White & Case beats disqualification bid over lawyer's defection, relationship

The logo of law firm White & Case is seen outside of their office in Washington, D.C., August 31, 2020. REUTERS/Andrew Kelly
  • Dispute stems from firm's hiring of Sidley bankruptcy leader Jessica Lauria and her marriage to White & Case restructuring leader Thomas Lauria
  • A U.S. appeals court said the firm had taken adequate steps to ward off conflicts

(Reuters) - It was not a conflict of interest for law firm White & Case to continue representing its client in multibillion-dollar litigation after it hired - and the head of its restructuring practice soon married - a Sidley Austin lawyer who represented its adversary in the same case, a U.S. appeals court ruled Friday.

The 3rd Circuit U.S. Court of Appeals upheld a bankruptcy judge's order rejecting a bid to disqualify White & Case by Argentine energy company YPF SA, finding the law firm had "implemented a thorough, robust ethical screen" between partner Jessica Lauria and its client, a trust of creditors of Maxus Energy.

A YPF spokesperson declined to comment. A White & Case spokesperson did not immediately respond to a request for comment.

Maxus Energy, a YPF subsidiary, went bankrupt in 2016. In 2018, the trust, which White & Case represents, sued YPF in Delaware bankruptcy court over $14 billion in environmental liabilities.

YPF tapped Sidley Austin. At the time, Sidley partner Jessica Lauria, then known as Jessica Boelter, was dating Thomas Lauria, the head of White & Case's bankruptcy and restructuring practice. The 3rd Circuit said Sidley Austin was aware of the relationship, "but it is unclear from the record whether YPF knew."

Jessica Lauria billed 300 hours of work in the YPF-Maxus case, the 3rd Circuit said. In October 2020, Jessica Lauria and Bojan Guzina, the global co-chairs of Sidley's restructuring practice, joined White & Case. The Laurias married after she switched firms, and she remains a prominent partner in the restructuring practice there along with her husband.

The ongoing, underlying case grew out of Maxus's and its predecessors' ownership of chemical plants that produced pesticides and herbicides, including Agent Orange. YPF denies that it is liable for the billions of dollars in environmental claims lodged against Maxus and argues that the environmental contamination occurred decades before it obtained any equity interest in the company.

The case is In re Maxus Energy Corporation, U.S. Court of Appeals for the Third Circuit, No. 21-2496.

For the Maxus trust: Catherine Stetson and Johannah Walker, of Hogan Lovells, and Rosemary Piergiovanni of Farnan

For YPF: Victor Hou, Ari MacKinnon and Jeffrey Rosenthal, of Cleary Gottlieb Steen & Hamilton, and Adam Landis and Matthew McGuire of Landis Rath & Cobb

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Bankruptcy judge won't kick White & Case from enviro suit after lawyer defection, romance

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David Thomas reports on the business of law, including law firm strategy, hiring, mergers and litigation. He is based out of Chicago. He can be reached at d.thomas@thomsonreuters.com and on Twitter @DaveThomas5150.