Freivogel on Conflicts
FREIVOGEL ON CONFLICTS
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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

Former Client; Rule 1.8(i); Passage of Time (posted August 21, 2017) Residences at Bay Point Condo. Ass'n, Inc. v. Chernoff Diamond & Co., LLC, 2017 WL 3531683 (D.N.J. Aug. 17, 2017). This is a suit by a condo association ("CA") against certain developer/managers for purchasing the wrong kind of insurance for CA. Defendants moved to disqualify CA's lawyer ("Lawyer"). In this opinion the court denied the motion. First, Defendants claimed that Lawyer had earlier represented one of the defendants in this matter. The court rejected that ground based upon a totality of circumstances showing no lawyer-client relationship with that defendant. Lawyer's retainer agreement said Lawyer would represent CA. There were no communications indicating that Lawyer represented the defendant. Last, there was no showing that the defendant had conveyed confidences to Lawyer. The second ground for disqualification was that Lawyer and his family owned ten units in the development, triggering the prohibition of N.J. Rule 1.8(i) (same as MR 1.8(i)). Noting the "paucity" of authority under that rule, the court ruled that the ownership of units was not the kind of interest meant to be protected by the rule. The court also based its denial upon Defendants' waiting three years to bring their motion.

Bankruptcy
(posted August 18, 2017) In re Memory Lane Assisted Living of Bowdon LLC, 2017 WL 3475663 (N.D. Ga. Aug. 11, 2017). This case involved the retention of Debtors' Counsel. The primary value of this bankruptcy judge's opinion is its discussion of "actual" versus "potential" conflicts under the disinterested standard in § 327 of the Bankruptcy Act. Otherwise, it is too fact-specific to be of additional educational value.

Standing; Former Client (posted August 18, 2017) CWT Canada II Ltd. P’ship v. Bridges, 2017 WL 3534977 (D. Ariz. Aug. 17, 2017). The interrelationships of the parties along with the number of lawsuits defy diagramming (we tried!). Each side moved to disqualify the other’s law firm. One issue was standing. The court noted that there are exceptions to the rule requiring standing, but this case was not one of them. The other issue involved the substantial relationship test under Rule 1.9(a). The court found that an issue regarding the failure to remit tax credits (this case) was not substantially related to an earlier defamation case.

                                                               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.]

Rule 1.8(i)

(posted August 21, 2017) Residences at Bay Point Condo. Ass'n, Inc. v. Chernoff Diamond & Co., LLC, 2017 WL 3531683 (D.N.J. Aug. 17, 2017). To read about the case, go to "Former Client," below.

CONFLICTS - UNCATEGORIZED

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

(posted July 24, 2017) Export Dev. Canada v. ESE Elecs. Inc., 2017 WL 3122157 (C.D. Cal. July 10, 2017). A dispute arose over whether a party or his lawyer was responsible for failure to produce a document required in discovery. The court raised on its own motion whether that created a conflict between the party and his lawyer. The court, in this opinion, held that it was an unwaivable conflict and that, if an opposing party made a motion for sanctions, the party would have to get other counsel on sanctions issues. However, the court allowed the lawyer to remain as to all other issues because the party signed a conflicts waiver, which appeared to explain adequately all the above.

APPEALABILITY OF DISQUALIFICATION (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 18, 2017) In re Memory Lane Assisted Living of Bowdon LLC, 2017 WL 3475663 (N.D. Ga. Aug. 11, 2017). This case involved the retention of Debtors' Counsel. The primary value of this bankruptcy judge's opinion is its discussion of "actual" versus "potential" conflicts under the disinterested standard in § 327 of the Bankruptcy Act. Otherwise, it is too fact-specific to be of additional educational value.

(posted August 5, 2017) In re Pilgrim Med. Ctr, Inc., 2017 WL 3311227 (D.N.J. July 26, 2017). The primary issue to this audience is whether counsel for the creditors' committee ("Law Firm") had a conflict that would deprive it of fees. In this opinion the bankruptcy judge said it did not. Law Firm did represent several bank/creditors in matters other than this one. Moreover, those banks accounted for a very small percentage of Law Firm's business.

