Monday, September 15, 2014

Client Conflicts Allegations in the News

A few stories of conflicts allegations making news, each with complex fact patterns worth a click-through for those looking for a more complete picture:

"Ex-Client Sues, Alleges Conflict of Interest Against Thompson & Knight" --
  • "A former client of Thompson & Knight seeks at least $1 million in damages in a Sept. 8 lawsuit that alleges that the firm had a conflict of interest when it represented him and a third-party investor in the acquisition of a Houston company."
  • "Richard Slaughter of Houston alleges in a petition he filed in state district court in Harris County that he was 'shocked' to discover that Thompson & Knight had filed paperwork in the deal that identified the third-party investor as the 'sole manager' of Sivco Holdings..."
  • "Slaughter alleges in Slaughter v. Thompson & Knight that no one at Thompson & Knight, including former partner Bryan K. Brown, who allegedly worked on the deal, ever disclosed to him that the corporate formation documents excluded him as a manager of the company."
  • "Slaughter alleges that only after Houston attorney Rusty Hardin, of Rusty Hardin & Associates, 'expressed his concern' on Slaughter's behalf did the firm withdraw from representing the third-party investor and affiliated entities in connection with a postpurchase dispute with Slaughter."
  • "As alleged in the petition, Slaughter 'sought legal advice' from Brown, who was then a partner in Thompson & Knight in Houston, and Brown represented him in connection with the acquisition from late 2011 through the acquisition in December 2012."\
  • "When asked for a response to the allegations in the petition, the firm provided a written statement from Thompson & Knight partner L. James Berglund II of Dallas. Berglund wrote that the firm will vigorously defend itself... 'The claims in the lawsuit are simply incorrect. Thompson & Knight has a long history of honoring our legal and ethical obligations at every turn, which is exactly what occurred in this case. We regret that the plaintiff has elected to file litigation, and we are confident that a full examination of the facts will confirm that Thompson & Knight handled the matter appropriately,' Berglund wrote."

"Sparks fly as Cassels Brock rejects GM conflict claim" --
  • "Cassels Brock & Blackwell LLP was 'hopelessly conflicted' when it represented the Canadian government in its bailout talks with General Motors of Canada Ltd. in 2009 while simultaneously acting for the Canadian Automobile Dealers Association, counsel for dealers who launched a class action over the matter told a Superior Court judge last week."
  • "Before some 180 dealers signed GM’s wind-down agreement in 2009, Cassels Brock “did nothing” to help them get a better deal from the company, said Bryan Finlay, one of the counsel for the dealers, as the trial got underway on Tuesday. The class action seeking $750 million in damages names GM and Cassels Brock as defendants. None of the allegations have been proven in court."
  • "The interests of the dealers were adverse to those of Canada, said Finlay, adding that instead of advising the dealers of their rights, Cassels Brock told some of them the wind-down agreements weren’t negotiable."
  • "For its part, Cassels Brock argues the association, and not the individual dealers, had retained the firm. When the wind-down notice went to a group of GM dealers, the association advised them to seek legal advice from their individual lawyers."
  • "Cassels Brock didn’t present its opening statement on the first day of the class action trial on Tuesday. Earlier in the day, another lawyer for the plaintiffs, David Sterns of Sotos LLP, argued GM had made the dealers sign the wind-down agreements during the financial crisis through 'ambush, deception, and divide-and-conquer tactics.'"
  • "The trial continues with hearings set for six weeks in Toronto."

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