Wednesday, February 22, 2017

Conflicts: Curious, Complex, Curated, Confidential, Cleared

Several interesting conflicts stories to note today. First up: "Conflicted Kirkland Team Hangs On In Turkish Trader Case" --
  • "A Kirkland & Ellis team representing a Turkish businessman accused of money laundering and breaking U.S. sanctions on Iran can stay in the case despite a maze of conflicts surrounding the firm’s work for banks named in the government's case, a New York federal judge ruled Wednesday."
  • "Calling Kirkland & Ellis LLP’s conflicts related to eight banks federal prosecutors say were victimized by Reza Zarrab more theoretical than actual, U.S. District Judge Richard M. Berman denied the government’s disqualification bid."
  • "After extensive briefings on the conflict issues and proposed solutions, and check-ins with legal ethics experts, Judge Berman said he was not aware of any actual conflict or potential conflict Zarrab couldn’t waive."
  • "'The court finds that Mr. Zarrab -- with ‘eyes wide open’ — knowingly, intelligently and rationally accepts the...potential conflicts and limitations upon Kirkland and Ellis's representation of him,' the judge said. 'He does so (apparently) because he has confidence in the value of Kirkland and Ellis's (even limited) representation and also because he has qualified primary counsel who appear to be conflict free.'"
Next: "How far does DQ extend? NY appeals court says not that far, reinstating co-counsel" --
  • "When a conflict of interest crops up during a case, Ethics 101 tells us that the “taint” of that conflict can spread, and potentially disqualify all the lawyers of the affected firm. Model Rule 1.10, “Imputation of Conflicts” explains the rule. But how far does that disqualification go? A New York appeals court examined this question in December, and reversed a DQ order in a personal injury suit."
  • "In Kelly v. Paulsen, the firm (“HHK”) represented two plaintiffs who had been injured in a motorcycle accident allegedly caused by the defendant. HHK filed suit on plaintiffs’ behalf in 2009. Four years later, a sole practitioner joined the plaintiffs’ team as co-counsel. Very shortly before trial in 2015, the defendant learned — allegedly for the first time — that HHK was representing plaintiffs. On the first day of trial, the defendant moved to disqualify HHK because the firm had also represented the defendant in “personal and business matters” for the previous 30 years.""
  • Based on the conflict, HHK withdrew, leaving the solo as plaintiffs’ only lawyer.  Defendant then moved to disqualify the solo as well, and the trial court granted the motion.  On appeal, the Third Department reversed...  the court wrote, “not every lawyer who has any connection or relationship with a firm is considered to be ‘associated’ with that firm” for conflicts and imputation purposes.  The question requires a factual analysis, and turns on whether the lawyer’s relationship with the firm is “sufficiently close, regular and personal."
  • "There are a number of courts that, like Kelly, have held that taint doesn’t affect co-counsel, at least where there is no showing that co-counsel received confidential information about the party moving to disqualify. The always-excellent Freivogel on Conflicts collects the cases. But there are still decisions that go the other way, too. See, e.g., j2 Global Communications Inc. v. Captaris Inc., (C.D. Cal. 2012) (imputing “outside in-house counsel’s” disqualification to firm). Bottom line: while information-sharing remains key, this is a fact-specific area, and it pays to be aware of nuances that can vary the outcome."

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