Freivogel on Conflicts
FREIVOGEL ON CONFLICTS
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Items posted here during the past thirty days will also appear on this What's New page.  Items posted within the past ten days will appear In Ten Day Bulletin immediately below.  Items older than ten days but less than 30 days will be posted in the Thirty-Day Holding Area, which follows.

Ten Day Bulletin

Current Client (posted January 12, 2018) The Owners, Strata Plan VR2122 v. Wake, 2017 BCSC 2386 (CanLII) (S. Ct. B.C. Dec. 22, 2017). A strata is a form of property ownership very similar to a condominium. It is unique to British Columbia and Australia. This case involves disputes over whether to terminate a strata so that the premises could be sold for more lucrative development. One of the issues became whether the law firm representing the strata corporation and working on (for) termination had a conflict of interest. Evidently, several dissenting owners believed the law firm represented them individually. The dissenting owners also pointed out that the law firm had, in other matters, represented developers bidding on the strata property. In this opinion the court, after considering the law firm's engagement letter and conduct, held that the dissenting owners' beliefs about the law firm's representation of them were not reasonable. Thus, the court held that the alleged conflicts should not be a bar to strata termination.

Current Client (posted January 12, 2018) N. Am. Fin. Grp. Inc. v. Ontario Sec. Comm'n, 2018 ONSC 136 (CanLII) (Ont. Super. Ct. Jan. 5, 2018). The Commission found Company had committed fraud and imposed monetary and other sanctions. One of the grounds of this appeal is that Company's counsel had conflicts. Company's lawyer's partner was concurrently representing the Commission on unrelated matters, and Company's lawyer had previously done so. Because Company could not demonstrate a miscarriage of justice from the alleged conflicts, the court in this opinion rejected that defense.

Former Client (posted January 12, 2018) Mahoney (Edward) v. Mahoney (Garrett), 2017 CanLII 87168 (CanLII) (S. Ct. Newf. & Lab. Dec. 29, 2017). Suit to collect on a debt. Defendant moved to disqualify law firm for Plaintiff ("Law Firm") based on earlier contacts Defendant had with Law Firm. The two primary issues were whether Law Firm ever represented Defendant and whether the earlier representation was "sufficiently related" to this one to be a conflict. In this opinion the court answered yes to the first question and no to the second. The analyses as to both issues were painfully fact-specific and of little, if any, precedential value. It might be worth reading for the process employed by the court.

                                                               Thirty Day Holding Area

MISCELLANEOUS ETHICS AND LIABILITY NEWS

[Note: Items that do not fit under the conflicts categories below, but which we believe will be of interest to this audience will appear here and on the This and That pages.]

Enforceability of Fee-Sharing Agreement

(posted December 20, 2017) SCF Consulting, LLC v. Barrack, Rodos & Bacine, 2017 WL 6492686 (Pa. Dec. 19, 2017). SCF claimed to have an agreement with Law Firm to share in law firm's fees from class actions for which SCF referred clients or in which SCF assisted. SCF sued Law Firm for not honoring the agreement. Law Firm's defense was, in part, that even if there was such an agreement, it would violate Rule 5.4(a) on fee-splitting and should not be enforceable. In this opinion the court held that such agreements that violate the rule are not per se unenforceable. The court remanded the case to the trial court to determine the degree of culpability of the non-client (plaintiff, here) as to the violation. Only two justices participated in the main opinion. There were a number of concurrences and dissents. The opinion notes that the majority of jurisdictions do follow a per se rule.

CONFLICTS - UNCATEGORIZED

[Note: These, too, will appear at the This and That pages.]

(posted January 4, 2018) Hawkins v. Eighth Judicial Dist. Ct., 2017 WL 6629205 (Nev. Dec. 28, 2017). After Lawyer changed firms, his new firm ("Law Firm") was disqualified because Lawyer had earlier represented Plaintiff, on the other side of this case. In the meantime, Plaintiff was sanctioned for discovery abuse including an award of lawyers' fees. Defendant sought fees for Law Firm for work done prior to Law Firm's disqualification. The trial court granted those fees on a reduced basis, the reduction not related to the disqualification. Plaintiff sought mandamus objecting to Law Firm's fees because of the disqualification. In this opinion the Nevada Supreme Court granted mandamus and remanded to the trial court to reconsider Law Firm's fees in accordance with Restatement § 37, cmt. d. That comment does provide guidance for determining when disqualified firms may receive fees, and how much.

