Bressler Risk Blog

“CPS chief Martinez seeks to disqualify law firm over alleged conflict of interest” —

• “Chicago Public Schools chief Pedro Martinez is alleging the firm representing the school board in an ongoing lawsuit has a conflict of interest that warrants disqualification. Martinez’s lawyer, William Quinlan, filed a motion March 4 to ‘disqualify the law firm of Cozen O’Connor LLP.’ Cozen serves as counsel for seven board members named in the lawsuit between the district’s outgoing chief executive officer and the Chicago Board of Education.”
• “Martinez filed the lawsuit against the school board after he was fired Dec. 20 to block the then seven-member body from stripping him of his duties, including his involvement in contract negotiations with the Chicago Teachers Union. Several days after Martinez’s firing the board members attended ongoing contract negotiations with CTU on a new four-year contract that has yet to be settled. Martinez’s tenure as CPS chief will conclude in June.”
• “It was the first time in 12 years that school board members attended a bargaining session. Typically, the schools chief and his team negotiate the contract and collaborate with the board.”
• “However, Cozen also represents the members of a new, 21-member partially elected, partially appointed board, seated in January after Martinez was fired. The previous board that voted to fire Martinez was appointed by Mayor Brandon Johnson. Five of them remain on the board.”
• “Quinlan argues in the motion that Cozen representing the new school board in addition to the board members who fired Martinez ‘raises an impermissible concurrent conflict of interest.'”
• “Quinlan spoke about the motion to disqualify Cozen O’Connor at a hearing in front of Chupack Monday.”
• “‘I don’t know how we can decide (the motion to dismiss the temporary restraining order) without deciding if there’s a conflict first,’ he said.”
• “Jeremy Glenn, Cozen O’Connor’s attorney, said that ‘the conflict, if it arose, hasn’t presented itself in a way that changes the legal arguments.'”
• “He cited prior case law suggesting that a motion to disqualify ‘needs to be looked at carefully to make sure it’s not a tactic to delay a ruling on a motion to dismiss (the temporary restraining order).'”
• “A conflict of interest exists if ‘the representation of one client will be adverse to another’ or if ‘there is a significant risk that the representation of one or more clients will be materially limited by the lawyer’s responsibilities to another client,’ Quinlan’s motion argues.”
• “In this case, the motion continues, there is a conflict of interest because seven board member defendants ‘are alleged to have acted outside the scope of their capacities’ as members of the full board entity Cozen represents.”
• “‘The Board Member Defendants have separate interests that conflict with those of the Board as an entity, and vice–versa,’ Quinlan’s motion says. ‘In making these determinations, the Board is entitled to counsel separate from and independent of counsel representing the Member Defendants.'”
• “Additionally, neither the seven-member board named in the lawsuit nor the current board gave ‘informed consent’ to the conflict of interest. Quinlan’s motion states that they are entitled to that consent.”
• “The school board retained Cozen O’Connor at a meeting in mid-November, a move that hinted at the beginnings of the process of firing Martinez. Employment lawyers told the Tribune at the time that the board was likely looking for cause to fire the CEO. Martinez was fired without cause, meaning he will stay on the job until June.”

“Masimo Aims To DQ Hueston Hennigan As Ex-CEO’s Counsel” —

• “Masimo Corp. is urging the Delaware Chancery Court to disqualify Hueston Hennigan LLP from representing its founder and former CEO in a lawsuit over his quest for a $450 million payout from the medical technology company, arguing the firm has a conflict of interest.”
• “The firm previously represented Masimo and Kiani in another Chancery case in which company stockholders ‘challenged the enforceability of entrenching and coercive provisions in Mr. Kiani’s employment agreement with Masimo,’ the brief said. ‘Now, Hueston Hennigan has taken sides against Masimo, and must be disqualified from representing Mr. Kiani,’ the company contended.”
• “Masimo argued that, ‘in violation of Rule 1.9 of the Delaware Lawyers’ Rules of Professional Conduct, Hueston Hennigan currently stands opposite its former client, Masimo, on the very same subject on which it previously represented it.'”
• “In October, Masimo sued Kiani in Chancery Court, seeking a declaration that a $450 million payout he seeks under the terms of his employment agreement is unenforceable.”
• “Now that Masimo has its first independent board in its history, Kiani demanded the $450 million payout under the terms of his employment agreement after being ousted by the new board from his positions as CEO and chairman, the complaint said.”
• “‘In November 2023, after it already had been advising Masimo for months, Hueston Hennigan formally appeared for Masimo in the prior Delaware action to oppose Politan’s fee application, which Mr. Hueston personally argued,’ the brief said. ‘Indeed, Mr. Hueston was listed as counsel on Masimo’s opposition to Politan’s application, which stated, among other things, that ‘the employment agreement … effectively guarantees that Mr. Kiani will receive the special payment at some point in time.’ That is precisely the opposite of Masimo’s position in this action.'”
• “Masimo accuses the firm of violating an ethics rule that ‘prohibits the representation of parties in matters involving material conflicts of interest.'”
• “‘Due to its conflict, Hueston Hennigan provided advice to Masimo that was directly contrary to Masimo’s interests,’ the brief asserts.”
• “Details about the allegedly conflicted advice the firm offered are redacted in the brief.”
• “Masimo argued the court ‘should disqualify Hueston Hennigan or, in the alternative, Mr. Hueston from representing Mr. Kiani in this action.'”

“Trump picks his next Big Law target” —

• “President Donald Trump continued his retaliatory spree against major law firms on Friday, signing an executive order targeting New York firm Paul, Weiss days after a judge ruled that major parts of a similar order were unconstitutional.”
• “Trump’s new order seeks to suspend the security clearances of attorneys with the firm and limit their access to government buildings, ability to get federal jobs and receive money from federal contracts.”
• “The order is the third targeted move against a big firm. Trump has signed similar orders aimed at Seattle-based Perkins Coie, which regularly represents Democratic entities including the Democratic National Committee, and any employee at Covington & Burling who provided free legal services to special counsel Jack Smith, who brought two criminal cases against Trump.”
• “As POLITICO first reported, some top firms are considering publicly supporting the firms under attack by the Trump administration. But the show of solidarity has been hard to build as privately, firms worry that they could be next on the president’s hit list.”
• “The Paul, Weiss spokesperson also noted that a federal judge had this week deemed a similar order unconstitutional.”
• “U.S. District Judge Beryl Howell ruled on Wednesday that major parts of Trump’s order against Perkins Coie were likely unconstitutional, including efforts to bar attorneys from interacting with federal agencies or entering federal buildings.”
• “In her ruling, Howell said Trump’s order appeared motivated by ‘retaliatory animus,’ and concluded that it ‘runs head on into the wall of First Amendment protections.'”

I woke up Wednesday, still dark outside from the time change, with the shard of an odd dream-thought about law firm risk. (Yes, you folks are always on my mind.) Having read a few stories about AI writing getting firms into trouble, it felt like the right time to invite a robot or two to flesh out the idea and write the first BRB spec script. Below, with your kind indulgence.

Firms with Hollywood clients, feel free to send them my way to work out a development deal. Firms with IP practices, just parody here!

[Dan B. will be back on Monday, with the normal updates. Be seeing you…]

—

# SEVERANCE: LUMON LLP

## “CONFLICT CONVERSIONS”

FADE IN:

INT. LUMON LLP – MACRO RISK DATA REFINEMENT DEPARTMENT – MORNING

The stark white room with its symmetrical desks houses the MRDR team. MARK, DYLAN, IRVING, and HELLY are at their workstations, processing data on their ancient computers.

