Sedgwick, the dissolved law firm, filed for bankruptcy Tuesday in federal bankruptcy court in San Francisco, reports the ABA Journal.

“The firm generally estimates its liabilities at up to $50 million and says in a declaration that there are about $32.6 million in claims from the termination of office leases as well as about $9.2 million owed in accounts payable. The firm had assets of about $1.56 million in cash and recoverable accounts receivable of about $1.5 million, the declaration says.”

“The firm is analyzing whether it has clawback claims against former partners.”

“Sedgwick had its best year in 2012 with $212 million in gross revenue … According to the bankruptcy declaration, Sedgwick ‘established a well-deserved reputation for high-end insurance work and as one of the pre-eminent product liability firms in the country.’”

Read the ABA Journal article.

“In a recent case before Justice Andrea Masley, Corporate Electrical Technologies, Inc. v. Structure Tone, Inc. et al., Plaintiff Corporate Electrical Technologies, Inc. (“CET”), a subcontractor, was hired by Structure Tone, Inc. (“STI”), a general contractor, to perform electrical work on a multi-million dollar renovation project at a Macy’s flagship store in Herald Square, in anticipation of the holiday shopping season.” reports Sonia A. Russo in Farrel Fritz Attorney’s New York Commercial Division Practice Blog.

“CET argued that soon after the renovation work commenced, the project was delayed to the point that Macy’s took over the day-to-day running of the renovation project. Once Macy’s took over, it directly negotiated with CET and requested that CET perform extra work beyond CET’s subcontractor agreement with STI. Based on the additional work performed, CET submitted numerous unpaid change orders and brought this action against STI and Macy’s, alleging that it was owed over a million dollars for the project.”

Read the article.

“At some point, every custom integrator will run into a litigious client. Fortunately, your written contract protects you against basic errors and omissions on the job. But it can get dicey when the client claims the work you performed was ‘grossly negligent.’ Even with a specific clause in your contract stating you are not liable for gross negligence, it is not legally enforceable and might result in the entire contract being deemed invalid by a judge. So what should you do and what is gross negligence anyway?” asks Jason Knott in CEPro’s Business Support.

“Legal expert Ken Kirshenbaum, says the definition of gross negligence is somewhat murky. He notes that every client contract should include a clause that excludes the integrator from liability for negligence on the part of the company or its subcontractors.”

“Unfortunately, gross negligence is defined differently by the courts in different states. ”

Read the CEPro article.

Read the ABA Journal’s article.

Read WFLA 8’s article.

Read the StamformAdvocate’s article.

“The patient was age 53 when he was transferred to Kindred Hospital. He had been diagnosed with multiple sclerosis and bipolar disorder in his twenties. When he signed the arbitration agreement in issue, he had required 24-hour nursing care for the previous 13 years, although he was not cognitively impaired at the time of the signing.” reports the Law Office of Donald D. Vanarelli in their blog.

“After he filed a negligence suit regarding pressure ulcers he had developed, the hospital filed a motion to dismiss his complaint and compel arbitration, based on the arbitration agreement the patient had signed. The hospital’s motion was denied, and an appeal was filed. On appeal, the Appellate Division affirmed.”

The appeals court noted “The arbitration agreement was not explained to him; he was only told to sign all the documents. He did so, including the “voluntary” arbitration agreement. Every document was signed within the span of one minute. The arbitration agreement stated that his signature was not a precondition to treatment, and that he could cancel it within 5 days; however, he was not provided a copy of the arbitration agreement.”

Read the article.

“Lawyers and clients often need cash. There is also the element of risk. Lawyers and clients may want to lay off some of the risk of a case on someone else, and the litigation finance industry generally offers non-recourse money.” advises Robert W. Wood in the Taxes section of Forbes.

He explains that “Lawyers may seek funding, the clients alone may seek it, or each may get some, depending on how the deal is structured. But one of the most consistent questions is how taxes will be handled, and that depends on the documents. Financing documents vary materially, so one can’t answer the tax questions without reviewing them. Fundamentally, is this a loan? Is it a sale of a portion of the claim, or of a portion of the fees?”

