Wednesday, February 1, 2017

Conflicts: You Don't See This Every Day...

These stories caught the eye for breaking the typical patterns you'd expect, in quite interesting ways. First: "Turkish Trader Wants To Retain Kirkland Despite Conflicts" --
  • "Accused international bank fraudster Reza Zarrab said Thursday he wants to keep a Kirkland & Ellis LLP team to support his defense despite conflicts the megafirm has with eight banks — even astonishingly agreeing to allow HSBC, a Kirkland client in a similar case, to examine his defense filings before they are made public."
  • "The eight banks with which Kirkland has ties are seen as victims of Zarrab's scheme, according to prosecutors."
  • "'I am aware of the conflicts,' Zarrab said during a lengthy questioning designed to convince Judge Berman that his choice of counsel had not wavered despite the direct and potentially thorny conflicts with the banks, especially HSBC. 'I am very happy with their services.'"
  • "In Lanard Toys Limited v. Toys “R” Us, Inc. et al, 3-15-cv-00849 (FLMD December 16, 2016, Order) (Barksdale, MJ), a patent infringement matter in Florida District Court, the court denied defendants’ motion to disqualify plaintiff’s new counsel for simultaneously representing defendant in an unrelated case."
  • "Four months after lawyers with Gordon & Rees Scully Mansukhani LLP (“Gordon & Rees”) began representation of Lanard Toys Limited (“Lanard”) against Toys “R” Us-Delaware, Inc. (“TRU”), other lawyers with Gordon & Rees began representation of TRU in a California state case. Upon discovering the conflict of interest, Gordon Rees withdrew from representing TRU in the California matter.  However, Gordon Rees refused to withdraw from the Florida case, so TRU filed a motion seeking disqualification."
  • "Gordon Rees asserted the dual representation was a result of an “inadvertent input error,” wherein the names of some of the parties where inadvertently omitted from the conflict tracking software during the conflicts check, and not because Gordon & Rees deliberately disregarded the duty of loyalty to a client."
  • "Gordon Rees was only acting as local counsel to TRU in the California matter.  The only activity in which Gordon & Rees participated on behalf of TRU in the California Case was the finalization and filing of TRU’s answer to the complaint at the direction of the Palter Firm, who was TRU’s primary counsel in the California matter."
  • "In analyzing the issue and ruling on TRU’s disqualification motion, the Court first noted that because a litigant is presumptively entitled to counsel of its choosing, only a compelling reason will justify disqualification.  Disqualification is a “harsh sanction, often working substantial hardship on the client,” so it “should be resorted to sparingly.” And, because a disqualification motion may be used to harass or for tactical advantage, it should be viewed with caution. The Florida Court further noted disqualification is not mandatory, even if a court finds a lawyer is violating a conflict-of-interest rule."
See also BNA’s take on this matter.

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