Freivogel on Conflicts
FREIVOGEL ON CONFLICTS
WHAT'S NEW

Home/Table of Contents

Items posted here during the past thirty days will also appear on this What's New page.  Items posted within the past ten days will appear In Ten Day Bulletin immediately below.  Items older than ten days but less than 30 days will be posted in the Thirty-Day Holding Area, which follows.

Ten Day Bulletin

Bankruptcy (posted February 21, 2018) In re Encore Prop. Mgmt. of Western N.Y., LLC, 2018 WL 941647 (W.D.N.Y. Feb. 16, 2018). This opinion contains only a casual reference to a possible conflict of interest. The bankruptcy judge was very unhappy with the debtor's lawyer for, among other things, not properly responding to a motion: "a memorandum of law is to be submitted to support legal arguments where necessary; putting scraps of paper, bits of string, a lucky bottle cap, and an old red yo-yo in a cigar box doesn't cut it." (fn. 3)

Current Client
(posted February 20, 2018) In re Ace Real Prop. Invs., LP, 2018 WL 915192 (Tex. App. Feb. 15, 2018). Purchaser, represented by Lawyer, sued Seller for fraud in the sale of commercial real estate. Seller brought a third-party action against Broker. Lawyer appeared for Broker. Seller moved to disqualify Lawyer. Broker substituted another lawyer. The trial court disqualified Lawyer. In this opinion the appellate court reversed (granted mandamus), noting that Seller "neither alleged nor demonstrated any actual prejudice," and that Lawyer had stopped representing Broker by the time of the disqualification order.

                                                               Thirty Day Holding Area

MISCELLANEOUS ETHICS AND LIABILITY NEWS

[Note: Items that do not fit under the conflicts categories below, but which we believe will be of interest to this audience will appear here and on the This and That pages.]

In-Firm Communications

(posted February 6, 2018) Cal. Op. 12-0005. This opinion holds that where a lawyer communicates with an outside lawyer or with another lawyer in the lawyer's firm, about liability or ethics issues regarding a client, those communications do not comprise a conflict of interest. The opinion points out that there will always be communications-with-the-client issues under California Rule 3-500 (version of MR 1.4).

Other; Award


(posted January 29, 2018) On January 24, 2018, in New York City, we received this: "New York State Bar Association Committee on Professional Ethics Sanford D. Levy Memorial Award Presented to William Freivogel for His Contribution to the Field of Legal Ethics, 2017."

CONFLICTS - UNCATEGORIZED

[Note: These, too, will appear at the This and That pages.]

Nothing current.

ARBITRATION OF MALPRACTICE CLAIMS (To read the full article, click here.)

(posted February 6, 2018) Tecnomatic, S.p.A. v. Bryan Cave, 2018 IL App (1st) 161908-U (February 1, 2018). Plaintiff retained Law Firm and executed an engagement letter containing a broad arbitration clause. A fee dispute arose, and Plaintiff filed this action seeking a declaratory finding that Plaintiff can litigate its fee dispute in court, rather than in arbitration. The case is a procedural mess, and we will not try to unravel it here. In brief, the trial court found for Law Firm. In this opinion the appellate court affirmed. The opinion contains a lengthy discussion of the role of arbitration as a substitute for litigation in Illinois, particularly in the case of fee disputes. Among other things, the court held that a broad arbitration clause, including for malpractice disputes, does not violate Illinois' version of MR 1.8(h)(1) (prospectively limiting liability of lawyer).

BANKRUPTCY (To read full article, click here)

(posted February 21, 2018) In re Encore Prop. Mgmt. of Western N.Y., LLC, 2018 WL 941647 (W.D.N.Y. Feb. 16, 2018). This opinion contains only a casual reference to a possible conflict of interest. The bankruptcy judge was very unhappy with the debtor's lawyer for, among other things, not properly responding to a motion: "a memorandum of law is to be submitted to support legal arguments where necessary; putting scraps of paper, bits of string, a lucky bottle cap, and an old red yo-yo in a cigar box doesn't cut it." (fn. 3)

(posted February 6, 2018) In re ProFlo Indus., LLC, 2018 WL 615122 (N.D. Ohio Jan. 29, 2018). Creditor moved for appointment of a Chapter 11 trustee. Creditor claimed that one reason for the motion is that the sole member of the Debtor is represented by Lawyer. Lawyer was previously disqualified from representing the Debtor because she represented too many parties, including Debtor, the sole member, the member's father, and a related entity. In denying appointment of a trustee, the court held that because Debtor is now represented by a different, disinterested, lawyer, Lawyer's current representation of just the member is not a reason for such appointment.

