Investing; Financial Planning (posted August 14, 2020) Ohio Op. 2020-8 (Aug. 8, 2020). The opinion provides that a lawyer may provide financial planning services to clients provided the fee is on a basis other than a percentage of the client's assets. A lawyer may not sell financial products to clients. Compare this opinion with N.Y. Op. 1200 (July 21, 2020), which holds that a lawyer may not provide financial planning services to law clients.

Conflict Uncategorized; Rule 1.11 (posted August 13, 2020) Berkeley County Sch. Dist. v. Hub Int'l Ltd., No. 1:18-cv-00151-DCN (D.S.C. Aug. 13, 2020). CFO of School District ("District") allegedly embezzled District's money. CFO was indicted by a state grand jury. District's outside lawyer ("Lawyer") was given access to prosecution evidence "to aid in the State's investigation." District, represented by Lawyer, brought this damages case against CFO and various insurance entities, alleging that the defendants conspired in the embezzlement. The insurance entities moved to disqualify Lawyer in this case because of Lawyer's access to the grand jury material. In this opinion the court denied the motion. The only aspect of this opinion that is clear to us is the court's holding that S.C. Rule 1.11 does not apply to Lawyer because Lawyer has "never been a 'public officer or employee'" within the meaning of Rule 1.11. The rest of the opinion makes no sense to us. For cases and authorities on disqualification (or not) of lawyers possessing confidential information of non-clients, go to "Possessing Confidences of Non-Clients," at "Current Client" at this site.

Corporate Family (posted August 13, 2020) Keefe Commissary Network, LLC. v. Beazley Ins. Co., Inc., No. 4:20-cv-00176-SNLJ (E.D. Mo. Aug. 12, 2020). Law Firm represents Beazley in this case. For one week earlier this year, Law Firm represented members of a corporate family, which family included Plaintiff, Keefe Commissary. Plaintiff moved to disqualify Law Firm. In this opinion the court denied the motion. Plaintiff might have had a "hot potato" argument, but the court passed over that to examine the parties' engagement letter. It arguably included Plaintiff's corporate parent, but "nowhere is Keefe Commissary . . . expressly mentioned or tacitly embraced." Thus, "the representational disclaimer" in the engagement letter excludes Plaintiff.

Joint Representation (posted August 10, 2020) Infosphere Consulting, Inc. v. Habibi Life, LLC, No. 19-cv-15577-MCA-ESK (D.N.J. Aug. 7, 2020). Infosphere, which does business as "Habibi," has sued Habibi Life for trademark infringement and related causes of action. Law Firm, which represents Habibi Life, filed a motion to intervene on behalf of Shahada Karim. Infosphere, claiming it would be a conflict, under N.J. Rule 1.7, for Law Firm to represent both Habibi Life and Karim, moved to disqualify Law Firm. In this opinion the magistrate judge denied the motion. Habibi Life and Karim had entered into a series of agreements that defined their relationship and concurrence as to the future use of the name Habibi. For that reason the court found that their interests were aligned. Moreover, the agreements addressed Law Firm's joint representation -- amounting to consent under N.J. Rule 1.7(b).

Miscellaneous; Confidentiality (posted August 6, 2020) N.Y. Op. 1194 (June 11, 2020). This opinion deals with an inquiry from a N.Y. lawyer ("Lawyer") who represents the executor of a "not insubstantial" estate. Lawyer learns that the executor was a beneficiary of a transfer-on-death designation ("TOD") -- of a "significant sum." Lawyer unsuccessfully  sought documentation from the executor about the TOD. The circumstances are suspicious. Among other things, Lawyer believes the executor intends not to disclose the TOD to the probate court. The opinion first holds that Lawyer's only client is the executor, not the beneficiaries. The opinion holds that Lawyer may withdraw under N.Y.'s version of MR 1.16. The opinion considers Lawyer's duty of disclosure to the court under N.Y.'s version of MR 3.3. It also looks at the exceptions to Lawyer's duty of confidentiality under N.Y.'s Rule 1.6, including the exceptions relating to crimes or frauds. Under any of these rules much depends upon the extent to which Lawyer "knows" of the executor's misconduct. In any event, Lawyer must first give the executor an opportunity to disclose the TOD to the probate court.

[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.]

