Wednesday, December 7, 2016

Recent Conflicts News & Updates




A few stories and updates of note, starting with the latest from Bill Freivogel:
  • "Screening; Electronic Files: Estate of Kennedy v. Stuart A. Rosenblatt, C.P.A., 2016 WL 6543629 (N.J. App. Div. Nov. 4, 2016). This opinion’s description of the parties and the procedure is somewhat befuddling (to us, at least).  Therefore, we will take extreme liberties in simplifying the facts in order to reach the key issue for this audience: the application of N.J. Rule 1.10(b) (same as M.R. 1.10(b)) to electronic files remaining in the law firm when the lawyers handling the matter in question have left, taking the paper files with them. Law Firm defended a lawyer (“Defendant Lawyer”) in a prior malpractice case (“Prior Case”). After Prior Case was dismissed, the lawyer representing the plaintiff in Prior Case (“Lawyer”) joined Law Firm. Lawyer then filed the same case as before, including against Defendant Lawyer (“This Case”). In This Case Defendant Lawyer moved to disqualify Law Firm. Law Firm defended the motion because the lawyers working on Prior Case had left and taken the paper files with them. The issue was whether the electronic files left behind disqualified Law Firm under Rule 1.10(b)(2). The trial court granted the motion. In this opinion the appellate court reversed “conditionally” and remanded for further proceedings. Law Firm had erected a “screen” around the electronic files. However, the court said that if someone in Law Firm looked at the substance of the retained electronic files, Law Firm should be disqualified. If, however, all Law Firm lawyers did was look at metadata to determine whether anybody in Law Firm had looked at the files substantively, then the Law Firm should not be disqualified. The appellate court felt that New Jersey’s recent adoption of its version of M.R. 1.6(b)(5) (N.J. Rule 1.6(d)(5)), helped inform its decision here, even though the N.J. version came after the events in question. The opinion also discusses the nuts and bolts procedure that should be followed in resolving the remaining issues, and directs Law Firm to delete any electronic files remaining."
  • "Waiver; Passage of Time (posted December 2, 2016) Worth v. Worth, 2016 WL 7007721 (E.D. Pa. Nov. 29, 2016). The parties litigated this derivative action in state court for nine months. They now appear in federal court with different lawyers. Law Firm is representing the company and individual defendants. The plaintiff moved to disqualify Law Firm. In this opinion the court denied the motion because the plaintiff allowed a different law firm to represent the company and individual defendants for nine months in state court without objection."
  • "Of Counsel (posted November 30, 2016) LoPorto v. County of Rensselaer, No. 1:15-CV-0866 (LEK/DJS) (N.D.N.Y. Nov. 16, 2016). Lawyer filed this case for Plaintiff. Two individual defendants, A and B, were represented by Law Firm. After filing this case Lawyer became of counsel to Law Firm. Plaintiff and A and B reached an agreement to settle by dismissing A and B. The court held a conference to discuss the settlement. There the court learned of Lawyer’s of counsel status at Law Firm. The court ordered the lawyers to address this conflict.  After the lawyers did so, the court, sua sponte in this opinion disqualified Lawyer and Law Firm."
"More Conflicts Arise On Kirkland Team for Turkish Trader" --
  • "A hearing Wednesday in a New York federal court intended to address two possible conflicts with a Kirkland & Ellis LLP team representing a Turkish gold trader accused of violating Iran trade sanctions revealed several additional issues with the firm’s banking clients."
  • "Instead, one of Zarrab’s 14 lawyers, Viet Dinh of Kirkland & Ellis, told Judge Berman than six additional banks involved in transactions worth hundreds of millions of dollars at the heart of the case are also on Kirkland’s client roster."
  • "Moreover, he and another one of Zarrab's lawyers, Paul Clement, were also representing one of the banks that prosecutors claim were victimized by Zarrab's scheme in another ongoing federal case, representing a "metaphysical" conflict issue in the case."
  • "Zarrab and two others were charged in March with acting on behalf of the Iranian Bank Mellat and others on a U.S. sanctions list. He was initially represented in part by a Bancroft PLLC team that including Dinh and Clement."
  • "But in September, Kirkland announced it was absorbing the entire 17-attorney team at Bancroft, a renowned appellate firm. That created conflict issues for the four former Bancroft partners on Zarrab's deep legal team."
  • "Dinh argued Wednesday that the possible conflicts between the Zarrab and the banking clients were at worst indirect, and could be handled with an ethical wall in the firm. He also said he’d gotten Zarrab’s informed consent for the former Bancroft lawyers to continue to represent him, as well as conflict waivers from Bank of America and Deutsche Bank."
  • "He likened the issue to lawyers who represent a plaintiff suing a defendant who happens to have insurance coverage from a company also represented by the plaintiff firm in unrelated matters. 'It’s analogous to an indirect springing conflict,' he said."
  • "But Dinh also acknowledged that even if he could secure waivers from the other six Kirkland clients and erect an ethical wall in his new firm, he and Clement were also personally representing one of them, HSBC, in a Second Circuit appeal. 'We can’t wall ourselves off, and Mr. Zarrab understands that metaphysical issue,' he said."

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