Monday, May 30, 2016

Conflicts Concerns Continued (or: Damned if You Do, Don’t, or Do Both?)

Here’s a development from last month that’s still worth highlighting: "Dentons DQ Order Vacated, but Verein Conflicts Issues Remain" --
  • “An order disqualifying Dentons US LLP as counsel for an Ohio corporation prosecuting patent infringement claims is no longer on the books—but the firm is now facing a malpractice suit from the company over the firm's alleged conflict of interest.”
  • “The U.S. International Trade Commission April 12 vacated as moot an administrative law judge's disqualification order after the parties settled and the commission terminated its investigation into whether retailers were violating the company's patents by importing laser-abraded jeans (In re Certain Laser Abraded Denim Garments, USITC, Inv. No. 337-TA-930, notice issued 4/12/16).”
  • “Observers had hoped the ITC's decision would clarify whether law firms operating under a “Swiss verein” affiliation model will be treated as a single firm for conflict of interest purposes. Matthew J. O'Hara, a partner in Hinshaw & Culbertson LLP's Chicago office, told Bloomberg BNA the issue of whether vereins must apply U.S. conflicts rules across their entire structure remains unresolved now that the ITC withdrew the ALJ's opinion disqualifying Dentons US.”
  • Nevertheless, Dentons US still has to deal with a malpractice suit filed by the client it stopped representing after the ALJ's decision.
  • “Dentons US got booted from representing RevoLaze in May 2015 when Chief Administrative Law Judge Charles E. Bullock found that the firm had a disqualifying conflict of interest because Dentons Canada LLP was concurrently representing one of the respondents—The Gap Inc.—in unrelated matters.”
  • “Bullock rejected the firm's argument that Dentons US and Dentons Canada are separate firms that aren't tainted by each other's conflicts of interest. As a Swiss verein, Dentons is a “firm” or “law firm” as those terms are used in ABA Model Rule of Professional Conduct 1.0(c), he ruled. Bullock said “Dentons holds itself out to the public as a single law firm, but says that it is divided into ‘Legal Practices.'”
The ABA opinion on referral fees we noted previous was issued after this news. But the question of which side of the Schrödinger's Cat vereins may turn out to be, combined with a potential argument regarding firms (or legal practices) referring clients to “itself” or its “brand twin” raises interesting questions I’ll leave to sharper legal minds to ponder...

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