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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 Bankruptcy (posted June 22, 2018) In re Grasso, 2018 WL 3036735 (E.D. Pa. June 15, 2018). Lawyer represents Debtor. This case started out as a Chapter 11 and became a Chapter 7. This opinion deals with Lawyer's entitlement to fees. The bankruptcy judge found Lawyer's services to be so deficient that Lawyer was entitled to no additional fees and must disgorge what he had already received. The deficiencies were many and not worth completely repeating here. One problem that stood out was the accuracy of the bankruptcy filings. While Lawyer blamed Debtor for inaccuracies, the court noted that Lawyer repeatedly turned a blind eye to things that should have alerted him to the inaccuracies. Another issue was that Lawyer was representing Debtor individually, apart from the bankruptcy, and failed to show the judge how this was not inimical to the estate. There was much, much more, but this gives you a flavor of things. In the court's eyes Lawyer's conduct was so troubling that the court ordered the opinion sent to bar disciplinary authorities. Bankruptcy; Standing (posted June 22, 2018) In re Technical Sys., Inc., 2018 WL 3056940 (5th Cir. June 20, 2018). Chapter 7 trustee sought to employ Law Firm as "special counsel" to consolidate Debtor with other related businesses and pierce the corporate veil. Debtor's owner ("Owner") objected claiming Law Firm was not a disinterested person under 11 U.S.C. § 327(a). The bankruptcy court and district court held Owner lacked standing to object. In this opinion the Fifth Circuit agreed. The court discussed the need for a strict standing requirement to prevent endless appeals in multi-party proceedings. In this case Owner could not show a direct economic harm from the appointment. In the court's words, "The order must burden his pocket before he burdens a docket." Former Client (posted June 22, 2018) Oved & Oved, LLP v. Zane, 2018 WL 3058795 (N.Y. App. Div. June 21, 2018). Law Firm suing for fees. Defendant moved to disqualify Law Firm from representing itself. The trial court denied the motion. In this opinion the appellate court affirmed. The court said the "lawyer as witness" rule does not apply where the lawyer is a litigant, and that Rule 1.9 does not apply where Law Firm is acting pro se to recover fees. Current Client; Standing; Waiver (posted June 13, 2018) Smith v. TFI Family Servs., Inc., 2018 WL 2926474 (D. Kan. June 8, 2018). In this case the father of two children sued a private foster care placement company ("TFI") claiming the children were abused by foster parents. Lawyer and Law Firm are representing TFI. Lawyer is representing Kansas State Department for Children and Families ("DCF") in another unrelated case. Lawyer has indicated that he may seek to implicate DCF's comparative fault in this case. Plaintiffs moved "to determine whether [Lawyer] and [Law Firm] have conflicts of interest . . . " In this opinion the court held that Law Firm had a conflict, but that the conflict was effectively waived. First, as to standing, the court held that Plaintiffs could bring the motion because of the public interest in child custody matters. In a thorough discussion of the consent provisions of Rule 1.7(b), the court held that all the requirements of that rule had been met. The court also discussed duties to former clients, confidentiality, successive government and private employment, and Lawyer's service on the TFI board, but our discussing them here would add little to understanding this case. 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; Award 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.] Nothing current. ARBITRATION OF MALPRACTICE CLAIMS (To read the full article, click here.) Nothing current. BANKRUPTCY (To read full article, click here) (posted June 22, 2018) In re Grasso, 2018 WL 3036735 (E.D. Pa. June 15, 2018). Lawyer represents Debtor. This case started out as a Chapter 11 and became a Chapter 7. This opinion deals with Lawyer's entitlement to fees. The bankruptcy judge found Lawyer's services to be so deficient that Lawyer was entitled to no additional fees and must disgorge what he had already received. The deficiencies were many and not worth completely repeating here. One problem that stood out was the accuracy of the bankruptcy filings. While Lawyer blamed Debtor for inaccuracies, the court noted that Lawyer repeatedly turned a blind eye to things that should have alerted him to the inaccuracies. Another issue was that Lawyer was representing Debtor individually, apart from the bankruptcy, and failed to show the judge how this was not inimical to the estate. There was much, much more, but this gives you a flavor of things. In the court's eyes Lawyer's conduct was so troubling that the court ordered the opinion sent to bar disciplinary authorities. Standing (posted June 22, 2018) In re Technical Sys., Inc.,
2018 WL 3056940 (5th Cir. June 20, 2018). Chapter 7 trustee sought to
employ Law Firm as "special counsel" to consolidate Debtor with other
related businesses and pierce the corporate veil. Debtor's owner
("Owner") objected claiming Law Firm was not a disinterested person
under 11 U.S.C. § 327(a). The bankruptcy court and district court held
