White & Case LLP properly screened a newly hired attorney from a conflict that would have otherwise spread to the entire firm and disqualified it from participating in a bankruptcy case, the Third Circuit ruled on Friday.
Jessica Lauria, formerly called Jessica Boelter, worked at Sidley Austin LLP, which represented YPF SA in a case brought by Maxus Liquidating Trust in connection with the Chapter 11 bankruptcy of Maxus Energy Corp. She was later hired by White & Case, which represented the trust and is where her husband also works.
White & Case timely screened Lauria from involvement in the matter, but her former client YPF sought to disqualify the firm, saying the screening was insufficient. The bankruptcy court denied the disqualification bid.
The US Court of Appeals for the Third Circuit affirmed that decision, agreeing with the lower court that White & Case’s screening followed the rules, which included a requirement that the conflicted attorney not receive any portion of the fees.
The appeals court rejected the argument that Lauria’s husband receiving fees meant the screen was not properly conducted.
The rule requires only that the “disqualified lawyer” be excluded from the fees, and not the lawyer’s spouse, according to the ruling by Judge David J. Porter. Judges Joseph A. Greenaway Jr. and Peter J. Phipps joined.
The trust is represented by Hogan Lovells US and Farnan. YPF is represented by Cleary Gottlieb Steen & Hamilton LLP and Landis Rath & Cobb LLP.
The case is In re Maxus Energy Corp., 3d Cir., No. 21-02496, 9/9/22.