A CHIME sounds. The team looks up as MILCHICK enters, carrying a folder and smiling his professional smile.

**MILCHICK**
Good morning, everyone. It’s time for your quarterly review.

**DYLAN**
*(perking up)*
Is there a waffle party?

**MILCHICK**
That depends on your numbers, Dylan G.

Milchick walks to the center of the room and sets up a small projector.

**MILCHICK**
If I could have everyone gather around.

The team reluctantly leaves their desks and assembles in a semi-circle.

**HELLY**
What exactly are we reviewing?

**MILCHICK**
Your conflict clearance rate, Helly R. It’s the primary metric by which the MRDR team is evaluated.

The projector flickers on, displaying a colorful pie chart.

**MILCHICK**
As you can see, this quarter, your team has successfully processed 428 potential conflicts of interest.

He clicks to the next slide: a bar graph with rising columns.

**MILCHICK**
Of those 428 potential conflicts, you identified 217 that could be “converted” through severed attorney assignment.

**MARK**
*(hesitantly)*
Converted?

**MILCHICK**
Yes, Mark S. Matters that would typically require Lumon LLP to decline representation due to conflicts, but which we were able to accept thanks to our innovative use of severance technology.

**IRVING**
*(proudly)*
We’re protecting the firm’s integrity.

**HELLY**
*(under her breath)*
Or undermining it.

Milchick clicks to another slide showing a comparison between quarters.

**MILCHICK**
I’m pleased to announce that your conversion rate is up 12% from last quarter, which puts you in the top tier of all MRDR teams.

**DYLAN**
*(excitedly)*
So there IS a waffle party!

Milchick smiles and produces a small box from behind his back.

**MILCHICK**
Even better, Dylan G. The partners have authorized a special reward.

He opens the box to reveal five FINGER TRAPS made of expensive-looking metal.

**MILCHICK**
Titanium finger traps. Only four MRDR departments in Lumon history have earned these.

Dylan’s eyes widen with excitement. Helly looks skeptical.

**HELLY**
So we’re being rewarded for finding loopholes?

**MILCHICK**
*(smile hardening slightly)*
We’re rewarding efficiency, Helly R. These conflict clearances represent approximately $19,342,246.01 in billable hours that would otherwise be lost.

He hands out the finger traps. Dylan immediately puts his on both index fingers, grinning.

**MILCHICK**
And as an additional reward, tomorrow morning, there will indeed be a waffle party. With toppings.

**DYLAN**
Yes!

**MILCHICK**
Keep up the excellent work, team. Ms. Cobel is very pleased.

Milchick packs up and exits. The team returns to their desks, Dylan struggling with his trapped fingers.

**HELLY**
Does anyone else find this… wrong?

**IRVING**
What do you mean?

**HELLY**
I mean, conflicts of interest exist for a reason. Just because lawyers are severed doesn’t mean they’re not the same person.

**DYLAN**
*(working his fingers free)*
But they’re not, that’s the whole point. Their outies know one thing, their innies know another. No confidential information crosses over.

**MARK**
It does seem like we’re helping the firm… be more efficient.

**HELLY**
Or helping them cheat.

CUT TO:

INT. LUMON LLP – RESTROOM – LATER

Irving is washing his hands methodically, counting under his breath as he always does. He glances up at the mirror and freezes.

In the reflection, he sees words written in what appears to be graphite from a pencil, barely visible unless caught in the right light: “YOU USED TO FIGHT AGAINST THIS.”

Irving stares, confused. He reaches out to touch the writing, and it smudges slightly under his finger.

CUT TO:

INT. LUMON LLP – MRDR DEPARTMENT – EVENING

The team is preparing to leave for the day. Irving lingers at his desk, searching through his drawers.

**MARK**
Everything okay, Irv?

**IRVING**
Yes, just… making sure everything is in order.

After the others leave, Irving carefully pulls out a file he’s hidden beneath his desk pad. Inside are notes he’s been making about his strange experiences and memories.

He adds a new entry: “Restroom mirror message. What did I fight against?”

As he writes, he notices something about his handwriting. He pulls out older notes and compares them. Then he flips through them and finds a note from weeks ago that he doesn’t remember writing: “Before severance, I was an ethics attorney. Specializing in conflicts of interest. Remember who you were.”

Irving stares at the note, his hand shaking.

CUT TO:

EXT. IRVING’S APARTMENT – NIGHT

OUTIE IRVING sits at his desk, surrounded by legal textbooks and papers. He’s methodically writing on a small notepad, pressing hard to make sure the indentations go through multiple pages.

We see the title of one book: “Legal Ethics and the Future of Attorney Severance” by I. B. Petersen -— himself.

Outie Irving tears off the top sheet of the notepad, crumples it, and burns it in an ashtray. The next page, with its impressed message, remains: “YOU USED TO FIGHT AGAINST THIS.”

He carefully tucks the notepad into his work bag.

FADE OUT.

END OF EPISODE

“Jackson Walker Rejected Judge Romance Ethics Advice, Report Says” —

• “Jackson Walker LLP rebuffed advice from its own outside ethics expert to disclose a relationship between a partner and a bankruptcy judge, instead opting for a confidentiality agreement barring discussions of the romance, according to a government-commissioned report.”
• “The Texas law firm failed to uphold disclosure obligations under bankruptcy law, an expert report filed in Thursday [1/30] in the US Bankruptcy Court for the Southern District of Texas found. The firm exhibited a ‘persistent pattern of ignoring, obfuscating and concealing’ a relationship between its former partner, Elizabeth Freeman, and former Houston bankruptcy Judge David R. Jones, according to the report.”
• “‘Unfortunately, at every important moment in this matter, JW chose not to disclose but instead to conceal what it knew or had good reason to know about the Relationship,’ wrote the report’s author, Temple University law professor Jonathan Lipson.”
• “Jackson Walker and the Justice Department’s bankruptcy watchdog, the US Trustee, each moved to strike the other’s expert reports from being used in litigation. The reports were filed in a lawsuit where the US Trustee’s office has said Jackson Walker breached its ethical duties, a charge the firm rejects.”
• “The firm regularly represented clients in cases Jones oversaw. A trial set for April will decide whether as much as $23 million in fees awarded to Jackson Walker should be vacated and whether the firm can be sanctioned.”
• “Jones resigned soon after the relationship became public in late 2023 but litigation over the scandal remains pending. Freeman left Jackson Walker in December 2022.”
• “Once the firm learned of an ongoing relationship between Jones and Freeman, by at least February 2022, it had a duty to amend its bankruptcy disclosures in cases where it implied or said there were no such connections, Lipson concluded.”
• “Instead of disclosing or withdrawing from cases, Jackson Walker ‘decided to further bury evidence’ of the relationship through a confidential withdrawal agreement between the firm and Freeman in November 2022, Lipson said.”
• “Jones’ own ‘erroneous interpretation of his ethical obligations,’ is separate from Jackson Walker’s duty to investigate allegations of an ethical conflict, disclose connections, or withdraw from those cases, Lipson said.”
  Conflicts and Confidentiality”
• “Lipson cited expert opinions Jackson Walker received from Holland & Knight LLP attorneys in 2021 who were tapped by the Texas firm to provide ethics opinions about the relationship.”
• “The Holland & Knight team advised Jackson Walker in June 2022 that the conflict should be reported or it should withdraw from cases before Jones, Lipson’s report said. Jackson Walker did neither, he said.”
• “The firm didn’t tell its co-counsel, Kirkland & Ellis LLP, and didn’t ask if clients consented either, he said. No amendments were made to the firm’s bankruptcy disclosures, Lipson said.”
• “Lipson also said said Freeman’s connections can be imputed to Jackson Walker under Texas rules.”

