Monday, September 25, 2017

Lateral Drama

"Atty's Ex-Partner Wins Bid To Arbitrate Trade Secrets Fight" --
  • "A California federal judge Thursday sided with the attorney accused by his former partner of stealing trade secrets and client data to launch a competing law firm, sending the matter to arbitration rather than allowing the case to continue."
  • "U.S. District Court Judge Edward J. Davila agreed with William Paradice’s argument at an April hearing that plaintiff Zurvan Mahamedi had signed an agreement when they were partners at Mahamedi Paradice LLP that contained broad arbitration provisions that covered a wide range of potential disputes that might arise, including the trade secret claims alleged in the instant suit."
  • "But in a May 2016 lawsuit, Mahamedi and the firm accused Paradice of violating that agreement and transferring Mahamedi’s proprietary information, including billing data, legal research, contact information and strategy documents, in order to allegedly compete with Mahamedi and to attack his reputation. The complaint names Paradice as well as an information technology consultant who allegedly helped Paradice transfer the sensitive information."
"Charges Against BigLaw Atty Show Vetting Difficulties" --
  • "Alleged improper trading on client information got a former Foley & Lardner LLP partner fired last year, but the firm that hired him next didn't find out until he was charged — showing how hard it can be to unearth a lateral hire's problematic conduct."
  • "Without naming Little, Foley & Lardner said in a recent statement that it had done an internal investigation in June 2016 after learning of a partner's "trading activity" that resulted in the partner being shown the door and the firm alerting authorities. But when Bradley Arant hired Little in July 2016, chairman and managing partner Beau Grenier said the firm knew nothing of the alleged misconduct despite a thorough check."
  • "Florida bar spokeswoman Karen Kirksey confirmed on Monday that the bar has no open complaint file on Little. And he has no disciplinary record in the bar's public information system, which displays formal findings by the state's Supreme Court dating back 10 years. Did someone at Foley & Lardner have an obligation to report Little's conduct to the Florida bar? It depends on what they actually knew."
  • "While the bar rules don't speak specifically to trades on inside information about a colleague's clients, they prohibit disclosing client information to others and committing criminal or other conduct that smacks of dishonesty."
  • "Australia’s Henry Davis York and British firm Olswang both saw large groups of partners leave their ranks prior to unions with large firms. Norton Rose Fulbright and Henry Davis York announced in June their intention to join forces. Earlier this week, rival Australian firm Corrs Chambers Westgarth confirmed its hire of five Henry Davis York partners in Sydney, as legal publications Downs Under noted the possibility of more senior exits ahead of an expected combination later this year."
  • "'To give some context, a number of these departures took place well before merger discussions began and bear no relevance to the current firm,' CMS said. 'As to be expected with a combination of our size, there were a small number of partners that were not able to accept offers as a result of conflicts or other issues. Looking forward, the combined firm is in a strong position and we are continuing to make the most of the opportunities that the merger presents.'"
  • "The loss of lawyers prior to any Big Law nuptial has become fairly commonplace in a robust lateral market. Earlier this month, Bloomberg Big Law Business reported on a group of eight Liner lawyers leaving the Los Angeles-based firm ahead of its merger with DLA Piper to form Pasich, a firm comprised of [sic, tsk tsk] several Dickstein Shapiro alums."
  • "And in early June, just before Norton Rose Fulbright completed its agreement with Henry Davis York, the global legal giant watched a group of 15 lawyers leave Chadbourne & Parke for Covington & Burling in Dubai, Johannesburg and London."

Thursday, September 21, 2017

Information Security: GDPR, ISO & Balancing Risk

"Information security & the risks for the legal sector" --
  • "Information security is a substantial risk for the legal sector. Law firms are an attractive target to cyber criminals due to the vast wealth of personal and private information in their possession. Cyber-attacks on UK law firms increased by a fifth between 2014 and 2016, with nearly three quarters of the country’s top 100 targeted in 2015, according to PwC’s 25th Annual Law Firms’ Survey."
  • "Despite the increasing threat, and the potential financial and reputational damage following a breach, a survey by online legal magazine, Legal Week, found that only 35% of law firms had a response plan in place for cyber-attacks. This is compared to 52% for non-legal professions."
  • "With the European Union’s General Data Protection Regulations (GDPR) due to come into force in May 2018, legal firms that fail to appropriately secure personal data will face severe fines in the event of a breach. The regulations could affect organisations throughout the world because they apply to any company that handles the personal data of Europeans. The GDPR defines a personal data breach as a breach of security leading to the destruction, loss, alteration, unauthorised disclosure of, or access to, personal data."
  • "Fines imposed following a breach could be as much as 4% of a firm’s annual global turnover, or €20 million, depending on which is greater. Furthermore, should a firm be fined under GDPR they are also likely to face personal litigation from the individuals whose data is lost. The total cost of a breach could therefore be far greater than the fine, and might see senior partners being taken to court and even imprisoned should the breach show negligence."
"Richard Elson, IS Director at law firm Trowers & Hamlins LLP, discusses the challenges of taking a security-first stance" --
  • "Speaking to Computing recently, Richard Elson, director of IS at the firm, explained how they balance the need for security with the oftentimes conflicting need for open communication."
  • "'We could probably spend millions and millions and millions on security," he said. 'It's obviously central to what we do; we've tried to take a security-first approach to all of our technology projects, but particularly our mobile technology. Taking a security-first stance can sometimes be a little unfashionable - and there can be trade-offs with ease-of-use, productivity, people wanting to use the latest apps. But we think we've got the right balance. We fairly recently standardised around a BYOD strategy, which is centrally-managed applications delivered to personal devices.'"
  • "When asked about the impact of the GDPR on the firm, Elson explained that although the regulation is a fairly onerous set of responsibilities, good data governance has accelerated their preparations. 'We did an awful lot of work around the ISO 27001 and we did a lot of work for the Cyber Essentials Plus [scheme] and got the accreditation for that last year; and also in preparation for looking at the cyber insurance, about two and a half years ago, we put together a systems map of our Personally Identifiable Information.' He explains, 'What we've tried to do is, for each system and for each set of Personally Identifiable Information, [identify] what the risk is, how we're treating it today and how the requirements of GDPR - particularly in respect of consent and control - what next steps we have to take for each set.' The firm's security-led stance means that from an IT perspective, they're well prepared for the GDPR."

