Marc E. Kasowitz.
Marc E. Kasowitz. (Photo: Rick Kopstein/ALM)

A recent disqualification ruling that prevents Kasowitz, Benson, Torres & Friedman from representing InterActiveCorp in a property contract dispute with The Georgetown Co. had an unusual side effect: It revealed why a high-profile family law practice left Kasowitz last year.

But the decision, issued by New York Supreme Court Justice O. Peter Sherwood, was unusual in another way: The judge also disqualified Georgetown’s lawyers from DLA Piper, effectively barring counsel on both sides from representing their respective clients.

In a ruling dated March 3, Sherwood cited separate conflicts of interest that, he determined, justified kicking Kasowitz and DLA Piper lawyers off of a lawsuit pitting real estate developer Georgetown against the digital media conglomerate IAC.

Georgetown filed the underlying suit in March 2016, seeking a declaration that it deserved half of a $35 million fee associated with the development rights of a property in Manhattan’s West Chelsea neighborhood. Shortly afterward, Georgetown principal Joseph Rose sought to intervene in the case and have Kasowitz disqualified.

At the time, Rose was also a client of Kasowitz’s in a long-running divorce case handled by former partners Eleanor Alter, Adam Wolff and Jenifer Foley. The trio left Kasowitz along with a handful of others in May 2016 to form their own family law boutique, Alter, Wolff & Foley.

Alter—who has represented Madonna in a custody battle, and has also represented such celebrities as Mia Farrow and Robert De Niro in divorces—told the New York Law Journal in June that she was troubled by “internal events” at Kasowitz prior to branching off to form a boutique. Although she declined then to say what specifically triggered the departure, court papers in the dispute between Georgetown and IAC offer insight.

In a June 6 affidavit, Rose said that he contacted Wolff immediately after learning that Kasowitz had signed on to represent IAC in the real estate contract dispute. Wolff and Alter, who told Rose they weren’t aware of the IAC case, then asked around within their former firm, and eventually found out that Kasowitz was taking the position that there was no conflict.

Alter and Wolff apparently disagreed, however. In April 2016, they told Rose that they had decided to leave Kasowitz “in large part due to their concern about going to trial in the divorce action with the conflict issue hanging over them,” Rose wrote in his affidavit.

Sherwood also disagreed with Kasowitz’s position on the conflict question, and on March 3 disqualified the firm from continuing to represent IAC in the property rights case. “In this case, Kasowitz seeks to represent a party whose interests are not merely competing but are substantially adverse to Rose,” the judge wrote.

In a recent interview, Wolff confirmed that conflict concerns involving Rose and other clients of the family law group played into the decision to leave Kasowitz.

“We were fixated on representing him,” said Wolff, who said he believes that Sherwood’s disqualification ruling against Kasowitz vindicates the position that Rose took. “It certainly is a decision that shows that Joe Rose was right.”

In a statement, Kasowitz founding partner Marc Kasowitz said he disagrees with Sherwood’s ruling and that the firm “scrupulously complied with its ethical obligations to each of its clients.” Kasowitz also said that with every client, his firm takes pains to protect client confidences, and in this case, that included “implementing an ethical wall between lawyers representing our matrimonial clients and all other attorneys at the firm.”

“As Ms. Alter herself represented to the court, Mr. Rose’s confidences were never threatened or compromised in any way,” Kasowitz said. “Disqualification was especially unwarranted because any purported conflict dissipated when Ms. Alter and her partners, with their client Mr. Rose, left the firm.”

Sherwood’s ruling didn’t only include an analysis of Kasowitz, however. The judge also found that Georgetown’s lawyers at DLA Piper had a conflict of their own, since the firm had previously represented IAC subsidiary Match.com in an unrelated case in California.

DLA argued that it should be able to continue representing Georgetown in part because DLA’s engagement letter with Match.com contained a conflict waiver, and because DLA ultimately withdrew from representing Match.com in the California case.

In response, IAC argued that it wasn’t bound by that engagement letter, and that DLA dropped the company as a client in the California case so it could represent Georgetown in a “more attractive and lucrative” matter.

Sherwood sided with IAC, describing DLA’s argument as “akin to the defendant facing sentencing for killing his parents pleading for leniency because he’s an orphan.”

“While DLA blames their parting of the ways on IAC’s position that the Match.com engagement letter does not bind it, that position was raised in reference to DLA’s attempt to withdraw from representing IAC [in California] so as to clear the conflict and represent a preferred client,” the judge wrote.

Representatives for DLA didn’t immediately respond to a request for comment.

Scott Flaherty covers the business of law with a special focus on plaintiffs firms. He can be reached at sflaherty@alm.com. On Twitter: @sflaherty18.

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