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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 Miscellaneous; Other; Need for Expert (posted August 17, 2018) Sere v. Trapeni, No. 170842 (Va. July 26, 2018). Lawyer filed a complaint for Client against Store. Because of name mixups, that case was dismissed. Client then brought this suit against Lawyer. However, the trial court found that Client had not complied with Virginia rules on designating experts, found that this failure was fatal to her case, and dismissed it with prejudice. On appeal Client argued that Lawyer's failures were not beyond the ken of a lay jury, and expert testimony was not required. In this opinion the supreme court affirmed. The court noted that the expert would have to address the following: complex rules regarding voluntary dismissals; how to determine the proper defendant; and, the distinction between misjoinder and misnomer. These matters were beyond the ken of "a layperson, or perhaps, even the average attorney." Miscellaneous; Other; Need for Expert (posted August 17, 2018) Sandhu v. Kanzler, 2018 WL 3862774 (D. Minn. Aug. 14, 2018). This is a legal malpractice case involving, among other things, an alleged conflict of interest. Plaintiff did not comply with a Minnesota statute requiring disclosure of experts. Plaintiff claims an expert would not be necessary in this case. In this opinion the court disagreed and granted Defendant a summary judgment. The court said a conflict claim "is far more complex and nuanced than missing a deadline or stealing client funds." Conflict Uncategorized; Litigation Funding; Fee Sharing (posted August 16, 2018) NYC Op. 2018-5 (July 2018). In some litigation funding arrangements the client deals directly with the funder, and the loan repayment is contingent upon the client's being successful. The rule on sharing fees with non-lawyers is not implicated. Where the arrangement is between the lawyer and the funder, and the funder's loan must be paid regardless of outcome, fee-sharing is also not implicated. However, where the arrangement is between the lawyer and funder, and repayment of the loan is contingent upon the lawyer's receipt of fees, the Committee opined that this arrangement is a violation of the fee-sharing prohibition of New York's Rule 5.4(a). Insurance Defense; Reservation of Rights (posted August 15, 2018) Celerity Educational Group v. Scottsdale Ins. Co., 2018 WL 3853998 (C.D. Cal. Aug. 10, 2018). InsCo sent a "general" reservation of rights letter to Insured. Later, InsCo sent a clarifying letter to Insured stating that the reservation relates only to lack of coverage for punitive damages. Insured sought a ruling that Insured was entitled to independent counsel at InsCo's defense. In this opinion the court denied that relief. First, the court said that a general reservation of rights, without more, does not create a conflict of interest. As to the clarification, the court said that because punitive damages are uninsurable, there is still no conflict of interest entitling Insured to independent counsel. Investing; Business with Client (posted August 15, 2018) Creer Legal v. Monroe School Dist., 2018 WL 3830035 (Wash. App. Aug. 13, 2018). Lawyer representing Client filed a Public Records Act ("PRA") complaint against District. This led ultimately to a settlement between Client and District, in which Client gave up her rights under the PRA, in exchange for not having to pay District's costs. Lawyer then filed this PRA complaint involving the same requests as those given up by Client. The trial court granted summary judgment to District. In this opinion the appellate court affirmed. The court held that Lawyer owned no rights under the PRA, because Lawyer had been acting solely as Client's agent. The court said Rules l.8(a) and 1.8(i) support that finding. As to her claim that she obtained ownership of the PRA rights, Lawyer made no showing that she made the disclosures or obtained the consents required by Rule 1.8(a). Changing Firms; Screening Judicial Clerk (posted August 10, 2018) Stevens v. Brigham Young Univ.-Idaho, 2018 WL 3747448 (D. Ida. Aug. 7, 2018). Both a current and future law clerk to the judge in this case know several of the parties. In this opinion the court holds that the judge is not disqualified. Instead, the law clerks will be screened from this case. The judge said he would "borrow" a clerk from another judge to work on this case. Malpractice Liability (posted August 10, 2018) Knutson v. Foster, 2018 WL 3751724 (Cal. App. Aug. 8, 2018). Plaintiff was an outstanding swimmer in high school. At one point she hired Lawyer to negotiate a professional swimming contract with USA Swimming. The whole matter ended badly. When Plaintiff learned that Lawyer had conflicts, she sued Lawyer for fraudulent concealment and breach of fiduciary duty. The jury returned a verdict of $617,000 for Plaintiff. The trial judge granted a new trial. In this opinion the appellate court reversed and remanded for reinstatement of the verdict and judgement. Much of this opinion deals with causation, damages, burdens of proof, and the like. Of special interest was Lawyer's astonishing insensitivity to his conflicts. He was active in the professional swimming world, and had many relationships with USA Swimming and its high-ranking officials and lawyers. He concealed all these relationships from Plaintiff while making disclosures to USA Swimming personnel, unbeknownst to Plaintiff, that prejudiced Plaintiff's negotiating position. 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.] Other; Need for Expert (posted August 17, 2018) Sere v. Trapeni,
No. 170842 (Va. July 26, 2018). Lawyer filed a complaint for Client
against Store. Because of name mixups, that case was dismissed. Client
then brought this suit against Lawyer. However, the trial court found
that Client had not complied with Virginia rules on designating experts,
found that this failure was fatal to her case, and dismissed it with
prejudice. On appeal Client argued that Lawyer's failures were not
beyond the ken of a lay jury, and expert testimony was not required. In
this opinion the supreme court affirmed. The court noted that the expert
would have to address the following: complex rules regarding voluntary
dismissals; how to determine the proper defendant; and, the distinction
between misjoinder and misnomer. These matters were beyond the ken of "a
layperson, or perhaps, even the average attorney." Other; Need for Expert (posted August 17, 2018) Sandhu v. Kanzler,
2018 WL 3862774 (D. Minn. Aug. 14, 2018). This is a legal malpractice
case involving, among other things, an alleged conflict of interest.