Wednesday, September 20, 2017

Risk Updates: Waivers, Client Guidelines & More

"Conflict Waiver Fails After ‘Mission Creep’ in Lobbying Work" --
  • "Holland & Knight must stop representing a bank in a civil fraud case against a company the firm concurrently represented in other matters during the run-up to the suit, the U.S. District Court for the Southern District of New York held April 28 ( First NBC Bank v. Murex, LLC , 2017 BL 141143, S.D.N.Y., No. 16 Civ. 7703 (PAE), 4/28/17 )."
  • "The court concluded that a broad advance conflict waiver in the company’s engagement agreement didn’t cure the problem. H&K’s services expanded beyond the nonlegal services contemplated in the agreement, and the waiver provision didn’t mention the specific adverse matter, Judge Paul A. Engelmayer said."
  • "Advance conflict waivers have become a regular feature of engagement agreements for big law firms and their corporate clients. But as this case makes clear, a future conflict waiver isn’t a bulletproof shield, especially if the firm’s adverse role comes across as stabbing the client in the back."
  • "A nonlawyer senior policy analyst in H&K’s Washington office arranged the engagement, which called for “regulatory consulting services.” The engagement agreement stated that the conflicts of interest rules applicable to lawyers wouldn’t apply, and the agreement permitted H&K to represent clients adverse to Murex in unrelated matters."
  • "H&K argued that Murex was solely a lobbying client, but the court found that H&K formed an attorney-client relationship with the company. The firm’s representation of Murex broadened beyond lobbying work to include helping Murex defend itself against a threatened EPA enforcement action and briefly counseling Murex on a pending lawsuit in which Murex was represented by a different law firm, the court said."
  • "Those activities outside the scope of the engagement agreement clearly amounted to legal services, and it was reasonable for Murex to believe it had an attorney-client relationship with H&K, it found."
"Lawyers Should Negotiate Outside Counsel Guidelines" --
  • "The idea of lawyers negotiating the terms of a contract shouldn’t sound controversial, but when it comes to the terms of their own contracts, lawyers engage in behavior they would never recommend to a client. Other than big-ticket contracts, such as property leases and firm-wide outsourcing contracts, lawyers often agree to terms—such as those in agreements with e-discovery or contract attorney vendors—without any review whatsoever. The same has been true for OCGs, to which attorneys historically have paid little attention, partially, according to James R. Clark, general counsel and partner at Foley & Lardner LLP, 'in the interest of not disrupting client relations.'"
  • "Let’s look at three of the most problematic types of provisions found in OCGs, and ways to negotiate amendments to satisfy a firm’s business needs and risk management concerns."
  • "Expanded Duties of Loyalty. Every U.S. state has developed its own rules governing what constitutes a conflict of interest, most of which track closely the ABA Model Rules of Professional Conduct... Corporate clients have developed other ideas. Instead of relying on established rules and laws, corporate clients are defining conflicts for themselves and dictating the relationships law firms may have with other clients. A natural outcome of the basic conflict rules is that every matter a lawyer or law firm takes on necessarily restricts future business opportunities. Today’s corporate OCGs are, however, expanding the set of clients and matters foreclosed to law firms beyond the operation of the conflicts rules. And advance waivers are out of the question."
  • "Uninsured Liability. Beyond the acceptability of terms for conflicts/future business, another type of common OCG provision more directly targets the firm’s liability to the client. Corporations often include indemnification requirements of varying scope in their OCGs. I’m not aware of a claim against a firm involving the firm’s indemnification obligations. Yet, the consequences of certain types of indemnification provisions could prove disastrous."
  • "Promises of Data Security Not Enough. A notable development in OCGs is driven by concerns regarding the security of data. While clients in certain industries—finance, healthcare, and retail, for example—long have required assurances from their outside lawyers regarding adherence to principles of data security, clients no longer accept mere promises. In many OCGs, corporations are laying out specific measures and policies that they expect law firms to have in place or adopt in order to retain the client’s business. In addition, clients are following up on OCG terms with extensive written assessments and on-site, multi-office audits."
  • "At least as important as what the firm negotiates is who does the negotiation. Mr. Clark notes that one of the most effective ways to negotiate OCG terms—and avoid rocking the boat—is to entrust the task to firm personnel (in-house firm attorneys, if the firm has them, certain partners if it does not) other than client relationship partners. These individuals can ensure consistency in the application of the firm’s positions and, if necessary, play the bad cop role in the negotiation. OCGs are not non-negotiable. In fact, they represent an opportunity to open a discussion with the client and to build productive relationships."