ARBITRATION OF MALPRACTICE CLAIMS (To read the full article, click here.)

Nothing current.

BANKRUPTCY (To read full article, click here)

Nothing current.

BANKS/TRUST DEPARTMENTS (To read full article, click here.)

Nothing current.

BOARD POSITIONS (To read full article, click here.)

Nothing current.

CHANGING FIRMS - SCREENING (To read full article, click here.)

Screening; Non-Lawyer

(posted December 24, 2017) Moray v. UFS Indus., Inc., 2017 WL 6504583 (N.Y. App. Div. Dec. 20, 2017). Lawyer, a sole practitioner, represents the plaintiff in this breach of contract case. Lawyer hired a paralegal ("Paralegal"), who previously worked for the family that owns, or controls, the defendants. Paralegal has since become an associate of Lawyer. The defendants moved to disqualify Lawyer. The trial court denied the motion. In this opinion the Appellate Division reversed. The opinion begins by referencing an earlier proceeding involving many of the same players. There the Appellate Division disqualified Lawyer because of his hiring Paralegal, USA Recycling, Inc. v. Baldwin Endico Realty Assoc., Inc., 48 N.Y.S.3d 134 (N.Y. App. Div. 2017). The court noted that Lawyer had not screened Paralegal from this case. The court also based its ruling upon the "appearance of impropriety" standard. [Our note: It appears that New York, unlike the ABA, retained the appearance of impropriety standard in Rule 1.11, relating to former judicial officers. However, we do not see that standard in the New York rules in other contexts, including the context of this case.]

Screening; Non-Lawyer

(posted December 24, 2017) In Re Bertram Turner, 2017 WL 6542689 (Tex. Dec. 22, 2017). Law Firm No. 1, representing Plaintiffs, employed Paralegal for about six months. During that time Paralegal was heavily involved in this case. Paralegal left Firm 1 and joined Law Firm 2, which represents Defendant. At Law Firm 2 Paralegal worked on this case "for several months, albeit largely in a clerical capacity." When hired by Firm 2, Paralegal did not disclose her earlier employment by Firm 1. When Firm 1 discovered Paralegal's activity, it informed Firm 2, claiming a conflict. Firm 2 refused to withdraw. Plaintiffs moved to disqualify Firm 2. The trial court denied the motion, and the appellate court denied mandamus. In this opinion the Texas Supreme court ruled that Firm 2 should be disqualified.

CLASS ACTIONS (To read full article, click here.)

(posted January 8, 2018) Bell v. Disner, 2018 WL 296035 (W.D.N.C. Jan. 4, 2018). Certain class members moved to decertify the class because class counsel also represented individual plaintiffs in other cases against Defendant. In denying the motion the court reiterated the majority rule that such situations are not normally disqualifying. (These individual representations were fully apparent to the parties and the court when class counsel was appointed, and no objection was made at that time.)

CLIENT MERGERS/ASSET SALES (To read full article, click here.)

Nothing current.

CO-COUNSEL/COMMON INTEREST (To read full article, click here.)

Nothing current.

COMMERCIAL NEGOTIATIONS (To read full article, click here.)

Nothing current.

CORPORATIONS (To read full article, click here.)

Nothing current.

CORPORATE FAMILIES (To read full article, click here.)

Nothing current.

CRIMINAL PRACTICE (To read full article, click here.)

Nothing current.

CURRENT CLIENT (To read full article, click here.)

(posted January 12, 2018) The Owners, Strata Plan VR2122 v. Wake, 2017 BCSC 2386 (CanLII) (S. Ct. B.C. Dec. 22, 2017). A strata is a form of property ownership very similar to a condominium. It is unique to British Columbia and Australia. This case involves disputes over whether to terminate a strata so that the premises could be sold for more lucrative development. One of the issues became whether the law firm representing the strata corporation and working on (for) termination had a conflict of interest. Evidently, several dissenting owners believed the law firm represented them individually. The dissenting owners also pointed out that the law firm had, in other matters, represented developers bidding on the strata property. In this opinion the court, after considering the law firm's engagement letter and conduct, held that the dissenting owners' beliefs about the law firm's representation of them were not reasonable. Thus, the court held that the alleged conflicts should not be a bar to strata termination.

