Malpractice Liability (posted September 26, 2022) Kunasek v. Johnson, 2022 WL 4377299 (Ariz. App. Sept. 22, 2022). A trust beneficiary sued the trust creator and trustees for breach of fiduciary duty and sued the trust law firm for aiding and abetting that breach. A jury returned a verdict against all the defendants for $10.5 million in compensatory damages plus $10.5 million in punitive damages. In this opinion the appellate court upheld the verdicts. [Our note: While we have always felt that lawyer malpractice cases are usually poor vehicles for teaching about legal ethics, this case is instructive in two respects. First, it is a stark illustration of how a law firm can be liable for aiding and abetting someone else's breach of fiduciary duty. Second, the opinion contains a helpful discussion of the propriety of expert testimony on the aiding and abetting claim.]

[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.]

Nothing current.

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.

BANKS/TRUST DEPARTMENTS (To read full article, click here.)

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

Screen not Needed

(posted September 15, 2022) Lecompte v. C.F. Woodford & Son, Inc., 2022 WL 4129410 (Super. Ct. Conn. Sept. 12, 2022). Plaintiff is suing Defendants for injuries suffered on Defendants' premises. Firm 1 represents Defendants. Firm 2 represents Plaintiff. Lawyer was employed at Firm 1 when this case began. Lawyer moved to Firm 2. Defendants moved to disqualify Lawyer and Firm 2. In this opinion the court denied the motion. In a fact-intensive analysis the court found that Lawyer did not represent Defendants while at Firm 1 and learned nothing about the case while there. Thus, there was no basis to disqualify Lawyer or Firm 2 and no need for a screen at Firm 2.

(posted September 12, 2022) In re Maxus Energy Corp., 2022 WL 4113656 (3d Cir. Sept. 9, 2022). In this Chapter 11 proceeding the liquidating trustee is suing YPF S.A., and others, for fraudulent conveyance and related claims. Firm 1 is representing the trustee. Firm 2 is representing YPF. Lawyer, while at Firm 2 did substantial work on the case for YPF. Lawyer moved to Firm 1, which erected a timely screen. YPF moved to disqualify Firm 1. The bankruptcy judge denied the motion, terming the screen "robust." In this opinion the Third Circuit affirmed. The court noted that the Bankruptcy Court for the District of Delaware had adopted the ABA Model Rules. The only unique circumstance here was that when Lawyer changed firms, she was engaged to a lawyer in her new firm. (They ultimately married, but the opinion is not clear when.) While Lawyer was not apportioned any fees from this case, her "spouse" was not so treated. YPF felt that for the screen to be effective, the spouse should also be denied a share of fees from the case. Nope, said the Third Circuit, construing Model Rule 1.10(a)(2)(i).

(posted August 28, 2022) Lowes v. Lowes, 2022 MBQB 156 (CanLII) (Ct. Q.B. Man. July 29, 2022). Divorce case filed by W. One of W's lawyers was Lawyer employed by Law Firm 1. After W replaced lawyer, Lawyer left Firm 1 and joined Law Firm 2. Law Firm 2 is representing H in this case. W moved to disqualify Law Firm 2. In this opinion the master denied the motion. Firm 2 had erected an "ethical wall" (herein, "Screen"). In an exhaustive discussion of authorities throughout Canada on screening laterals, the master relied primarily upon guidelines in the Law Society of Manitoba Code of Professional Conduct. The Manitoba guidelines are consistent with those recommended by the Federation of Law Societies and the Canadian Bar Association. We will not set forth the guidelines' requirements for Screens other than to say that they work in Canada, and there were no surprises here.

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

(posted September 8, 2022) Aguilar v. Walgreen Co., 2022 WL 4090305 (9th Cir. Sept. 7, 2022). Through a series of procedural maneuvers in a series of related class actions Law Firm found itself representing an individual objecting to a proposed settlement and class members who "joined the proposed settlement." In this opinion the court found Law Firm in violation of California Rule 1.7(b). Thus, the court declined to grant mandamus as to a "Corrective Notice" to be sent to class members. [Our note: We don't quite get the nexus between the conflict and the Corrective Notice, but we do get the conflict identified by the court.]