Tuesday, September 19, 2017

Conflicts: Concerning Checking Standards and Skills

The Legal Intelligencer notes: "Carefully Evaluate Whether Issues Involving Your Case Are 'Substantially Related'" --
  • Comment 3 to Rule 1.9: "Matters are substantially related for the purpose of this rule if they involve the same transaction or legal dispute or if there otherwise is a substantial risk that confidential factual information, as would normally have been obtained in the prior representation, would materially advance a client's position in the subsequent matter. For example, a lawyer who has represented a business person and learned extensive financial information about that person may not then represent that person's spouse in seeking a divorce. Similarly, a lawyer who has previously represented a client in securing environmental permits to build a shopping center would be precluded from representing neighbors seeking to oppose the zoning of the property on the basis of environmental consideration."
  • "It does appear from the case law that confidential information is often a sticking point in deciding whether or not the matters are substantially related. A review of the case law seems to also suggest that the cases are decided on the specific facts of a particular case. But, there does not appear to be a bright line. A number of factors could be involved. The length of time between the current representation and the past representation is one. Also, confidential information or lack of it being obtained or whether the representation was directly adverse or not."
  • "Also, the business of representing a client or representing a competitor of a client can, at times, create potential issues of conflict or disqualification. In this modern world where new business is eagerly sought and a substantial fee can, at times, blind one to their ethical obligations, a lawyer must step back and think about the consequences. As difficult as it may be, clients are entitled to independent representation and also entitled to the fact that their prior lawyer will not be acting in an adverse manner against them in the future if there are similar or substantially related issues or issues of confidentiality. All lawyers should very carefully evaluate that."
And the folks at InOutsource have launched it's "Conflicts Essentials" training program --
  • "Researching and evaluating potential conflicts of interest serve as a fundamental component of law firms’ business operations. However, many law firms are challenged with incorporating rules from different jurisdictions into their internal processes for evaluating conflicts."
  • "InOutsource, an industry-leading global legal consulting firm celebrating its 15-year anniversary, has launched an innovative service to help law firms identify and address this challenge: Conflicts Essentials. Led by InOutsource experts with established experience with conflicts, the service includes an intensive series of programs for conflicts administrative professionals, review for nonlawyer professional staff and education and training for attorneys."
  • "InOutsource's new Conflicts Essentials program can be scaled and tailored to the needs and interests of each member of your team. Seminar offerings include: Intensive training series for conflicts administrative personnel; Basic review for non-lawyer professional staff; CLE-eligible* risk education for your firm's lawyers"
More information via their web site.

Monday, September 18, 2017

Risk, Money and Market Pressure (Litigation Financing, Billing Busted, and New Legal Practitioners: The Big Four)

Let's talk about money a bit. Well, financing and other forces on the legal market. First: "Attys Can Ethically Sell Future Fees To Nonlawyers, Prof Says" --
  • "Allowing attorneys to sell their unmatured fees to nonlawyers would permit law firms and legal practitioners to more widely use a capital source that still complies with current ethical restrictions on nonlawyer investment in the industry, according to a law professor."
  • "Professor Anthony J. Sebok of Yeshiva University’s Benjamin N. Cardozo School of Law contended that there has been little consideration by state bar ethics committees as to whether the purchase of expected attorneys’ fees by nonlawyer entities is permitted under American Bar Association ethics rules."
  • "In his April 21 paper, Sebok surmised that this method of capital creates a passive investment that does not necessarily involve the sale of a property interest in an attorney’s practice and should be allowed under current ethical rules restricting lawyer fee arrangements with nonattorneys."
  • "Sebok drew parallels to the practice of “standard” factoring, in which a lawyer or legal entity sells accounts receivables that have been billed to a client but are not yet paid. He said the vast majority of ethics bodies in the U.S. recognize the standard form of factoring as an acceptable practice under the so-called direct relation test, which measures the significance of a financial arrangement between a nonlawyer and a lawyer."
"Elephants in the Room Part I: The Big Four’s Expansion in the Legal Services Market" --
  • "The Big Four’s recent expansion into the legal market is not the accounting industry’s first foray into providing legal services. Throughout the 1990s, the big accounting firms expanded aggressively from their traditional audit business. After a decade of investment and expansion, the Big Five, as they were then known, built legal arms which rivalled the scale of the biggest law firms. Despite their early success, their ambitions in the legal industry were thwarted by a series of scandals and ensuing regulation, which exposed the potential conflicts of interest stemming from mixing audit with legal advisory services."
  • "The first section of this paper examines the prior expansion of accounting firm into the legal market – a period from which accounting and law firms can learn valuable lessons. The second section looks at the current state of the Big Four in today’s global legal market. Accounting firms have learned valuable lessons from their prior misadventures in the legal industry. They are approaching expansion more cautiously and are using more sophisticated business models that combine traditional aspects of legal services delivery with newer methods. This strategy, combined the Big Four’s relationships with large clients, have allowed the Big Four to penetrate many areas of the legal industry and, once again, rival the largest law firms in the world."
"After Wedding, An Associate's Overbilling Leads to a Suspension" --
  • "Mary Jaclyn Cook spent nearly two weeks last December in Hawaii, getting married and honeymooning in the Pacific paradise. All the while, she knew she was short on hours... A November meeting with her boss had failed to quell Cook’s fear that she would be fired if she missed the target. On Jan. 3, 2017, when time logs were due, Cook wrote 60 entries totaling 135.7 hours. Thanks to the help of a December in which she billed more than 12 hours every day, despite her travel, Cook managed to end the year about an eight-hour workday over her firm’s expected hours for associates. If only it were true."
  • "This month, Cook and the Colorado Attorney Regulation Counsel agreed to a nine-month suspension from the practice of law for the now former Faegre Baker Daniels associate. In a stipulation with the disciplinary board, Cook admitted to inflating and fabricating time entries totaling nearly 140 hours, worth nearly $40,000. The firm never collected the money, having noticed Cook’s unusually high hourly totals in December before most of its bills went out to clients. She resigned from the firm in January."
  • "Cook 'was caught off-guard, and she panicked. She claimed the hours were legitimate,' according to the stipulation. Stark countered by saying that a document management system her log claimed she used on certain days showed she never logged in those days. After the meeting ended, Cook confessed on the same day to Stark about the overbilling, stating she was afraid she would lose her job if she missed the firm’s hours requirement. Faegre Baker Daniels gave her the change to resign, which she accepted."
  • "Michael Frisch, an ethics expert and professor at the Georgetown University Law Center, said that while there is no excuse for overbilling, Cook’s tale is symptomatic of the billable hour pressures that associates face and the inherent conflict they create within firms, their lawyers and clients. 'The whole idea of targeting billable hours, saying an attorney must work ‘X’ number of hours to stay employed, doesn’t encourage efficiency and it doesn’t encourage the most cost-conscious use of attorneys’ services for clients,” said Frisch, who spent 17 years as a grievance prosecutor for the District of Columbia’s Court of Appeals. “And that’s been widely recognized in the profession.'"

