Conflict Uncategorized; Syndicate Financing (posted April 14, 2021) Wis. Memo. Op. EM-19-02 (Feb. 2, 2021). Bank #1 hires Law Firm to document a loan. The deal will involve a number of yet-unidentified additional lenders. As the deal progresses, Banks 2, 3, and 4 agree to participate. Law Firm is representing Bank 2 on other matters. Bank 2 may, or may not, wish to negotiate special terms for this deal. Under what circumstances may Law Firm participate in such a negotiation for Bank 1? That is one of several scenarios discussed by this opinion. When is this a conflict? What if anything can be done about it? (advance consent, concurrent consent, withdrawal, etc.) Your situation may not fit any of the scenarios neatly, but the opinion provides a list of issues likely to arise. A companion pair of opinions considers a law firm's malpractice liability to the other lenders in a syndicated loan. Are they clients with privity? The cases are Leonard v. Dorsey & Whitney LLP, 553 F.3d 609 (2009), and McIntosh County Bank v. Dorsey & Whitney, LLP, 745 N.W.2d 538 (2008). Context for all this is in the article cited by the Wisconsin opinion, Reade H. Ryan, Jr., The Role of Lead Counsel in Syndicated Lending Transactions, 64 Bus. Law. 783 (May, 2009).

Former Client (posted April 9, 2021) Bd. of County Comm'rs v. Ass'n of County Comm'rs of Okla. Self-Insured Group ("Group"), No. 118613 (Okla. April 6, 2021). In an underlying case an inmate had sued Sheriff for sexual assault. Group, in effect, provided insurance for the claim with a limit of $2 million. That case resulted in a judgment against Sheriff far exceeding the limit. As a result, Board filed this malpractice case against the law firm defending Sheriff, and against Group. Law Firm 2 is defending. One of the lawyers ("Lawyer") appearing for Board in this case had, about eight years ago, at another firm ("Firm 1"), participated in defending Group in a different, but similar, matter. Group moved to disqualify Lawyer and Firm 2 in this case. The trial court, after a hearing, denied the motion. In this opinion the Supreme Court affirmed. The earlier case also arose out of alleged mistreatment of inmates by a sheriff in another county. While the cases were "similar," Lawyer's role in the earlier case appears to have been subordinate to other lawyers in Firm 1, and Lawyer came away with no confidential information from Group.

Former Client (posted April 9, 2021) Skii km Lax Ha v. Mali, 2021 BCCA 140 (CanLII) (Ct. App. B.C. April 7, 2021). This a territorial dispute between two Aboriginal groups ("Nation A" and "Nation B"). Warning: We are completely unfamiliar with property issues confronting Aboriginal Canadians, so this note will be a bare bones discussion of the conflict issues as we see them. Lawyer represents Nation A in this case. Some twenty years ago Lawyer represented Nation B in a territorial dispute. Nation B moved to disqualify Lawyer in this case. The chambers judge dismissed the motion finding that the "two cases were non-overlapping," that they were not sufficiently related, and that Lawyer could not have learned anything in the earlier case that would be prejudicial to Nation B in this case. In this opinion the appellate court affirmed. Nation B attempted to make a "playbook" argument, claiming Lawyer would have learned much about Nation B's history, approach to litigation, philosophies, and the like. Both the chambers judge and the appellate court rejected that approach, the latter holding that, in any event, all that material was already public.

Bankruptcy (posted April 7, 2021) In re Pope, No. 20-22889-GMH (E.D. Wis. March 31, 2021). Law Firm represented Mr. and Mrs. Pope in filing their Chapter 11 petition and became debtors' counsel in this case. Law Firm violated Bankruptcy Rule 2014 by failing to disclose a pre-petition transaction wherein Mr. Pope had sold his gas station. The terms of that sale, handled by Law Firm, could have impacted Law Firm's compensation. Post-petition, the U.S. Trustee learned of the transaction, moved to disqualify Law Firm, and moved that Law Firm forfeit fees. In this opinion the court expressed concern about the omission but felt that creditors' and debtors' interests were best protected by keeping Law Firm in the case. The court did not order a fee forfeiture, but did say the U.S. Trustee could seek a fee adjustment when Law Firm requests the court for compensation from the estate.