Plaintiff did not comply with a Minnesota statute requiring disclosure
of experts. Plaintiff claims an expert would not be necessary in this
case. In this opinion the court disagreed and granted Defendant a
summary judgment. The court said a conflict claim "is far more complex
and nuanced than missing a deadline or stealing client funds." Liability - not Conflicts Related (posted July 26, 2018) NYC Op.
2018-4 (July 2018). A lawyer handling a transaction feels that the
lawyer's client's behavior is somewhat "fishy" (our word). This opinion
analyzes the lawyer's duties under the ethics rules. While Rule 1.2(d),
the rule preventing a lawyer from assisting in a crime or fraud, does
not specifically require the lawyer to investigate, other rules, when
read with Rule 1.2(d), probably do. This includes Rule 1.1, which
requires a lawyer to be competent. The opinion also discusses Rules 1.4,
1.6, 1.16, 2.1, and 8.4. [Our note: disciplinary cases in this
context are rare. Civil lawsuits brought by innocent victims against the
miscreants' lawyers are inevitable. Some recent settlements of such
cases, including defense costs, are in the hundreds of millions of
dollars.] 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.] Litigation Funding; Fee Sharing (posted August 16, 2018) NYC Op.
2018-5 (July 2018). In some litigation funding arrangements the client
deals directly with the funder, and the loan repayment is contingent
upon the client's being successful. The rule on sharing fees with
non-lawyers is not implicated. Where the arrangement is between the
lawyer and the funder, and the funder's loan must be paid regardless of
outcome, fee-sharing is also not implicated. However, where the
arrangement is between the lawyer and funder, and repayment of the loan
is contingent upon the lawyer's receipt of fees, the Committee opined
that this arrangement is a violation of the fee-sharing prohibition of
New York's Rule 5.4(a). Nothing current. BANKRUPTCY (To read full article, click here) (posted July 27, 2018) Greene v. InforMD, LLC, 2018 WL 3579470
(M.D. La. July 25, 2018). The bankruptcy judge, over a creditor's
objection, authorized Trustee to retain Law Firm as "Special Counsel" to
pursue claims against current and former members of Debtor. Prior to
the bankruptcy proceeding Law Firm had represented three current members
of Debtor. These members have signed consents to this retention
anticipating that Law Firm might be adverse to them. In this opinion the
district judge affirmed, holding that the bankruptcy court "did not
abuse its discretion" in approving the retention. Nothing current. BOARD POSITIONS (To read full article, click here.) Nothing current. CHANGING FIRMS - SCREENING (To read full article, click here.) Screening Judicial Clerk (posted August 10, 2018) Stevens v. Brigham Young Univ.-Idaho,
2018 WL 3747448 (D. Ida. Aug. 7, 2018). Both a current and future law
clerk to the judge in this case know several of the parties. In this
opinion the court holds that the judge is not disqualified. Instead, the
law clerks will be screened from this case. The judge said he would
"borrow" a clerk from another judge to work on this case. (posted July 23, 2018) Vanderbilt Univ. v. Scholastic, Inc., 2018
WL 3490919 (M.D. Tenn. July 20, 2018). Lawyer worked as in-house
counsel at Univ. until late 2017. While there, he did substantial work
on the license agreement, which is the subject of this case. Lawyer left
Univ. and, on January 2, 2018, went to work for Law Firm, which is
representing Defendant in this case. This case was filed two weeks after
Lawyer joined Law Firm. Law Firm erected a screen. There is no
suggestion that Lawyer disclosed anything to Law Firm about this case,
other than responding to a conflicts inquiry. Univ. moved to disqualify
Law Firm. The magistrate judge granted the motion. In this opinion the
district judge reversed. The decision turned on Tennessee's Rule
1.10(d), which could be read to allow screening of someone who had had
substantial involvement, if the case was not "pending" when the lawyer
changed firms. The district court found that the plain meaning of Rule
1.10(d) dictated that the screen in this case would be effective. CLASS ACTIONS (To read full article, click here.) (posted August 6, 2018) Medical & Chiropractic Clinic, Inc. v. Oppenheim,
2018 WL 3707836 (M.D. Fla. Aug. 3, 2018). This is a malpractice case