BANKS/TRUST DEPARTMENTS (To read full article, click here.)

Nothing current.

BOARD POSITIONS (To read full article, click here.)

Nothing current.

CHANGING FIRMS - SCREENING (To read full article, click here.)

(posted January 29, 2018) California Self-Insurers' Security Fund v. Superior Court, 2018 WL 561707 (Cal. App. Jan. 26, 2018). In this case Fund is seeking reimbursement from 304 members of the Fund. Lawyer worked on this case while at the law firm ("Firm 1") representing several defendants. In early February 2017 Lawyer left Firm 1 and joined Firm 2, while Firm 2 was representing Fund in this case. Lawyer was in an office of Firm 2 that was not the office handling the Fund's case. When Firm 2 learned of this situation in early March 2017, Firm 2 and Lawyer promptly "parted ways." Nevertheless, the involved defendants moved to disqualify Firm 2. The trial court granted the motion saying that disqualification was automatic and that a screen would not work. In this opinion the appellate court granted a petition for writ of mandate and remanded the case for the trial court to determine whether "all relevant facts and circumstances" warrant disqualification. The court did say that if Lawyer had remained at Firm 2, Firm 2 would have been disqualified.

CLASS ACTIONS (To read full article, click here.)

(posted February 9, 2018) Wexler v. AT&T Corp., 2018 WL 748607 (E.D.N.Y. Feb. 7, 2018). Suit under the Telephone Consumer Protection Act. Plaintiff sues on behalf of herself and on behalf of a class. Defendant moved to strike the class allegations because class counsel is Plaintiff's husband. Actually, the husband has withdrawn, but will ultimately seek quantum meruit fees for the period up to his withdrawal. In this opinion the court struck the class action, saying Plaintiff "cannot adequately" look after the class' interests regarding her husband's fee request, because of the benefit she would realize from the fee.

CLIENT MERGERS/ASSET SALES (To read full article, click here.)

Nothing current.

CO-COUNSEL/COMMON INTEREST (To read full article, click here.)

Nothing current.

COMMERCIAL NEGOTIATIONS (To read full article, click here.)

Nothing current.

CORPORATIONS (To read full article, click here.)

(posted February 9, 2018) Deerin v. Ocean Rich Foods, LLC, 2018 WL 736212 (N.Y. App. Div. Feb. 7, 2018). A, B, & C formed an llc ("Co."). A died, and his executor sued B and C over certain life insurance proceeds. A moved to disqualify the lawyer ("Lawyer") for B and C, because Lawyer was involved in creating Co. and represented Co. In this opinion the appellate court ruled that Lawyer should have been disqualified. It is not clear from the opinion whether the court was relying on certain facts regarding the relationship, or whether the court was holding that, as a matter of law, the lawyer for a three member LLC was ipso facto lawyer for each of the members.

(posted February 7, 2018) Clemente v. Martinelli, 2018 WL 708835 (Mass. App. Feb. 5, 2018). This is a legal malpractice suit by Clemente against against a lawyer (Martinelli). In 2004 Martinelli "assisted" Clemente in "forming" an llc, ("Co."). Martinelli continued to represent Co. and billed Co. for his fees. Later, Martinelli became a co-owner of Co. Before becoming an owner, Martinelli advised Clemente to see another lawyer about this relationship. When Co. began to struggle financially, Martinelli negotiated a merger with another entity. Clemente remained an employee of the "new business." Clemente was later terminated but remained an owner and director. Clemente then filed this lawsuit. The trial court granted Martinelli a summary judgment, holding that Clemente was not a client of Martinelli. In this opinion the appellate court affirmed. [Our note: The court did not discuss whether Martinelli represented Clemente before, and during, the formation of Co.]

CORPORATE FAMILIES (To read full article, click here.)

Nothing current.