Changing Firms; Screening (posted April 7, 2021) In re Maxus Energy Corp., No. 16-11501 (CSS) (D. Del. April 6, 2021). This is a "$14 billion" adversary proceeding arising out of the captioned Chapter 11 bankruptcy.  Simplifying the parties, Maxus, represented by "New Firm," is suing YPF, represented by "Old Firm." YPF moved to disqualify New Firm because a partner of Old Firm ("Lawyer") moved to New Firm. Lawyer worked on this case at Old Firm, but was screened from this case at New Firm. In this opinion the bankruptcy judge denied the motion to disqualify. After a fact-intensive analysis of what Lawyer did on this case at Old Firm, the court found that involvement "significant but not substantial." From all accounts New Firm's screen was by the book (fee-sharing, notices, etc.). Notwithstanding that compliance, YPF claimed that this case was "exceptional." The court rejected that characterization, again relying on its fact-specific analysis. YPF tried to make something of the fact that Lawyer is married to the head of Firm 2's restructuring group. The court found that gambit "shabby" and rejected it. This is interesting: In Footnote 62 the court discusses its rejection of expert opinions offered on both sides by two of the leading ethics experts in the country. We are not sure what to make of it. The court lays out what it thinks experts cannot do, leaving us to wonder what ethics experts can do.

[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.]

Nothing current.

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

(posted April 14, 2021) Wis. Memo. Op. EM-19-02 (Feb. 2, 2021). Bank #1 hires Law Firm to document a loan. The deal will involve a number of yet-unidentified additional lenders. As the deal progresses, Banks 2, 3, and 4 agree to participate. Law Firm is representing Bank 2 on other matters. Bank 2 may, or may not, wish to negotiate special terms for this deal. Under what circumstances may Law Firm participate in such a negotiation for Bank 1? That is one of several scenarios discussed by this opinion. When is this a conflict? What if anything can be done about it? (advance consent, concurrent consent, withdrawal, etc.) Your situation may not fit any of the scenarios neatly, but the opinion provides a list of issues likely to arise. A companion pair of opinions considers a law firm's malpractice liability to the other lenders in a syndicated loan. Are they clients with privity? The cases are Leonard v. Dorsey & Whitney LLP, 553 F.3d 609 (2009), and McIntosh County Bank v. Dorsey & Whitney, LLP, 745 N.W.2d 538 (2008). Context for all this is in the article cited by the Wisconsin opinion, Reade H. Ryan, Jr., The Role of Lead Counsel in Syndicated Lending Transactions, 64 Bus. Law. 783 (May, 2009).

APPEALABILITY (To read full article, click here.)

Nothing current.

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

(posted March 24, 2021) Frederick v. Law Office of Fox Kohler & Assocs. PLLC LLC, No. 20-2539 (3d Cir. March 24, 2021). Plaintiff hired Law Firm to help her negotiate amounts due her creditors. Plaintiff brought this case against Law Firm in New Jersey District Court for racketeering and related statutory causes of action. Law Firm moved to compel arbitration. The trial court denied the motion. In this opinion the appellate court reversed. Plaintiff had entered into an agreement with Law Firm that had an arbitration provision. That provision provided that arbitration "replaces the right to go to a court before a judge or a jury which may limit each party's right to discovery and appeal."

BANKRUPTCY (To read full article, click here)

(posted April 7, 2021) In re Pope, No. 20-22889-GMH (E.D. Wis. March 31, 2021). Law Firm represented Mr. and Mrs. Pope in filing their Chapter 11 petition and became debtors' counsel in this case. Law Firm violated Bankruptcy Rule 2014 by failing to disclose a pre-petition transaction wherein Mr. Pope had sold his gas station. The terms of that sale, handled by Law Firm, could have impacted Law Firm's compensation. Post-petition, the U.S. Trustee learned of the transaction, moved to disqualify Law Firm, and moved that Law Firm forfeit fees. In this opinion the court expressed concern about the omission but felt that creditors' and debtors' interests were best protected by keeping Law Firm in the case. The court did not order a fee forfeiture, but did say the U.S. Trustee could seek a fee adjustment when Law Firm requests the court for compensation from the estate.