Confidentiality

(posted August 6, 2020) N.Y. Op. 1194 (June 11, 2020). This opinion deals with an inquiry from a N.Y. lawyer ("Lawyer") who represents the executor of a "not insubstantial" estate. Lawyer learns that the executor was a beneficiary of a transfer-on-death designation ("TOD") -- of a "significant sum." Lawyer unsuccessfully  sought documentation from the executor about the TOD. The circumstances are suspicious. Among other things, Lawyer believes the executor intends not to disclose the TOD to the probate court. The opinion first holds that Lawyer's only client is the executor, not the beneficiaries. The opinion holds that Lawyer may withdraw under N.Y.'s version of MR 1.16. The opinion considers Lawyer's duty of disclosure to the court under N.Y.'s version of MR 3.3. It also looks at the exceptions to Lawyer's duty of confidentiality under N.Y.'s Rule 1.6, including the exceptions relating to crimes or frauds. Under any of these rules much depends upon the extent to which Lawyer "knows" of the executor's misconduct. In any event, Lawyer must first give the executor an opportunity to disclose the TOD to the probate court.

(posted July 18, 2020) Cortina v. North Am. Title Co., No. F077659 (Cal. App. June 18, 2020). In this class action, after one of the classes had been decertified, Morgan, Lewis lawyers, representing the defendant, interviewed four members of that class. The plaintiffs moved to disqualify Morgan, Lewis for violating California Rule 2-100 (predecessor to current rule 4.2). The trial court granted the motion. In this opinion the appellate court reversed. The court did not get to the issue of whether the four class members were represented. The gist of the decision was that the plaintiffs had not been prejudiced.

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

Rule 1.11

(posted August 13, 2020) Berkeley County Sch. Dist. v. Hub Int'l Ltd., No. 1:18-cv-00151-DCN (D.S.C. Aug. 13, 2020). CFO of School District ("District") allegedly embezzled District's money. CFO was indicted by a state grand jury. District's outside lawyer ("Lawyer") was given access to prosecution evidence "to aid in the State's investigation." District, represented by Lawyer, brought this damages case against CFO and various insurance entities, alleging that the defendants conspired in the embezzlement. The insurance entities moved to disqualify Lawyer in this case because of Lawyer's access to the grand jury material. In this opinion the court denied the motion. The only aspect of this opinion that is clear to us is the court's holding that S.C. Rule 1.11 does not apply to Lawyer because Lawyer has "never been a 'public officer or employee'" within the meaning of Rule 1.11. The rest of the opinion makes no sense to us. For cases and authorities on disqualification (or not) of lawyers possessing confidential information of non-clients, go to "Possessing Confidences of Non-Clients," at "Current Client" at this site.

APPEALABILITY (To read full article, click here.)

Nothing current.

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

Nothing current.

BANKRUPTCY (To read full article, click here)

(posted August 3, 2020) In re Vascular Access Centers, L.P., Bankruptcy No. 19-17117-AMC (E.D. Pa. April 6, 2020). Debtor sought to have Law Firm approved as Debtor's counsel. The U.S. Trustee objected because Law Firm had a conflict under Section 327(a) of the Bankruptcy Act and because Law Firm violated Bankruptcy Rule 2014(a) by failing to disclose all Law Firm's relationships to Debtor's principal owner. The court approved the retention, finding that the conflict really existed only three days and was inconsequential. The court was very troubled by the disclosure failure and ruled that Law Firm would receive no compensation for work prior to when Law Firm finally did make the disclosures. [Our note: We just found this opinion at Google Scholar, which usually publishes opinions within a week or two of the decisions. We have omitted the factual particulars because they are banal and a bit sad. If you want to know how not to handle relationship disclosures under Rule 2014(a) at the beginning of a bankruptcy proceeding, read the opinion.]

(posted July 30, 2020) In re Art Van Furniture, LLC, No. 20-10553 (CSS) (D. Del. July 21, 2020). Law Firm seeks to become Debtor's counsel in what has become a Chapter 7 case. Earlier in the matter Law Firm represented Bank, a secured creditor of Debtor, in an attempt to work out a restructuring. Bank and Debtor had executed a waiver allowing Law Firm to represent Debtor in matters possibly adverse to Bank. After failure to agree on a restructuring, Law Firm continued to represent Bank on unrelated matters. The U.S. Trustee was the only objector to Law Firm's retention. In this opinion the bankruptcy judge approved Law Firm's retention. Much of the court's reasoning dealt with the terms of the waiver including distinctions between the terms, "dispute" and "the transaction." The court found that Law Firm's retention would not violate the terms of the waiver. The court further found that there was no actual conflict or potential conflict and that Law Firm's retention was consistent with Section 327 of the Bankruptcy Act.

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

Nothing current.