(posted January 12, 2018) N. Am. Fin. Grp. Inc. v. Ontario Sec. Comm'n, 2018 ONSC 136 (CanLII) (Ont. Super. Ct. Jan. 5, 2018). The Commission found Company had committed fraud and imposed monetary and other sanctions. One of the grounds of this appeal is that Company's counsel had conflicts. Company's lawyer's partner was concurrently representing the Commission on unrelated matters, and Company's lawyer had previously done so. Because Company could not demonstrate a miscarriage of justice from the alleged conflicts, the court in this opinion rejected that defense.

DERIVATIVE ACTIONS (To read full article, click here.)

Nothing current.

ENJOINING CONFLICTS (AND OTHER NON-TRADITIONAL REMEDIES) (To read full article, click here.)

Nothing current.

EXPERT WITNESSES (To read full article, click here.)

Nothing current.

FORMER CLIENT (To read full article, click here.)

(posted January 12, 2018) Mahoney (Edward) v. Mahoney (Garrett), 2017 CanLII 87168 (CanLII) (S. Ct. Newf. & Lab. Dec. 29, 2017). Suit to collect on a debt. Defendant moved to disqualify law firm for Plaintiff ("Law Firm") based on earlier contacts Defendant had with Law Firm. The two primary issues were whether Law Firm ever represented Defendant and whether the earlier representation was "sufficiently related" to this one to be a conflict. In this opinion the court answered yes to the first question and no to the second. The analyses as to both issues were painfully fact-specific and of little, if any, precedential value. It might be worth reading for the process employed by the court.

(posted January 8, 2018) Canta v. Philip Morris USA, Inc., No. 3D17-1959 (Fla. App. Dec. 27, 2017). Lawyer, at Law Firm 1, worked on tobacco cases for Philip Morris for about ten years, until 2015. Lawyer left Firm 1 and joined Law Firm 2 in 2015. Firm 2 represents Plaintiff in this tobacco case against Philip Morris. At Firm 2 Lawyer began working on tobacco cases against Philip Morris, including this case. On March 1, 2017, Philip Morris moved to disqualify Lawyer and Firm 2. On March 3, 2017, Law Firm terminated Lawyer. The trial judge granted the motion to disqualify. In this opinion the appellate court denied mandamus (affirmed). The unique issue in this case is whether Lawyer's termination removes the imputation of conflict. In a careful review of the Florida Rules and the Restatement the court ruled that the imputation was not removed.

(posted December 26, 2017) Wynveen v. Corsaro, 2017 6540640 (Ohio App. Dec. 21, 2017). Lawyer No. 1 and Law Firm represented Doctor on a variety of matters, including estate planning, for many years. This included setting up, and serving as trustee of, trusts for Son A and Son B. Lawyer also did work for Son B relating to Doctor’s estate and the trusts. After the death of Doctor and Son A, a dispute arose regarding who should pay the estate tax on Doctor’s estate. Son B sued Lawyer No. 1 for Lawyer’s conduct in administering Doctor’s estate and the trusts. Lawyer No. 1 counterclaimed against Son B for amounts Son B owed to Doctor’s estate and Son B’s trust. Lawyer No. 2, also a member of Law Firm, appeared for Lawyer No. 1 on the counterclaim against Son B. Son B moved to disqualify Lawyer No. 2. The trial court granted the motion. In this opinion the appellate court affirmed. Basically, both courts found that the work that Law Firm did for Son 2 was substantially related to the issues in this case.

(posted December 24, 2017) Fid. & Deposit Co. of Md. v. Travelers Cas. & Surety Co. of Am., 2017 WL 6520912 (D. Nev. Dec. 19, 2017). School District hired Big Town to install HVAC systems in five schools. Big Town obtained a performance bond from Travelers. Big Town did not perform. Travelers took over and hired F.A.S.T. to complete the work. F.A.S.T. obtained a performance bond from Fidelity. F.A.S.T. did not perform, so Fidelity took over. It hired Perini to take over. The Fidelity team, too, failed to complete the project. Travelers had to take over again, and they finally completed the project. School District, represented by Law Firm, sued Travelers over the delays. Travelers settled, paying $5 million, and School District assigned its claims to Travelers. In this case Fidelity, represented by Law Firm, is suing Travelers for certain damages arising from all the above debacles. Travelers moved to disqualify Law Firm in this case. The magistrate judge denied the motion. In this opinion the district judge affirmed. Both courts held that Travelers lacks standing because it is not a former client of Law Firm. They rejected Travelers argument that the assignment in the School District vs. Travelers case included the right to disqualify Law Firm. They rely, largely, on the language of the assignment (you may want to read it). There is more, but we have hit the high points.