brought by a former class representative against class counsel. In this
opinion the court granted summary judgment to the lawyers. The court
noted that the duties of class counsel to individual class members
differ from duties lawyers owe to individual clients in non-class
actions. Among other things, the court noted that "it is questionable"
whether state ethics rules apply in class actions the same as in
non-class actions. What the lawyers did that did not violate class
counsel standards, but that might have violated state ethics rules, was
very fact-specific. If this interests you, you are encouraged to read
the opinion. This litigation got more bizarre on August 10, 2018, when a magistrate judge, post judgment, denied the defendants' motion to disqualify the plaintiff's law firm, Medical & Chiropractic Clinic. Inc. v. Oppenheim, No 8:16-cv-1477-T-36CPT (M.D. Fla. Aug. 10, 2018). The motion was based primarily upon Florida's version of M.R. 1.8(e), because another law firm, not a party here, was funding the plaintiff's litigation expenses. The court's denial was based upon the following: (1) application of Rule 1.8(e) was attenuated; (2) the defendant's standing to make the motion was questionable; (3) the defendant waited too long to make the motion; and, in any event, (4) not all violations of ethics rules require disqualification. 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 August 6, 2018) Quatama Park Townhomes Owners Ass'n, v. RBC Real Estate Fin., Inc., 2018 WL 3689902 (D. Ore. Aug. 3, 2018). Bear with us. We are condensing the facts for brevity. This case involves a planned community during development. During the development stage the acting developer appointed two consultants to act as sole directors of the homeowners' association ("the Directors"), until lot purchasers could appoint their own board. The association hired Law Firm to act as the association's counsel. During early litigation involving construction defects, Law Firm communicated frequently with Directors, including, among other things, asking Directors to turn over their files. Subsequently, Law Firm filed this suit for the association against, among others, the Directors. The Directors moved to disqualify Law Firm in this case. In this opinion the magistrate judge granted the motion. Little would be served by reviewing all the factors the judge considered. On balance, the earlier contacts were too frequent and too meaningful to render the Directors' subjective belief that they were clients of Law Firm, not reasonable. 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.) 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 August 7, 2018) Moradi v. Baxi, 2018 ONSC 4645 (CanLII)
(Super. Ct. Ont. Aug. 2, 2018). Parties A and B retained Lawyer to
obtain specific performance of a real estate sales contract, in which
they are the sellers. Lawyer did much work on the case including
substantial communications with both A and B. A and B had a falling out,
and now B, among other things, seeks to become a defendant. B moved to
disqualify Lawyer from representing A in this case. In this opinion the
master granted the motion. The court noted this is the "same" matter in
which Lawyer had represented B and that Lawyer had almost certainly
received confidential information from B. The master went on to say that
just the duty of loyalty to his former client, notwithstanding
confidences, was enough to be disqualifying. (posted July 26, 2018) Hamilton Group Funding, Inc. v. Basel,
2018 WL 3546242 (S.D. Fla. July 24, 2018). Hamilton Group ("HG")
terminated its CFO. CFO sued HG ("Other Case"). Basel, the defendant in
this case, was head of IT at HG until May 2016. Because HG suspected
Basel of secretly helping CFO in Other Case, HG brought this case
against Basel. Law Firm represented HG in Other Case, and represents HG
in this case. Basel moved to disqualify Law Firm in this case. In this
opinion the court denied the motion. While still an employee of HG,
Basel was deposed in Other Case, and Law Firm appeared for HG at the
deposition. Basel claims Law Firm represented him at the deposition.
According to the court's very fact-specific analysis Basel waited a year
before filing the motion to disqualify. Moreover, Basel failed to
establish that Law Firm represented him at his deposition in Other Case.