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

(posted August 4, 2020) Warner v. Google LLC, 2020 BCSC 1108 (CanLII) (S. Ct. B.C. July 29, 2020). The claim is that Google improperly gathered data from certain Canadians using Android phones. As a settlement was being negotiated, before class certification, Plaintiff and his law firm ("Law Firm") got into a disagreement about where cy-pres funds should be distributed. Plaintiff wanted those funds to go to Free Software Foundation, an American not-for-profit. Other parties wanted the funds to go to Canadian bar-related foundations. In this opinion the court was faced with whether Plaintiff should be replaced, and, if so, whether Law Firm should be replaced. First, the court determined that Plaintiff should go because of Plaintiff's possibly advantageous relationship with the Free Software Foundation and its leader(s), and Plaintiff's difficult conduct during the cy-pres dispute. As to Law Firm, the court ruled it could stay. The court noted the "bright line" Canadian conflicts rule might otherwise mean that Law Firm could not continue because of its disagreement with Plaintiff. However, the court looked at prior Canadian decisions suggesting that class actions can be different in this respect. Thus, even though no class has yet been certified, with the only relationship being Law Firm's representation of Plaintiff, keeping Law Firm in the case would be in the best interests of the future class.

(posted August 3, 2020) In re Suboxone Antitrust Litig., No. 19-3640 (3d Cir. July 28, 2020). The trial court certified a class. Defendant appealed. In this opinion the Third Circuit affirmed. Defendant claims that class counsel and the class representative "could have conflicting views" on what should be alleged, who should be a defendant, whether to settle or go to trial, and the impact of this case on other cases. The court rejected those points saying that at this stage of the litigation, such conflicts are hypothetical. Defendant also claimed a conflict because the class representative had "ceded control" of the case to class counsel. In rejecting that point the court said everybody knows class counsel control class litigation.

(posted July 18, 2020) Cortina v. North Am. Title Co., No. F077659 (Cal. App. June 18, 2020). To read about the case, go to "Miscellaneous," above.

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.)

Nothing current.

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

(posted July 15, 2020) Canfield v. SSI&C Techs. Holdings, Inc., No. 1:18-cv-08913(ALC) (S.D.N.Y. July 10, 2020). 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") represents the plaintiffs. The problem is that in the Western District of Missouri Klamann represents 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 this opinion the court granted the motion. [Our note: We had difficulty following the court's reasoning, possibly because we have had little experience in ERISA litigation. ERISA litigators may want to take a look at the opinion.]

DERIVATIVE ACTIONS (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 July 30, 2020) McCormick, Inc. v. Fredericks, No. 20190254 (N.D. July 22, 2020). To read about the case, go to "Malpractice," below.

(posted July 25, 2020) Quezada v. Pizarro, No. 651434/2020 (N.Y. Sup. Ct. July 17, 2020). Plaintiffs bought a restaurant from Defendant in 2010. For some years after the sale, Defendant stayed on as general manager of the restaurant. In this suit Plaintiffs are claiming that Defendant stole money from the restaurant. Defendant moved to disqualify Lawyer from representing Plaintiffs in this case. Lawyer had represented Defendant when she sold the restaurant to Plaintiffs. However, Lawyer claims he remembers almost nothing about the sales transaction. In this opinion the court found that the matters were substantially related and granted the motion. Among other things, Defendant's finances had to have been involved in the sales transaction as well as in this case.

(posted July 18, 2020) L'Oreal USA Creative, Inc. v. Drunk Elephant, LLC, No. 1:18-CV-982-LY (W.D. Tex. June 10, 2020). Plaintiff is suing Defendant for infringing Plaintiff's '841 patent. The Lerner law firm is representing Defendant. Lerner had done patent prosecution work for Plaintiff from 2003 until early 2016. Plaintiff moved to disqualify Lerner in this case. In this opinion the court denied the motion, primarily because the earlier work was not substantially related to this case. The opinion deals with the relationship (or lack thereof) of the earlier patent work that Lerner did for Plaintiff and the patent in this case. Moreover, the court considered what knowledge remaining in the Lerner firm could be harmful to Plaintiff and the extent (or lack thereof) to which the lawyers working on this case had access to that knowledge. Moreover, Plaintiff did not make its motion as soon as it could have. On balance, the "equities weigh on the side of" Defendant.

