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Legal News for Tues 1/30 - Sotomayor on SCOTUS Workload, Trump's Lawyer Claims Judge Conflict and Column Tuesday on Nonprofit Hospital Charity Care
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Legal News for Tues 1/30 - Sotomayor on SCOTUS Workload, Trump's Lawyer Claims Judge Conflict and Column Tuesday on Nonprofit Hospital Charity Care

We delve into rising legal malpractice claims, Sotomayor's Supreme Court strain, Trump's lawyer challenging a $83M verdict, and Column Tuesday on nonprofit hospitals and their need for reform.
Transcript

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A hospital, pencil sketch.

This Day in Legal History: Shoe Bomber Sentenced

On this day, January 30th, in the year 2003, a significant event in the annals of legal and aviation history unfolded when Richard Reid, a British national, received a life sentence in the United States for an act of terrorism that gripped the world. Reid's infamous attempt to destroy an American passenger plane with a bomb concealed in his shoe marked a chilling moment in aviation security.

It was on December 21, 2001, when Reid boarded a flight at Miami International Airport, destined for Paris, with a sinister plan. Hidden within his shoe was an explosive device, a fact unknown to fellow passengers and crew as the flight commenced. The calm of the flight was shattered when Reid made his move to ignite the explosive device. 

However, the narrative took a dramatic turn as alert passengers and crew members quickly intervened. Displaying remarkable courage and presence of mind, they restrained Reid, thwarting what could have been a catastrophic tragedy in mid-air. This act of collective bravery averted potential loss of life and highlighted the importance of vigilance in air travel.

Reid's arrest and subsequent trial brought to light the ever-present threats in aviation and the need for stringent security measures. His conviction and life sentence, handed down on this day, served as a stark reminder of the ongoing battle against terrorism and the importance of international cooperation in ensuring the safety of air travel.

Richard Reid's case not only transformed airport security protocols worldwide but also became a case study in counter-terrorism strategies. It underscored the reality that threats can come in the most unexpected forms and from seemingly ordinary individuals. Today, as we look back on this day in legal history, we are reminded of the thin line between normalcy and chaos in our interconnected world.


Legal malpractice claims against law firms are on the rise, both in frequency and in financial magnitude. This trend is driven by a combination of factors, including large insurance policies held by law firms, client reluctance to pay fees, and the involvement of investors in litigation. As a result, law firms increasingly find themselves as defendants in costly lawsuits.

Clients are suing their legal counsel for various alleged missteps, such as conflicts of interest and failure to file documents on time. This has led to a specialty emerging among attorneys in suing law firms. Bethany Kristovich, a litigation partner, observes a growing tendency for clients to view law firms as just another source of financial compensation.

A 2023 report by Ames & Gough highlights the escalating scale of these claims, with seven out of ten insurers of top law firms paying claims over $50 million in recent years, and two exceeding $150 million. The most common areas for malpractice claims are trusts and estates, and business and commercial transactions.

Law firms' perceived financial backing by substantial insurance policies makes them attractive targets for malpractice suits. Economic pressures further exacerbate this vulnerability, leading clients to dispute fees, especially during tough business conditions. High-profile cases, such as X Corp.'s (owned by Elon Musk) lawsuit against Wachtell, Lipton, Rosen & Katz over $90 million fees, illustrate this trend.

Attorneys, once reluctant to sue fellow law firms, now pursue these cases more freely, as seen in the success of Reid Collins & Tsai in securing substantial settlements from such lawsuits. The firm's approach often involves a pre-suit process, maintaining discretion and good relations with insurance carriers and law firms.

Kristovich predicts an increase in claims related to breaches of fiduciary duties and conflicts of interest. She notes a shift in the nature of allegations, with law firms now more likely to be sued for their association with a client's alleged crimes, rather than just their legal advice. This changing landscape suggests a more challenging environment for legal practices in managing their professional risks.

Legal Malpractice Claims Grow in Size as Clients Turn on Counsel


Justice Sonia Sotomayor, during an appearance at the University of California, Berkeley's law school, expressed that she is feeling the strain of an increasingly demanding workload at the Supreme Court. Sotomayor, who was appointed by President Barack Obama in 2009 and is the first Latina justice, mentioned the court's packed schedule, which includes significant cases on abortion, guns, social media, and a Trump ballot issue. She noted the growing number of emergency cases and briefs from outside groups as factors contributing to her exhaustion.