“No DQ For Norton Rose In Texas Competition Row, Court Says” —

• “Norton Rose Fulbright shouldn’t be disqualified in a competitive spat between two industrial maintenance companies even though the firm has represented both entities in recent years, a state appeals court has ruled.”
• “Industrial maintenance provider Brown & Root Industrial Services LLC made only ‘conclusory statements of similarities’ about the firm’s current representation of its competitor, CAM Industrial Solutions LLC, the Fourteenth Court of Appeals wrote in a brief opinion Tuesday.”
• “Without more specific facts, the court said it can’t rule that Norton Rose Fulbright’s prior representation of Brown & Root violates the Texas Disciplinary Rules of Professional Conduct Rule 1.09, which bars an attorney ‘who personally has formerly represented a client in a matter’ from representing ‘another person in a matter adverse to the former client … if it is the same or a substantially related matter.'”
• “CAM retained Norton Rose Fulbright in the Chambers County suit, an action Brown & Root alleged presented a conflict of interest because the firm represented Brown & Root for eight years beginning in 2016.”
• “‘[Norton Rose’s] representation of Brown & Root included business advice and consulting, including on issues specifically related to Brown & Root’s industrial maintenance business line,’ Brown & Root wrote in its August 2024 petition to the Fourteenth Court of Appeals.”
• “‘In the context of that attorney-client relationship, Brown and Root shared internal business information with NRF, such as client information, contractual information, and personal employee information specifically related to Brown & Root’s industrial maintenance business.'”
• “Brown & Root wrote that the firm was continuing to bill it as recently as August 2023. It moved to disqualify CAM’s attorneys in May 2024, which the trial court denied three months later.”
• “The Fourteenth Court of Appeals on Tuesday outlined Brown & Root’s allegations, which included that the company consulted with two Norton Rose partners about corporate labor and employment law in relation to a specific bid the company was seeking. As part of that consultation, the firm helped Brown & Root set up a Canadian business entity, according to the company.”
• “The court wrote that those facts are not specific enough to determine that Norton Rose lawyers ‘could have acquired confidential information concerning a prior client that could be used either to that prior client’s disadvantage or for the advantage of the lawyer’s current client or some other person,’ as the disciplinary rule dictates.”

“Judge blocks key provisions of Trump’s bid to punish Democratic-linked law firm” —

• “President Donald Trump’s retaliation against a prominent Democratic-linked law firm is likely unconstitutional, a federal judge ruled Wednesday.”
• “U.S. District Judge Beryl Howell blocked the Trump administration from enforcing central provisions of an executive order that seeks to punish the law firm, Perkins Coie, by barring its attorneys from interacting with federal agencies or even entering federal buildings.”
•  “Howell said the ‘retaliatory animus’ of Trump’s order is ‘clear on its face’ and appears to violate constitutional restrictions on ‘viewpoint discrimination.’ The executive order, which Trump issued last week, ‘runs head on into the wall of First Amendment protections,’ the judge concluded.”
• “Howell noted that the order would harm not only the firm’s 1,200 lawyers — most of whom had nothing to do with the Russia probe — but its 2,500 non-lawyer employees, from IT staff to secretaries.”
• “The judge said Trump’s order was also flawed because it was issued without any notice to the firm or due process to challenge his determination.”
• “‘This may be amusing in ‘Alice in Wonderland’ where the Queen of Hearts yells, ‘Off with their heads!’ at annoying subjects … and announces a sentence before a verdict,’ Howell said, ‘but this cannot be the reality we are living under.'”

David Kluft, Assistant Bar Counsel at Massachusetts Office of Bar Counsel, notes another recent Ohio opinion:

• “If I appear before a Judge who my partner represents in an unrelated matter, does the judge have to recuse? The Ohio Bd. Of Prof. Conduct opined that a judge must recuse herself if her own lawyer appears before her. However, the opinion also states that the judge would not have to recuse herself if someone else from the same firm appeared before her.”
• “To my understanding, this NOT the rule in other states. If a judge is represented by a lawyer at a firm, she is represented by the firm and should recuse from cases involving that firm. The only citation in the opinion for the opposite proposition is a matter in which conflicts were not imputed among lawyers of the same Attorney General’s office. Perhaps the appearance of bias could be rebutted in the unique case of an AGO, which is massive and must necessarily represent judges in some cases, but how can anyone seriously justify applying it to say, a two-person law firm that represents a judge in a private matter?If I’m crazy, you tell me. Anyway, good luck to Ohio lawyers.”
• See the complete opinion.

“Revoking Security Clearances: How Bad Could It Get for Lawyers?” —

• “Washington lawyer Mark Zaid’s security clearance gives him access to information, like whether a client works for the Central Intelligence Agency and what happened to the US intelligence officers he represents who are suffering from ‘Havana Syndrome.'”
• “Zaid is one of a relatively small number of lawyers with ‘full’ security clearances, he says, listed in databases with mysterious titles such as the Director of National Intelligence’s ‘SCATTERED CASTLES’ and ‘DISS’ at the Defense Department. The status, which Zaid has had for 23 years, allows him to be quickly granted access to classified material impacting his clients.”
• “Now Zaid is part of another select group of lawyers: Those whose security clearances President Donald Trump wants to revoke. He believes he’s being retaliated against for representing a whistleblower whose claims led to Trump’s first impeachment.”
• “‘That is not how this system ever has worked,’ Zaid said in an interview. ‘It is unprofessional, un-American, unethical, and just in total poor taste.'”
• “The president also is pulling clearances for lawyers at two major firms, Perkins Coie and Covington & Burling. The moves sent shock waves through the legal industry, but it’s unclear how much impact they will have on the firms’ bottom lines.”
• “‘For a lawyer that practices in the security or intelligence arena, the fact that your clearance has been revoked could have a substantial impact on their business,’ said Greg Rinckey, a former Army Judge Advocate General who represents clients in security clearance matters. ‘That’s because they aren’t able to review classified documents anymore or have access to specific buildings.'”
• “It’s unknown how many attorneys at Perkins Coie and Covington have been granted clearances. Lawyers do not typically advertise their security clearance status.”
• “Critics slammed the orders as attempts to chill lawyers from representing parties adverse to the president and his administration. Perkins Coie intends to challenge the order against the firm, which it called ‘patently unlawful.'”
• “Many lawyers receive clearances on a case-by-case basis, national security experts said. A federal agency will sponsor the lawyer’s request for a clearance, allowing the attorney to review classified evidence in a specific case. The clearances can grant lawyers access to certain federal buildings or to secure rooms where the evidence is kept, known as SCIFs.”
• “That became an issue in the criminal case against Trump over his possession of classified documents at Mar-a-Lago. Trump’s lawyers objected to the government’s request that they only access the classified material in a SCIF. They applied for security clearances to see the documents themselves.”
• “Big Law firms like Perkins and Covington could be more significantly impacted if they are handling major litigation or transactional matters for defense contractors interacting with the federal government. Those companies’ lawyers often require security clearances, experts said.”
• “Perkins Coie’s clients include massive contractors like Boeing, Microsoft, Noble Supply, and Northrop Grumman, according to its website. Covington’s government contracts practice represents ‘large aerospace and defense contractors,’ according to its website.”
• “Zaid read about his security clearance being potentially revoked in a February New York Post report. He’s heard nothing since, and said he still maintains his clearance. Losing it would not significantly impact him from a financial standpoint, Zaid said, because much of his work requiring a clearance is done on a pro bono basis.”
• “The real victims of the moves will be clients who need lawyers with security clearances, he said. That includes Trump administration officials.”
• “‘I’ve helped a number of people already who are senior in the administration to ensure that they have security clearances,’ Zaid said. ‘I am not political, regardless of what they want to make me out to be.'”