(posted July 17, 2020) WhatsApp Inc. v. NSO Group Techs. Ltd., No. 19-cv-07123-PJH (N.D. Cal. June 16, 2020). King & Spalding ("K&S") represents the defendants. From December 2015 to July 6, 2016 K&S represented plaintiff WhatsApp as local counsel in another case, which involved WhatsApp's "core technology." Three of the K&S lawyers who did work for WhatsApp have left K&S. One, who did minimal work, remains. WhatsApp moved to disqualify K&S in this case. In this opinion the court denied the motion. The court held that the two cases are not substantially related, a test under either Rule 1.9 or 1.10. The relevant material in the earlier case is under seal, and key parts of this opinion are redacted. So, it is hard for us to describe meaningfully why the court deemed the matters not substantially related. Evidently, the WhatsApp technical information K&S had access to in the earlier case, involved open source software, which, by definition is public information. The physical files from the earlier case had been moved to K&S' off-site storage. For purposes of this motion, the files had transferred to K&S' General Counsel, where they are not available to other K&S lawyers. The opinion contains an apparently helpful review of the evolution of the substantially related test in California.

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

Nothing current.

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

(posted July 25, 2020) Sempra Energy v. Assoc. Elec. & Gas Ins. Servs. Ltd., No. 2:19-cv-03340-ODW(JPRx) (C.D. Cal. July 20, 2020). GasCo had a natural gas storage facility in L.A. It leaked. Thousands of people and entities sued GasCo. GasCo tendered the cases to InsCo under insurance policies issued many years ago. InsCo issued a reservation of rights letter. InsCo agreed to defend the suits subject to its reservation of rights. In this case GasCo is suing InsCo for breach of contract. InsCo seeks to control the defense of the underlying cases, over the objection of GasCo. InsCo moved for summary judgment on the right to control. In this opinion the court granted InsCo summary judgment. The issue for this audience is whether counsel hired by InsCo would have a conflict of interest. The court said no. The court found that the issues in the underlying cases are unrelated to coverage issues in this case and that InsCo's retained lawyers would not be in a position to affect coverage. [Our note: We have glossed over precisely how InsCo's lawyers would not be in that position because we do not fully understand it. If you are involved in gas leak/insurance coverage litigation, you better take a look at the opinion.] In an unpublished opinion, eight days before this opinion, the Ninth Circuit reiterated the concept that the insurance company need not reimburse the insured for legal fees of independent counsel where the insurance company's retained counsel was in no position to affect coverage, Scottsdale Ins. Co. v. PTB Sales, Inc., No. 19-55350 (9th Cir. July 16, 2020).

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

Financial Planning

(posted August 14, 2020) Ohio Op. 2020-8 (Aug. 8, 2020). The opinion provides that a lawyer may provide financial planning services to clients provided the fee is on a basis other than a percentage of the client's assets. A lawyer may not sell financial products to clients. Compare this opinion with N.Y. Op. 1200 (July 21, 2020), which holds that a lawyer may not provide financial planning services to law clients.

Non-Law Businesses

(posted July 31, 2020) N.Y. Op. 1199 (July 15, 2020) & N.Y. Op. 1200 (July 21, 2020). New York adopted a new set of ethics rules in 2009. This included Rule 5.7, which appears to be substantively the same as ABA Model Rule 5.7. These two opinions of the New York State Bar Ethics Committee explore the ways in which the New York rule applies to lawyer activity that is not the practice of law. Opinion 1199 discusses a lawyer's setting up a business to provide pro se litigants with forms and procedures, with or without the lawyer's assistance. Opinion 1200 discusses a lawyer who wishes to practice law and provide wealth management services to clients. The opinion holds that a lawyer may not provide investment services to clients but may provide such services to non-clients. Both opinions discuss the interplay of Rule 5.7 with other rules, particularly conflict rules. Both opinions discuss when certain disclosures must be made to non-clients to ensure that non-clients do not believe they have protections of law clients. The above just scratches the surface of the advice provided by the opinions. Any practicing lawyer in the U.S. who wishes to branch out into non-legal areas would do well to read both opinions, in addition to authorities where the lawyer is admitted.

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

(posted August 10, 2020) Infosphere Consulting, Inc. v. Habibi Life, LLC, No. 19-cv-15577-MCA-ESK (D.N.J. Aug. 7, 2020). Infosphere, which does business as "Habibi," has sued Habibi Life for trademark infringement and related causes of action. Law Firm, which represents Habibi Life, filed a motion to intervene on behalf of Shahada Karim. Infosphere, claiming it would be a conflict, under N.J. Rule 1.7, for Law Firm to represent both Habibi Life and Karim, moved to disqualify Law Firm. In this opinion the magistrate judge denied the motion. Habibi Life and Karim had entered into a series of agreements that defined their relationship and concurrence as to the future use of the name Habibi. For that reason the court found that their interests were aligned. Moreover, the agreements addressed Law Firm's joint representation -- amounting to consent under N.J. Rule 1.7(b).

