Tuesday, February 9, 2016

Commerce, Conflicts, Collections & More

Money and related risk matters making news. First, fascinating developments for those following the public listing of law firms in Australia: "High Court judge warns of conflicts facing listed law firms" --
  • "When a High Court judge this week raised concerns about the pitfalls of the profit motive at publicly listed law firms he cut to the heart of the financial difficulties facing Slater and Gordon and Shine Corporate."
  • "It was a timely intervention by Justice Geoffrey Nettle because it is clear that the accounting rules and complexities associated with a public listing of a law firm can ultimately work against the interests of clients."
  • "He said he was concerned about the additional pressures that are brought to bear on lawyers working for public companies. He highlighted the inherent conflicts of interest between acting for clients and for shareholders."
  • "However, the 80 to 90 per cent collapse in the share prices of Slaters and Shine have left both firms facing uncertain futures."
  • "Shareholders come last which means that when there is a choice between the duty to the client and the interests of shareholders the client will come first. If that means a loss for the shareholders, then so be it. Slater made clear in its prospectus in 2007 that it was bound by the professional hierarchy of the legal profession."
  • "A company spokesperson said that the effect of these obligations mean that 'any person who invests or provides debt financing in Slater and Gordon does so on the basis that they understand this hierarchy and the importance that we place on our professional obligations.'"
via the Recorder: "Sheppard Mullin Ordered to Refund Client Due to Undisclosed Conflict" --
  • "A California appellate court ruled against Sheppard, Mullin, Richter & Hampton on Friday, finding that the firm isn't due fees for litigation where it was disqualified because of a client conflict and must refund payments to its former client."
  • "J-M, the world's largest maker of PVC pipe, hired Sheppard Mullin in 2010 to defend it in qui tam litigation involving more than $1 billion in claims related to allegedly substandard pipe the company provided to local, state and federal government entities. When it was hired, Sheppard Mullin failed to disclose that it had handled labor and employment work for South Tahoe, one of the municipalities involved in the qui tam lawsuit."
  • "Although an internal firm conflict check flagged the issue, J-M wasn't informed about the potential conflict until after South Tahoe sought to disqualify Sheppard Mullin from the qui tam suit. A federal judge granted South Tahoe's motion to disqualify in July 2011. By that time, the firm had billed J-M nearly $3.8 million for about 10,000 hours of work done over 16 months, work that included an extensive internal investigation at J-M."
  • "Friday's ruling remanded the case to determine just when the conflict arose in Sheppard Mullin's representation and how much J-M is due."
  • "Ralph Richardson, spokesman for Sheppard Mullin, wrote in an emailed statement that the firm disagreed with 'the court's analysis of both the facts and the scope of judicial review.'"
On the flip side: "Texas Bar Committee OKs Collection Agencies For Fees" --
  • "Using a collection agency to pursue clients who are delinquent in paying their fees doesn’t violate Texas attorneys’ ethical duty to keep client information confidential, according to a recent Texas ethics opinion, though lawyers can’t report their clients to a credit bureau."
  • "The Professional Ethics Committee for the State Bar of Texas said Opinions 495 and 556 have long held that lawyers can’t share confidential information to a collection agency without the client’s consent, but that this view is at odds with almost every other jurisdiction that has considered the issue."
  • " The lawyer can no longer be handling the matter from which the unpaid fees arose, can’t charge an unconscionable fee, and must first attempt other reasonable means of collecting the fee, including at least one demand letter, before resorting to a collection agency, the committee said."

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