“Judge Won’t Disqualify Firm In Solar Co. Fraud Fight” —

• “A federal judge denied Michigan residents’ attempt to disqualify attorneys representing a bankrupt solar company’s former founding CEO in their fraud case, holding that the law firm’s allegedly obstructionist discovery tactics don’t amount to an actual conflict of interest.”
• “Plaintiffs claiming deceptive sales tactics left them stuck with overpriced solar systems that don’t work or deliver promised energy savings argued that DarrowEverett LLP’s stonewalling is driven by various conflicts, including in-house counsel work for Power Home Solar, which is now operating as Pink Energy, and its representation of former CEO William ‘Jayson’ Waller in nearly two dozen similar lawsuits.”
• “‘It seems that fundamentally, plaintiffs’ issue is with [DarrowEverett] and Waller’s discovery practices,’ the judge said in an opinion issued on Wednesday. ‘Alleged bad behavior in discovery is not a conflict of interest, nor does it appear that the alleged bad behavior here resulted from actual, unwaived conflicts of interest.'”
• “At a hearing in January, the Michigan residents charged that Waller’s counsel have purposefully stymied discovery based on multiple conflicts of interest, and that the delays have destroyed their case schedule.”
• “According to the judge, however, Waller and a number of nonparties that the residents have subpoenaed have all consented to DarrowEverett representing them, something the firm provided signed conflict waivers to prove.”
• “‘Under the applicable rules of professional conduct, such a waiver ends this inquiry,’ the judge said in the decision.”
• “The judge also rejected assertions that the New York-based firm is limited in its ability to represent Waller based on its own self-interests under the Model Rules of Professional Conduct, since some of its lawyers, including Zachary Darrow, are likely to be witnesses in the litigation.”
• “While the law firm acknowledged that Darrow may be a witness if the suit proceeds to trial, the judge said, it also rightly argued that such a situation does not warrant a disqualification as things stand now.”
• “‘[DarrowEverett] argues that neither rule 1.7 nor 1.9 are at issue because any conflict has been waived and moreover, any such disqualification is premature until the time of trial,’ the judge said. ‘[DarrowEverett’s] analysis of this issue is correct and disqualification of Mr. Darrow is not warranted at this time.'”

“Justices Asked To Recuse Fitbit Judge Over Google Ties” —

• “A Silicon Valley-based patent-holding company that lost its infringement case against Fitbit is telling the U.S. Supreme Court that a California federal judge and her husband’s financial ties to Fitbit parent Google are so strong that ‘if these circumstances do not warrant recusal … then nothing does.'”
• “A new petition for certiorari, docketed Tuesday, wants the U.S. Supreme Court to take a look at a ruling out of the Federal Circuit last year that rejected an effort from Cellspin Soft to force the recusal of U.S. District Judge Yvonne Gonzalez Rogers after she rejected Cellspin’s patent case against Fitbit, which was picked up by Google in 2021.”
• “Back in 2022, Judge Rogers granted summary judgment to the handful of companies that remained in these cases, which included Fitbit, Nike, Under Armour, the Fossil Group, Garmin International Inc. and Nikon. The ruling found that the patent-holding company’s allegations were ‘conclusory and lacking substance’ and, ‘ultimately, do not carry evidentiary weight.'”
• “The petition from the patent-holding company focused in large part on Judge Rogers’ husband, Matt Rogers, and his work as an operating partner at the venture capital firm Ajax Strategies, which takes money from Google to operate at least three startups.”
• “‘The venture capitalist spouse has taken $700 million in part from Google, the spouse has five separate publicly-announced strategic partnerships with Google, and the judge herself owns anywhere between $5-$25 million in a specific hedge fund,’ read the petition, pointing to Judge Rogers’ investment in a Vanguard S&P Index fund.”
• “Last year’s Federal Circuit ruling had pointedly avoided looking at the merits of that last argument by pointing out that it was filed way too late and could have been filed before Judge Rogers rejected Cellspin’s case.”

“Courts Soften Stance Against Law Clerks Seeking Political Work” —

• “The federal judiciary is walking back an ethics opinion that told judges to prevent their law clerks from seeking jobs with political groups while still working for the court, instead leaving that decision up to individual judges.”
• “The Judicial Conference Committee on Codes of Conduct in September had said such job searches by law clerks “may run the risk” of associating a judge’s chambers with political activity. In updated opinions released Friday, the committee now says that while it’s “critical” to separate the judiciary from politics, it’s up to individual judges to determine ‘to assess this risk and to impose restrictions or limitations, if any.'”
• Guide to Judiciary Policy, Vol. 2B Last revised (Transmittal 02-087) March 6, 2025:
  • “III. Future Employment with Political Organizations. Canon 4C(4) of the Employees’ Code permits law clerks and staff attorneys to seek future employment opportunities during their judicial employment provided such pursuits are in consultation with their appointing authority. The Employees’ Code does not qualify this permission based on the type of prospective employment. Although seeking and obtaining future employment while clerking is generally acceptable under the ethics rules, prospective employment with a political organization may trigger Canon 5 concerns. The commentary to Canon 5 in the Code of Conduct for United States Judges explains that a political organization is “a political party, a group affiliated with a political party or candidate for public office, or an entity whose principal purpose is to advocate for or against political candidates or parties in connection with elections for public office.”
  • “The Committee has advised that keeping the judicial branch removed from politics and political preferences is critical. See Advisory Opinion No. 92 (‘Political Activities Guidelines for Judicial Employees’). It is necessary, therefore, to safeguard against risks that may potentially associate a judge or chambers with politics. Under some circumstances, a law clerk’s employment discussions with a political organization during a clerkship or judicial employment may pose such a risk. Ultimately, the appointing judge retains discretion to assess this risk and to impose restrictions or limitations, if any. Assessments should be made on a case-by-case basis in full consideration of all the facts, circumstances, and potential risks involved, underscoring the importance that the judge, as the law clerk’s appointing authority, should be completely informed.”

