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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; Failure to Reveal Lack of Insurance (posted January 25, 2020) Hance v. Super Store Indus., 2020 WL 373070 (Cal. App. Jan. 23, 2020). Wage and hour class action. Several lawyers represented the class. They had a fee splitting agreement. One of the lawyers did not have malpractice insurance, and that fact was not conveyed to the plaintiffs, in violation of then California Rule 3-410 (now, Rule 1.4.2 - effectively the same). The trial court granted a fee award in conformance with the fee agreement. In this opinion the appellate court reversed and remanded the case to the trial court to determine what, if any, quantum meruit award the offending lawyer should receive. The court discussed several California decisions dealing with the enforceability issue including, prominently, Sheppard, Mullin, Richter & Hampton, LLP v. J-M Mfg. Co., Inc., 6 Cal. 5th 59 (Cal. 2018). Hot Potato (posted January 23, 2020) FurnitureDealer.Net, Inc. v. Amazon.Com, Inc., 2020 WL 331190 (D. Minn. Jan. 21, 2020). This is a brief opinion, and we are taking a few liberties, such as with the sequence of events. Briggs and Morgan was representing FurnitureDealer against Amazon in this case. During 2019 Briggs and Taft Stettinius were planning a merger, which, according to Taft's Website, was consummated January 1, 2020. In the lead-up to the merger, the firms determined that Taft was representing Amazon in other matters, thus potentially creating a Rule 1.7(a)(1) conflict. So, before the merger, Briggs moved to withdraw from this case. Over FurnitureDealer's objection, the magistrate judge granted the motion. FurnitureDealer had argued that Taft should have sought a waiver from Amazon, and if the waiver was refused, Taft should drop Amazon as a client in the other matters. The district judge rejected that position and affirmed the magistrate judge. Waiver; Not Written (posted January 20, 2020) Lavigne v. Allied Shipyard, Inc., 2020 WL 236708 (La. App. Jan. 15, 2020). Plaintiff was injured in an auto accident. Plaintiff sued, among others, the other driver and the other driver's insurance company. A jury awarded Plaintiff $2.7 million. After the verdict the insurance company moved to disqualify Plaintiff's law firm because a partner in that law firm had formerly represented it. The trial court denied that motion. In this opinion the appellate court affirmed. The court grounded its ruling on: (1) Plaintiff's counsel averred, and the court believed, that his law firm had obtained an oral waiver (La. Rule 1.9 requires a written waiver - oh well); and (2) granting the motion after the verdict would have only punished Plaintiff. 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; Failure to Reveal Lack of Insurance (posted January 25, 2020) Hance v. Super Store Indus.,
2020 WL 373070 (Cal. App. Jan. 23, 2020). Wage and hour class action.
Several lawyers represented the class. They had a fee splitting
agreement. One of the lawyers did not have malpractice insurance, and
that fact was not conveyed to the plaintiffs, in violation of then
California Rule 3-410 (now, Rule 1.4.2 - effectively the same). The
trial court granted a fee award in conformance with the fee agreement.
In this opinion the appellate court reversed and remanded the case to
the trial court to determine what, if any, quantum meruit award the
offending lawyer should receive. The court discussed several California
decisions dealing with the enforceability issue including, prominently, Sheppard, Mullin, Richter & Hampton, LLP v. J-M Mfg. Co., Inc., 6 Cal. 5th 59 (Cal. 2018). [Note: These, too, will appear at the This and That pages.] Sanctions (posted January 15, 2020) Essmaker v. Smith Food & Drug Centers,
2020 WL 184515 (D. Ida. Jan. 13, 2020). Sexual harassment and wrongful
termination case. The court entered a sanctions order against the
defendant's lawyer, not the defendant. The parties settled the case, and
the defendant's lawyer moved to vacate the sanction. In this opinion
the court disagreed, holding, in part, that such a result would create a
conflict of interest for the lawyer, in that the lawyer might seek an
unfavorable settlement for the client just to get rid of the sanction. 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) Nothing current. Nothing current. BOARD POSITIONS (To read full article, click here.) Nothing current. CHANGING FIRMS - SCREENING (To read full article, click here.) Nothing current. CLASS ACTIONS (To read full article, click here.) (posted December 26, 2019) Faitro v. Top Surgeons, LLC, 2019 WL
7161488 (Cal. App. Unpub. Dec. 24, 2019). This is a class action case, but the issue was not unique to class actions. To read about the case, go to "Zero Sum . . . ," below. Nothing current. CO-COUNSEL/COMMON INTEREST (To read full article, click here.) COMMERCIAL NEGOTIATIONS (To read full article, click here.) Representing Both Sides (posted January 10, 2020) Doyle v. Otto, 2020 WL 105089 (Ia. App.