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

COMMERCIAL NEGOTIATIONS (To read full article, click .)

Nothing current.

CORPORATIONS (To read full article, click here.)

Nothing current.

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

Nothing current.

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

Verein

(posted September 6, 2022) RevoLaze LLC v. Dentons US L.L.P., No. 2022-0708 (Ohio Aug. 30, 2022). The Ohio Supreme Court has "not accepted for review" Dentons' appeal of the appellate court's decision at RevoLaze LLC v. Dentons US L.L.P., No. 109742 (Ohio App. 8th Dist. April 28, 2022). Here is our summary of the case below. Because of our various associations with a number of players in this matter, we will report here only the basic findings relating to Swiss vereins and conflicts of interest. On April 28, 2022, the Ohio Court of Appeals affirmed the trial court's denial of a JNOV motion by Law Firm following a $32 million legal malpractice verdict against Law Firm in favor of Client. This started during a proceeding before the International Trade Commission ("ITC") when an administrative law judge disqualified Law Firm from proceeding on behalf of Client. The problem was that Law Firm was a member of a verein. Another member of the verein in another country was representing a party that was Client's opponent in the ITC proceeding. Client is claiming that it suffered all sorts of losses as a result of Law Firm's disqualification. Client sued Law Firm in Ohio state court. One of Client's claims (there were several) was that Law Firm's clumsy handling of the conflict led, in part, to Client's losses. After a trial, the jury found that those losses totaled $32 million. The judge denied Law Firm's motion for JNOV. The appellate court affirmed that denial. While we express no view as to the correctness of all this, we will say that the appellate court's 56-page (142 paragraphs) opinion provides a fairly clear description of what has gone on and what the issues are.

(posted September 1, 2022) N.J. Op. 743 (June 23, 2022). This opinion discusses the situations where a partner's conflict may not be imputed to others in the firm. In sum, "Family-based or belief-based personal interests ordinarily are not considered to present a significant risk of materially limiting the representation of the client by the remaining lawyers in the firm. Conflicts arising from a lawyer’s personal business interests – particularly when those business interests affect the client’s objectives of legal representation – ordinarily would present a significant risk of materially limiting the representation of the client by the other lawyers in the firm."

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 August 30, 2022) Mortland v. Castle Hospitality, LLC, 2022 WL 3586661 (W.D. Pa. Aug. 22, 2022). Plaintiff, who is disabled, brought this ADA suit against the owner of a motel. In this opinion the court granted Plaintiff a default judgment because the owner failed to plead. Among other things, the court ruled that Plaintiff qualified as an expert on the motel's accessibility and that Plaintiff is entitled to an expert witness fee of $1,720. The court cited an Ohio case in the which the court ruled that it was not a conflict of interest for Plaintiff to serve as an expert witness in his own case and to receive a fee for serving as an expert.

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

(posted September 1, 2022) Cypress Holdings, III, LP v. Sport-BLX, Inc., No. 22 Civ. 1243 (LGS) (S.D.N.Y. Aug. 23, 2022). Cypress is suing Sport-BLX, GlassBridge Enterprises (Sport's majority shareholder), and two individuals, for securities fraud and related business torts. The defendants moved to disqualify Fox Rothschild ("Fox") as Cypress' law firm because Fox had earlier represented GlassBridge in negotiations with the Pension Benefit Guaranty Corporation ("PBGC"). Fox's representation of GlassBridge ended in November 2021. Fox filed this case on behalf of Cypress in January 2022. In this opinion the court granted the motion to disqualify. The court found that the PBGC matter and this case were substantially related. The analysis was highly fact-specific. One of the factors in the PBGC matter was that Fox needed to be involved in the value GlassBridge attributed to its subsidiary, Sport. There was also a whiff of "playbook" in the court's analysis, noting that in this case Cypress "appears to put at issue" GlassBridge's "state of mind," its "compliance efforts," and its "corporate culture," things that Fox may well have been exposed to in the PBGC matter.