“Bar Bid by Attorney General’s Brother Prompts Lawyers’ Concerns” —

• “Some Washington lawyers are raising concerns over a campaign by the brother of Attorney General Pam Bondi to lead the DC Bar, as the body fields ethics charges against attorneys linked to President Donald Trump.”
• “Brad Bondi, a partner at Paul Hastings, was named in February as a candidate for DC Bar president. Also running for a bar leadership position is Alicia Long, chief deputy for Ed Martin, Trump’s pick to lead the US attorney’s office in Washington. She’s one of two nominees for treasurer. If elected, both would be among the 20 lawyers who sit on the bar’s board of governors.”
• “Current and former bar officials and members said that, if elected, Bondi wouldn’t oversee the disciplinary proceedings, and any other influence he could have over that work would be tempered by other bar leaders or the District of Columbia Court of Appeals. DC Bar elections begin on April 15 and run until June 4.”
• “Concerns about the two attorneys come as Senate Judiciary Committee Democrats on Thursday filed a misconduct complaint with the bar’s disciplinary counsel against Martin, alleging he abused his position while handling Jan. 6 Capitol riot cases.”
• “If elected, Bondi—through his role on the bar’s board of governors—would help recommend members for the Board on Professional Responsibility, a panel that reviews disciplinary findings against Washington attorneys. Final disciplinary decisions are made by the local District of Columbia Court of Appeals, which appoints the members of the professional responsibility board.”
• “‘The disciplinary system operates independently from the D.C. Bar, and we have no control or influence over cases that are investigated or prosecuted by the Office of Disciplinary Counsel,’ Robert Spagnoletti, CEO of the D.C. Bar, said.”
• “The board of governors also approves the bar’s budget, including money set aside for the disciplinary counsel’s office. Any conflict over those funds are taken to the DC Court of Appeals, and former bar officials say they don’t recall that ever happening.”
• “The president also has influence over who chairs the bar’s standing committees, which include panels overseeing the bar’s budget and investments. The treasurer helps oversee the budget, but changes would require approval from a majority of the board of governors.”
• “David Cole, a Georgetown University law professor, said that even though the disciplinary proceedings aren’t run by bar leadership, he’s still concerned that the process could be manipulated as a retaliatory move due to cases against Trump allies. He raised the possibility of charges being filed against Washington lawyers who’ve worked on lawsuits against early Trump administration actions.”
• “Charles Work, who served as one of the bar’s first presidents, said he’s concerned that a person related to a top Trump administration official leading the group could give the impression of partisanship, even if Bondi doesn’t take any overtly partisan actions.”
• “Bondi, a longtime white collar attorney, currently co-chairs Paul Hasting’s investigations and white collar defense practice. He was recently hired by YouTube personality ‘MrBeast’ Jimmy Donaldson and a group of investors for legal advice on a bid to buy TikTok Inc., and has also given advice to top Trump ally and billionaire Elon Musk’s Tesla, Inc. on SEC matters.”

“Connecticut Standing Committee on Professional Ethics: “Informal Opinion 2023-01: Whether Prior Co-counsel Relationship Presents a Conflict” —

• “The Committee has been asked whether a criminal defense lawyer (the ‘Requester’) who periodically serves as co-counsel with another defense attorney in serious criminal cases may represent an individual charged with conspiracy to commit murder, where the other attorney with whom he has co-counseled has been retained to represent a co-defendant in the same alleged conspiracy. The Requester explains that he and the other attorney maintain separate law practices in separate office locations. The request presents the following questions: 1. Would the representation create a conflict of interest or potential conflict of interest in violation of Rule 1.7 of the Rules of Professional Conduct (the ‘Rules’)? 2. If so, are there procedures to avoid violation of the Rules?”
• “Rule 1.7(a) provides that a lawyer shall not represent a client if the representation involves a concurrent conflict of interest, unless the conflict is waivable and the client provides his or her informed consent in writing to that representation. ‘A concurrent conflict of interest exists if: (1) the representation of one client will be directly adverse to another client; or (2) there is a significant risk that the representation of one or more clients will be materially limited by the lawyer’s responsibilities to another client, a former client or a third person or by a personal interest of the lawyer.'”
• “Rule 1.7(a)(1) would typically prohibit the same lawyer from representing both co-defendants in a criminal case, since there is significant risk that the defendants might have incompatible defense strategies.”
• “Here, however, there are two lawyers—one representing each defendant. The issue presented under Rule 1.7(a)(1) is thus whether the potential adversity between the two codefendants is imputed to the lawyers based on the fact that the two lawyers have served as co-counsel together in various other criminal cases. Rule 1.10 governs imputation of conflicts and provides that ‘while lawyers are associated in a firm, none of them shall knowingly represent a client when any one of them practicing alone would be prohibited from doing so.’ “
• “Thus, the Commentary suggests that there may be some informal arrangements among lawyers that may rise to the level of constituting a ‘firm’ for purposes of imputation. However, the Commentary also explains that, even where two practitioners share office space and consult with one another from time to time, this would ordinarily not be regarded as a firm unless other factors were present—such as operational integration or if they held themselves out to the public in a way that suggested that they were a firm.”
• “Here, the Requester indicates that he and the other lawyer maintain separate office space and periodically work together as co-counsel to clients in specific cases (approximately two cases per year). In the Committee’s view, this type of co-counseling arrangement does not transform the lawyers into a ‘firm’ for purposes of imputation under Rule 1.10. Thus, based on the facts presented, the Committee concludes that there is no conflict under Rule 1.7(a)(1) that would preclude the Requester from taking on the representation.”
• “The representation is therefore permissible unless, under Rule 1.7(a)(2), there is a significant risk that the Requester’s representation of his client would be materially limited by the lawyer’s responsibilities to his former co-counsel or by his personal interest in his relationship with this other attorney. In the absence of unique factors (such as reliance on the other lawyer for a significant portion of the Requester’s business or an extremely close personal relationship), the Committee’s view is that a periodic co-counseling arrangement such as the one described here would not rise to the level of creating a material limitation conflict.”
  In fact, in some circumstances, it may benefit the client for a lawyer in the Requestor’s position to have knowledge about a co- defendant’s counsel. Ultimately, however, as described below, the Requester is in the best position to make the determination of whether the relationship with the other lawyer creates a material interest conflict.”

“Michigan Counties Say Firm’s Client Solicitations Merit DQ” —

• “Michigan counties sought to disqualify plaintiff firm Visser & Associates PLLC Tuesday, telling a federal judge that the lawyers went back on their word by soliciting potential class members in a suit claiming the government entities improperly kept a surplus of foreclosed home sales.”
• “The counties said that Visser belatedly reported its misconduct and urged the court to partially lift a stay in the case to determine whether the firm and attorneys Donald Visser and Donovan Visser should be disqualified or face some other discipline for 2022 solicitations sent out to potential class members..”
• “The Visser firm solicited potential members of the class in 2022 despite telling the court it wouldn’t roughly a year earlier, said the roughly 30 Michigan counties named as defendants, including Macomb, Washtenaw, Saginaw, Bay and Genesee counties.”
• “The lengthy saga began in 2020, when the class, led by named plaintiff Thomas Fox, sought to enjoin Visser from soliciting members of the then-certified class, but later withdrew that request after telling the court it would work with Visser. In 2021, class counsel and Visser came to an agreement, under which Visser agreed to stop attempting to retain victims and agreed not to enforce any retainer agreements it issued. As part of the agreement, the Visser firm agreed to ‘support prosecution of these matters’ under the class counsel, according to a filing from class counsel in 2021.”
• “In 2022, Visser sent two batches of letters to about 1,200 addresses related to foreclosures in Macomb County, according to court filings. Visser also filed a motion for surplus proceeds in Macomb County Circuit Court on behalf of an individual who fit the profile of the then-certified class, the counties said. The counties said Visser tried to ‘escape sanctions’ for what the plaintiffs had previously called a ‘clear violation of ethical rules.'”
• “‘Now, more than two years after disregarding its promises to the court, Visser has filed a notice belatedly reporting its misconduct, accompanied by some proposed excuses,’ the counties said, referencing Visser’s previous promise to the court that it would not solicit represented members.”

ABA Formal Opinion 515: “A Lawyer’s Discretion to Report When a Client Commits a Crime Against the Lawyer or Against Someone Associated with, or Related to, the Lawyer” —

• “A lawyer who is the victim of a crime by a client or prospective client may disclose information relating to the representation to the appropriate authority in order to seek an investigation and potential prosecution of the alleged offender or other services, remedy, or redress. To the extent that the information would otherwise be subject to the lawyer’s duty of confidentiality under Model Rule of Professional Conduct 1.6, the information is subject to an implicit exception to the Rule.”
• “This implicit confidentiality exception also applies when someone associated with the lawyer or related to the lawyer is a victim of the client’s crime and the lawyer is a witness to that crime.”