CRIMINAL PRACTICE (To read full article, click here.)

Nothing current.

CURRENT CLIENT (To read full article, click here.)

(posted February 20, 2018) In re Ace Real Prop. Invs., LP, 2018 WL 915192 (Tex. App. Feb. 15, 2018). Purchaser, represented by Lawyer, sued Seller for fraud in the sale of commercial real estate. Seller brought a third-party action against Broker. Lawyer appeared for Broker. Seller moved to disqualify Lawyer. Broker substituted another lawyer. The trial court disqualified Lawyer. In this opinion the appellate court reversed (granted mandamus), noting that Seller "neither alleged nor demonstrated any actual prejudice," and that Lawyer had stopped representing Broker by the time of the disqualification order.

(posted February 6, 2018) The Revolution FMO, LLC v. Mitchell, 2018 WL 583044 (E.D. Mo. Jan. 26, 2018). Plaintiff is suing Defendant for taking Plaintiff's trade secrets and sharing them with Plaintiff's competitor ("Competitor"). Lawyer represents both Defendant and Competitor. Plaintiff moved to disqualify Lawyer, alleging that Lawyer will share Plaintiff's secrets with Competitor. In this opinion the court denied the motion. The court quoted an elaborate "Protective Order" prohibiting Defendant from sharing certain information with Competitor during the pendency of this case. The court said any claim that Lawyer would misuse the information was "pure speculation."

Also, Rule 4.2

(posted February 6, 2018) Jackson v. City of Sherman, 2018 WL 621259 (E.D. Tex. January 30, 2018). Law Firm represents Plaintiff in this federal ADA, unlawful termination, case. Law Firm also represents the former Human Resources Director of Defendant ("Former Director") in an "unrelated" matter. The decision to terminate Plaintiff was made by two other officials of Defendant. Former Director's only role in Plaintiff's matter was to write a letter to Plaintiff offering him another position consistent with his disability. Defendant moved to disqualify Law Firm. In this opinion the court denied the motion. Defendant invoked Texas' version of MR 4.2, but the court held that Former Director did not possess the kind of information about Plaintiff's matter that would prejudice Defendant. The court also rejected Defendant's claim that Law Firm's conduct created "an appearance of impropriety" under "Canon 9."

(posted January 30, 2018) McCoy v. Loveday, 2018 ONSC 3 (CanLII) (Super. Ct. Ont. Jan. 15, 2018). McCoy, injured in an car accident, sued the driver of the other car (this case). McCoy was a passenger. McCoy is a litigation lawyer. He and his firm are representing the driver of the car he was riding in a different case (other case). During the mediation of the other case, McCoy, while the parties were "filling time," chatted with a lawyer on the other side. Some of the chatter dealt with McCoy's own injuries and the parties' views of the driver's negligence. That lawyer's firm (other firm) is also defending this case. Because of McCoy's disclosures to lawyers at the other firm, while handling the other case, McCoy moved to disqualify the other firm. In this opinion the master denied the motion. Basically, after noting that the other firm did not represent McCoy, the master said that a litigation lawyer, such as McCoy, knowing the relationships of the other law firm, "should have kept his mouth shut" (our words).

(posted January 29, 2018) Greenfield MHP Assocs., L.P. v. Ametek, Inc., 2018 WL 538961 (S.D. Cal. Jan. 24, 2018). This suit is one of several related suits involving pollution of soil and groundwater by an aircraft parts manufacturer. One group of plaintiffs own mobile homes on polluted property ("Residents"). Another group of plaintiffs are nearby landowners ("Other Owners"), some of whom sold property to Residents. Residents and Other Owners are represented by the same two law firms ("Law Firms"). Defendant moved to disqualify Law Firms because Residents may have claims against Other Owners for failure of Other Owners to warn Residents about the pollution when Residents purchased their properties. In this opinion the court denied the motion. First, the court looked at Defendant's standing to make the motion. After a lengthy discussion of Article III of the U.S. Constitution, the court held that Article III does not prevent the court from dealing with disqualification. Moving to the merits of the motion, the court seemed especially influenced by the fact that Residents signed declarations acknowledging the conflicts and agreeing to proceed after consulting with other counsel. Last, Defendant's waiting about six months to make the motion suggested "gamesmanship" by Defendant. [Our note: This is only the second standing case, out of scores, in the seventeen years of this site, that we can recall, that considered the impact of Article III of the Constitution. Usually, the court simply says it is not inclined to entertain a motion to disqualify by a party who was never represented by the target law firm. There are exceptions, of course, such as when the "fair administration of justice" is threatened, or where the court sees a need to enforce ethics rules.]

