Tuesday, February 10, 2015

Conflicts Round Up


Let's start with something about a law firm merger making a bit of news these days: "East meets West: Dentons-Dacheng merger raises host of questions" --
  • "The creation of the world’s largest law firm stands to smooth the path for new Chinese investments into Canadian finance and agriculture, even as it raises questions about how well China’s legal establishment can mesh with western practices."
  • "For all the potential benefits of combining forces with Chinese lawyers, western law firms have been hesitant out of fears that doing so could expose them to Foreign Corrupt Practices Act violations, potential troubles with cyber-security or vexing cultural questions. Among them can be a laxer attitude toward conflict of interest at Chinese law firms and different compensation practices. Many Chinese lawyers are paid a fixed percentage of their individual gross billings and maintain their own secretaries and support staff. 'It’s what we would call a hotel for lawyers,'"
And then move to a complex analysis of potential conflicts and a "web of relationships," getting some public attention: "Casino sitting ripe with potential conflicts" --
  • "When a Chicago law firm ended its 11/2-year relationship with a partner in the Lago Resort & Casino project last March, it had another big client waiting in the wings... Taft, Stettinius & Hollister LLP, which merged with law firm Shefsky & Froelich last year, became the state board's lead gambling consultant under a one-year, $4.9 million contract."
  • "In December, the board recommended Lago's site, in Tyre, Seneca County, for a commercial casino license. Montreign Resort Casino and Rivers Casino & Resort at Mohawk Harbor also got recommendations. Key officials involved in all three projects had previously used the Taft firm in their businesses."
  • "These potential conflicts of interest were disclosed to the Gaming Facility Location Board in applications submitted last summer, yet the board continued to use the firm as its gambling-services consultant. The board contends that the past associations between the selected bidders and Taft had no bearing on its recommendations."
  • "Of the 16 casino bids evaluated, five, including the three winning bidders, identified dealings with the Taft firm as a potential conflict of interest in their applications. Two of those five bidders — Hudson Valley Casino & Resort in Newburgh, Orange County, and Live! Hotel & Casino New York in South Blooming Grove, Orange County — were not recommended for a license. The board decided not to recommend an Orange County bidder."
Finally, see: "Even in the Ninth Circuit, courts should not intervene mid-arbitration" --
  • "In Sussex v. U.S. Dist. Ct. for D. Nevada, __ F.3d __, 2015 WL 327558 (9th Cir. Jan. 27, 2015), the underlying issue was whether the arbitrator had a disqualifying conflict of interest.  A single arbitrator was hearing three similar actions by condominium owners against the developer.  During the course of his service, the arbitrator founded a company to invest in 'high-value, high-probability legal claims.' The arbitrator did not disclose that investment activity, but the developer discovered it and moved the AAA to disqualify the arbitrator.  The AAA denied the developer’s request after the arbitrator said his investment company was 'dormant.'"
  • "On appeal, the Ninth Circuit issued a writ of mandamus, instructing the district court to vacate its disqualification of the arbitrator.  It noted that no court after Aerojet had approved of a mid-arbitration intervention and that a majority of circuit courts 'expressly preclude' such intervention."

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