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

(posted April 7, 2021) In re Maxus Energy Corp., No. 16-11501 (CSS) (D. Del. April 6, 2021). This is a "$14 billion" adversary proceeding arising out of the captioned Chapter 11 bankruptcy.  Simplifying the parties, Maxus, represented by "New Firm," is suing YPF, represented by "Old Firm." YPF moved to disqualify New Firm because a partner of Old Firm ("Lawyer") moved to New Firm. Lawyer worked on this case at Old Firm, but was screened from this case at New Firm. In this opinion the bankruptcy judge denied the motion to disqualify. After a fact-intensive analysis of what Lawyer did on this case at Old Firm, the court found that involvement "significant but not substantial." From all accounts New Firm's screen was by the book (fee-sharing, notices, etc.). Notwithstanding that compliance, YPF claimed that this case was "exceptional." The court rejected that characterization, again relying on its fact-specific analysis. YPF tried to make something of the fact that Lawyer is married to the head of Firm 2's restructuring group. The court found that gambit "shabby" and rejected it. This is interesting: In Footnote 62 the court discusses its rejection of expert opinions offered on both sides by two of the leading ethics experts in the country. We are not sure what to make of it. The court lays out what it thinks experts cannot do, leaving us to wonder what ethics experts can do.

(posted April 2, 2021) MD Helicopters, Inc. v. Aerometals, Inc., No. 2:16-cv-02249-TLN-AC (E.D. Cal. March 31, 2021). To read about the case, go to "Former Client," below.

(posted March 27, 2021) Cal. Op. No. 2021-1 (Feb. 11, 2021). California Rule 1.10, adopted in 2018, provides specifically for a screen for migratory lawyers. Effective February 11, 2021, the California Lawyers Association published its first Formal Opinion, No. 2021-1, which is an expanded discussion of California rules on screening, including Rule 1.10. The opinion contains no surprises and should be a useful tool for law firms considering a screen for a new lawyer or non-lawyer employee.

(posted March 27, 2021) Maxell, LTD. v. Apple Inc., No. 5:19-CV-00036-RWS (E.D. Tex. March 3, 2021). Maxell, represented by Mayer Brown ("MB"), and other firms, is suing Apple for patent infringement. DLA Piper ("DLA") is one of the firms defending Apple. Justin Park, while at MB, worked on Maxell matters. He left Mayer Brown to join DLA in January 2020. DLA erected a screen. Nevertheless, Maxell moved to disqualify DLA. In this lengthy opinion the court denied the motion. The case is a vivid illustration of the machinations of large law firms engaged in major litigation when a possible conflict is detected. Among the highlights: (1) the court chose to follow the ABA rules on screening rather than Texas rules; (2) the screen's timing was not perfect, but DLA did the best it could; (3) DLA's compliance with the ABA's notification provisions was faulty, but not so faulty as to invalidate the screen; (4) Maxell made no showing that Park had any communications about this case with DLA lawyers working on this case; (5) the DLA lawyers working on this case were in cities remote from Park; and, (6) the case is nearing trial, and DLA has spent 3,000 hours preparing for trial. Thus, the court viewed the "hardship" of disqualification as weighing against the lack of any meaningful showing by Maxell of "taint" from Park's arrival at DLA.

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

(posted April 1, 2021) Denicolo v. Hertz Corp., 2021 WL 1176534 (N.D. Cal. March 29, 2021). Motion to certify class. A party claimed that the class representative and his proposed class counsel were not adequate because they were close personal friends and neighbors, creating a conflict of interest. In granting certification, the court rejected the claim of conflict. The court noted that there was no showing that this relationship would disadvantage the class. Moreover, the lawyer was not a partner in his firm, and two additional firms were also looking after the class' interests.

