Bitcoin financial services company Swan Bitcoin has sued Gibson, Dunn & Crutcher, a law firm it still retains, after it hired a lawyer representing stablecoin issuer and rival crypto firm Tether.

Swan sued Gibson in California’s Superior Court on Nov. 22, accusing it of legal malpractice, claiming it “wooed and won Swan” to represent it against “former-partner-turned-adversary” Tether before the law firm “embraced Tether as a client and told Swan to get lost.”

Swan claimed one of Gibson’s lawyers called its CEO Cory Klippsten to warn that Swan would need to find other counsel, because the law firm hired lawyer Barry Berke, who represents Tether, and there could be a conflict of interest.

In September, Swan — with Gibson as its legal counsel — sued a group of its former employees, accusing them of stealing software code to form a crypto-mining company called Proton Management.

Swan claimed Proton had convinced Tether to cut ties with Swan and back Proton instead — allegations that Proton denied . Tether was not named as a defendant in Swan’s lawsuit.

On Nov. 24, Gibson filed to withdraw as Swan’s lawyers in its case against Proton, saying “there has been a complete breakdown of the attorney-client relationship.”

It pointed to Swan’s suit against the law firm and claimed Swan told it that “it will ‘never’ pay the legal fees it owes” and “demanded millions of dollars” not to oppose Gibson withdrawing from the lawsuit.

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On Nov. 25, Swan asked the Superior Court of California for a temporary restraining order to stop Gibson from withdrawing from its case against Proton and block it from bringing on Tether as a client.

Swan Bitcoin sues its lawyers for picking up Tether as client image 0

An excerpt of Swan’s complaint asking the court to stop Gibson from dropping the firm as a client. Source: Thomson Reuters

It claimed Gibson is “in clear violation of the ‘Hot Potato’ Rule in attorney ethics” — a rule saying lawyers can’t drop a client by withdrawing from a case to avoid a conflict of interest.

A hearing for the restraining order is scheduled for Nov. 26.

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