“Trump expands clash with law firms with order against Perkins Coie” —

• “U.S. President Donald Trump on Thursday signed an executive order suspending security clearances for employees of law firm Perkins Coie and targeting the firm’s business with federal contractors, citing its diversity practices and political activities.”
• “Seattle-founded Perkins Coie has long drawn criticism from Trump allies over its prior work for Trump’s 2016 Democratic election opponent Hillary Clinton.”
• “The order also directed federal officials to investigate other ‘large, influential, or industry leading law firms’ over their compliance with laws against racial discrimination.”
• “‘This executive order will suspend security clearances and access to certain federal resources for that law firm and also launch a holistic review of unlawful DEI (diversity, equity and inclusion) practices at some of the nation’s largest law firms,’ Trump aide Will Scharf said during an Oval Office signing event with reporters.”
• “Perkins Coie in a statement said the executive order is ‘patently unlawful, and we intend to challenge it.'”
• “The executive order targeting Perkins Coie went further, ordering agencies to require that federal contractors must disclose any business with the firm and saying contracts related to that business may be terminated. The order also said Perkins Coie employees’ ability to access federal government buildings would be restricted to protect U.S. interests and national security.”
• “White House officials said federal agencies would refrain from hiring Perkins Coie employees ‘unless specifically authorized’ and block business with contractors that work with Perkins Coie because of the firm’s involvement in ‘partisan lawsuits against the United States.'”
• “Perkins Coie and Covington are among nearly a dozen major U.S. law firms representing clients in lawsuits against the Trump administration, challenging executive actions related to immigration, transgender rights and other issues.”
• “Legal scholars said they were not aware of a U.S. presidential administration ever taking such official actions against specific law firms in the past.”
• “University of Minnesota law professor Richard Painter, who served as associate White House counsel from 2005 to 2007, said he could see no direct connection between law firm diversity initiatives and risks to national security that would entail stripping a law firm’s security clearances.”
• “Perkins Coie is widely known for its legal work for tech companies and other clients. It is defending Alphabet’s Google against a lawsuit by the Republican National Committee accusing the tech giant of sending its emails to users’ spam filters. The firm has represented Amazon in a number of court cases. The companies did not immediately respond to requests for comment.”
• “Its work for Hillary Clinton’s campaign led to criticisms from Trump supporters, including Elon Musk.”

“The Expanding Cyber Liability Landscape for Attorneys: Upstream and Downstream Risks” —

• “Attorneys and law firms face increasing cyber liability from multiple directions, including regulators, state attorneys general, and class action litigants. As stewards of highly sensitive client data, legal professionals are being held accountable not only for their own cybersecurity practices but also for those of their vendors and service providers.”
• “Cybersecurity threats to law firms are intensifying as regulators, clients, and the courts impose stricter requirements on the legal profession’s handling of sensitive data.”
• “Downstream liability, by contrast, arises when clients, affected individuals, or business partners seek damages due to a law firm’s cybersecurity failures, leading to compliance and negligence claims, breach of fiduciary duty lawsuits, or class actions. Attorneys must navigate these risks while maintaining ethical duties to safeguard client information.”
  Regulatory and Enforcement Risks (Upstream Liability)”
• “Federal and State Regulatory Scrutiny”
  • “Regulatory agencies and state authorities are poised to hold attorneys and law firms accountable for cybersecurity failures. Agencies such as the Federal Trade Commission (FTC), the Securities and Exchange Commission (SEC), and state attorneys general have broadened their enforcement actions against businesses, including law firms that fail to maintain reasonable cybersecurity.”
  • “Gramm Leach Blilely Act (GLBA): Revised in 2023, the GLBA Safeguards Rule (16 CFR Part 313) covers those entities involved in activities ‘incidental to…financial activities’ of covered institutions and requires both enhanced breach disclosure and reporting requirements.”
  • “SEC Cybersecurity Compliance Requirements: Effective December 2023, Regulation S-K 106, law firms advising publicly traded companies or handling material nonpublic information (MNPI) must comply with SEC cybersecurity disclosure rules, which require firms to assess and disclose cyber risks and incidents. Advisors to covered companies may similarly be subject to heightened regulatory scrutiny.”
  • “Health Insurance Portability and Accountability Act (HIPAA): When counsel is deemed a business associate of a covered entity and experiences a cybersecurity incident involving a covered entity’s PHI, a law firm is subject to investigation and fines for violations of the HIPAA Security Rule (45 CFR Part 160 and Subparts A and C of Part 164). In 2016, Business Associate Catholic Health Care Services of Philadelphia (CHCS) entered into a settlement with the U.S. Department of Health and Human Services in connection with CHCS’s alleged violation of HIPAA’s Security Rule. https://www.hhs.gov/hipaa/for-professionals/compliance-enforcement/agreements/catholic-health-care-services/index.html “
  • “State Attorneys General Actions: State attorneys general (AGs) enforce data breach notification laws and consumer protection statutes. Firms failing to report breaches or safeguard consumer data may face investigations, fines, and consent decrees mandating stronger cybersecurity programs. Enforcement actions against law firms have commenced by the New York Attorney General for violations of the New York SHIELD ACT (General Business Law 899-aa and 899-bb). https://ag.ny.gov/press-release/2023/attorney-general-james-secures-200000-law-firm-failing-protect-new-yorkers”
• “Ethical and Professional Responsibility Risks”
  • “State bar associations and legal ethics committees impose strict obligations on attorneys that unquestionably now include cybersecurity compliance. The ABA Model Rules of Professional Conduct, particularly Rules 1.1 (Competence), 1.6 (Confidentiality), and 5.3 (Supervision of Non-Lawyers), require attorneys to safeguard client data and oversee third-party service providers.”
  • “Failure to implement cybersecurity safeguards can result in disciplinary action, malpractice claims, and reputational damage. Attorneys must not only secure their own systems but also ensure that MSPs entrusted with client data meet equivalent security and compliance standards.”
• “MSP Risks: Upstream Cyber Liability from Service Providers”
  • “Law firms increasingly rely on third parties (MSPs) for document management, cloud storage, e-discovery, and cybersecurity solutions. While these MSP enhance efficiency, they also introduce significant upstream liability risks when they experience breaches or fail to comply with legal and ethical obligations.”
    Common MSP-Related Cyber Risks”
• “Client and Third-Party Litigation Risks (Downstream Liability)”
  • “Law firms are also vulnerable to downstream liability, as clients, clients or customers of clients, and even non-clients affected by a breach, as well as business partners seek legal recourse after cybersecurity incidents.”
• “Common Legal Theories in Cyber Liability Lawsuits”
  • “Negligence Claims: Clients may argue that a law firm failed to implement reasonable cybersecurity measures, leading to a data breach that exposed sensitive information.”
  • “Negligence Per Se: Affected individuals may file claims based on violation of cybersecurity laws even where the laws themselves do not provide a private right of action.”
  • “Breach of Fiduciary Duty: Attorneys owe clients a fiduciary duty of confidentiality. A cyber incident exposing client data can lead to claims that the firm breached this duty.”
  • “Breach of Contract: Engagement agreements often contain confidentiality and data security provisions. A breach may result in contractual liability if security commitments are not met.”
  • “Consumer Protection and Privacy Statutes: Clients may sue under state consumer protection laws, the CCPA, or GDPR, seeking statutory damages for improper handling of their data.”
    “Mitigating Downstream Liability”
• “Provide Client Transparency on Cybersecurity Measures: Firms should educate clients about their cybersecurity practices and clearly define data protection obligations in engagement letters.”
• “To mitigate these risks, attorneys must adopt proactive cybersecurity governance, including service provider risk management, contractual safeguards, regulatory compliance, and robust client data protection strategies. As cyber threats and legal obligations continue to evolve, law firms that prioritize cybersecurity will be best positioned to protect their clients, their reputations, and their legal standing.”