(posted December 24, 2017) Castelino v. Rose-Hulman Inst. of Tech., 2017 WL 6523410 (S.D. Ind. Dec. 21, 2017). First, the court held that waiting a year after learning of the conflict, and five months after this case was filed, was a waiver of any conflict. The court nevertheless went on to look at the merits. A lawyer in the firm representing the defendant had earlier represented the plaintiff in an eviction case. In this case the firm is defending the university defendant in a dispute over the plaintiff's re-admission to the university. Thus, no substantial relationship under Rule 1.9. The court also noted that both representations overlapped somewhat resulting in a violation of Rule 1.7. However, the court took a "no-harm-no-foul" approach in denying the motion to disqualify, but "directed" the firm to shape up its conflicts-checking procedures.

GOVERNMENT ENTITIES - SUING ONE PART/REPRESENTING ANOTHER PART (To read full article, click here.)

Nothing current.

HOT POTATO DOCTRINE (To read full article, click here.)

Nothing current.

INITIAL INTERVIEW - HEARING TOO MUCH (To read full article, click here.)

Nothing current.

INSURANCE DEFENSE (To read full article, click here.)

(posted December 24, 2017) Tokio Marine Specialty Ins. Co. v. City of Laguna Beach, 2017 WL 6512226 (C.D. Cal. Dec. 18, 2017). In this case the issue was whether Insured was entitled to independent counsel at InsCo's expense. InsCo had issued a reservation of rights letter. In this opinion the court held that Insured was not entitled to separate counsel. The court noted that reservation of rights letters do not automatically entitle insureds to independent counsel. Where the insurer's retained counsel is not in a position to affect coverage during the trial, InsCo does not have to pay for independent counsel. That was the case here. This case involved backed-up sewer lines and policy interpretation. To expand upon the logic of the court's holding would require an extensive discussion of sewer lines and policy language, which we choose not to do here. Read the opinion if you have a backed-up sewer case.

INVESTING IN CLIENTS/STOCK FOR FEES (To read full article, click here.)

Rule 1.8(a)

(posted January 4, 2018) Sands v. Menard, 2016 WL 6758454 (Wis. Dec. 29, 2017). For several years John Menard (SAVE BIG MONEY AT MENARD'S) lived with Debra Sands. This case is a fight over whether Sands was entitled to certain compensation and an interest in Menard's companies. Sands is a lawyer and did legal work for Menard. One of Menard's defenses was that Sands failed to comply with Rule 1.8(a) (written disclosures, consents, etc.). The Wisconsin Supreme Court, in this opinion, resolved Sands' claims without resort to that rule. However, the court felt that it needed to address whether violation of such a rule would be an absolute defense against a claim against the lawyer. The court said it would not but "may guide courts in determining required standards of care generally."

ISSUE OR POSITIONAL CONFLICTS (To read full article, click here.)

Nothing current.

JOINT/MULTIPLE REPRESENTATION (To read full article, click here.)

Nothing current.

LAWYER AS EXPERT WITNESS OR CONSULTANT (To read full article, click here.)

Nothing current.

LAWYERS REPRESENTING LAWYERS (To read full article, click here.)

Nothing current.

MALPRACTICE LIABILITY/FEE FORFEITURES (To read full article, click here.)

Nothing current.

OF COUNSEL (To read full article, click here.)

Nothing current.

OPPOSING LAWYERS NEGOTIATING A LAW PRACTICE MERGER (To read full article, click here.)

Nothing current.

PARTNERSHIPS (INCLUDING LIMITED PARTNERSHIPS) (To read full article, click here.)

Nothing current.

SETTLEMENT AGREEMENTS (To read full article, click here.)

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STANDING (To read full article, click here.)

Nothing current.

TRADE (AND OTHER) ASSOCIATIONS (To read full article, click here.)

Nothing current.

UNDERLYING WORK PROBLEM (To read full article, click here.)

Nothing current.

WAIVERS/CONSENTS (To read full article, click here.)

Passage of Time as Waiver

(posted December 24, 2017) Castelino v. Rose-Hulman Inst. of Tech., 2017 WL 6523410 (S.D. Ind. Dec. 21, 2017). Waiting one year after learning of conflict and five months after case filed was too late. To read more about the case, go to "Former Client," above.

WITNESS - ADVERSE - CURRENT/FORMER CLIENT (To read full article, click here.)

Nothing current.

ZERO SUM GAMES (To read full article, click here.

Nothing current.

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