Nothing current.

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

Res Judicata

(posted July 30, 2020) McCormick, Inc. v. Fredericks, No. 20190254 (N.D. July 22, 2020). Plaintiff, Corp. 1, a 49% shareholder of Corp. 2, sued Defendant, a 51% shareholder of Corp. 2, claiming breach of contract and breach of fiduciary duty to Corp. 2. The suit includes claims by Corp. 1 directly, and derivatively on behalf of Corp. 2. Law Firm represented Corp. 1 in the trial of this case. Defendant, claiming he is a former client of Law Firm, moved to disqualify Law Firm. The trial court denied the motion. In this opinion the N.D. Supreme Court affirmed. First the court said that Law Firm never represented Defendant. Second, the court, assuming arguendo that Defendant had been a client, found that what Law Firm did for Defendant was not substantially related to this case. Quoting the trial judge, "[Law Firm] only reviewed Master Service Agreements between [Corp. 2] and other oil companies." Those agreements "are [not] at issue in this case." Plus, there was no showing that Law Firm had confidential information about Defendant from that earlier supposed representation. A companion case is Fredericks v. Vogel Law Firm, No. 2019-272 (N.D. July 22, 2020). There, the defendant in the above case attempted to sue Law Firm, based upon the alleged conflict. In this opinion the N.D. Supreme Court affirmed the trial court's ruling that res judicata bars this action, based upon the earlier finding of no conflict.

Unique California Issue

(posted July 30, 2020) Fields v. Fox Rothschild LLP, No. B295928 (Cal. App. Unpub. July 22, 2020). This opinion deals with California Civil Code § 1714.10, which requires plaintiffs to secure a court prefiling order before suing a lawyer for conspiring with a client. The issue in this case was whether a plaintiff could proceed in a case against a law firm without a prefiling order. The court said the case could proceed because the claim was a breach by the law firm of a duty that the law firm "independently owed to" the plaintiff. Such a claim is an exception to the prefiling order requirement under § 1714.10 (c)(2). [Our note: We will not bother you with more because the opinion was unpublished. However, California legal malpractice lawyers may want to take a look.]

(posted July 25, 2020) The Atlantic Channel, Inc. v. Solomon, No. 15-1823 (RC) (D.D.C. July 23, 2020). Henry Solomon, with the Haley, Bader firm, representing Atlantic Channel ("ACI"), filed with the FCC an allegedly defective application for a Class A license for a Low Power Television Station. He filed the application in December 1999. In June 2000 the FCC's Mass Media Bureau rejected the application. Also in June 2000 Solomon filed a Petition for Reconsideration. The Bureau denied reconsideration in November 2000. In December 2000 Solomon filed an Application for Review with the FCC. That was denied in November 2012. Solomon started at the Garvey firm in 2000. In 2012 ACI retained Melodie Virtue of the Garvey firm to resurrect and complete the Class A license proceeding. At some point ACI sued Solomon for his failure to obtain the license. Two years later ACI added Virtue and Garvey firm as defendants. ACI claims that as part of obtaining the license Virtue should have addressed Solomon's earlier malpractice, the statute of limitations for that claim, a conflict of interest, and the need to consult with independent counsel. Virtue and the Garvey firm moved for summary judgment. In this opinion the court denied the motion. The court said a jury might find Virtue's failure to address those issues (Solomon's malpractice, etc.) fell below the standard of care. The jury would need to hear from expert witnesses on the standard of care.

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

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

STANDING (To read full article, click here.)

(posted July 22, 2020) HSBC Bank USA, N.A. v. Santos, No. 1139, 35755/15 (N.Y. App. Div. July 16, 2020). Mortgage foreclosure. Law Firm A represents Mortgagor A. Mortgagor B, represented by Law Firm B, moved to intervene claiming it owned the property. (Ownership of the property was a confused mess.) A name partner of Law Firm A was also listed as a partner at Law Firm B. Mortgagee moved to disqualify Law Firms A and B because ownership of the property was contested. The trial court granted the motion. In this opinion the appellate court reversed. First, the court held Mortgagee had no standing to make the motion because it was never a client of either firm. Moreover, for purposes of defending the foreclosure, Mortgagors A and B's interests were aligned. The court noted that their interests could diverge. In that case the court said that the lawyers would have to comply with N.Y. Rule 1.7.

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.