In Re: SRC Holding Corporation a/k/a Miller & Schroeder, Inc., Debtor Adversary Action: Bremer Business Finance Corporation v. Dorsey & Whitney LLP, 2006 WL 2788232 (Bkrtcy. D. Minn.)

Even though the decision has been appealed – and on appeal the findings of fact on which this article is based, as well as the legal conclusions, will be reviewed and may be modified or replaced entirely – the case provides a fascinating and valuable framework for discussion of three distinct and important risk management issues.

The Case, Part I: Conflicts of Interest – Client Identity: Avoiding Conflicts of Interest When a Law Firm Is Retained to Represent a Group of Entities Whose Individual Identities Are Unknown at the Time of the Engagement
Risk Management Issue: How can a law firm manage the client intake process effectively and avoid conflicts of interest when it is engaged by a single nominal client to represent multiple clients whose identities are not determined at the time of initial engagement?
The Case, Part II: Conflicts – Self-interest: Disclosure to Client Required When a Law Firm Discovers a Potential Error, Regardless of the Law Firm’s Opinion As to Whether the Client Will Be Damaged
Risk Management Issue: What should a law firm do when it discovers it has or may have made a mistake?
The Case, Part III: Conflicts: Court Holds Law Firm’s Efforts at “Claims Repair” Violated Fiduciary Duties of Loyalty and Full Disclosure
Risk Management Issue: When and how should a law firm, which has discovered an error or potential error, engage in “claims repair?”

This newsletter has been prepared by Hinshaw & Culbertson LLP to provide information on recent legal developments of interest to our readers. It is not intended to provide legal advice for a specific situation or to create an attorney-client relationship.

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