Last, the court noted prior cases holding that, even where there is a
conflict, disqualification is not always "mandatory." Nothing current. HOT POTATO DOCTRINE (To read full article, click here.) (posted July 27, 2018) Altova GmbH v. Syncro Soft SRL, 2018 WL 3589076 (D. Mass. July 26, 2018). Altova is suing Syncro for patent infringement. The patent "concerns an automatic fix feature for errors in XML coding." Law Firm represents Altova. Law Firm over the years has done work for Syncro relating to XML but not adverse to Altova. In 2017 Altova asked Law Firm to bring this action against Syncro. In July 2017 Law Firm wrote to Syncro severing its relationship with Syncro. Law Firm filed this action in August 2017. Altova moved to disqualify Law Firm. In this opinion the court granted the motion. The court treated the matter as a Rule 1.7 duty of loyalty one and said Law Firm should have seen this conflict coming years ago. 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 August 15, 2018) Celerity Educational Group v. Scottsdale Ins. Co.,
2018 WL 3853998 (C.D. Cal. Aug. 10, 2018). InsCo sent a "general"
reservation of rights letter to Insured. Later, InsCo sent a clarifying
letter to Insured stating that the reservation relates only to lack of
coverage for punitive damages. Insured sought a ruling that Insured was
entitled to independent counsel at InsCo's defense. In this opinion the
court denied that relief. First, the court said that a general
reservation of rights, without more, does not create a conflict of
interest. As to the clarification, the court said that because punitive
damages are uninsurable, there is still no conflict of interest
entitling Insured to independent counsel. INVESTING IN CLIENTS/STOCK FOR FEES (To read full article, click here.) (posted August 15, 2018) Creer Legal v. Monroe School Dist., 2018
WL 3830035 (Wash. App. Aug. 13, 2018). Lawyer representing Client filed
a Public Records Act ("PRA") complaint against District. This led
ultimately to a settlement between Client and District, in which Client
gave up her rights under the PRA, in exchange for not having to pay
District's costs. Lawyer then filed this PRA complaint involving the
same requests as those given up by Client. The trial court granted
summary judgment to District. In this opinion the appellate court
affirmed. The court held that Lawyer owned no rights under the PRA,
because Lawyer had been acting solely as Client's agent. The court said
Rules l.8(a) and 1.8(i) support that finding. As to her claim that she
obtained ownership of the PRA rights, Lawyer made no showing that she
made the disclosures or obtained the consents required by Rule 1.8(a). Nothing current. JOINT/MULTIPLE REPRESENTATION (To read full article, click here.) (posted July 27, 2018) O'Hanlon v. AccessU2 Mobile Solutions, LLC,
2018 WL 3586395 (D. Col. July 26, 2018). Plaintiff is suing AccessU2,
several LLCs, and several individuals, for what appears to be wrongful
termination from AccessU2. Lawyer represents all defendants. Plaintiff
moved to disqualify Lawyer because of this multiple representation.
Plaintiff is not a former client of Lawyer. In this opinion the
magistrate judge denied the motion. First the court found that Plaintiff
lacked standing to make the motion. Notwithstanding lack of standing,
the court looked at the merits and found (somewhat summarily) that
Plaintiff could show neither direct adversity nor material limitation. (posted July 20, 2018) Frey v. City of Hoboken, 2018 WL 3468165 (N.J. App. Div. July 19, 2018). Plaintiffs brought this employment-related suit against City, Union, and Union President. Law Firm represents both Union and President. Plaintiffs moved to disqualify Law Firm. The trial court denied the motion. In this opinion the appellate court affirmed. The court found that plaintiffs failed to show the Union and President were adverse. Plaintiffs also failed to show that, although they were Union members, Law Firm ever represented them personally. The opinion contains a classic analysis of Rules 1.7, 1.9, and 1.13. 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 August 10, 2018) Knutson v. Foster, 2018 WL 3751724 (Cal. App. Aug. 8, 2018). Plaintiff was an outstanding swimmer in high school. At one point she hired Lawyer to negotiate a professional swimming contract with USA Swimming. The whole matter ended badly. When Plaintiff learned that Lawyer had conflicts, she sued Lawyer for fraudulent concealment and breach of fiduciary duty. The jury returned a verdict of $617,000 for Plaintiff. The trial judge granted a new trial. In this opinion the appellate court reversed and remanded for reinstatement of the verdict and judgement. Much of this opinion deals with causation, damages, burdens of proof, and the like. Of special interest was Lawyer's astonishing insensitivity to his conflicts. He was active in the professional swimming world, and had many relationships with USA Swimming and its high-ranking officials and lawyers. He concealed all these relationships from Plaintiff while making disclosures to USA Swimming personnel, unbeknownst to Plaintiff, that prejudiced Plaintiff's negotiating position. 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 July 27, 2018) O'Hanlon v. AccessU2 Mobile Solutions, LLC,
2018 WL 3586395 (D. Col. July 26, 2018). Standing required. To read more about the case, go to "Joint . . . ," above. 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. Nothing current. Home/Table of Contents Website powered by Network Solutions® |