reckless, I offended people, and I am deeply sorry for my choice of words. I’m beyond disappointed and will make every effort to self-reflect and learn from this.'”
  • “Mickelson praised LIV Golf Investments, Super Golf League’s financial backer, and called the people he has worked with there ‘visionaries.'”

Judge Hummel Accused of Intimidating Oil and Gas Counsel” —

  • “An attorney for an oil and gas company has accused Second Judicial Circuit Judge David Hummel of pointing a gun at her and also at her colleagues in his courtroom during a bench trial earlier this year.”
  • “Lauren Varnado, a Texas-based managing partner of the law firm Michelman & Robinson LLP, told The Intelligencer that Hummel had been openly hostile toward her team after they sought to have the judge disqualified from a case in Wetzel County involving oil and natural gas royalty payments.”
  • “The case Hummel was appointed to oversee involved EQT Corp. and local residents over royalty payments. Varnado said she and Hummel had gotten off on the wrong foot, starting with her attempt at having him removed from the case. In 2020, Circuit Judge Jeffrey Cramer had voluntarily recused himself from the matter over a potential conflict of interest. That case then went to Hummel, who Varnado believed may have had a similar conflict of interest.”
  • “The West Virginia Supreme Court of Appeals declined to disqualify Hummel, who Varnado said may have relatives who receive oil and gas payments. Afterward, Varnado said Hummel conducted the legal proceedings with an air of open hostility.”
  • “‘He kind of started [the status hearing] off with, ‘I’m Judge Hummel, and I don’t have any conflicts, nice try,” she said. ‘He turned to the plaintiff’s lawyers and said, ‘This is a bench trial, right?’ and winked at him.'”
  • “By the time the matter had gone to trial earlier this year, Varnado said Hummel’s behavior had become significantly worse, devolving into screaming matches and interrupting opening arguments, among other things. In her affidavit, Varnado also states that Hummel berated and ridiculed counsel throughout the trial, calling her ‘despicable.'”
  • “Varnado also claims that Hummel would gesture toward his stenographer to go on and off the record during the trial, one instance of which was prior to Hummel’s alleged brandishing of a handgun.”
  • “During the hearing, Hummel allegedly told Varnado that the courtroom security officer, and Hummel personally, would be enough security for her team, according to Varnado’s affidavit. Hummel allegedly said that his guns were bigger than the guns of her security personnel before drawing his holstered weapon, pointing it at the defendant’s table where EQT’s legal team was waiting, and then at the podium where Varnado was stationed. Hummel then allegedly laid his weapon on the desk before deliberately rotating the gun so that the barrel was pointing directly at Varnado, she said.”
  • “According to that reporting, Hummel first denied anything had taken place in his courtroom, then called the reporter back later to say he had a gun on his person but never brandished it, then called back again to say he did show Varnado and her team a foil packet of blood coagulant from a first aid kit, but not a gun.”