Wednesday, December 17, 2014

Risk Updates: Conflicts Edition

First up, two partners at McKenna Long & Aldridge highlight a trend we've certainly witnessed here on the risk blog: "Motions to Disqualify: Four Things to Know" --
  • "Few things are worse for an attorney than getting a new big matter, starting work, and then facing a motion to disqualify. In recent months, high-profile disqualification motions have appeared more frequently in various legal news publications and Internet news sites."
  • "Many disqualification motions are well founded. Other times, disqualification motions are used as nothing more than a litigation tactic, forcing attorneys to scramble to protect valued client relationships."
  • "More significantly, increasingly mobile lateral attorneys (with attorneys rarely spending their entire legal careers at a single law practice or firm) have triggered a host of issues that can be the basis of a motion to disqualify."
  • "The best way to deal with motions to disqualify is to prevent them. Two important pre-motion strategies are effective. First, identify and resolve potential conflicts of interests including both multiple and successive representations prior to undertaking a representation or hiring a lateral. Where a conflict exists, an effective consent is the best defense to a motion to disqualify."
  • "Second, take effective steps to mitigate, if not eliminate, risks that a former client's confidences and secrets might be accessible by attorneys working on a matter involving the former client. Increasingly, courts have recognized and accepted timely, effective ethics screens as a tool for addressing the risks inherent becoming adverse to a former client."
  • "The 2014 Guidelines, published on 28 November, do not mark a substantial departure from the Original Guidelines, and instead make refined changes to reflect and inform current debates on issues in modern arbitral practice, and 'the increased complexity in the analysis of disclosure and conflict of interest issues.' In clarifying the standards expected of arbitrators and parties, it is the aim of the 2014 Guidelines 'that arbitration proceedings are not hindered by ill-founded challenges against arbitrators' or that 'the legitimacy of the process [is] not affected by uncertainty and lack of uniformity.'"
  • "Paula Hodges QC, Global Head of Herbert Smith Freehills’ International Arbitration Practice, says of the 2014 Guidelines that: 'we hope that these new Guidelines will prove useful in providing more clarity and a level playing field to parties and arbitrators, striking the right balance between impartiality and due process on the one hand and unmeritorious challenges on the other.'"
Revisions include:
  1. Third Party Funders must disclose their identity, and share the “identity” of the party they are funding
  2. Arbitrators who are members of law firms, must also “bear the identity” of his or her law firm – this does not extend to barristers and their chambers
  3. "Advance waivers" by Arbitrators do not discharge an ongoing duty of disclosure
  4.  2014 Guidelines apply to non-lawyers sitting as arbitrators
  5. Disclosure of identity of parties’ counsel, including if the counsel is member of the same chambers as the arbitrator
  6. Duty of impartiality and independence extends to Tribunal Secretaries
  7. Arbitrator to consider making disclosure in situations falling outside of the time limits used in the Orange List
  8. Arbitrator and another arbitrator or counsel currently act or have acted together as co-counsel within the last three years

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