“Judge disqualified for unusual conflict prior to bench” —

• “Justice Cameron Moore stepped away from the Greensill Bank AG v Insurance Australia Limited proceedings after concerns were raised about his involvement in the matter prior to his appointment.”
• “In his recent judgment, Justice Moore explained he appeared as senior counsel for one of the parties in November 2024 – just a month before his appointment to the bench – on an interlocutory application concerning the Harman obligation.”
• “While the issue itself was not for determination, or had any direct bearing, in the substantive hearing, the application was ‘collateral’.”
• “‘I was briefed on that application because both senior counsel briefed for the Marsh [Limited and Marsh Pty] entities in the proceedings were unavailable on the date set down for the hearing of the Harman application. I was not briefed in the matter generally,’ he said.”
• “In January this year, after the proceedings were allocated to Justice Moore, he said he considered whether his involvement in the Harman application would prevent him from the allocation.”
• “Justice Moore said that the fact a judge may have appeared in the same matter they presided over ‘does not of itself necessarily give rise to a reasonable apprehension of bias’, nor would the mere identification of the issues during an interlocutory dispute.”
• “On the face of the matter, Justice Moore said his prior involvement would not necessarily require his disqualification.”
• “‘However, the [Greensill] parties contend the submissions advanced by me on behalf of the Marsh entities went further than merely identifying uncontroversial issues in the proceedings and suggested how those issues might be approached and resolved,’ he said.”
• “Having reviewed the material provided by Greensill, Justice Moore said he agreed certain passages ‘went further and were suggestive of a particular outcome on issues’ that require resolution in the substantive proceedings and interlocutory issues.”
• “‘In those circumstances, a fair-minded lay observer might reasonably apprehend that I might not bring an impartial mind to the resolution of those issues, and I am satisfied that I ought to recuse myself from further involvement in the proceedings,’ Justice Moore said.”

“Treasury Department Announces Suspension of Enforcement of Corporate Transparency Act Against U.S. Citizens and Domestic Reporting Companies” —

• “The Treasury Department is announcing today that, with respect to the Corporate Transparency Act, not only will it not enforce any penalties or fines associated with the beneficial ownership information reporting rule under the existing regulatory deadlines, but it will further not enforce any penalties or fines against U.S. citizens or domestic reporting companies or their beneficial owners after the forthcoming rule changes take effect either.”
• “The Treasury Department will further be issuing a proposed rulemaking that will narrow the scope of the rule to foreign reporting companies only. Treasury takes this step in the interest of supporting hard-working American taxpayers and small businesses and ensuring that the rule is appropriately tailored to advance the public interest.”
• “‘This is a victory for common sense,’ said U.S. Secretary of the Treasury Scott Bessent. ‘Today’s action is part of President Trump’s bold agenda to unleash American prosperity by reining in burdensome regulations, in particular for small businesses that are the backbone of the American economy.'”

“KPMG Must Pivot Around Audit Clients in Creating US Law Practice” —

• “KPMG must overcome a prohibition against giving legal advice to audit clients as it becomes the first Big Four accounting firm to practice law in the US.”
• “The prohibition stops the company from gaining potential legal customers from the hundreds of Fortune 500 and privately held companies it audits. KPMG agreed to the limitation to win Arizona Supreme Court approval Thursday to practice law in the state.”
• “‘This is the biggest challenge when you’re dealing with the Big Four—they have conflicts,’ said Howard Rosenberg, head of talent intelligence and acquisition at Baretz + Brunelle. A prohibition against accounting firms providing consulting and auditing services under the same roof prompted, in part, EY to scrap the spin-off of its consulting business in 2023.”
• “KPMG said it never planned to offer legal services to audit clients. The firm will apply the service restriction to both its public company and privately held audit clients, including those served by affiliates around the globe. Rather than shedding clients to comply with the order, the firm said it expects to gain ‘many’ customers as a result of being able to practice law in Arizona.”
• “KPMG has said it seeks to provide services to multinational corporations that largely complement the work of traditional law firms, such as harmonize thousands of legal contracts as part of post-merger integration or help re-orient supply chains.”
• “US auditor independence rules generally bar accountants from acting on behalf of company managers and US securities laws specifically prohibit auditors from providing legal services to their publicly traded clients.”
• “The Arizona high court’s decision extends that logic to prevent possible conflicts of interest, said Robert Knechel, director of the International Accounting and Auditing Center and accounting professor at the University of Florida. ‘Law is by definition an advocacy service, and auditing is not,’ Knechel said.”
• “The Arizona court’s decision ‘still leaves open a wide market of non-audit clients to sell services to,’ said Tom White, a retired Wilmer Hale partner and lecturer at Columbia Law School.”
• “Over the past two decades, the Big Four have amassed lucrative consulting arms despite strict conflict-of-interest rules set after accounting scandals toppled Enron Corp. and WorldCom Inc. and now policed by the Securities and Exchange Commission. KPMG’s US advisory business generated roughly 40% of the firm’s $12.6 billion in revenue in 2024.”
• “As an Arizona alternative business structure, KPMG will have an internal compliance watchdog, said Natalie Knowlton, associate director for legal innovation for Stanford Law School. This watchdog, identified by KPMG Law US as longtime KPMG attorney David Rizzo, will be required to comply with Arizona’s requirement to file compliance reports twice a year.”
• “‘This is a much more heavily regulated environment than any other jurisdiction in the US,’ Knowlton said. ‘There’s a compliance lawyer who is required to report to the bar in case there are any incidences of malfeasance or any lawyers have gone outside of the boundaries the court has set up. You don’t see that in any other law firms.'”