“These may sound like simple questions, but they can be difficult to answer.”

Read the Forbes article.

“There is perhaps no more consistently vexing problem for transactional attorneys on opposite sides than figuring out a fair contractual resolution for “sandbagging” issues.” warns Allison J. Sherrier in Goulston & Storrs’ What’s Market.

“One problem for attorneys is the extraordinary difficulty of defining and proving what kind of actual or constructive pre-closing knowledge a buyer had or should have had. As a result, lawyers and their clients frequently choose to avoid wrangling over contractual terms associated with sandbagging for fear of blowing up a deal or spending inordinate time to reach agreement on this one problem.”

“Because transactional contracts often fail to address sandbagging, the post-closing resolution of sandbagging issues frequently hinges on applicable common law, and courts in different states have very different views about the proper resolution of these controversies. This makes the choice-of-law provision in transactional contracts extremely important.”

Read the article.

“Federal prosecutors allege that a former Morrison & Foerster office operations manager spent more than $400,000 on the firm’s credit card to make personal purchases and transfer money to his PayPal account.” reports Debra Cassens Weiss of the ABA Journal.

“The former employee, Andrew Robertson, faces a preliminary hearing at the end of the month in Washington, D.C., on a federal mail fraud charge.”

“Robertson is accused of spending money on personal purchases that included designer clothing, jewelry, home furnishings, groceries, his Verizon bill and storage units for his personal items.”

Read the article.

“Two state agencies are taking the unusual step of trying to stop Riot Games from paying out $10 million to female employees as part of a settlement over a gender discrimination class action suit.” reports the Los Angeles Times. “The state thinks the women could be entitled to as much as $400 million instead.”

“The suit began in November 2018, when two women who had worked at the Los Angeles game studio, which makes the popular “League of Legends” title, sued over violations of the California Equal Pay Act, alleging they were routinely subjected to sexual harassment and gender discrimination.”

Read the Los Angeles Times article.

“The judge presiding over a case which saw Johnson & Johnson hit with an $8bn jury verdict has reduced the amount the company has to pay in damages to $6.8m.” reports PM Live.

“Last October,  J&J was ordered to pay $8bn in damages to a US man who claims he was not warned that taking the company’s antipsychotic Risperdal could lead to breast growth.” A jury in Philidelphia agreed with his allegations.

Johnson & Johnson appealed the verdict arguing the size of the payout was “grossly disproportionate”.

Read PM Live‘s article.

“The opening debate of the Senate impeachment trial on Tuesday afternoon was supposed to be merely about the trial rules. But members of President Donald Trump’s legal team wasted no time telling a number of lies before things really got going.” reports Vox.

“Though getting facts wrong might be somewhat understandable in the context of extemporaneous statements, these falsehoods came in the context of prepared remarks read by White House counsel Pat Cipollone and personal Trump attorney Jay Sekulow.”

Read Vox‘s article.

Photo by John Phelan

As Trump reshapes the federal judiciary with staunch conservatives and controversial picks, some Harvard Law School students appear to be thinking twice about applying for clerk jobs with them, and passing up what are generally considered plum positions, reports The Boston Globe.

Some Harvard law students are reluctant to clerk for some recent appointees who have been outspoken opponents of gay rights, antiabortion stalwarts, and who have been deemed “not qualified” by the American Bar Association, said one third-year student.

“But some legal scholars worry that the reluctance of students at one of the nation’s premier law schools to clerk for Trump-appointed judges, first reported by Bloomberg Law, could further polarize the legal profession and do the country more harm than good,” writes the Globe‘s Deirdre Fernandes.

Read the Boston Globe article.

HP Inc. was awarded $439 million in damages against Quanta Storage Inc. and its U.S. subsidiary after a federal judge tripled a jury’s 2019 award for damages caused by a widespread scheme to inflate the price of optical disk drives, Bloomberg reports.