Sunday, September 17, 2017

Client Information Risk Management (Ethics, Border Searches, Marketing & More)

Several interesting stories and updates to share concerning managing sensitive client information. First up: "Dissemination of Confidential Client Information Discouraged in Formal Ethics Opinion 130" --
  • "The Colorado Bar Association Ethics Committee recently issued Formal Opinion 130, dated April 3, 2017. Formal Opinion 130 addresses the disclosure of confidential client information, including information that is publicly available, such as when the information has been on the news. The opinion concludes that dissemination of such information is prohibited by the Rules of Professional Conduct, and specifically states that there is no exception for information contained in the public record."
  • "Formal Opinion 130 also addresses the use of information about former clients, concluding that such use may be allowed under the Rules when such information is “generally known.” The opinion advises attorneys to exercise caution when using information about former clients."
Hinshaw's latest newsletter also notes: "Duty of Confidentiality – Marketing – Revealing the Identity of Current and Former Clients. Wisconsin Formal Ethics Opinion EF-17-02" --
  • "The opinion concludes that disclosure of a client’s identity, without informed consent, is prohibited unless the disclosure falls under limited exceptions... This extremely broad definition leads to confusion as to the scope of the rule. The duty to protect information thus defined is often misunderstood because lawyers confuse the duty of confidentiality with attorney-client privilege."
  • "The duty of confidentiality extends automatically even if the client does not request the information be kept confidential or if the client does not consider it confidential. In order to disclose information relating to the representation of a client, it is the lawyer’s obligation to obtain informed consent, or determine if there is an exception that allows disclosure of the information. Even if the lawyer thinks that disclosure of the information is harmless, it does not mean that the disclosure is permitted, absent client consent. The Opinion recognizes that attorneys also have duties with respect to prospective clients, and that the duty of confidentiality continues beyond the death of a client. See Wisconsin Ethics Op. E-89-11."
  • "The ethical duty of confidentiality is extremely broad, applying to any information related to the representation of a client no matter the source. This information is protected regardless of privilege, status as public record, or where disclosure would be harmless. The duty extends to former clients and prospective clients. The disclosure of a client’s identity is prohibited unless the client gives informed consent, unless it is necessary to carry out the representation, or is within a specific exception to the rule. Attorneys should be mindful of this duty in all circumstances, and should consult their state version of Rule 1.6."
  • "The ACLU and the Electronic Frontier Foundation have sued the Department of Homeland Security to block U.S. Customs and Border Protection personnel from searching travelers’ electronic devices without warrants.  This has implications for lawyers who cross in and out of the U.S. with phones and laptops  containing confidential client information.  The CBP’s policy, which the ABA also has questioned, currently authorizes such searches even without a suspicion of wrongdoing."
  • "We first wrote about the issue last month, when the New York City Bar Association published an ethics opinion raising the client confidentiality issues and advising that in some circumstances lawyers should consider using “burner” phones, and avoid taking client confidential information across borders."