“Covington Revenge Deepens Worries of Defending Trump Targets” —

• “President Donald Trump’s decision to punish Covington & Burling for representing former Special Counsel Jack Smith will feed some firms’ worries about letting lawyers volunteer to represent former Justice Department attorneys.”
• “Private attorneys seeking to represent DOJ workers being forced out or investigated had already faced pushback from their firms’ executive committees over concerns such work will hurt their brands and cut into billings, according to interviews with 12 attorneys.”
• “Some firm leaders, citing corporate clients threatening to walk if they get crosswise with Trump, have rejected outright or put up roadblocks to partners seeking approval to represent DOJ lawyers, FBI agents, and other civil servants who’ve faced various forms of attack, three lawyers familiar with the decisions told Bloomberg Law. That was before Trump’s executive order Tuesday pulling the security clearances of Covington lawyers and vowing to cancel any government business with the firm.”
• “‘I continue to see as I reach out and recruit lawyers to help me that there is an absolute battle in many of the firms between playing a role or staying out of it,’ said Mark Zaid, a national security lawyer who’s been helping Trump’s perceived foes at DOJ and other agencies match with pro bono counsel from large and small shops.”
• “Zaid last month sued on behalf of FBI agents to halt the administration from releasing identities of those involved in Trump-related investigations. He said the problem is pronounced at law firms that have well-established Washington offices and are governed by out-of-town managing partners.”
• “There are Democratic and Republican partners at firms who are ‘gung ho and really want to play a role in challenging this administration,’ but they’re getting pushback from leadership, Zaid said. It’s typically over the unprofitable time suck of pro bono matters and the potentially negative public relations impact on existing and prospective clients, added Zaid, who himself had his security clearance pulled by Trump earlier this month.”
• “The attorneys declined to name law firms due to the sensitive nature of internal deliberations.”
• “Individual attorneys want to enter what they see as a nonpartisan battle to preserve democracy by filing merit systems complaints for terminated federal employees, representing Jan. 6 prosecutors under investigation from DOJ and Congress, or participating in litigation to halt Trump policies. Firms’ senior decisionmakers, however, agonize about the sustainability of representing current and former government employees opposite the administration, according to multiple attorneys.”
• “Such strain isn’t new, but one Big Law partner said he’s never witnessed this level of concern in which firm leadership worries they could jeopardize their economic future by protecting the rule of law.”
• “‘I am seeing from individual attorneys who are former DOJers a real wakeup moment with the Thursday night massacre’ in which multiple prosecutors resigned over leadership’s order to dismiss charges against New York’s mayor, said Erica Newland, who leads Protect Democracy’s civil service protection project. ‘They are enraged and understand the existential nature of the threat for both the culture and norms of the Department of Justice.'”
• “Zaid said that some Big Law partners have found a workaround when firm leaders block their involvement. They’ve continued supporting the cause in the background, while letting lawyers from other firms sign court filings, he said. This can protect the reputation of white collar defense partners when later advocating for corporate clients, such as in urging DOJ to decline prosecution.”
• “Adding to firm leaders’ concerns is that a few competitors have warmed up to Trump, a significant turnabout from when much of Big Law shunned the president following the Jan. 6 Capitol insurrection.”

“Elon Musk’s DOGE Adventure Leads to Knotty Accounting Question for Tesla” —

• “How much influence does Elon Musk have over the U.S. government? Enough that Tesla will need to make a judgment call on a disclosure issue that once would have been unthinkable for an American private-sector company to contemplate.”
• “Here is the question at hand: Are Tesla and the government ‘related parties’ for purposes of generally accepted accounting principles?The answer would appear to be yes, as wild as that might seem.”
• “As the functional leader of the Trump administration’s Department of Government Efficiency, or DOGE, Musk has rapidly amassed enormous power over vast portions of the U.S. government, nearly wiping out entire agencies and targeting others for elimination, while directing mass employee layoffs. Officially, Musk has been designated a ‘special government employee.’ He also is synonymous with Tesla, the electric-vehicle maker where he is chief executive, the largest shareholder and the face of the company.”
• “The related-party designation would mean Tesla, in its disclosures to investors, could have to start reporting transactions it has with the government if they are significant. It also would underscore how powerful Musk has become. U.S. accounting standards say the reason for requiring such disclosures is that ‘transactions involving related parties cannot be presumed to be carried out on an arm’s-length basis, as the requisite conditions of competitive, free-market dealings may not exist.'”
• “Other public companies have named the U.S. government as a related party before in their disclosures, including American International Group, General Motors, Fannie Mae and Freddie Mac. But that was because the government had bailed them out and taken large ownership stakes during the 2008 financial crisis. If Tesla were to start identifying the government as a related party in its reports to investors, it would be because of the amount of control Musk wields over the government, not the other way around.”
• “Under U.S. accounting standards, Tesla and the government would be considered related parties if one of them ‘can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests.'”
• “Jack Ciesielski, founder of the asset manager R.G. Associates in Towson, Md., and a member of the Financial Accounting Standards Board’s Emerging Issues Task Force, said Tesla and the government fit that description. ‘Tesla and Musk have significant influence over the U.S. government,’ he said. ‘I don’t think there’s any definition you can come up with that says they’re not related parties.'”
• “The same analysis would apply in principle to Musk’s other companies, including SpaceX, which has billions of dollars of federal contracts, and the social-media company X. However, unlike Tesla, those other companies aren’t publicly held, so they don’t file their financial statements with securities regulators.”
• “Tesla in its latest annual report identified several of Musk’s other companies as related parties, including SpaceX and X. It said its transactions with those companies didn’t have a material impact on its financial statements. Tesla didn’t say how much of its $98 billion of revenue last year came from the government. The company didn’t respond to requests for comment.”
• “The importance of Tesla’s relationship with the government goes beyond commercial transactions. Tesla customers can receive as much as $7,500 in federal tax credits for the purchase of electric vehicles, under current law. Tesla also has been the subject of numerous government investigations, including by the National Highway Traffic Safety Administration, where DOGE has been directing layoffs.”
  Tesla mentioned DOGE only once in its last annual report, filed Jan. 30. In a risk-factor disclosure, Tesla said it is highly dependent on Musk’s services and that ‘he does not devote his full time and attention to Tesla,’ noting that he holds management positions at five other companies and is involved with other ventures, as well as DOGE.”
• “Listing the U.S. government as a related party might not trigger any other immediate changes to Tesla’s books, and it shouldn’t be a problem for Tesla shareholders. If the government and Tesla do significant amounts of business together, the related-party designation would help provide transparency into the extent of those dealings. Investors would be the intended beneficiaries of the disclosure. Taxpayers, too, could benefit from some additional sunlight.”

“Ethics ruling bars law firm from taking hospital clients in Blue Cross case” —

• “A judge in Alabama has barred a large U.S. law firm from representing plaintiffs in major litigation accusing Blue Cross Blue Shield of underpaying hospitals, physicians and other medical providers for years.”
• “The decision on Wednesday [2/26] was a rebuke for 1,100-lawyer law firm Polsinelli, which is known for representing healthcare companies and which had been advising clients on potentially opting out of a $2.8 billion class-action settlement in the Blue Cross case in order to sue the insurer on their own.”
• “Chief U.S. District Judge R. David Proctor in Birmingham said in his ruling that attorneys who now work at Polsinelli had earlier represented Blue Cross Blue Shield of Alabama in the case, creating an ethical conflict.”
• “‘Lawyers who until recently did substantial work for (Blue Cross) in this litigation are now at a firm that is taking materially adverse positions against it — in that same litigation,’ Proctor wrote in his order.”
• “In the underlying litigation, hospitals and other health providers claimed Blue Cross and some of its affiliates violated antitrust law by dividing the country into exclusive areas where they agreed not to compete with each other. The providers’ class action, filed in 2012, said the alleged conspiracy increased the cost of insurance and drove down reimbursements. Blue Cross Blue Shield denied wrongdoing but agreed in October to settle with the plaintiffs for $2.8 billion.”
• “Alabama-founded law firm Maynard Nexsen had been one of the firms defending a Blue Cross affiliate in the case, Blue Cross Blue Shield of Alabama, billing thousands of hours. In 2024, some of the Maynard Nexsen attorneys left the firm to join Polsinelli, the decision said.”
• “Lawyers for the plaintiffs who negotiated the settlement complained earlier this month that a different Polsinelli lawyer was talking with clients about opting out of the deal and potentially filing their own lawsuits, violating ethics rules against conflicts of interest.”
• “Attorneys for Polsinelli denied that Polsinelli’s hiring of a handful of lawyers from Maynard Nexsen created a conflict. Polsinelli said clients that are weighing whether to accept the settlement did business with non-Alabama Blue Cross companies. ‘The right to counsel of one’s choosing is a bedrock principle of American jurisprudence,’ Polsinelli told Proctor.”