Owner lacked standing to object. In this opinion the Fifth Circuit
agreed. The court discussed the need for a strict standing requirement
to prevent endless appeals in multi-party proceedings. In this case
Owner could not show a direct economic harm from the appointment. In the
court's words, "The order must burden his pocket before he burdens a
docket." 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.) Nothing current. CLASS ACTIONS (To read full article, click here.) (posted June 12, 2018) West Morgan-East Lawrence Water & Sewer Authority v. 3M Co., 2018 WL 2473831 (11th Cir. June 4, 2018). The two corporate defendants allegedly polluted the Tennessee River with PFCs. This is a suit by the Water Authority and by a class of ultimate users of the water. The Water Authority and the class are seeking injunctive relief against Defendants. The class, additionally, is seeking personal-injury-type type damages. The parties reached a tentative settlement. Several hundred class members objected. The trial court approved the settlement. On appeal, in this opinion, the 11th Circuit reversed. One issue troubling the court was class counsel’s conflict of interest in representing the Water Authority and the class, given the differing nature of the relief sought by each. One interesting aspect of the conflicts analysis was the court’s discussion of Alabama’s version of MR 1.8(g) (the aggregate settlement provision). The court acknowledged that Rule 1.8(g) does not apply to class actions, citing an ABA opinion and the MR comment. However, because one plaintiff, the Water Authority, was not a class member, Rule 1.8(g) should somehow apply, especially when combined with Alabama Rule 1.7(b) (MR 1.7(a)(2) & (b)). Without specifying exactly how these provisions should be complied with, the court did suggest that there should be some additional form of disclosure and consent by the class. One judge dissented, primarily relying on the trial court’s not abusing its discretion. 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.) (posted June 13, 2018) Smith v. TFI Family Servs., Inc., 2018 WL
2926474 (D. Kan. June 8, 2018). In this case the father of two children
sued a private foster care placement company ("TFI") claiming the
children were abused by foster parents. Lawyer and Law Firm are
representing TFI. Lawyer is representing Kansas State Department for
Children and Families ("DCF") in another unrelated case. Lawyer has
indicated that he may seek to implicate DCF's comparative fault in this
case. Plaintiffs moved "to determine whether [Lawyer] and [Law Firm]
have conflicts of interest . . . " In this opinion the court held that
Law Firm had a conflict, but that the conflict was effectively waived.
First, as to standing, the court held that Plaintiffs could bring the
motion because of the public interest in child custody matters. In a
thorough discussion of the consent provisions of Rule 1.7(b), the court
held that all the requirements of that rule had been met. The court also
discussed duties to former clients, confidentiality, successive
government and private employment, and Lawyer's service on the TFI
board, but our discussing them here would add little to understanding
this case. (posted June 12, 2018) Bartolini v. Mongolia, 2018 WL 2725417
(E.D.N.Y. June 5, 2018). Plaintiff brought this civil rights case
against five defendants arising out of a state court probate proceeding.
One of the defendants is Lawyer. Lawyer appeared in this case for
himself and two other defendants. Plaintiff moved to disqualify Lawyer.
In this opinion the court denied the motion. The court could not see how
the Lawyer and his clients were not completely aligned and said that,
absent a showing of a conflict, Lawyer could proceed in this case. DERIVATIVE ACTIONS (To read full article, click here.) (posted June 4, 2018) Third Wave Tech. Servs., Inc. v. Marcato,
2018 WL 2408980 (Cal. App. Unpub. May 29, 2018). Third Wave ("3W") and
Wroan, 3W's majority shareholder and only director, sued several
individuals. Two of the defendants filed a counterclaim derivatively in
favor of 3W and against Wroan. Those defendants moved to disqualify the
law firm representing 3W and Wroan ("Law Firm"). The trial court granted
the motion. In this opinion the appellate court affirmed, holding that
the interests of 3W and Wroan were adverse. (posted May 25, 2018) Tatintsian v. Vorotyntsev, 2018 WL 2324998 (S.D.N.Y. May 22, 2018). In this case Plaintiff is pursuing both a direct action against Defendant and a derivative action on behalf of Corp. against Defendant. Both sets of claims arise out of the same conduct. Contractually, Corp. must indemnify Defendant for any such claims. Because Plaintiff’s direct claim against Defendant may reduce the recovery realized by Corp., the court in this opinion ruled that Plaintiff has a conflict of interest, and that the derivative claim must be dismissed. The opinion is a good discussion of when bringing both a direct claim and a derivative claim might, or might not, be an impermissible conflict of interest. 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 June 22, 2018) Oved & Oved, LLP v. Zane, 2018 WL
3058795 (N.Y. App. Div. June 21, 2018). Law Firm suing for fees.
