Keep your finger on the legal world's pulse

Two bills in Louisiana are seeking to regulate the litigation finance industry. One bill requires parties to disclose litigation finance agreements within 60 days after filing a civil action, while the second requires disclosure of litigation finance if a foreign entity is the source of funding. The bills aim to restrict the practice of investors paying for the cost of lawsuits in return for a share of the proceeds. The U.S. Chamber of Commerce supports the legislation, stating that the litigation finance industry encourages frivolous lawsuits. Last year, similar legislation was vetoed by the governor, but with a change in governors, lawmakers hope for a different outcome. Other states have also introduced legislation to regulate litigation finance. The bills have faced mixed results in state legislatures, with some states enacting laws to block foreign entities from funding lawsuits. The U.S. Chamber of Commerce warns of the risks of litigation finance, stating that it pressures businesses to settle even when claims lack merit. The Chamber supports the Louisiana bills, though it considers one of the proposals to be "under inclusive." The litigation finance industry has defenders in state houses, with some arguing that the Chamber is attempting to pass a bill in support of national regulation.

 

Bloomberg Law

Clifford Chance has hired two U.S. partners as part of its expansion in the United States. Houston-based partner Todd Lowther joins Clifford Chance's tax and energy and infrastructure teams from Shearman & Sterling. In New York, White & Case partner Chang-Do Gong has joined Clifford Chance's U.S. M&A practice. Clifford Chance has been aggressively hiring in the United States, making 29 senior hires since last year. The firm has also opened an office in Houston to focus on energy and infrastructure work. Clifford Chance is also targeting sectors such as technology, healthcare, and life sciences in the United States. The firm's hiring spree has helped boost its profile in the U.S. legal market. Freshfields and Linklaters, two other London-founded law firms, have also seen significant growth in the top U.S. markets.

 

Reuters

Jones Day attorneys have dominated the U.S. Supreme Court this term, with five attorneys from the firm arguing the most cases. The firm, known for attracting former Supreme Court clerks, sent partners John Gore, C. Kevin Marshall, Noel Francisco, Hashim Mooppan, and Traci Lovitt to argue their respective cases. All but Gore have clerked for a Supreme Court justice. Other firms such as Gibson Dunn, Hogan Lovells, and Williams & Connolly also had attorneys arguing cases.

 

Bloomberg Law

Chicago-based Mayer Brown is preparing to split off its Hong Kong operation amid U.S. and China geopolitical tensions. Mayer Brown's Hong Kong office will become an independent entity. The breakup comes at a time when companies increasingly need to navigate conflict between the world's two largest economies. The Hong Kong operation was formerly Johnson Stokes & Master, which was established locally in the 19th century. Geopolitical tensions aside, international law firms also face financial hurdles. Law firms have been reducing office space in prime locations, partly due to the dearth of M&As and IPOs.

 

Bloomberg

Sarah Walters, former assistant U.S. attorney, joins Ropes & Gray as partner in Boston office, specializing in litigation and enforcement.

 

Bloomberg Law

Republican states are filing legal challenges against the Biden administration's newly expanded campus sexual assault rules, claiming they exceed the president's authority and undermine the Title IX anti-discrimination law. At least three federal lawsuits have been filed seeking to overturn the new rules, with support from nine Republican-led states. The lawsuits are the first to challenge Biden's new Title IX rules, which provide additional protections for LGBTQ+ students and victims of sexual assault. The states argue that the updated rules conflict with their own laws, including those regarding transgender students' use of bathrooms and locker rooms. They also claim that the new rules erode the due process rights of accused students. The Biden administration's rules were proposed two years ago and roll back changes made during the Trump administration.

 

U.S. News

A U.S. appeals court has upheld a Biden administration rule requiring government contractors to pay seasonal recreational workers at least $15 an hour. The ruling has sparked controversy, with a dissenting judge arguing that Congress has given the president too much power to regulate federal contracting. The court stated that the president's authority to dictate wages extends to workers who do not directly provide services to the government. However, a judge claimed that this broad discretion violates the U.S. Constitution. The rule, implemented by the U.S. Department of Labor, eliminates an exemption for seasonal recreational employers. The court found that higher wages would improve worker absenteeism and turnover, as well as the quality of services provided. The decision is seen as giving the president unlimited power to impose conditions on federal permit holders. The case may have broader implications for minimum wage regulations in the U.S. contracting industry.

 

Reuters

Defaults in the U.S. office market are at historic levels, with over $38bn of office buildings facing defaults, foreclosures, or other forms of distress, the highest amount since the aftermath of the 2008-2009 financial crisis. Office owners are struggling to pay back loans due to high interest rates and weak demand. The pandemic has caused a decline in demand as businesses allow employees to work from home and reconsider their workspace needs. Tenants are now closely scrutinizing landlords' financial health before signing new leases. The Federal Reserve's decision not to cut interest rates has further worsened the situation. The office vacancy rate is currently at a record 13.8%, compared to 9.4% in 2019. This financial upheaval is pressuring U.S. banks and insurance companies. Major institutional owners are handing properties back to lenders, while new investors are taking advantage of discounted prices. Tenants are benefiting from attractive lease deals in the current market.

