Thursday, February 6, 2014

Navigating Potential Conflicts in Complex Matters

Interesting story in today's Wall Street Journal. Interesting both for its substance, and as an example of another conflicts discussion in the general media. This matter relates to the recent chemical spill in West Virginia that left 300,000 people with unsafe drinking water:

"Law Firm Has History With West Virginia Chemical Company: McGuireWoods to Represent Freedom Industries in Post-Spill Bankruptcy" --
  • "When Freedom Industries Inc. faced mounting litigation over a chemical spill that tainted the water supply of a large swath of West Virginia last month, it turned to lawyers at McGuireWoods LLP as it sought Chapter 11 protection."
  • "Weeks earlier, McGuireWoods represented Chemstream Holdings Inc. when it acquired Freedom for $20 million. In that takeover, McGuireWoods also represented the subsidiary that owned the site where the trouble started. In matters unrelated to Freedom, McGuireWoods has represented J. Clifford Forrest, the Pennsylvania mine operator who owns Chemstream, as well as Mr. Forrest's Rosebud Mining Co."
  • "McGuireWoods disclosed most of these connections to the bankruptcy court on the first day of Freedom's Chapter 11 case and won the court's approval to represent Freedom. But bankruptcy experts say disclosures raise new questions that may require answers as creditors begin to form ranks. Can McGuireWoods represent Freedom in battles that may pit the company's interests against those of the law firm's former clients? Such battles are likely to be waged in the coming weeks... In a court filing late Tuesday, McGuireWoods said it wouldn't represent Freedom in the event of clashes with Freedom's owners."
  • "McGuireWoods spokesman Bob Lewis said the law firm 'takes very seriously its ethical and disclosure obligations and devotes significant resources to those matters to ensure compliance.'"
  • "'Ethics rules say that you can't pull your punches on behalf of one client against another client,' said Nancy Rapoport, a bankruptcy law professor and ethics expert at the University of Nevada at Las Vegas. 'Professionals have to search through what they've done before and let the court know: Have they represented people on the other side of a transaction with the debtor? Have they represented people related to the debtor? Have they represented principals of the debtor?'"

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