Jan. 9, 2020). Geri Doyle and Caren De Voe were partners in a real
estate brokerage business. Lawyer Mark Otto had represented both of them
in various business contexts. When Doyle and De Voe agreed to part,
they hired Otto to prepare the needed documents. Otto asked them to sign
a conflicts waiver. De Voe insisted on a ten year non-compete clause.
When Doyle asked Otto about the length, Otto opined that he did not
think a court would enforce it for more than "two to three years." Doyle
signed the contract Otto prepared, which included the ten-year
non-compete provision. Later, in a new business, Doyle started listing
property in a county named in the non-compete. De Voe reminded Doyle
about the non-compete. Doyle responded by filing this action seeking a
declaration that the non-compete was not enforceable and seeking
malpractice damages against Otto. We will focus on the claims against
Otto. The trial court granted Otto summary judgment. In this opinion the
appellate court affirmed. It was clear that De Voe and Doyle agreed on
all the separation terms without Otto's involvement and that Doyle was
sophisticated about the real estate business. The court found that
Otto's prediction about the excessiveness of the ten-year term was good
advice. Thus, the court held that Otto had not been negligent, and that
he had not breached his fiduciary duty to Doyle. CORPORATIONS (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 January 10, 2020) Gowdy v. Cook, 2020 WL 90720 (Wyo. Jan.
8, 2020). Dennis and Craig Cook are law partners in Cook and
Associates, P.C. ("Cook Firm"). Marian Jackson retained Dennis to
prepare her revocable living trust. Gerald Gowdy was to be a "primary
beneficiary" after Marian's death. Marian was trustee while alive and
appointed Dennis as her successor trustee and Craig has "trust
protector." The trust instrument contained liability protections for the
trustee. There was much more going on, but you get the idea. After
Marian's death Gerald Gowdy sued Dennis, Craig, and Cook Firm
essentially for malpractice and breach of fiduciary duty. The trial
court granted the the defendants summary judgment. In this opinion the
Wyoming Supreme Court affirmed. The gist of these findings was that
Gowdy could show no damages from any of the Cooks' activities.
Evidently, Gowdy was counting on alleged violations of ethics (i.e.
conflicts) rules to carry the day. The court recognized the truism that
violation of an ethics rule does not, without more, constitute a viable
cause of action. DERIVATIVE ACTIONS (To read full article, click here. Nothing current. Nothing current. EXPERT WITNESSES (To read full article, click here.) Nothing current. FORMER CLIENT (To read full article, click here.) Nothing current. Nothing current. HOT POTATO DOCTRINE (To read full article, click here.) (posted January 23, 2020) FurnitureDealer.Net, Inc. v. Amazon.Com, Inc., 2020 WL 331190 (D. Minn. Jan. 21, 2020). This is a brief opinion, and we are taking a few liberties, such as with the sequence of events. Briggs and Morgan was representing FurnitureDealer against Amazon in this case. During 2019 Briggs and Taft Stettinius were planning a merger, which, according to Taft's Website, was consummated January 1, 2020. In the lead-up to the merger, the firms determined that Taft was representing Amazon in other matters, thus potentially creating a Rule 1.7(a)(1) conflict. So, before the merger, Briggs moved to withdraw from this case. Over FurnitureDealer's objection, the magistrate judge granted the motion. FurnitureDealer had argued that Taft should have sought a waiver from Amazon, and if the waiver was refused, Taft should drop Amazon as a client in the other matters. The district judge rejected that position and affirmed the magistrate judge. INITIAL INTERVIEW - HEARING TOO MUCH (To read full article, click here.) Nothing current. INSURANCE DEFENSE (To read full article, click here.) Nothing current. INVESTING IN CLIENTS/STOCK FOR FEES (To read full article, click here.) Nothing current. Nothing current. JOINT/MULTIPLE REPRESENTATION (To read full article, click here.) Nothing current. Nothing current. Nothing current. MALPRACTICE LIABILITY/FEE FORFEITURES (To read full article, click here.) (posted January 15, 2020) Amer. E Group PLLC v. Livewire Ergonomics Inc.,
