Willkie Removal in Bankruptcy Case Is Lesson in Ethics’ Limits

Willkie Farr & Gallagher LLP’s disqualification as bankruptcy counsel for brand manager Franchise Group Inc. is a lesson for Big Law firms that ethical walls and conflicts counsel won’t always solve larger issues over impartiality.

The ruling from Judge Laurie Selber Silverstein of the US Bankruptcy Court for the District of Delaware severing a large company from its preferred Chapter 11 counsel is rare, but it signals to other law firms that building in ethical walls much earlier is key to keeping their lucrative debtor counsel positions.

Willkie’s prior work with Franchise Group’s ex-CEO Brian Kahn and investment adviser B. ...