Kirkland responds to Invitae matter conflicts allegation: “Invitae Corporation, Docket No. 3:24-bk-11362 (Bankr. D.N.J. Feb 13, 2024), Court Docket” —

• “Kirkland does not hold or represent any interest adverse to these chapter 11 estates and is disinterested, as the term is defined by section 101(14) of the Bankruptcy Code.”
• “Kirkland ‘holds’ absolutely no interest adverse to these estates: it is neither a creditor of these estates nor economically motivated to do anything other than zealously represent the Debtors as fiduciaries for all stakeholders. Just as Kirkland does in every single debtor representation, irrespective of who is invested in the capital structure. The record in these cases is equally clear: Kirkland has and will continue to serve the Debtors’ interests—and only the Debtors’ interests—in these chapter 11 cases.”
• “Kirkland also does not “represent” any interest adverse to these estates. The Committee and the U.S. Trustee seek to disqualify Kirkland because Kirkland represents Deerfield in fund formation matters entirely unrelated to these chapter 11 cases. But Kirkland has not, does 4 not, and will not represent Deerfield in connection with these chapter 11 cases or in matters adverse to the Debtors.”
• “Notably, Kirkland’s limited funds work for Deerfield falls well short of the Committee’s assertion that Deerfield is a “significant” Kirkland client. Deerfield accounts for a tiny fraction of total firm revenue: approximately 0.03% of Kirkland’s annual revenue, less than $1,885,000 in 2023, and less than $2,400,000 in the aggregate for all time.”
• “Kirkland properlydisclosed its ongoing unrelated representation of Deerfield consistent with the requirements of the Bankruptcy Rules and Local Rules. And Kirkland has an advance waiver from Deerfield that expressly enables Kirkland to be adverse to Deerfield in any matter, including any restructuring, bankruptcy, or litigation matter.”
• “In similar facts, the Bankruptcy Court for the District of Delaware recently overruled an objection to retention of debtors counsel that also concurrently represented a secured lender in unrelated matters, where the law firm had an applicable waiver on file and fee receipts were approximately 0.1% of firm revenues. See In re Art Van Furniture, LLC, 617 B.R. 509, 519 (Bankr. D. Del. 2020) (Sontchi, J.).”
• “The Committee and U.S. Trustee have failed to meet their burden. They have not shown that any actual conflict or adversity exists… At bottom, the Committee Objection is purely tactical—a potentially value-destructive attack on the Debtors’ restructuring efforts deployed to circumvent the traditional requirements for derivative standing (for the second time in this case).”
• “The only question currently before the Court is whether the Debtors may retain Kirkland under section 327 of the Bankruptcy Code and this Circuit’s prevailing jurisprudence. The answer is clearly yes. Kirkland (i) does not hold an interest adverse to the estates, (ii) does not represent any interest adverse to these chapter 11 estates, and (iii) is disinterested. Therefore, Kirkland clearly satisfies the standard for retention.”

Chuck Lundberg presents an interview with Cassie Hanson (Conflicts and Ethics Counsel at Fredrikson & Byron) and Sara Gross Methner (Chief Attorney Talent Officer and Senior Counsel for Nilan Johnson Lewis) on: “Navigating the Ethical Landscape: Supervisory Practices in Law Firms” —

• “This month’s column offers a deep dive into an increasingly critical issue for any law firm seeking to avoid ethics complaints and malpractice claims. The ethics rules affirmatively require firms to adopt supervisory practices for all firm lawyers and non-lawyer staff, and effective supervision is an essential component of law firm risk management.”
• “Q: What constitutes “reason- able” supervision under the ethics rules?”
• “The rules do not de- fine ‘reasonable efforts,’ nor what degree of certainty is required to establish ‘reasonable assurance’ of ethical compliance by lawyers in a firm. But under Rule 1.01(i), ‘reasonable conduct by a lawyer denotes the conduct of a reasonably prudent and competent lawyer.’ Community standards are highly relevant when determining what is reasonable (and therefore a subject of expert testimony). Ultimately, the question of reasonableness is fact-specific and tailored to the role of the lawyer in a law firm. At a minimum, ‘reasonable’ probably includes written policies, training, and auditing for compliance to ensure that policies are followed.”
• “Q: The COVID-19 pandemic fundamentally changed how lawyers practice together in a firm setting. Most law firms permit employees to work hybrid and/ or fully remote. What are the biggest challenges that hybrid/remote work present for law firms in terms of supervisory duties?”
• “It’s hard to have eyes on what your associates and staff are doing when they’re not on-site. One major ethics challenge is maintaining effective communication and oversight. In a hybrid or remote work environment, it is more difficult for supervisors to stay connected with their team members, leading to potential gaps in supervision and guidance. This lack of direct, in-person interaction can hinder the ability to promptly address issues, provide feedback, and ensure that work is being conducted ethically and in compliance with firm policies.”
• “I always encourage lawyers with supervisory responsibilities to engage in ‘active supervision’ with supervisees. That means getting to know them, asking how work is going, having an open-door policy, and implementing regularly scheduled check-ins — both as a team and one-on-ones.”
• “It’s also important to consider jurisdictional issues — making sure there are controls to keep remote attorneys from engaging in the unauthorized practice of law by inadvertently holding themselves out as practicing in jurisdictions where they’re physically located but not licensed.”
• “Q: Statistically, what areas present the greatest risk and need for formal written supervisory policies and procedures?”
• “Trust account issues are the single biggest area of risk. For 2022, OLPR reports 39 admonitions and 125 probations related to safekeeping client property. Even if the firm’s finance employees are performing the day-to-day trust account recordkeeping, the firm’s attorneys remain responsible for reasonable assurance of compliance with the rules. Clear policies and procedures are particu- larly important in this area.”