A Positive Test

A recent public censure from the Tennessee Board on Professional Responsibility of two attorneys in the same law firm

Mr. Barham, along with two other attorneys in his firm, represented two clients in a breach of contact related to the manufacturing and sale of COVID-19 Test Kits. On or about July 3, 2020, the Court appointed a Custodian and entered an Order enjoining the clients from dissipating any corporate assets outside the ordinary course of business. The Order further directed that any profits collected or derived from the sale of the Test Kits be surrendered to the Custodian. In or about February 2021, the clients received $700,000.00 in partial settlement of a claim against a third party related to the sale of certain Test Kits sold prior to the entry of the July 3, 2020, Order. The funds were deposited into the law firm’s trust account without notice to the Custodian, opposing counsel, or the Court. A motion for contempt was filed by opposing counsel and a hearing was held on April 6, 2022. At the contempt hearing, Mr. Barham argued the court order was unclear but acknowledged the Test Kits at issue were the subject of the original hearing wherein the injunction was issued.

Mr. Barham’s failure to timely notify the Court, the Custodian and opposing counsel of the receipt of an asset subject to the Order entered by the Court on July 3, 2020, and request authorization from the Court to deposit the settlement funds in the law firm’s trust account for his clients’ use in the ordinary course of business violated Rules of Professional Conduct, 3.4 (Fairness to Opposing Party and Counsel) and 8.4(d) (Misconduct).

A like censure was imposed on another firm lawyer. (Mike Frisch)