 

Wall Street Journal

A judge declared a mistrial after a jury said it was deadlocked and couldn't reach a verdict in the trial of a military contractor accused of contributing to the abuse of detainees at the Abu Ghraib Prison in Iraq two decades ago. The mistrial came in the jury's eighth day of deliberations. The eight-member civil jury in Alexandria deadlocked on accusations the civilian interrogators who were supplied to the U.S. Army at Abu Ghraib in 2003 and 2004 had conspired with soldiers there to abuse detainees as a means of “softening them up” for questioning. Reston, Virginia-based CACI had argued that it wasn't complicit in the detainees' abuse. The plaintiffs can seek a retrial. Baher Azmy with the Center for Constitutional Rights, one of their lawyers, said ”The work we put in to this case is a fraction of what they endured as survivors of the horrors of Abu Ghraib, and we want to honor their courage.” During the trial, lawyers for the three plaintiffs argued that CACI was liable for their mistreatment even if they couldn't prove that CACI's interrogators were the ones who directly inflicted the abuse. The evidence included reports from two retired Army generals, who documented the abuse and concluded that multiple CACI interrogators were complicit in the abuse. CACI officials initially had serious doubts about his ability to work as an interrogator, according to evidence introduced at trial. CACI initially sent Stefanowicz over to Iraq not as an interrogator but as a screener, but he testified that the Army — desperately short of interrogators at a prison with a rapidly expanding population — promoted him to interrogator within a day of his arrival. Trial evidence showed that CACI defended the work of another of its interrogators, Dan Johnson, even after the Army sought his dismissal when photos of the Abu Ghraib abuse became public, and one of the photos showed Johnson questioning a detainee in a crouched position that Army investigators determined to be an unauthorized stress position.

 

U.S. News

A staffing company that performed COVID-19 contact tracing for Pennsylvania and exposed the private medical information of about 72,000 residents will pay $2.7m in a settlement with the U.S. Justice Department and a whistleblower. The Pennsylvania Department of Health paid Atlanta-based Insight Global tens of millions of dollars to administer the state's contact tracing program. Insight Global used unauthorized Google accounts to store sensitive information, violating its contract with the state. The company was fired after the data breach came to light. A whistleblower lawsuit alleged that Insight Global knew about its lack of secure computer systems. The whistleblower, a former contractor, complained to the company but was ignored. Maureen R. Dixon, from the U.S. Department of Health and Human Services, stated that contractors which fail to safeguard personal health information will be held accountable. The whistleblower is set to receive nearly $500,000 from the settlement. Insight Global has acknowledged its mishandling of sensitive information and apologized.

 

U.S. News

The real estate brokerage unit of Warren Buffett's Berkshire Hathaway, HomeServices of America, is facing a new proposed class-action lawsuit. The lawsuit accuses the company of charging commissions that artificially inflated the cost of buying a home in the United States. Home buyers claim that the commission rule leads agents to steer their clients to houses with higher commissions, resulting in inflated home prices. The lawsuit seeks at least $5m in damages for a class estimated to include thousands of home buyers. HomeServices of America, the country's largest residential real estate brokerage, is the lone defendant in the lawsuit. The National Association of Realtors, along with a group of large real estate brokerages, is named as conspirators in the complaint. The case is ongoing in the U.S. District Court for the Southern District of Florida.

 

Reuters

A group of newspaper companies, including the publishers of the New York Daily News and Chicago Tribune, have filed a lawsuit against Microsoft Corp. and OpenAI Inc. in New York federal court. The companies allege that Microsoft and OpenAI have engaged in "massive copyright infringement" by using millions of copyrighted articles to train their artificial intelligence (AI) products. OpenAI's co-founder has admitted that the models require copyrighted materials to be commercially viable. This lawsuit adds to the growing number of legal battles over the use of AI inputs.

 

Bloomberg Law

The Supreme Court has agreed to hear an appeal from a CBD hemp oil company in Vista, California, that is facing a lawsuit from a truck driver. The driver claims he was fired after using a product that was falsely advertised as being free from THC, marijuana's active ingredient. The truck driver, Douglas Horn, took the product to help with chronic shoulder and back pain. After a failed drug test, Horn confirmed that the product did contain THC. He sued the company under the Racketeer Influenced and Corrupt Organizations Act, alleging fraud. The Supreme Court will decide on a nationwide rule regarding RICO suits in similar circumstances. The case will be heard in the fall.

 

U.S. News