Experts Say Treasury Conflict Rules Are Unprecedented

The AMLawDaily has an interesting article about client conflict rules in the Treasury Departments bailout of some firms.  Here's an excerpt:

When The Am Law Daily read the client conflict rules in the Treasury Department's $5.5 million bailout contracts with Hughes Hubbard and Reed and Squire, Sanders & Dempsey, one clause struck us as particularly onerous: both firms agreed not to represent any bank or financial institution Treasury buys assets from as long as Treasury owns equity in that institution. Experts have estimated the capital purchase program may involve as many as 2,500 financial institutions. That's a lot of potential clients.

So we called two well-known ethics experts, New York University's Stephen Gillers and Boston University's Nancy Moore, and asked them about the conflicts provisions. Both agreed: they've never quite seen conflicts rules like these.

"Treasury is being very demanding," Gillers says. "They are putting the fear of God into these law firms."

Read the article here.

Posted by Jon Lutz