Thursday, April 6, 2017

Risk Grab Bag (Suing the Regulators, Lawyer Liability, Conflicts, Hot Potatoes & More)




  • "Former Torys LLP lawyers Beth DeMerchant and Darren Sukonick are suing the Law Society of Upper Canada for damages totalling $22-million, alleging the regulatory body was malicious in its prosecution of them over alleged errors in their work for Hollinger Inc. more than 15 years ago."
  • "Former Torys LLP lawyers Beth DeMerchant and Darren Sukonick are suing the Law Society of Upper Canada for damages totalling $22-million, alleging the regulatory body was malicious in its prosecution of them over alleged errors in their work for Hollinger Inc. more than 15 years ago."
  • "The Law Society appealed the decision to the Law Society Tribunal Appeal Division, which dismissed the appeal in 2015. In January, 2017, the appeal division increased the costs awarded to the two lawyers from a total of $500,000 to $1.3-million to cover their legal fees."
  • "The lawyers, both of whom have since retired, filed a lawsuit this week against the Law Society, seeking general and special damages of $21-million and further aggravated and punitive damages of $1-million."
  • "The suit alleges the Law Society knew it didn’t have sufficient evidence to prosecute the pair after conducting an investigation, but pushed ahead in part because of public criticism that the organization hadn’t disciplined any lawyers over controversial Hollinger business transactions."
  • "Courts have typically ruled that defendants in legal proceedings cannot sue regulatory bodies and tribunals for prosecuting them in good faith, even if the prosecution does not succeed and the accused are cleared. But some cases have succeeded when there is evidence of negligence or wrongdoing by prosecutors."
"7th Circ. Wary Of Expanding Atty Liability In Mayer Brown Suit" --
  • "A Seventh Circuit panel had serious questions Thursday about a lawsuit brought against Mayer Brown LLP by lenders of a $1.5 billion loan held by General Motors Co., expressing concerns that reviving the class claims would dramatically expand attorney liability."
  • "The suit stems from an error a Mayer Brown paralegal had made as the firm drew up documents while representing GM in the payoff of a different loan. Rebooting the case would hold attorneys responsible for the way their errors impact people other than their own clients, judges said during oral arguments Thursday in the lenders’ appeal."
  • "The error, which had resulted in the inadvertent release of the lenders’ security interest in the $1.5 billion loan, came to light after GM filed for bankruptcy in 2009."
  • "The lenders argued that although Mayer Brown was representing GM in the loan payoff deal, the law firm had a responsibility to JPMorgan and the lenders that opened it up to liability. But that theory was rejected by a district court judge, a decision at least two of the Seventh Circuit judges seemed to agree with."
And, much like a certain doctor, one should never forget about the good work pursuing by Bill Freivogel, who has noted several updates:
  • " Prince v. Chatman, 2017 NLTD(G) (CanLII) (S. Ct. Newf. & Lab. March 2, 2017). Suit by Prince to quiet title. Chatman hired Law Firm to defend him. Prince moved to disqualify Law Firm. In this opinion the court denied the motion. The evidence was that in 1975 a senior partner in Law Firm had briefly represented Prince’s husband in an attempt to get several family members to agree on a division of the property in question. Both the husband and the senior partner have since passed away. In a fact intensive analysis the court held that the senior partner in 1975 would not have received “confidential information” from the husband that would be “relevant” to this proceeding or that a current member of Law Firm will use such information to the prejudice of Prince."
  • Lectric Ltd., Inc. v. DGW, Inc., 2017 WL 1149335 (N.D. Ill. March 28, 2017). Plaintiff is claiming that Defendants 1, 2, and 3 are breaching its common law trademark for “T-3” headlamps for classic cars. Lawyer initially represented all three defendants. Plaintiff moved to disqualify Lawyer because of possible conflicts among the three defendants. After receiving the motion Lawyer withdrew from representing Defendant No. 1. Defendant No. 1 never responded to Plaintiff’s motion. Defendants 2 and 3 are owned by one individual (“Owner”). In this opinion the court found violations of Rule 1.7 but ruled Lawyer could continue for 2 and 3 if Lawyer would obtain consents from all three defendants. The court also struck the pleadings Lawyer filed during the conflict and said they could be refiled after the requisite consents were produced. Among other findings, the court found that Lawyer’s dropping Defendant No. 1 violated the “hot potato” rule, thus making this a current client/Rule 1.7 situation. The court also found that Lawyer could have a conflict as to Defendants 2 and 3 even though they were owned by the same individual. Neither the court nor the parties appear to have raised, or addressed, the standing issue."
  • "Akagi v. Turin Hous. Dev. Fund Co., Inc., 2017 WL 1076345 (S.D.N.Y. March 22, 2017). This is a housing discrimination case brought against two groups of defendants. We will call them Owners and Managers. Law Firm started out representing both groups. Part way into the representation Law Firm filed a state court action for Owners against Managers. That case is related to this case. In the face of a motion to disqualify, Law Firm withdrew from representing Managers in this case. Nevertheless, certain parties have moved to disqualify Law Firm from representing Owners in this case. In this opinion the court granted the motion. The court viewed this as a current client conflict even though Law Firm had dropped Managers. The parties had signed a joint defense agreement and a conflict waiver. In parsing those, the court felt neither was an adequate waiver of this current client conflict."

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