Defendant moved to disqualify Law Firm from representing itself. The
trial court denied the motion. In this opinion the appellate court
affirmed. The court said the "lawyer as witness" rule does not apply
where the lawyer is a litigant, and that Rule 1.9 does not apply where
Law Firm is acting pro se to recover fees. Playbook (not) (posted June 12, 2018) Stevens v. Wal-Mart Stores, Inc.,
2018 WL 2766876 (D. Nev. June 8, 2018). This is a slip and fall case
against Wal-Mart. Plaintiff’s law firm employs a lawyer who had, from
2011 to 2014, at a previous law firm, handled 37 tort cases for
Wal-Mart. For that reason Wal-Mart moved to disqualify Plaintiff’s law
firm. In this opinion the magistrate judge denied the motion. Wal-Mart
failed to provide enough specifics about those 37 cases to show
prejudice to Wal-Mart in this case. In our view, this was an implied
rejection of the playbook approach. (posted June 12, 2018) TWit, LLC v. Twitter, Inc., 2018 WL 2470942 (N.D. Cal. June 1, 2018). TWit previously consulted with Law Firm about a third party’s threatened patent suit against TWit. In this case TWit sues Twitter for trademark infringement and breach of contract. Law firm appeared for Twitter. TWit moved to disqualify Law Firm. In this opinion the magistrate judge denied the motion, finding that the matters were not substantially related. Playbook (maybe) (posted June 12, 2018) Hilliard v. House,
2018 IL App (1st) 171787-U (Ill. App. June 6, 2018). Three former
employees of Defendant sued Defendant for unpaid wages. Lawyer, who
represents Plaintiffs, formerly represented Defendant. Based upon
Lawyer’s alleged conflict, Defendant moved to dismiss the complaint,
which the trial court granted. We will skip the unusual (at least to us)
procedure that occurred in this case and get to the relevant issue
discussed in this opinion: Was Lawyer’s work for Defendant substantially
related to this case? In holding that it was, the appellate court noted
that Lawyer’s work for Defendant included wide-ranging duties related
to employment law and employee compensation. Thus, this was an implicit
adoption of the playbook approach. 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.) Nothing current. INVESTING IN CLIENTS/STOCK FOR FEES (To read full article, click here.) Nothing current. 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.) Fee Forfeiture (posted June 12, 2018) Lerette v. Howard,
300 Neb. 128 (Neb. June 1, 2018). Legal malpractice case largely based
on the lawyer’s conflict of interest. The jury returned a verdict of
$775,000. It was reduced by the trial judge. Both sides appealed. Among
other things, the Supreme Court increased the reduced amount by
$114,000, because that was the fee received by the defendant lawyer. The
court said that when a lawyer violates an ethics rule, the lawyer may
not charge a fee. 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.) Aggregate Settlement (posted June 12, 2018) West Morgan-East Lawrence Water & Sewer Authority v. 3M Co.,
2018 WL 2473831 (11th Cir. June 4, 2018). Unusual discussion of aggregate settlement principles in a case where a class action involves a plaintiff that is not a class member. To read more about the case, go to "Class Action," above. STANDING (To read full article, click here.) (posted June 22, 2018) In re Technical Sys., Inc.,
2018 WL 3056940 (5th Cir. June 20, 2018). Strict standing requirement for bankruptcy litigants. To read more about the case, go to "Bankruptcy," above. (posted June 13, 2018) Smith v. TFI Family Servs., Inc., 2018 WL
2926474 (D. Kan. June 8, 2018). The court held that where child custody matters are concerned, public interest would excuse need for standing to bring motion. To learn more about the case, go to "Current Client," above. 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 June 13, 2018) Smith v. TFI Family Servs., Inc., 2018 WL
2926474 (D. Kan. June 8, 2018). Lengthy discussion of the requirements of Rule 1.7(b) for a waiver of a current conflict. To learn more about the case, go to "Current Client," above. WITNESS - ADVERSE - CURRENT/FORMER CLIENT (To read full article, click here.) Cross-Examining Former Client (posted June 4, 2018) U.S. v. Baca,
2018 WL 2422053 (D.N.M. May 29, 2018). In this criminal case the
Government indicated its intention to call Witness. The defendant's
lawyer ("Lawyer") had earlier represented Witness in another criminal
case. The Government moved to disqualify Lawyer in this case because
Lawyer would be cross-examining a former client. In this opinion the
court appointed an additional lawyer to cross-examine Witness, and ruled
that Lawyer may continue in this case. Cross-Examining Former Client (posted June 3, 2018) Cy Rheault Constr. Ltd. v. Danark Enters. Ltd.,
2018 ONSC 3016 (CanLII) (Ont. Super. Ct. May 22, 2018). Roger owns Co.
In this lien enforcement case brought by Co., Co. moved to disqualify
Defendant's lawyer ("Lawyer"). Lawyer had previously represented Roger
on financial issues in Roger's divorce. The issue in this opinion is
whether Lawyer can cross-examine Roger in connection with the motion to
disqualify. In this opinion the court ruled that Lawyer could not
cross-examine Roger. The court's principal concern was the "public
interest in preserving the integrity of the system, as well as its
appearance." ZERO SUM GAMES (To read full article, click here.) Nothing current. Home/Table of Contents Website powered by Network Solutions® |