Sotomayor remarked that the court's emergency calendar is now active almost weekly, a significant change from when the justices had a substantial summer break. In response to UC Berkeley Law Dean Erwin Chemerinsky's query about how to address student disillusionment with the Supreme Court and the Constitution, Sotomayor emphasized the importance of continuing to fight for justice. She referenced historical figures like Justice Thurgood Marshall, Rep. John Lewis, and civil rights activists, highlighting their sacrifices and the necessity of persevering against challenges.

Sotomayor conveyed her own sense of obligation and commitment, despite the frustrations and emotional toll of her work. She stressed that change requires persistent effort and dedication, underscoring the importance of not yielding to despair in the pursuit of justice.

Sotomayor Calls Supreme Court Pace, Workload More Demanding (1)


Donald Trump's lawyer, Alina Habba, has raised questions about a potential conflict of interest involving U.S. District Judge Lewis Kaplan, who presided over E. Jean Carroll's recent defamation trial. Habba's skepticism stems from a New York Post article that highlighted an alleged prior working relationship between Judge Kaplan and Carroll's lawyer, Roberta Kaplan, at the law firm Paul, Weiss, Rifkind, Wharton & Garrison in the early 1990s. This claim, based on an unnamed source, suggests that Roberta Kaplan sought to stand out as an associate and Judge Kaplan was "like her mentor."

Habba finds this relationship "particularly concerning" and suggests it could be grounds for a new trial. She also accuses Judge Kaplan of being "overtly hostile" towards Trump's side and showing "preferential" treatment to Carroll's, which she believes might support her call for a retrial. Trump's team is planning to appeal the recent $83.3 million verdict against him, which was a result of his 2019 denial of raping Carroll in the 1990s.

However, skepticism about these claims might be warranted given the lack of immediate response from Judge Kaplan's chambers, spokespeople for Carroll and Roberta Kaplan, and Paul Weiss. Furthermore, Habba's argument primarily relies on a single media report and an unnamed source, which might not provide the most reliable foundation for such serious allegations. The situation is complicated by the large amount of money involved in the verdict and the ongoing appeal of a previous $5 million award against Trump in a similar case, making the context of these allegations particularly charged.

Trump lawyer says judge's possible conflict may taint $83 million Carroll verdict | Reuters


In my column on nonprofit hospitals and tax reform, I discuss the significant tax benefits these institutions receive while often contributing less than 1% of their revenue to charity care. This disparity between tax advantages and charitable contributions raises concerns about the societal benefits these hospitals provide. Given that nonprofit hospitals make up a considerable portion of the healthcare system and are known for high executive compensation, it's clear that policy reforms are needed to ensure these institutions fulfill their societal obligations.

To address these issues, I propose enhanced financial transparency and real-time reporting. Nonprofit hospitals should be mandated to provide detailed financial data, including compensation for top executives and a breakdown of expenditures on administrative costs, marketing, and consulting fees. This level of transparency will help the public understand where tax expenditures are being allocated and whether they align with the hospitals' charitable mission.

I argue that financial transparency should extend to capital projects, property investments, and outsourced service costs. Large-scale transparency is essential to reassess the relationship between tax expenditures and societal returns, especially considering the potential misallocation of funds.

To aid in this endeavor, I suggest utilizing AI and other high-tech solutions. These technologies can manage large datasets and help in developing equitable benchmarks for charitable care. They can also assist in continuous financial monitoring, flagging anomalies in spending patterns.

Regarding the tax status of nonprofit hospitals, they must meet specific requirements under Section 501(r) of the tax code. This includes conducting a community health needs assessment every three years and adopting financial assistance policies for patients in need. However, the standards governing expenditures on charity care are less stringent compared to those for patient financial assistance.

Balancing accountability is crucial. Public awareness and demand are necessary to recalibrate the priorities of the nonprofit hospital sector. Funds allocated to public health should be viewed as investments, with misallocated resources representing both a loss of investment and an opportunity cost.

In summary, my column emphasizes the need for policy reforms to ensure nonprofit hospitals align their tax benefits with societal expectations. Enhanced transparency, supported by technology, and stricter regulation are key to achieving this balance.

Nonprofit Hospitals Need Novel Policy Solutions for Tax Reform

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Minimum Competence - Daily Legal News Podcast
Minimum Competence
The idea is that this podcast can accompany you on your commute home and will render you minimally competent on the major legal news stories of the day. The transcript is available in the form of a newsletter at www.minimumcomp.com.
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