Sony, Panasonic and some other disk-drive makers settled with HP over the past decade. Only Taiwan-based Quanta chose to go to trial.

Quanta lost that trial in October when a Houston jury ordered Quanta to pay HP $176 million in damages. Now the federal judge in the case has tripled the damages award, as authorized under antitrust law, to $528 million before deducting $89 million in settlements paid by the other companies.

Read the Bloomberg article.

James M. Wicks of Farrell Fritz writes about a recent breach of contract case in which a court found that an unsigned termination agreement between a real estate broker an another party was enforceable even though it never was signed.

He explains that the court focused its analysis on two questions: Is there evidence supporting a finding of an intent to be bound?, and if so, is there evidence that the parties “positive[ly] agree[d] that it should not be binding until so reduced to writing and formally executed”?

The ruling is a reminder that written agreements without the “not bound until signed or executed” clause is risky business, Wicks writes.

Read the article.

The Supreme Court will hear a slate of highly charged disputes when the justices return to the bench in the new year and resume one of the most politically volatile terms in recent memory, reports The Hill.

The court already has heard high-profile fights over LGBT rights in the workplace, the scope of the Second Amendment and the deportation status of nearly 700,000 young undocumented immigrants. But the remaining cases on the court’s docket are no less explosive, write The Hill‘s John Kruzel and Harper Neidig.

The top seven cases to be heard this session involve a separation of powers fight over President Trump’s financial records, Louisiana’s abortion law, religious school scholarships, religious exemptions from discrimination suits, the future of the Consumer Financial Protection Bureau, a fight over how copyright law treats software interfaces, and Bridgegate and public corruption.

Read the Hill article.

The former general counsel of Faraday & Future Inc. sued the company for $106 million Jan. 3, according to a Bloomberg Law article.

Hong Liu, a China expert, claimed in Manhattan federal court that the electric car startup lured him away from a Mayer Brown LLP partnership by fraudulently overstating its prospects.

He alleges top executives made false claims about a pending $2 billion investment to persuade him to abandon his lucrative practice and move his family from New York to California. The investment didn’t materialize, and Liu alleges he was fired after less than a year without receiving the compensation he’d been promised: $6 million in cash and 20 million shares—valued at $100 million—in Faraday affiliate Smart King Ltd.

Read the Bloomberg article.

Two Gray Reed lawyers give their take on a recent Texas appellate court’s ruling in Mesa v. Deep Energy, an opinion that will have profound impacts on mineral liens and contractual provisions purporting to waive mineral liens.

Writing on the firm’s website, Ethan Wood and Joe Virene describe the case in which Mesa sued Deep Operating for failing to pay fully for work Mesa performed on three wells. Deep Operating’s parent company claimed that Mesa contractually waived its right to assert liens against Deep Operating’s wells and waived its right to seek payment on the contract from any entity other than Deep Operating, which at that point was in bankruptcy.

“Relying on a 2012 case out of the Dallas Court of Appeals and a 2015 decision from the Texas Supreme Court, the Houston Court concluded that when a party to a contract agrees to seek payment or damages only from one source to the exclusion of all others, that party has effectively waived its rights to such payment or damages from other parties,” the authors write.

Read the article.

Faegre Baker Daniels is being sued for legal malpractice by a company that says the firm provided “erroneous” legal services relating to the launch and operation of a fund set up to acquire and manage crypto assets, according to a Bloomberg Law report.

Digital Capital Management’s complaint alleges that the law firm provided “inaccurate analysis and advice” to Digital Capital’s predecessor, Crypto Asset Management, LP, regarding how to register under the Investment Advisers Acts of 1940.

Crypto Asset Management alleges the firm advised the plaintiffs that “Crypto Assets are not securities” and to thus structure the fund’s business “accordingly.” The advice was “erroneous,” the complaint says, resulting in a censure and penalty from the SEC.

Read the Bloomberg Law article.