IT’S TIME FOR S.F. JUDGES TO REFLECT THE POPULATION

For more than 17 years, the Bar Association of San Francisco has led the nation in efforts to diversify the Bay Area legal workforce. That progress places city law firms among national leaders in diversity in the legal profession � including gender, ethnicity, sexual orientation and the disabled.

San Francisco law firms and legal organization have made great strides in the effort and realize they cannot meet the needs of San Francisco’s population if attorneys reflect a small slice of that population. The same holds true of San Francisco’s judges.

In a survey just released by the state Administrative Office of the Courts, they reported aggregate demographic data relative to the gender and ethnicity of California state court justices and judges, by specific jurisdiction. This information, now required annually under Senate Bill 56 (SB 56), is a snapshot of the diversity of California’s almost 1,600 judges and justices.

The data shows that San Francisco judges are equally divided between male and female � 25 of each � the most for a California county the size of San Francisco. But the data for ethnic makeup is dismal � 76 percent are white, with Asian judges a very distant second at 12 percent.

SB 56 also created 50 new judgeships this year throughout California, with more in the coming years. This opportunity for a sitting governor to affect the composition of the state’s bench is unprecedented.

Just as San Francisco law firms are working to diversify, so must our state and local courts. Gov. Arnold Schwarzenegger can make a significant impact on the future of San Francisco’s courts and our diverse population. The public will not continue to have faith in the integrity of our judicial system if it is operated and run by a narrow slice of the population.

These new appointments present an opportunity that we can’t afford to miss.

Nanci Clarence
San Francisco



JUSTICE’S REASONING FLAWED IN WILSON ELSER FEES CASE

We write in response to the April 6 article entitled “Wilson Elser Ordered to Return Fees,” which discusses Justice Marcy Friedman’s recent decision to grant partial summary judgment against our firm in the matter of Ulico v. Wilson, Elser, Moskowitz, Edelman & Dicker. You note that Wilson Elser is an “insurance defense giant.” We are proud of our reputation and standing in the insurance defense and greater legal community. We have built this reputation with over 30 years of exceptional service to our clients, and in accordance with the highest ethical standards.

With all due respect, Justice Friedman’s decision is flawed and contrary to the law and facts. As is the right of any litigant aggrieved by the order of a lower court, we intend to appeal. Unfortunately, an erroneous decision may do damage, even if ultimately overturned. While it would be impossible to demonstrate in this forum all of the problems underlying the court’s decision, we feel compelled to note the following:

The court stated that “the facts relevant to [the claim of breach of fiduciary duty] are largely undisputed,” yet failed to heed the most important undisputed fact: Wilson Elser did not represent two parties having adverse legal interests. Rather, the claim concerns the propriety of Wilson Elser doing work for an existing client that was potentially adverse to the business interests of Ulico. This is a question of interest to all lawyers. If, for example, a lawyer assists a restaurant in obtaining a liquor license, does he violate his ethical obligations to that client if he also helps another restaurant on the same street obtain a license? A “competitor” is simply and obviously not an “adversary.”

Justice Friedman appears to have overlooked the authority submitted by Wilson Elser, including the expert affidavit of Bruce Green, professor of ethics at Fordham University School of Law and former law clerk to Justice Thurgood Marshall of the U.S. Supreme Court and to Judge James Oakes of the Second Circuit. That affidavit was replete with citations to authority for the proposition that the representation of parties having competing economic interests does not constitute an ethical violation. The affidavit of professor Green cited opinions and comments of the ABA Standing Committee on Ethics and Professional Responsibility; the Association of the Bar of the City of New York, Committee on Professional and Judicial Ethics; and the ABA Model Rules of Professional Conduct. Notwithstanding professor Green’s affidavit, and the authority cited therein, Justice Friedman stated, “Wilson Elser argues, without citation to legal authority, that ‘doing work for a competitor’ does not constitute a ‘conflict of interest giving rise to a claim of a breach of fiduciary duty.’”

Furthermore, Justice Friedman’s decision is premised on a confused understanding of the nature of the relationship between Wilson Elser and Ulico. Wilson Elser has been counsel to an MGA � a managing general agency program � for trustee and fiduciary liability insurance for 30 years. Ulico was one among several insurers on whose paper the MGA placed coverage. Wilson Elser acted as claims counsel for all involved � the MGA and the all participating insurers and reinsurers � and was paid by the MGA, not by Ulico. These customs and practices were indeed “largely undisputed,” yet the justice incorrectly stated that $3.4 million in fees was paid by Ulico, and the court then ordered disgorgement of moneys paid by Ulico.

Aside from misapprehending the facts, the court also misconstrued the law. By way of example, the court used the discrete concepts of forfeiture and disgorgement interchangeably. Thus, Justice Friedman awarded total disgorgement, stating that “no proof of damages is required where the remedy that is sought for the breach is forfeiture of compensation.” Not only did Ulico not pay Wilson Elser, disgorgement is an equitable remedy which wrests ill-gotten gains from the hands of an unjustly enriched wrongdoer and has been limited to the disgorgement of illegal profits directly related to the wrongdoing. Although Justice Friedman recognized that there were no ill-gotten gains, and no provable damages, she ordered disgorgement � a clear error.

Furthermore, contrary to Justice Friedman’s position that “but for” causation need not be proved where breach of fiduciary duty is alleged, the First Department has held otherwise � in a decision that Justice Friedman herself recently cited for the very proposition that she now disregards. See Schneider v. Wien & Malkin, 5 Misc.3d 1011A (N.Y. Sup. Ct., 2004). In Schneider, this same judge stated, “The more rigorous ‘but for’ standard of causation will be applied where a breach of fiduciary claim against an attorney is premised on allegations of legal malpractice.” (Citing Weil, Gotshal & Manges, LLP v. Fashion Boutique of Short Hills, Inc., 10 AD3d 267 (1st Dep’t, 2004)).

A fair reading of the papers on the summary judgment motions demonstrates the many flaws in Justice Friedman’s decision � both factually and legally � and we look forward to presenting our position to a higher court. In the meantime, we continue to represent our clients as we always have: professionally, vigorously and ethically.

Thomas W. Hyland
New York

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