(posted August 28, 2022) In re Krivulka, 2022 WL 3693103 (N.J. App. Div. Unpub. Aug. 26, 2022). H and W were in a second marriage. H died leaving a substantial estate. W and Lawyer became co-executors of the estate. They are fighting over the management and disposition of the estate. W moved to disqualify Lawyer's law firm ("Law Firm") from representing Lawyer in this case. The trial court denied the motion. In this unpublished opinion the appellate court reversed. In the years leading up to H's death Law Firm represented H and W in their businesses and in their estate planning. The court found that this case was substantially related to the earlier estate planning, thus finding a violation of Rule 1.9(a). The court also found that W was a current client of Law Firm when the dispute between W and Lawyer arose, thus finding a violation of Rule 1.7(a). H and W had signed a conflicts waiver early on, but the court, after carefully parsing the waiver, found that it was not adequate to prevent disqualification here.

(posted August 28, 2022) Hong v. Hong, 2022 ABQB 555 (CanLII) (Ct. Q.B. Alb. Aug. 18, 2022). In this opinion the court disqualified Defendants' counsel ("Law Firm") because of a conflict of interest. Plaintiff had retained Law Firm to handle a tax appeal regarding the sale of certain property. Because this case involves, in part, the disposition of the same property, the two matters are "sufficiently related" to cause a risk that Plaintiff's confidences revealed in the earlier matter would be used against her in this matter.

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

(posted September 8, 2022) In re VUZ-Bank, No. 1:21-cv-04014-VMC (N.D. Ga. Aug. 30, 2022). In this brief opinion the district judge adopted the July 21, 2022 recommendation of the magistrate judge that Law Firm be disqualified from representing VUZ-Bank in this proceeding. This is a discovery proceeding under 28 U.S.C. § 1782, arising out of litigation in Dubai between VUZ-Bank and other entities ("Group"). After Law Firm began representing VUZ-Bank in the Dubai proceeding, individuals connected with Group approached Law Firm's Dubai office about representation on financial matters arguably related to VUZ-Bank. Law Firm's conflict check came up clean. Members of Group met with Law Firm and exchanged information. Ultimately, the conflict was discovered, and individuals related to Group moved to disqualify Law Firm in this proceeding. After a lengthy, fact-specific discussion, the magistrate judge entered a report and recommendation that Law Firm be disqualified under Georgia Rule 1.18. According to the district judge: "No objections to the R&R were filed." [Our note: Unlike the Model Rule version of 1.18, the Georgia rule has no screening provision. Indeed, screening was not discussed in either opinion.]

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

Nothing current.

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

(posted September 7, 2022) Hudye v. Rosowsky, 2022 ABCA 279 (CanLII) (Ct. App. Alb. Aug. 30, 2022). Lawyer had done legal work for a family group's businesses ("Group"). Lawyer negotiated with Group to become inside general counsel to Group and obtain an equity interest in Group. In this action Group sought recision of the resulting agreements. The trial court found for Lawyer holding that lawyer had no fiduciary obligations in his capacity as a "joint business partner." In this opinion the appellate court reversed, holding that, under applicable law and codes, the agreements should have been fair and reasonable to Group, the Group's consent should have been sought, and the Group should have been given adequate opportunity to seek other counsel's advice as to the agreements. According to the appellate court, Lawyer's conduct fell well short as to the latter two requirements. [Our note: The above is a bare-bones description of what happened. We should advise readers that its purpose is to alert lawyers who wish to mix legal advice to clients with doing business with clients, some of the issues that could arise.]

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

Nothing current.

Nothing current.

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

(posted September 26, 2022) Kunasek v. Johnson, 2022 WL 4377299 (Ariz. App. Sept. 22, 2022). A trust beneficiary sued the trust creator and trustees for breach of fiduciary duty and sued the trust law firm for aiding and abetting that breach. A jury returned a verdict against all the defendants for $10.5 million in compensatory damages plus $10.5 million in punitive damages. In this opinion the appellate court upheld the verdicts. [Our note: While we have always felt that lawyer malpractice cases are usually poor vehicles for teaching about legal ethics, this case is instructive in two respects. First, it is a stark illustration of how a law firm can be liable for aiding and abetting someone else's breach of fiduciary duty. Second, the opinion contains a helpful discussion of the propriety of expert testimony on the aiding and abetting claim.]

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.)

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.