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 August 11, 2017) Fant v. City of Ferguson, 2017 WL 3392073 (E.D. Mo. Aug. 7, 2017). For several years Lawyer worked at Firm 1. While there he worked on cases involving several of the plaintiffs in this case. Lawyer moved to Firm 2 in April 2017. Firm 2 represents the defendant in this case. Firm 2, at some point, erected a screen between Lawyer and this case. The plaintiffs moved to disqualify Firm 2 in this case. In this opinion the court granted the motion. The court noted that Missouri is not a screening state.

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

Nothing current.

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.)

Nothing current.

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.)

Nothing current.

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.)

(posted July 31, 2017) Busby v. Harvey, No. 02-16-00311-CV (Tex. App. July 27, 2017). This is a veterinary malpractice case against Texas Vet involving treatment of a horse. Although he already had a lawyer, Horse Owner called Lawyer Chamblee about locating an expert witness. Chamblee suggested Owner contact Florida Vet, which Owner (or his lawyer) did. After Owner's conversation with Chamblee, Chamblee was retained by the malpractice carrier for Texas Vet. According to Chamblee, he did not detect a conflict because Owner had never been a client and was not in Chamblee's database. Owner moved to disqualify Chamblee, which, after a hearing, the trial court denied. In this opinion the appellate court affirmed. There was some dispute  about how much Owner told Chamblee during their conversation, which the trial court resolved in Chamblee's favor. Basically, both courts held that Owner did not retain Chamblee for legal advice and did not disclose important information to Chamblee.

(posted July 27, 2017) In re Namenda Direct Purchaser Antitrust Litig., 2017 WL 3085342 (S.D.N.Y. July 20, 2017). This opinion by a magistrate judge recommends denial of motions to disqualify two different expert witnesses. The opinion is so fact-specific as to be of little precedential value. The opinion is, however, a good review of authorities regarding disqualification of expert witnesses, who, to one degree or another, had been associated with the other side.

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

(posted August 21, 2017) Residences at Bay Point Condo. Ass'n, Inc. v. Chernoff Diamond & Co., LLC, 2017 WL 3531683 (D.N.J. Aug. 17, 2017). This is a suit by a condo association ("CA") against certain developer/managers for purchasing the wrong kind of insurance for CA. Defendants moved to disqualify CA's lawyer ("Lawyer"). In this opinion the court denied the motion. First, Defendants claimed that Lawyer had earlier represented one of the defendants in this matter. The court rejected that ground based upon a totality of circumstances showing no lawyer-client relationship with that defendant. Lawyer's retainer agreement said Lawyer would represent CA. There were no communications indicating that Lawyer represented the defendant. Last, there was no showing that the defendant had conveyed confidences to Lawyer. The second ground for disqualification was that Lawyer and his family owned ten units in the development, triggering the prohibition of N.J. Rule 1.8(i) (same as MR 1.8(i)). Noting the "paucity" of authority under that rule, the court ruled that the ownership of units was not the kind of interest meant to be protected by the rule. The court also based its denial upon Defendants' waiting three years to bring their motion.

(posted August 18, 2017) CWT Canada II Ltd. P’ship v. Bridges, 2017 WL 3534977 (D. Ariz. Aug. 17, 2017). The interrelationships of the parties along with the number of lawsuits defy diagramming (we tried!). Each side moved to disqualify the other’s law firm. One issue was standing. The court noted that there are exceptions to the rule requiring standing, but this case was not one of them. The other issue involved the substantial relationship test under Rule 1.9(a). The court found that an issue regarding the failure to remit tax credits (this case) was not substantially related to an earlier defamation case.

(posted August 9, 2017) Baker v. Baker, 2017 WL 3326933 (Md. App. Aug. 4, 2017). Law Firm represented Son in applying for Mother's guardianship. Law Firm withdrew from that proceeding. Eight years later a Law Firm lawyer showed up as administrator of Mother's decedent estate. Son, among other things, seeks removal of the administrator. The trial court denied that relief. In this opinion the appellate court affirmed. In considering Md. Rule 1.9 the court found that there was nothing about the earlier representation that would prejudice anyone in the current estate administration.?