DERIVATIVE ACTIONS (To read full article, click here.)

Nothing current.

ENJOINING CONFLICTS (AND OTHER NON-TRADITIONAL REMEDIES) (To read full article, click here.)

Nothing current.

EXPERT WITNESSES (To read full article, click here.)

Nothing current.

FORMER CLIENT (To read full article, click here.)

(posted February 10, 2018) Alexander v. Alexander, 2018 ONSC 728 (CanLII) (Super. Ct. Ont. Jan. 1, 2018). Master's opinion granting Plaintiffs' motion to disqualify Defendants' law firm ("Law Firm"). Plaintiffs are H and W. Defendants are Daughter (of H and W) and Son-in-Law. This case started out as a defamation case against Defendants, which spawned counterclaims alleging sexual abuse, and so forth. A family food fight. Previously, Law Firm represented H in a variety of family and related business matters. In this case Law Firm is attempting to represent Defendants only in relation to W's claims, and not in relation to H's claims. After a lengthy discussion of all of Law Firm's representations of H, the master concluded that there was just too much opportunity for Law Firm to parlay the information it might have learned to prejudice both H and W in this case. Thus, the matters are "sufficiently related." Also, the public would conclude that the "proper administration of justice" requires disqualification.

Rule 1.11

(posted February 9, 2018) Barnett v. Hommrich, 2018 WL 736313 (E.D. Tenn. Feb. 6, 2018). Lawyer practiced family law for a time. She began working for the Tennessee Department of Children Services ("DCS") in January 2011. Lawyer went on medical leave in December 2015. She was hospitalized in March 2016 and returned to work in April 2016. She resigned from DCS effective May 2016. During her medical leave a matter arose involving Family. She did not work on that matter, although she had handled matters for Family prior to joining DCS. Also, Lawyer's title at DCS put her technically in charge of the matter. Lawyer now, in this case, represents Family against DCS personnel, involving the above events. DCS is not a party although DCS personnel are. Defendants moved to disqualify Lawyer. In this opinion the court denied the motion. The analysis was very fact-intensive. The focus was on Rule 1.11 and whether Lawyer "participated personally and substantially" in this matter while at DCS. The court held she did not. [Our note: There is more to the case, but given the fact-intensiveness, we will leave it at that.]

(posted February 9, 2018) WFG Nat'l Title Ins. Co. v. Meehan, 2018 WL 777122 (Ohio App. Feb. 8, 2018). Defendant moved to disqualify Plaintiff's law firm. The trial court denied the motion. In this opinion the appellate court affirmed because Defendant failed to establish that the law firm represented Plaintiff, "the first prong of the Dana test." [Our note: Dana was a 1990 Sixth Circuit case. One wonders why an Ohio appellate court would not cite the applicable Ohio Rule, adopted in 2007.]

GOVERNMENT ENTITIES - SUING ONE PART/REPRESENTING ANOTHER PART (To read full article, click here.)

Nothing current.

HOT POTATO DOCTRINE (To read full article, click here.)

Nothing current.

INITIAL INTERVIEW - HEARING TOO MUCH (To read full article, click here.)

Nothing current.

INSURANCE DEFENSE (To read full article, click here.)

Reservation of Rights

(posted January 29, 2018) Bean Prods. v. Scottsdale Ins. Co., 2018 IL App (1st) 170421-U (Jan. 22, 2018). Ontel sued Bean for violating Ontel's "copyright and trademark rights." Bean tendered the defense to InsCo. InsCo defended Bean under a reservation of rights and settled the case. In this case Bean seeks reimbursement from InsCo for the cost of Bean's hiring independent counsel. The trial court granted InsCo summary judgment. In this opinion the appellate court affirmed. The reservation of rights letter specifically referred to Ontel's claim for punitive damages. The letter added that it may discover other defenses as the Ontel case unfolded. The appellate court, in this opinion, said that the punitive damages claim did not create a conflict where the claims for compensatory damages and punitive damages were not "disproportionate," the case here. As for the open-ended part of the reservation, the court saw a conflict only as a "remote possibility."