2020 WL 209903 (S.D.N.Y. Jan. 14, 2020). AEG is suing Livewire on a
note. Livewire brought a third-party complaint against the Barkats law
firm because Barkats represented Livewire in obtaining the financing and
preparing the note. Livewire is claiming that that the terms of the
note were unfavorable to Livewire and that Barkats had a conflict of
interest, thus breaching its fiduciary duty to Livewire. Livewire has
also joined Elana Hirsch, a principal at AEG, as a third-party
defendant, claiming she aided and abetted Barkats' breach. Hirsch moved
to dismiss the third-party complaint against her. In this opinion the
court denied the motion. The problem is that AEG is related to the
Barkats law firm, including the fact that Hirsch is married to Sunny
Barkats, the firm's named partner. The engagement agreement between
Barkats and Livewire said that Livewire was waiving any conflict that
might arise out of the financing being with an entity related to
Barkats. However, the court said that this reference to a possible
future, "hypothetical," conflict falls far short of Rule 1.7's
requirement for an informed consent (see, especially, footnote 4). [Our
note: The opinion contains a helpful discussion of lawyers' breach of
fiduciary duty and of a third party's aiding and abetting such a breach.
The opinion also discusses the applicability of New York's versions of
Rules 1.7 and 1.8(a).] OF COUNSEL (To read full article, click here.) Nothing current. OPPOSING LAWYERS NEGOTIATING A LAW PRACTICE MERGER (To read full article, click here.) (posted January 15, 2020) Hinker v. County of Cape May, 2020 WL 205901 (D.N.J. Jan. 13, 2020). Law Firm P represents Plaintiffs. Law Firm D represents Defendant. Firm P assigned Lawyer to represent Plaintiffs. Lawyer contacted Firm D about employment there. Firm D made Lawyer an offer. Shortly after the offer, lawyers at Firm D realized that two matters, including this one, created conflict issues. Thus, Firm D withdrew its offer. Lawyer had a melt-down (our phrase). He begged Firm D to resolve the conflict issues so he could join Firm D after all. He even wrote disparaging descriptions of the size and merits of this case. Lawyer left Firm P but did not join Firm D. Plaintiffs moved to disqualify Firm D. In this opinion the magistrate judge denied the motion. The pivotal issue was whether Lawyer had become "associated" with Firm D within the meaning of New Jersey Rules 1.9 and 1.10. In a fact-specific analysis the judge concluded that Lawyer had not become associated with Firm D, and, thus, Rules 1.9 and 1.10 did not apply. PARTNERSHIPS (INCLUDING LIMITED PARTNERSHIPS) (To read full article, click here.) Nothing current. SETTLEMENT AGREEMENTS (To read full article, click here.) STANDING (To read full article, click here.) Nothing current. Nothing current. UNDERLYING WORK PROBLEM (To read full article, click here.) Nothing current. WAIVERS/CONSENTS (To read full article, click here.) Not Written (posted January 20, 2020) Lavigne v. Allied Shipyard, Inc.,
2020 WL 236708 (La. App. Jan. 15, 2020). Plaintiff was injured in an
auto accident. Plaintiff sued, among others, the other driver and the
other driver's insurance company. A jury awarded Plaintiff $2.7 million.
After the verdict the insurance company moved to disqualify Plaintiff's
law firm because a partner in that law firm had formerly represented
it. The trial court denied that motion. In this opinion the appellate
court affirmed. The court grounded its ruling on: (1) Plaintiff's
counsel averred, and the court believed, that his law firm had obtained
an oral waiver (La. Rule 1.9 requires a written waiver - oh well); and
(2) granting the motion after the verdict would have only punished
Plaintiff. WITNESS - ADVERSE - CURRENT/FORMER CLIENT (To read full article, click here.) ZERO SUM GAMES (To read full article, click here.) Nothing current. Home/Table of Contents Website powered by Network Solutions® |