Thursday, August 31, 2017

Catching up on Contentious Conflicts

Here are a few updates from earlier this Summer still worth noting:

"Report skewers law firm over conflicts" --
  • "A venerable Twin Cities law firm has come under sharp criticism for allegedly failing to address the conflicts of interests that arose in the course of its decades-long representation of a successful family-owned business that is now engulfed by multiple lawsuits involving warring family members."
  • "In a report commissioned by the board of directors of Twin City Fan Companies, former Minnesota Supreme Court Justice James Gilbert faults past and current attorneys at Lindquist & Vennum for the firm’s simultaneous representation of TCF, TCF’s former CEO Charles Barry, and other members of the Barry clan, including Charles Barry’s now ex-wife Melanie Barry and their son Michael Barry, TCF’s president."
  • “'Here Lindquist & Vennum failed to appreciate the risks presented by the many roles it undertook for TCF and the Barry family and as a consequence the clients were not make aware of those risks while many complicated intercompany and shareholder transactions were taking place,' wrote Gilbert, the principal at the Gilbert Mediation Center. 'As the events unfolded, those risks materialized into reality.'"
  • "Although Lindquist’s billings for both personal and corporate legal services were typically paid by TCF, Thomas Carlson, a Lindquist lawyer who handled estate planning services for Barry family members, said 'he deemed TCF as a third party beneficiary of any combined personal legal services,' according to the report."
  • "Carlson did not respond to an email or phone call seeking comment. Dennis O’Malley, Lindquist’s managing partner, said by way of email that the firm does not comment on matters involving clients or former clients."
In New Zealand: "Law firm Fitzherbert Rowe owes former client as much as $1.5m" --
  • "If a law firm had a proper process to check conflicts of interest, it may have avoided paying out as much as $1.5 million. Horse trainer Jeffrey Lynds has successfully sued Manawatu law firm Fitzherbert Rowe, after alleging its failure to declare a conflict of interest ended with him losing money on a bad business deal."
  • "Fitzherbert Rowe acted for Mitchell when he restructured his dairy business, as well as Mitchell's major lender, Lynds, and Lynds' and Mitchell's partnership. Various partners from the firm were involved."
  • "Lynds believed Fitzherbert Rowe knew about Mitchell's financial problems at the time of the pegasus transaction. He said that created a conflict of interest, which should have led to it going to him for informed consent, telling him he was entitled to independent legal advice due to what the firm knew."
  • "Fitzherbert Rowe denied any conflict, saying the firm was acting for Mitchell and Lynds jointly – a pair who both wanted the pegasus transaction to go ahead – and had not been asked to advise on the wisdom of the transaction."
  • "The judge found Fitzherbert Rowe breached the "double employment rule" – meaning its duty to one client could conflict another – at the point Lynds and Mitchell were about to sign the pegasus transaction...'Had they had such a system and carried out a conflict check before accepting the instructions [about the pegasus transaction], there would have been the opportunity to seek and obtain Mr Lynds' informed consent.'"
In Scotland "Litigant’s conflict of interest claim rejected after former lawyer ‘changed sides’" --
  • "A party litigant who argued that a solicitors’ firm instructed by the other party should be barred from acting because one of its consultants had previously represented her while working as a partner in a firm which merged with the opponent’s firm has her claim dismissed."
  • "By a majority of two-to-one, judges in the Inner House of the Court of Session ruled that there was no “conflict of interest” in BLM Solicitors acting for Ecclesiastical Insurance Office plc where the defender, Lady Iam Hazel Virginia Whitehouse-Grant-Christ, had previously consulted George Moore, then a partner in HBM Sayers, which had since amalgamated with BLM, with Mr Moore becoming a consultant."
  • "On behalf of the pursuers it was submitted that the court should follow the decision of the House of Lords in Bolkiah v KPMG [1999] 2 AC 222; that the real question was one of confidentiality, and it was only if there was a realistic risk of confidential information in the hands of Mr Moore being used to benefit the pursuers in the litigation that any difficulty might arise."
  • "The defender stressed that her concern about disclosure of confidential information, and, under reference to Bolkiah, asserted that there was a 'real risk of unlawful disclosure and unlawful use' by BLM of “private sensitive privileged and relevant confidential information', She also referred also to cases which supported not only the protection of such information but also a “duty of loyalty” and an “over-riding jurisdiction” of the court to intervene 'to protect the due administration of justice'."
  • "In a written opinion, Lord McGhie said: 'I have come to accept that there is no continuing obligation of loyalty in the present case and indeed that, unless there are special circumstances, there is no such duty on termination of a normal agency. Although I have come to the conclusion that dicta in Bolkiah need not be read as excluding consideration of the need to preserve public faith in the proper administration of justice, I do not think the circumstances of the present case call for intervention on that basis.' He continued: 'Mr Moore’s involvement was extremely limited and it is not suggested that the defender has had any dealings with him for about 15 years. Apart from the question of confidential material there is no practical reason to prevent his new firm acting against the defender.'"

Wednesday, August 30, 2017

For the Record (More Swap-outs of LegalKEY and ARM)

FileTrail is in the news again, noting recent LegalKEY and Autonomy/iManage records migration projects. In this case, Osler and Miller & Martin: "Law Firms Choose FileTrail to Replace ARM and LegalKEY" --
  • According to Osler’s CIO, Peter Bier: "After extensive research and product evaluations we chose FileTrail to replace ARM for our records management system. FileTrail’s deep expertise in the field of records management and its integration with such key vendors as Iron Mountain and iManage made it a front runner in our evaluation. The deciding factor for us was FileTrail’s workflows and interface, which our professionals found to be highly intuitive and efficient. We are looking forward to working with FileTrail on the implementation to manage retention of both physical and electronic items."
  • Jenny Sanders Plunkett, Miller & Martin’s Director of Business Intake and Records, said: "We chose FileTrail to replace LegalKEY because of their user interface and commitment to development of the product. We are looking forward to working with FileTrail on the implementation and integration with iManage to manage retention, disposition and deletion of both physical and electronic items."
  • "In recent years, Miller & Martin joined the long list of law firms that made the switch from LegalKEY due to an ongoing lack of support. As they looked for a replacement, FileTrail’s solution stood out."
For more detail on Osler's journey to improve risk controls, see this video interview on their decision to adopt Intapp Open for new business intake and conflicts management:

Wednesday, August 23, 2017

IP Conflicts (Subject Matter, Patent Disputes & More)

McCabe IP Ethics law does some excellent reporting and analysis on IP issues. Here are a few recent stories worth a look: "Portus Drops Subject Matter Conflict Claim Against Kenyon; Alleges Firm’s Prosecution Malpractice Shortened Patent Term By 3+Years" --

  • "For the past year, Portus Singapore Pte. Ltd. (“Portus”), a former client of the now-defunct Kenyon & Kenyon (“Kenyon”) law firm, has been trying to get a claim for legal malpractice to stick against its former IP counsel.   So far, Portus’ efforts have been unsuccessful.  On July 28, 2017, Portus took its third bite at the apple and filed another amended complaint against Kenyon."
  • "The complaint asserts that a Kenyon lawyer defended Bosch in an infringement action against Bosch “in the smart home and IP video surveillance domain” without Portus’ consent.  The complaint also alleges that Kenyon “has prosecuted patents on behalf of Bosch” in the “domain” of smart home and IP video surveillance technology. The complaint alleged that Bosch was a “potential infringement and licensee target in the patent prosecution” being handled by Kenyon."
  • "Notably, neither the complaint nor the amended complaint alleges that “but for” this alleged concurrent representation, Portus would have gotten a “better” patent or broader claims.  Portus also does not allege that it was required to narrow claims or that it lost any patent rights due to Kenyon’s work on any of Bosch’s patent applications."
  • "Notably, Portus no longer alleges that Kenyon engaged in a subject matter conflict of interest based upon its concurrent representation of Bosch in the same technical “domain.”  In light of the Massachusetts Supreme Judicial Court’s opinion in Maling v. Finnegan, Henderson (2015), one can understand why it was prudent for Portus to drop this allegation. Thus, the sole basis for the malpractice claim is now limited to the loss of patent term for failing to file a § 111(a) continuation application."
"Finnegan Henderson Committed Legal Malpractice By Favoring Marking Blade Inventor Over Corporate Patent Client: Lawsuit" --
  • "Who is an IP firm’s patent prosecution client when the firm represents a limited liability company and one of its members is the sole inventor?  Does the answer change if the LLC is never actually formed, and no one ever advises the law firm?  Those are just two questions that appear to be at the center of a malpractice lawsuit filed recently by a Massachusetts business against the IP law firm of Finnegan, Henderson, Farabow, Garrett & Dunner LLP.  Click here for a copy of the Accutrax malpractice complaint."
  • "The Accutrax complaint claims that Finnegan represented Accutrax LLC and negligently failed to document or record properly an assignment of patent rights from the inventor to the company.  The lawsuit also alleges that Finnegan engaged in a conflict of interest by representing the inventor, who purportedly was a member of Accutrax LLC, directly adverse to the interests of Accutrax LLC.  Finnegan’s alleged failure to document an assignment from the inventor to the company, and its alleged conflicting representation of the inventor, allegedly caused Accutrax LLC to lose out on a manufacturing contract.  Accutrax’s lawsuit seeks to recover lost profits and other damages from Finnegan."
  • "The action was filed in a Massachusetts state court, and Finnegan has yet to file its answer.  Nevertheless, in a statement published in the Boston Business Journal, Finnegan denies that it ever represented Accutrax."
  • Ed: See the full update for additional detail and extensive reader commentary on this one.

Tuesday, August 22, 2017

Client Selection & PR Risk (or "The Scarlett Firm" Effect?)

We've talked in the past about client selection and PR risk (independent of ethical/conflicts risk).

Here's an excerpt from a story posted a few days ago in a well read legal news publication. You probably know the one. They break a lot of inside news, and are never shy about being provocative.

However, the provocative tone of their editor-in-chief's writing on recent developments (tied to broader, real, mainstream news relating to recent demonstrations, and associated free speech issues), certainly raised eyebrows.

In this case, the hypothetical potential of two "name brand" law firms to take on clients earns the negative ink:

It's a very interesting question -- to what extent does (or can) current (or recent) client work, public spotlight on that representation, or other attention and controversy affect the reputation of firms, regardless of their actual activity, the merit of that work, etc?

Not an original question. But certainly on several minds. And definitely relevant in the context of large organizations advancing discussions about client evaluation, review and governance risk.