(posted April 1, 2021) Tang v. Wynn Las Vegas, 2021 WL 1169891 (D. Nev. March 26, 2021). This is a "collective action" under FLSA. It is different from class actions in certain respects. The court was asked to approve a settlement. In this opinion the court found the settlement to be fair and reasonable. Plaintiffs' lawyer moved to be relieved from representing any plaintiffs who reject the settlement. The court analyzed the motion under Nevada Rule 1.16 and found that the motion "squarely falls within the permissible reasons" for withdrawal under Rule 1.16(b). The court also discussed how this "opt-out" process could force Plaintiffs' lawyer to have a conflict of interest, violating Rule 1.7. That would fall within the mandatory withdrawal provision of Rule 1.16(a). The court prescribed a procedure for Plaintiffs' lawyer to serve notice of its intention to withdraw and set deadlines for parties' responses. The court approved proposed notice documents (attached to the opinion), which appear to have the effect of ultimately granting Plaintiff's lawyers' request to cease representing the "opt-out" plaintiffs.

(posted March 30, 2021) Bolding v. Banner Bank, No. C17-0601RSL (W.D. Wash. March 29, 2021). This is a putative class action claiming "wage theft" by Bank. Bank moved to disqualify class representative, Kelly Bolding, and proposed class counsel ("Law Firm") because Law Firm was simultaneously representing Bolding in an individual gender discrimination suit against Bank. In this opinion the court denied the motion. To disqualify, Bank needed to show how the individual action interferes with interests of the class in this case. Bank failed to do so.

(posted March 24, 2021) Schumacher v. Inslee, 2021 WL 1019823 (W.D. Wash. March 17, 2021). Motion to Certify Class. Plaintiffs are healthcare providers for the disabled and elderly. The Defendant is a union. The nature of the case is largely beyond the focus of this site. What is within that focus is that, in this opinion, the court denied class certification largely because proposed class counsel, Freedom Foundation, has a conflict of interest. "Twice in the last five years the Freedom Foundation has been fined for its role in purchasing stolen information about [certain of the Plaintiffs here]." Its client was convicted of a crime. The opinion does not explain how, if at all, the stolen information relates to this case.

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

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

Nothing current.

CORPORATIONS (To read full article, click here.)

(posted March 21, 2021) Ginzburg v. Poretsky, No 524080/20 (N.Y. Sup. Ct., Kings County, March 8, 2021). To read about the case, go to "Derivative . . . ," below.

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

Nothing current.

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

(posted March 21, 2021) Canfield v. SS&C Techs. Holdings, Inc., No. 1:18-cv-08913(ALC) (S.D.N.Y. March 17, 2021). This is one of four proceedings involving claims by current and former employees of SS&C for mismanagement of an SS&C ERISA plan. Thirty percent of the plan was invested in Valeant Pharmaceuticals, a huge failure to diversify. Moreover, Valeant had been suspected of dodgy accounting. The defendants include SS&C and "The Advisory Committee of the [SS&C ERISA] Plan." The Klamann Law Firm ("Klamann") represented the plaintiffs. The problem is that in the Western District of Missouri Klamann represented three former members of the Advisory Committee in a suit against an investment manager of part of the ERISA plan. Although "former members" of the Advisory Committee, they are, nevertheless, defendants in these cases. Several defendants in this case, and in related cases, moved to disqualify Klamann. In a July 2020 opinion the court granted the motion. In this opinion the court denied a motion for reconsideration of the disqualification. The grounds for reconsideration submitted by Klamann were unremarkable.

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

(posted March 21, 2021) Ginzburg v. Poretsky, No 524080/20 (N.Y. Sup. Ct., Kings County, March 8, 2021). Plaintiffs (the Ginzburg brothers) and Defendant (Brian Poretsky) together formed Big Bubble Car Wash Inc. The Ginzburgs put up the money, and Poretsky ran the business. In 2019 the Ginzburgs requested to see the books. Lawyer responded for Poretsky and Big Bubble that they could not see the books. The Ginzburgs sued Poretsky "individually and derivatively" (this case). Big Bubble was named "Nominal Defendant." Lawyer appeared for Poretsky. The Ginzburgs moved to disqualify Lawyer. In this opinion the court granted the motion.