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.)

Punitive Damages and Independent Counsel

(posted August 9, 2017) Med-Plus, Inc. v. American Cas. Co. Of Reading, PA, 2017 WL 3393824 (E.D.N.Y. Aug. 4, 2017). In this opinion the court held that under the law of New York and New Jersey, if the underlying insured case carries the possibility of punitive damages, the insured is entitled to independent counsel. In neither state may insurance companies cover punitive damage.

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

(posted August 11, 2017) Friedman v. Kuczkir, 2017 WL 3411971 (S.D.N.Y. Aug. 9, 2017). Defendant is a successful novelist. Plaintiff is a lawyer who did legal work for Defendant, for which he billed by the hour. Plaintiff also had a literary agency agreement with Defendant. Plaintiff brought this suit to collect a fee earned under that agreement. One defense is that Plaintiff violated then N.Y. D.R. 5-104 (predecessor to N.Y. Rule 1.8(a)). In this opinion the court rejected that defense because the agency agreement was unrelated to the practice of law.

Lawyer as Broker

(posted August 5, 2017) Jay Deitz & Assocs. of Nassau County, Ltd. v. Breslow & Walker, LLP, 2017 WL 3273327 (N.Y. App. Div. Aug. 2, 2017). Lawyer acted as broker in the sale of a business and also as lawyer in the sale. The retainer agreement provided that the broker portion of the fee would be contingent upon the deal closing. In this opinion the appellate court affirmed a trial court holding that Lawyer should be denied a fee because acting in both capacities, where the broker fee was contingent, was a violation of N.Y. Rule 1.7(a)(2). [Our note: This write-up is an over-simplification of the holding because of its New York-centric nature. New York lawyers who mix business with the practice of law should read the opinion. Among other things, the ruling is puzzling to us because it makes no mention of N.Y. Rule 1.8(a), which appears to be identical, or nearly so, to M.R. 1.8(a).]

Tax Shelter Penalties

(posted August 5, 2017) Curtis Inv. Co., LLC v. Comm'r., T.C. Memo. 2017-150 (U.S.T.C. Aug. 2, 2017). This case involves the use of a "CARDS" transaction to justify excessive tax deductions. The I.R.S. denied the deductions and assessed a 40% "gross valuation" penalty because Taxpayers did not rely on experts in good faith. The only expert Taxpayers relied upon was lawyer R.J. Ruble of Brown & Wood. Ruble was provided by, and paid by, the promoter of the shelter. In this opinion the court affirmed the I.R.S. disallowance of the deductions and imposition of the 40% penalty. The court said Ruble had a conflict of interest and Taxpayers should have known it. Thus, their reliance on Ruble's opinion was not in good faith. [Our note: Ruble ultimately went to prison for his work on hundreds of sham tax shelters.]

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 July 24, 2017) Bahoda v. Kaplan, 2017 WL 3090774 (Mich. App. Unpub. July 20, 2017). Legal malpractice case brought by Plaintiff against Lawyer. Lawyer had represented Plaintiff in a criminal case and lost. Plaintiff sought to overturn his conviction, alleging ineffective assistance of counsel. Among Lawyer's alleged deficiencies were conflicts of interest. The court refused to overturn the conviction. In this opinion the court dismissed the malpractice case on grounds of collateral estoppel (preclusion). The finding of effective assistance of counsel in the criminal case amounted to adjudication of no malpractice in this civil case.

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 August 18, 2017) CWT Canada II Ltd. P’ship v. Bridges, 2017 WL 3534977 (D. Ariz. Aug. 17, 2017). The interrelationships of the parties along with the number of lawsuits defy diagramming (we tried!). Each side moved to disqualify the other’s law firm. One issue was standing. The court noted that there are exceptions to the rule requiring standing, but this case was not one of them.

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.)

(posted August 21, 2017) Residences at Bay Point Condo. Ass'n, Inc. v. Chernoff Diamond & Co., LLC, 2017 WL 3531683 (D.N.J. Aug. 17, 2017). Three-year delay too long.

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

Nothing current.

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

Nothing current.

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