Wiley Rein admits ethics lapse but resists discovery bid in BDO case

A logo of Philippines’ top lender Banco de Oro (BDO) Unibank, Inc. is seen at their main building in Makati city, metro Manila, Philippines. REUTERS/Romeo Ranoco
  • McDermott motion to compel seeks internal Wiley Rein records
  • Wiley accuses McDermott of using its error to seek litigation advantage

(Reuters) - McDermott Will & Emery has asked a Washington, D.C., judge to let it scrutinize rival law firm Wiley Rein's business practices after it admitted to breaching ethics rules by simultaneously representing opposing sides in an employment lawsuit earlier this year.

The discovery bid stems from a D.C. Superior Court lawsuit that McDermott client BDO USA LLP brought last May against a former BDO partner, Eric Jia-Sobota, for allegedly scheming to steal the accounting giant's clients and employees.

Lawyers from Wiley Rein, working with Ari Wilkenfeld of Washington's Wilkenfeld, Herendeen & Atkinson, are representing Jia-Sobota and his new company EverGlade Consulting. But in March 2021, an insurance carrier for BDO separately reached out to Wiley Rein to serve as coverage counsel for a counterclaim filed by Jia-Sobota, who has denied taking any steps contrary to his obligations to BDO.

A conflicts team at Wiley Rein ran a check for any matters adverse to BDO, but the review "inadvertently" did not include EverGlade and Jia-Sobota, the firm stated in court filings. Wiley Rein represented a BDO insurance carrier and the defendants for a month, billing about 11 hours, until BDO first became aware of the conflict and alerted Wiley Rein. The firm apologized to BDO and stopped representing the insurance carrier in April.

Wiley Rein said no lawyer for EverGlade ever saw BDO-related documents during the month the firm represented the opposing sides.

The dispute has teed up a potential disqualification bid by McDermott, and claims from Wiley Rein that its adversary is trying to exploit the ethics error to gain an advantage in the ongoing employment case.

"At issue is conduct that threatens, and may have already tainted, the integrity of these proceedings as well as BDO's right to a just determination of its claims," McDermott lawyers wrote in a June motion to compel discovery.

McDermott is seeking documents from Wiley Rein including internal and external communication, conflict-check files and draft billing records. Judge Heidi Pasichow last week set a status hearing for October. The judge hasn't yet ruled on whether to allow discovery.

"Wiley must account for its engagement with precision and transparency, which can only be accomplished through the confirmatory discovery BDO seeks," McDermott lawyers told the court on June 28. The materials are needed to show “whether Wiley can ethically continue as counsel in this litigation,” the firm said.

Lawyers from Wiley Rein and McDermott declined to comment on Tuesday.

Wilkenfeld, a veteran labor and employment litigator, called McDermott's bid for discovery a "continuation of what is, in my view, scorched-earth litigation tactics."

"Litigants do not usually go out of their way to disqualify opposing counsel unless they are afraid of them," he said.

Wiley told the D.C. court on June 21 that the firm hasn't hidden anything from McDermott.

"BDO has been provided with far more information than that needed for any reasonable person to recognize that it suffered no prejudice whatsoever as a result of Wiley's mistake," Wiley Rein said in the filing.

The firm said it has acted "diligently, responsibly and ethically to address this situation since it was first discovered." BDO "has no good faith basis for its naked insinuations and outright assertions that there has been any kind of intentional wrongdoing or nefarious activity."

The employment case is now before the D.C. Court of Appeals, where BDO is challenging the denial of its effort to force Jia-Sobota to arbitrate his employment claims.

The case is BDO USA LLP v. Jia-Sobota, D.C. Superior Court, No. 2020-CA-002600-B.

For BDO: Julie McConnell and Michael Kimberly of McDermott Will & Emery

For EverGlade and Jia-Sobota: Richard Simpson and Ashley Criss of Wiley Rein; and Ari Wilkenfeld of Wilkenfeld, Herendeen & Atkinson

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