Monday, August 21, 2017

For the Records: Dentons Does Records Management Migration

"How a Global Law Firm Selected Its New Records Management Software," --
  • "In 2016, the Legal Services Management and the Chief Knowledge Officer (CKO) at Dentons decided it was time for a major records management software upgrade. Over the course of 10+ years, Dentons had expanded across the globe and now had more than 7,700 lawyers. Managing disposition and retention of the firm’s physical and electronic records using the limited automation of multiple legacy IT system was inefficient and costly. Its records management system functionality had stagnated and was unable to meet increasingly rigorous client and regulatory information governance requirements."
  • "Deploying a new business platform was a huge undertaking. To ensure success, Dentons teamed up with a consultant to evaluate and document current business operations and information governance requirements of the firm. This comprehensive baseline was used to objectively assess new records management systems, with the goal of assuring the upgrade would help the firm realize a significant ROI, as well as serve all stakeholders far into the future."
  • "A new records management software solution shouldn’t require excessive IT team or expensive vendor support. Instead, routine service modifications should be accomplished by the records services staff. The platform should also readily integrate with existing and future document management, new business intake and matter management systems of the firm. In order to meet these criteria, Dentons honed in on 100% browser-based systems that could be deployed either on-premises on securely in the cloud."
  • "By definition, the value of a modern records management system is that it reduces the risk of sensitive client and firm information exposure. It does so by helping the firm know exactly what sensitive information it possesses, who is responsible for the information, where it resides, how long it must be retained and when it should be disposed of."
  • 'When undertaking its assessment, Dentons asked whether records management systems:
    • Integrated with other data management platforms (such as Intapp’s Wall, Open and Terms modules), enabling information governance (IG) to be applied to all data from a single platform
    • Included IG tools that assured critical information was managed according to firm, client or regulatory stipulated criteria - but not over-retained which can create legal discovery or breach risks
    • Met firm and client security requirements for the system hosting environment, and the application and data bases."
  • "Records management systems vary in their ability address these vital risk management issues. If you know where sensitive information is at all times--and you apply appropriate IG controls--your risks are greatly reduced. Dentons determined that FileTrail offered the best single pane of glass to manage all file retention and disposition of the firm’s key information repositories, as well as its off-site storage vendors."
Read on, for the complete case study and deeper analysis.

Wednesday, August 16, 2017

Latest News: Records, Russia, Risk (and Elvis)

Greetings from the annual ILTA conference. Here in "Jane, get me off this crazy thing"-Las Vegas.

We'll try to keep the gambling-risk metaphors to a minimum. Elvis is not in the building. In fact, today marks the 40th anniversary of his departure from the earth, which was the same day my wife was born. So, Happy Birthday, honey! (Hey, if I were a songwriter, I'd write you a song. But, I'm just a simple blogger. So: "And you can tell everybody, this is your post... " >smile<)

Many of the usual suspects are here at the conference. (No one has yet attempted the secret risk blog handshake, but there is still time.) The folks at FileTrail have earned some new attention from LegalTech News for "Legacy Battle: FileTrail Aims to Attract LegalKEY Users With New Updates" --
  • "Companies such as FileTrail are fine-tuning their platform’s user interface and features to meet the demands of longtime LegalKEY users in a bid to capitalize on what they see as the legacy platform’s shortcomings. The move speaks to legal clients’ evolving demands in the record management space, as well as the pull which long-used platforms still hold for many in the industry."
  • "Mervau doesn’t believe that tailoring FileTrail’s UI to mimic that of LegalKEY is the prime selling point that will drive clients toward FileTrail. Such motivation to change is happening on its own because LegalKEY is “an older platform that hasn’t been updated [for years],” he said, and it “isn’t meeting the needs of today’s firms."
  • "Nancy Beauchemin, founder of information governance consultancy and legal solutions provider InOutsource, who handles the implementation of FileTrail at large law firms, noted that these needs are twofold. The first, she said, is that 'law firms have now adopted information governance and record retention policies, so they need their record platforms to enable compliance with that, and LegalKEY has limited functionality in this area.' The second is that more firms want solutions to be cloud-based, so “you don’t have to do an install of the software on a workstation,” can access the solution on mobile devices, and have a lower deployment and management costs, she said. LegalKEY can only be installed on premise.'"
"Wilmer Ends Work for Manafort as Ex-Partners Press Russia Probe" --
  • "Paul Manafort, President Donald Trump’s former campaign manager, is no longer being represented by Wilmer Cutler Pickering Hale and Dorr while special counsel and former Wilmer partner Robert Mueller III continues his probe into the Trump campaign’s Russia ties. Instead he’ll be represented by Miller & Chevalier, a Washington, D.C., boutique with a focus on international law, tax and litigation that has represented Manafort in the past."
  • "The move comes a day after news broke that FBI agents raided Manafort’s house, and a few weeks after Wilmer partner Jamie Gorelick wound-down her representation of Trump’s son-in-law and adviser Jared Kusher in Russia-probe related matters."
  • "That change was precipitated by the potential appearance of conflicts between the firm and Mueller, a former Wilmer partner who now leads the Russia investigation at the Justice Department and has hired three other former Wilmer partners for the team."
  • "The Justice Department had decided Mueller had no actual legal conflicts in the case, and had not represented either Manafort or Kushner while at Wilmer. Yet the same appearance of conflict could have hindered the firm’s representation of Manafort."
"SDT to probe former Clydes partner over 'improper' money transfer claims"
  • "A former partner in Clyde & Co’s Guildford office has been referred to the Solicitors Disciplinary Tribunal (SDT) over an alleged “improper” transfer of funds."
  • "A spokesperson for the firm said: 'We are aware of the Solicitors Regulation Authority decision in relation to Charles Smith, a junior partner at the firm from May 2013 to November 2015. The decision relates to how Charles, in his capacity as a department risk partner, processed a number of aged residual client account balances on historic cases. At the time we were working with the Solicitors Regulation Authority to improve our processes in this area. It would not be appropriate to comment further while the tribunal is pending.'"
  • "In April, Clydes was hit by a £50,000 fine by the SDT and three of its partners were fined £10,000 each for breaching money laundering rules, by allowing the firm’s client account to be used as a banking facility."
"Jones Day Conflict Waived In GWB Scandal Figure's Appeal" --
  • "A New Jersey federal judge on Tuesday ruled that a former public official convicted in the George Washington Bridge lane-closing scandal has knowingly and voluntarily waived any potential conflict of interest with Jones Day attorneys representing her as appellate counsel in light of the firm's representation of the Port Authority of New York and New Jersey in related matters."
  • "U.S. District Judge Susan D. Wigenton made that finding after Bridget Anne Kelly, a onetime deputy chief of staff to New Jersey Gov. Chris Christie, confirmed during a brief hearing in a Newark courtroom that her waiver of any such conflict is knowing and voluntary and that she wanted Jones Day to continue representing her."
  • "The Third Circuit on Aug. 4 granted the government's motion for a limited remand to Judge Wigenton to determine whether Kelly has knowingly and voluntarily waived any conflict Jones Day might have by representing both her and an agency identified as a victim in the case. Jones Day is defending the agency in a putative consolidated class action in New Jersey federal court over the lane closures in which Kelly was also a defendant, prosecutors said in their remand motion brief; a default judgment has been entered against her in that case. Prosecutors sought the on-the-record waiver to ensure that Kelly cannot later complain on appeal that she did not receive effective assistance of counsel, court documents say."
"BASF Alleges Conflict, Says Rivera-Soto Shouldn't Serve as Asbestos Special Master" --
  • "In the latest special master dispute, defense lawyers said Rivera-Soto's firm, Ballard Spahr, is represented in a suit in the Philadelphia Court of Common Pleas, Ballard Spahr v. Symphony Health Solutions, by Williams & Connolly, which also represents Cahill Gordon in the present case. Therefore, Williams & Connolly has a fiduciary relationship to both Cahill Gordon and Ballard Spahr, according to a letter signed by Robert Ryan of Connell Foley, representing Cahill Gordon, and Justin Quinn of Robinson Miller, which represents BASF. In addition, before Rivera-Soto was appointed to the Supreme Court in 2004, he was with Fox Rothschild, one of the firms representing the plaintiffs in the present case, Ryan and Quinn wrote. Those circumstances 'require the court to select a different special master for the case,' the defense lawyers said."
  • "But Rivera-Soto said in his Aug. 11 letter to Linares that he did not know that Williams & Connolly was involved in the case, and added that the issues raised in the Aug. 8 letter do not disqualify him from serving as special master in the present case. He said he is not involved in the Symphony Health Solutions case or events leading up to the case. He said he and any other Ballard Spahr lawyer assisting him with his special master duties would be segregated by an ethical 'wall' from lawyers in his firm's Philadelphia office who are working on or involved with the Symphony Health Solutions case."
Thank you very much...

