“Jones Day Disqualified as Bankruptcy Counsel to R.T. Vanderbilt Unit Before Asbestos Trial” —

• “A bankruptcy judge disqualified law firm Jones Day from representing an R.T. Vanderbilt Holding unit in its attempt to use chapter 11 to resolve asbestos-related liabilities at its nonbankrupt parent company.”
• “Judge Wendy Kinsella of the U.S. Bankruptcy Court in Syracuse, N.Y., ruled that Jones Day can’t act as bankruptcy counsel to former talc-mining company Vanderbilt Minerals due to the firm’s historical representation of R.T. Vanderbilt. ‘Approving the retention would compromise the integrity of the bankruptcy process in this very case, and the court is not willing to do that,’ Kinsella said.”
• “The judge said she understood her ruling was ‘a bomb that just dropped’ ahead of a trial on a proposed settlement between the subsidiary and its parent regarding their liabilities for more than 1,400 asbestos-related lawsuits stemming from past talc production.”
• “Vanderbilt Minerals filed for bankruptcy in February seeking a settlement that would shield its parent from existing and future talc-related asbestos claims in return for certain assets and the forgiveness of intercompany debt.”
• “A committee representing asbestos claimants has challenged the proposed deal, calling it an end run around the Supreme Court’s prohibition on releases for creditors’ claims against third parties. The justices in a 2024 ruling against Purdue Pharma held that such nonconsensual releases are beyond bankruptcy court’s power to grant.”
• “The committee sought to dismiss the bankruptcy case as a bad-faith litigation tactic and asked for Jones Day to be disqualified as bankruptcy counsel to Vanderbilt Minerals due to the firm’s many years representing the parent company.”
• “Vanderbilt Minerals has argued in court filings that any claims against its parent belong to its own bankruptcy estate, not to individual creditors. It also said Jones Day faced no conflict of interest because its representation of R.T. Vanderbilt concluded in September.”
• “Other corporate defendants that have tried to use bankruptcy to resolve tort liabilities have faced similar challenges to their choice of counsel due to alleged conflicts. Judges presiding over cases filed by Johnson & Johnson and 3M, however, allowed their chosen lawyers to be retained. Both those cases were subsequently dismissed.”

“Hicks Thomas DQ’d Over Aide’s Past Work For Other Side” —

• “Siding with two lower courts, the Texas Supreme Court on Friday held that Hicks Thomas LLP must be disqualified from a long-running suit over a hospital project because of a firm legal assistant’s past work for the other side of the case.”
• “The court said Lone Star State precedent is clear, ‘If a nonlawyer worked on the other side of a matter in a prior employment, there is a conclusive presumption that confidences were obtained from the prior representation and a rebuttable presumption that those confidences were shared with the new employer.’”
• “The justices said that the only way to rebut the ‘shared confidences presumption’ under ‘Turner’s rule’ is to show that preventative measures were taken by the firm to guard against any disclosure by the nonlawyer employee of information gained while working on matters for a prior employer and that Hicks Thomas had failed in that regard. Turner’s rule refers to a 2017 decision by the court in In re Turner, a case involving a nonlawyer who worked on one side of a matter and then switched law firm employers and worked on the opposite side of the case.”
• “Prior to joining Hicks Thomas, the legal assistant had worked for Munsch Hardt Kopf & Harr PC under a lawyer who previously represented Apex Katy Physicians LLC and its managing member Pankaj Shah, the plaintiffs in a 2009 lawsuit against Adeel Zaidi, A.K. Chagla and Prestige Consulting for damages arising out of multiple transactions related to a hospital project.”
• “From 2009 to 2011, the legal assistant actively worked on the plaintiffs’ side of the case under a Munsch Hardt lawyer, the Friday opinion said. When the legal assistant joined Hicks Thomas in 2011, the firm had no involvement in the case.”
• “Munsch Hardt’s work in the case ended a couple of years after the legal assistant left that firm, the opinion said. After the plaintiffs won the case in the trial court, the defendants — Zaidi, Chagla and Prestige Consulting — hired attorney Robin Harrison to represent them on appeal. In 2016 the case was remanded by the court of appeals for a new trial.”
• “Harrison brought the case with him when he joined Hicks Thomas in 2016, five years after the firm hired the legal assistant who previously worked on the plaintiffs’ side of the matter while employed by Munsch Hardt, the opinion said.”
• “‘Significantly, as the defendants acknowledge, there is no evidence that Hicks Thomas or Harrison instructed her not to work on cases she had worked on in her prior employment,’ the opinion said.”
• “Between 2017 and 2022, the legal assistant performed work on the case when Harrison’s usual assistant wasn’t available, including filing some case documents in 2022 on Harrison’s behalf, which led to her name appearing in the record. The opinion noted that the plaintiffs’ counsel, Andrew Meade, realized in early 2023 that the legal assistant had previously worked on their side of the case when a Munsch Hardt lawyer was still co-counsel for the plaintiffs.”
• “Meade reportedly asked Hicks Thomas about the firm’s conflict screening procedures for nonlawyers.”
• “‘Harrison responded that the legal assistant did not recollect her prior work on the matter, had not shared any confidential information with him, and would be screened from the matter going forward,’ the justices said. ‘But the plaintiffs considered these steps too little, too late and moved to disqualify Harrison and Hicks Thomas in early March [2023].’”
• “A Harris County trial court judge granted the motion for disqualification, and in 2024, a state appellate court affirmed, leading the defendants to seek mandamus relief from the state’s high court.”
• “In finding that Harrison and Hicks Thomas must be booted from their representation of Zaidi, Chagla and Prestige Consulting, the justices said that the shared-confidences presumption cannot be overcome by denials of disclosure ‘but by prophylactic measures assuring that legal assistants do not work on matters related to their prior employment,’ adding that it has no reason to doubt Harrison’s testimony.”
  “‘Strict adherence is required,’ the justices said. ‘Accordingly, an instruction when a firm hires a nonlawyer is a best practice to guard against disclosures and conflicts. That said, if the conflict did not exist at that time, a failure to instruct may be remedied later to avoid disqualification.’”
• “In a footnote, the high court said, ‘We acknowledge that this may lead firms and their human resources departments to adopt pro forma instructions designed to merely satisfy this rule.’”
• “‘Although a perfunctory instruction may leave a less indelible imprint, the admonishment still provides valuable information and training to a new nonlawyer employee,’ the justices said. ‘We hope firms will go beyond these minimal requirements and instruct their legal staff in a manner to convey the significance of guarding against conflicts and protecting prior client confidences.’”
• “The high court rejected an argument from the defendants that Apex and Shah had waived the issue of disqualification because they did not move for opposing counsel’s ouster for about a year after the assistant’s name appeared in the e-file record as an employee for the defense-side firm.”
• Decision: here.