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Mergers Among Law Firms Create Conflicts of Interest
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Patton Boggs LLP

Summary: Conflicts of interest have become a major concern for law firms involved in mergers as they are being removed from cases they have worked thousands of hours on. 

When Patton Boggs merged with Squire Sanders, the brand new law firm changed its name to Squire Patton Boggs  . The new firm also dropped one of Patton Boggs’ clients, Tate & Lyle, because it represents U.S. sugar companies that are suing Tate for falsely claiming its corn syrup “just like sugar,” according to Reuters.

  
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Tate has since asked a judge in Los Angeles to disqualify Squire Patton Boggs from representing the sugar companies. A couple of those companies are the Western Sugar Cooperative, American Sugar Refining, Inc. and C&H Sugar Co.

To read more stories about Squire Patton Boggs, click here.

Should the judge agree with the request, the companies will lose lawyers who have already put in more than 20,000 hours of work and billed more than $12 million in legal fees.

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The judge presiding over the case is U.S. District Judge Consuelo Marshall, who said she would consider the matter.

The law firm claimed that Tate waived future conflicts when it brought the firm in on retainer. This case shows how conflicts arise because of law firm mergers and from lawyers switching firms.



2013 was a record high for law firm mergers, with 88 taking place, which accounts for 47 percent more than in 2012. The numbers were provided by Altman Weil.

Lawyers are prohibited from representing clients on opposite sides of a dispute, according to ethics rules. But, when a conflict arises, many lawyers will either ask the client to waive it or lawyers will drop certain clients to avoid the conflict.

In a case from 2012, a judge in San Francisco disqualified McDermott Will & Emery from representing MotionPoint Corp. in a patent lawsuit with another company because the firm had hired lawyers from another law firm that represented the opponent in the case.

Read more law firm merger stories here.

MotionPoint lost the case and then sued McDermott for the $10 million it incurred when it had to bring on new lawyers to handle their case. This trial will start in February of 2016 in California.

In 2013, Winston & Strawn was taken off a case involving National Public Finance Guarantee Corp. in the bankruptcy case of San Bernardino County. The reason for being disqualified was that the firm hired lawyers from another firm that worked on the case for a state pension fund that was fighting against National Public Finance Guarantee Corp.

Read more about Winston & Strawn here.

Do firms actually check on potential ethics issues or do they wait for them to pop-up? Use our poll to share your thoughts.

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Image credit: Patton Boggs



 

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