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As the Internet's downloading denizens frantically looked for new content sources, file-sharing site Megaupload began to assemble a legal team to fight last week's criminal indictment.
On Friday, well-known defense attorney Robert Bennett was announced as Megaupload's lawyer. But by Monday, the Hogan Lovells attorney had resigned.
Sources cite a conflict of interest.
Megaupload, along with seven individuals, was indicted last week for carrying on a world-wide piracy ring. The company and its executives are accused of racketeering, money laundering and copyright infringement.
Bennett immediately signed on as Megaupload's lawyer, possibly because he was already working for the company, reports Reuters. Ira Rothken, corporate counsel, has said that those matters were not criminal.
Hogan Lovells must have discovered the conflict over the weekend, though there is no news of what other client is involved.
Still, it makes one question whether the firm had done its due diligence prior to accepting Megaupload as a client. If there is a conflict with the criminal representation, there very well may be a conflict with the other matter.
Even if there isn't, a second conflicts check might have been in order. The criminal matter is an entirely distinct representation, after all.
Do you know how your outside counsel would have acted in this situation? Do the firms conduct a conflicts check upon each new representation? Or do they accept your business based on your ongoing relationship?
If you don't know, it may be time to ask. Things are probably a bit more chaotic now that Megaupload's lawyer has resigned. You don't want the same to happen to you.