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

Nothing current.

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

(posted April 9, 2021) Bd. of County Comm'rs v. Ass'n of County Comm'rs of Okla. Self-Insured Group ("Group"), No. 118613 (Okla. April 6, 2021). In an underlying case an inmate had sued Sheriff for sexual assault. Group, in effect, provided insurance for the claim with a limit of $2 million. That case resulted in a judgment against Sheriff far exceeding the limit. As a result, Board filed this malpractice case against the law firm defending Sheriff, and against Group. Law Firm 2 is defending. One of the lawyers ("Lawyer") appearing for Board in this case had, about eight years ago, at another firm ("Firm 1"), participated in defending Group in a different, but similar, matter. Group moved to disqualify Lawyer and Firm 2 in this case. The trial court, after a hearing, denied the motion. In this opinion the Supreme Court affirmed. The earlier case also arose out of alleged mistreatment of inmates by a sheriff in another county. While the cases were "similar," Lawyer's role in the earlier case appears to have been subordinate to other lawyers in Firm 1, and Lawyer came away with no confidential information from Group.

(posted April 9, 2021) Skii km Lax Ha v. Mali, 2021 BCCA 140 (CanLII) (Ct. App. B.C. April 7, 2021). This a territorial dispute between two Aboriginal groups ("Nation A" and "Nation B"). Warning: We are completely unfamiliar with property issues confronting Aboriginal Canadians, so this note will be a bare bones discussion of the conflict issues as we see them. Lawyer represents Nation A in this case. Some twenty years ago Lawyer represented Nation B in a territorial dispute. Nation B moved to disqualify Lawyer in this case. The chambers judge dismissed the motion finding that the "two cases were non-overlapping," that they were not sufficiently related, and that Lawyer could not have learned anything in the earlier case that would be prejudicial to Nation B in this case. In this opinion the appellate court affirmed. Nation B attempted to make a "playbook" argument, claiming Lawyer would have learned much about Nation B's history, approach to litigation, philosophies, and the like. Both the chambers judge and the appellate court rejected that approach, the latter holding that, in any event, all that material was already public.

(posted April 2, 2021) MD Helicopters, Inc. v. Aerometals, Inc., No. 2:16-cv-02249-TLN-AC (E.D. Cal. March 31, 2021). In this case Plaintiff is claiming intellectual property rights in drawings Defendant used "to compete in the civilian market for MD 500 Series" helicopters. Gibson Dunn appeared as one of Plaintiff's law firms. Defendant moved to disqualify Gibson Dunn because in the early 2000s Gibson Dunn represented Defendant in matters related to MD 500 helicopters. In this opinion the court granted the motion. The opinion is long and highly fact-specific. We will provide a few highlights. First, the court discussed at great length California jurisprudence on the substantial relationship test under California Rule 1.9. Second, the court discussed, and rejected, Gibson Dunn's attempt to screen from this case three lawyers who worked a few hours on the earlier matters. Third, Gibson Dunn retained voluminous paper and electronic files from the earlier matters, some of which are arguably important to this case. Were the court's conclusions correct? Our response: "Probably, but you had to be there."

(posted March 27, 2021) Kemp Invs. N., LLC v. Englert, No. 5D20-1553 (Fla. App., 5th Dist., March 26, 2021). Carol Geisler sold her property to Kemp. Barry Walker and his law firm "acted as closing agents and issued title insurance." Geisler signed an acknowledgement that Walker was not acting as her lawyer in that transaction. After the closing, an earlier deed was discovered in which Geisler had supposedly conveyed an interest in the property to another person. Walker had Geisler come to his office to sign an affidavit swearing that she did not sign the earlier deed -- that it was a forgery. After that Walker filed this suit for Kemp, in which Geisler was a defendant, claiming she had committed fraud. Geisler successfully moved to disqualify Walker. In this opinion the appellate court affirmed the trial court. Although Walker had not represented Geisler at the closing, the trial court reasonably concluded that by getting Geisler to sign the forgery affidavit and advising her on its import, Walker had become Geisler's lawyer.