Reservation of Rights (in California)

(posted January 29, 2018) Centex Homes v. St. Paul Fire & Marine Ins. Co., 2018 WL 494749 (Cal. App. Jan. 22, 2018). This is yet another case dealing with an insured's right to independent counsel in the face of an insurer's reservation of rights. The trial court granted the insurer summary judgment. In this opinion the appellate court affirmed. Basically, the decision stands for the principle that if the insurer's chosen counsel has no ability to affect coverage in the underlying case, the insured has no right to independent counsel at the insurer's expense. The decision here was very fact- and contract-specific, so we will not explore those factors further. What is of special interest to California lawyers is the courts' application of California Civil Code section 2860. Also of interest is the appellate court's discussion of potential conflicts under California Rule 3-310(C) (a rare event) in the context of insured's retention of independent counsel.

INVESTING IN CLIENTS/STOCK FOR FEES (To read full article, click here.)

Bartering for Fees

(posted February 6, 2018) N.H. Op. 2017-18/01. This opinion holds that where the lawyer agrees to accept property instead of money for fees, whether at the outset of the representation, or midstream, the lawyer almost certainly will have to comply with Rule 1.8(a).

ISSUE OR POSITIONAL CONFLICTS (To read full article, click here.)

Nothing current.

JOINT/MULTIPLE REPRESENTATION (To read full article, click here.)

Nothing current.

LAWYER AS EXPERT WITNESS OR CONSULTANT (To read full article, click here.)

Nothing current.

LAWYERS REPRESENTING LAWYERS (To read full article, click here.)

Nothing current.

MALPRACTICE LIABILITY/FEE FORFEITURES (To read full article, click here.)

(posted January 29, 2018) CRIT Corp. v. Wilkinson, 2018 WL 504767 (Ind. App. Jan. 23, 2018). Individual owned Co. A. Co. B bought Co. A and kept on Individual as president of Co. A. In 2015, Individual, represented by Law Firm, negotiated his departure from Co. A. After the departure, Law Firm continued doing work for Co. A. Law Firm also did work for Individual, including the possible acquisition by Individual of a company arguably in competition with Co. A. Co. A learned of this because a lawyer at Law Firm erroneously sent an email to Co. A that was intended for Individual. Co. A sued Law Firm for malpractice. The trial court dismissed both the original complaint and an amended complaint. In this opinion the appellate court affirmed. The court found the first complaint defective because of its reliance on Indiana ethics rules. In the amended complaint the plaintiff attempted to clean things up by relying less on the ethics rules. Nothing doing, said the appellate court. [Our note: We have no sense whether the appellate court was right, but we do know that any Indiana lawyer contemplating bringing a malpractice case had better read the opinion.]

OF COUNSEL (To read full article, click here.)

Nothing current.

OPPOSING LAWYERS NEGOTIATING A LAW PRACTICE MERGER (To read full article, click here.)

Nothing current.

PARTNERSHIPS (INCLUDING LIMITED PARTNERSHIPS) (To read full article, click here.)

Nothing current.

SETTLEMENT AGREEMENTS (To read full article, click here.)

Nothing current.

STANDING (To read full article, click here.)

(posted January 29, 2018) Greenfield MHP Assocs., L.P. v. Ametek, Inc., 2018 WL 538961 (S.D. Cal. Jan. 24, 2018). Odd discussion of Article III of the U.S. Constitution. To read more about the case, go to "Current Client," above.

TRADE (AND OTHER) ASSOCIATIONS (To read full article, click here.)

Nothing current.

UNDERLYING WORK PROBLEM (To read full article, click here.)

Nothing current.

WAIVERS/CONSENTS (To read full article, click here.)

Nothing current.

WITNESS - ADVERSE - CURRENT/FORMER CLIENT (To read full article, click here.)

Nothing current.

ZERO SUM GAMES (To read full article, click here.

Nothing current.

Home/Table of Contents