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DQ from Facebook class action shows risk of Keller Lenkner's model

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(Reuters) - The three-year-old law firm Keller Lenkner aggressively styles itself as a different kind of plaintiffs’ shop. Just look at the firm’s website.

“Our attorneys trained at leading defense firms and commercial litigation boutiques,” the site boasts. “We offer comprehensive counsel because our lawyers have experience on both sides of the courtroom and the negotiating table.”

If you browse through the bios of Keller Lenkner lawyers, you’ll find descriptions of their previous stints at those leading defense firms, among them Gibson, Dunn & Crutcher, Kirkland & Ellis, Williams & Connolly and Latham & Watkins. One Keller Lenkner partner, Warren Postman, is even a former litigator for the U.S. Chamber of Commerce – not a credential you will find at many (or, quite possibly, any) other plaintiffs firm.

The implication: Keller Lenkner’s lawyers can match the best lawyers on the other side because they've been there.

That positioning – accompanied, of course, by the 35-lawyer firm's commendable litigation record, especially in the mass arbitration niche it dominates – has generally served Keller Lenkner well.

But the business model is not without risk, as is manifestly evident from an opinion issued on Tuesday by U.S. District Judge Lucy Koh of San Jose, California. Koh disqualified Keller Lenkner from representing consumers in a prospective antitrust class action against Facebook Inc, concluding that the firm violated California rules of professional conduct because it did not take immediate steps to set up a screen between its Facebook investigation and a mid-level associate who worked more than 800 hours on Facebook’s antitrust defense in his previous job at Kellogg, Hansen, Todd, Figel & Frederick.

The former Kellogg Hansen lawyer, Albert Pak, was a fourth-year associate when he joined Keller Lenkner in June 2020. Pak immediately informed Keller Lenkner partner Postman that he had been part of the Kellogg Hansen team representing Facebook in an antitrust investigation by the Federal Trade Commission.

At the time of Pak's hiring, according to Keller Lenkner, the firm “had no concrete plans to bring a lawsuit against Facebook.” Later in the summer of 2020, as Keller Lenkner began actively contemplating a consumer class action against Facebook, the firm said, Postman told the team analyzing the potential antitrust case not to talk to Pak about Facebook. In November, when Keller Lenkner neared an agreement to team up with Quinn Emanuel Urquhart & Sullivan to sue Facebook, the firm adopted an elaborate formal screening process to wall off Pak.

Keller Lenkner and Quinn jointly filed a consumer class action complaint against Facebook on Dec. 3, offering allegations similar to those asserted by the FTC in a complaint filed several days after the class action. Keller Lenkner did not formally notify Facebook until March 19 about Pak’s prior representation of the company as a Kellogg Hansen associate.

By then, as Facebook’s lawyers at Wilmer Cutler Pickering Hale and Dorr pointed out in the company’s disqualification motion, their client had already discovered Pak’s prior work for Facebook. In fact, Wilmer told Koh about the potential Pak conflict at a March 18 hearing on the appointment of lead counsel in the consumer case.

Facebook did not demand Keller Lenkner’s disqualification at that hearing, calling instead for more information about the firm’s screening process. But Keller Lenkner’s answers to Facebook’s follow-up questions, the company said in its May 7 disqualification motion, showed that the plaintiffs' firm did not set up the screen until four months after Pak’s arrival from Kellogg Huber, even though, in Facebook’s account, “Keller Lenkner was in the midst of its own antitrust investigation” by the time Pak joined the firm.

There’s considerable back-and-forth in the briefing about the breadth and depth of Keller Lenkner’s Facebook investigation before November 2020. Keller Lenkner, which told me in an email statement that it complied with its ethical obligations “in all respects," said in its brief opposing disqualification that it only launched "serious" analysis after Congressional hearings in late July.

The two sides' briefs debated the precise trigger for an ethics screen under California’s rules of professional conduct. Keller Lenkner argued that it established the screen as soon as the firm believed it was likely to be involved in a case against Facebook.

Facebook, meanwhile, pointed to Keller Lenkner partner Postman’s own statements at the lead counsel hearing, in which Postman described a “substantial pre-filing investigation” that “commenced ... two years ago.”

The judge agreed with Facebook in Tuesday’s opinion. (Koh had ordered Keller Lenkner’s disqualification last week, in advance of a July 15 hearing on Facebook’s motion to dismiss the consumer class action. Tuesday’s opinion explained her previous order.)

Keller Lenkner had depicted Pak as a young associate with little substantive responsibility at Kellogg Huber. Koh, however, said he “substantially participated” in Facebook’s defense: He drafted memos, assisted with a witness interview and was in regular contact with the company’s in-house lawyers and Kellogg partners leading the case. Given Pak’s relevant experience and Keller Lenkner’s failure to screen him off immediately, Koh said, the firm had to be disqualified.

Koh’s Facebook ruling marks the second time Keller Lenkner has been disqualified because of a lateral hire’s previous defense work. In 2019, as I reported at the time, U.S. District Judge Edward Chen of San Francisco granted Uber’s motion to disqualify Keller Lenkner from representing limousine companies suing for antitrust violations, citing Keller partner Postman’s previous work alongside Uber for the U.S. Chamber.

Facebook prominently mentioned Chen’s decision in its disqualification motion before Koh. You can be sure that other defense lawyers – who have been attacking Keller Lenkner’s tactics since the firm opened its doors – will now cite Koh’s Facebook opinion as well.

Keller Lenkner said in an email that such attacks prove its model is working. “The defense bar’s disqualification tactics are an unfortunate consequence of our having hired some of their most talented lawyers to represent plaintiffs,” the firm said.

The firm also said it “respectfully” disagrees with Koh’s decision: “Overly restrictive rules and fuzzy disqualification standards hamper lawyer mobility, which ultimately harms our profession.”

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Alison Frankel has covered high-stakes commercial litigation as a columnist for Reuters since 2011. A Dartmouth college graduate, she has worked as a journalist in New York covering the legal industry and the law for more than three decades. Before joining Reuters, she was a writer and editor at The American Lawyer. Frankel is the author of Double Eagle: The Epic Story of the World’s Most Valuable Coin. Reach her at alison.frankel@thomsonreuters.com

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