(posted March 20, 2021) Metris-Shamoon v. City of Detroit, 2021 WL 973076 (E.D. Mich. March 16, 2021). This is an opinion by a magistrate judge denying Plaintiffs' motion to disqualify the City Law Department. It is a jumble and - for us - hard to follow. City has been represented by an outside law firm. However, a member of Law Department (Patrick Cunningham) appeared for City to respond to certain discovery. The City Corporation Counsel is Lawrence Garcia. The problem, according to Plaintiffs, is that Garcia, before becoming Corporation Counsel, had represented a former city cop, Arthur Leavells, in another case involving alleged police misconduct. Leavells is not a party in this case but, evidently, is somehow involved. First, the court held that Plaintiffs' motion to disqualify should fail because no Plaintiff had never been Garcia's client. Last, the court held that Garcia's (Cunningham's?) position in this case is not adverse to Leavells. While we have little doubt about that conclusion, we don't follow how the court got there.

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

(posted March 18, 2021) The Source Store, LLC v. Hodge II, No. 20-00656-NGH (D. Ida. March 9, 2021). This is an adversary proceeding in this Chapter 7 bankruptcy case. Defendant in this case is the bankrupt. Plaintiff is claiming that Defendant's debt to Plaintiff is not dischargeable. Lawyer A at Law Firm represents Plaintiff. Defendant moved to disqualify Lawyer A because of Defendant's earlier, pre-petition, contact with Lawyer B at Law Firm. In this opinion the bankruptcy judge denied the motion to disqualify. Applying Idaho Rule 1.18, the court found that Lawyer B did not receive information from Defendant that was significantly harmful to Defendant in this case. Defendant's contact with Lawyer B involved Defendant's dispute with Bank about application of certain condemnation proceeds to Defendant's mortgage with Bank. The court found that dispute unrelated to Plaintiff's claim of non-dischargeability in this adversary case.

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

(posted March 30, 2021) Hertz Corp. v. Katzung, No. 3:20-cv-269-SI (D. Ore. March 29, 2021). This is a discovery dispute between Insured and Insurer. Insured (actually assignee of Insured) sought documents between Insurer and its law firm ("Law Firm"). In this opinion the court held the documents were privileged. Two holdings arguably relate to the focus of this site. First, the court held that in Oregon, in a standard tripartite situation, the lawyer represents both Insured and Insurer. Insured would, then, be entitled to communications between Insurer and Law Firm.  In this case, however, while the law firm retained by Insurer initially assumed it was representing Insured, the law firm and Insured never communicated about the case. As far as anyone knows, Insured never realized that any law firm was representing him. The court held there was no attorney-client relationship between the law firm and Insured. Thus, Insured's assignee was in no position to waive the privilege between Law Firm and Insurer.

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

Nothing current.

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

Nothing current.

Nothing current.

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

Nothing current.

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

OPPOSING LAWYERS NEGOTIATING A LAW PRACTICE MERGER (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.)

Nothing current.

Nothing current.

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

Passage of Time

(posted March 22, 2021) Storz Mgmt. Co. v. Carey, No. 2:18-cv-00068 (E.D. Cal. March 18, 2021). Plaintiffs filed a motion to disqualify Defendants' law firm 20 months after the alleged conflict was first raised as an issue in the case. That delay, alone, was enough to justify denial of the motion. Nevertheless, the court considered the merits of the motion under California's Rule 1.12. A member of Defendants' law firm had, nine years ago, acted as a mediator between Plaintiffs and their accounting firm. In a fact-intensive analysis the court found that the mediation and this case are not substantially related.

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

Nothing current.

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

Nothing current.