Monday, August 14, 2017

Malpractice Trends, Cyber Risk, Conflicts Allegations

"Legal Malpractice Claims Level Off as Conflicts and Cyber Claims Rise" --
  • "Statistics regarding the type, frequency and severity of legal malpractice claims submitted to insurers during 2016 were released at the end of June. From the law firm and attorney perspective, the news is generally good in that the number of malpractice claims has remained relatively steady. For insurers, however, the news is less rosy, because legal defense costs, claimed damages and settlement sums continue to climb."
  • "In its seventh annual survey, Ames & Gough, a risk and insurance adviser to the country's largest law firms, provides data relating to legal malpractice claims submitted last year. The survey includes information obtained by polling nine leading insurance companies that insure approximately 80 percent of the Am Law 100 firms."
  • "Indeed, the data show that legal malpractice claims are becoming more expensive, both in the potential damages and in the defense. With respect to damages, 6 out of 9 insurers reported claims for which they maintained reserves exceeding $500,000, and at least one insurer paid a claim exceeding $100 million."
  • "Conflicts remain the most common error resulting in legal malpractice claims. Nearly all participating insurers cited conflicts as either the first or second biggest cause of claims. Interestingly, about half of participating insurers witnessed an increase in conflicts claims involving lateral hires, some of which stemmed from inadequate resolution of a conflict of interest."
  • "Cyber-related malpractice claims have continued to rise, with the majority of insurers indicating more cyber claims last year than in prior years. Of those insurers, four noted that most cyber events involved hackers. This trend is not at all surprising, given the increasing number of news stories involving global hacking operations and ransomware threats."
  • "Claims involving conflicts are notoriously easy for a malpractice plaintiff to explain to a jury. Juries also appear to treat such claims seriously, because they suggest an attorney's violation of one of the utmost duties owed to clients: loyalty. As a result, it is worthwhile for firms to ensure that they have the proper systems in place to identify and resolve conflicts."
"Clifford Chance under investigation by the SRA over Excalibur case" --
  • "Clifford Chance (CC) is being investigated by the Solicitors Regulation Authority (SRA) over its controversial role in the long-running Excalibur case... CC was criticised by the CoA for its role advising Excalibur, after it emerged that there were family ties between CC’s lead partner, Alex Panayides, and one of the litigation funders."
  • "While the SRA regularly investigates individual lawyers, it is less common for the watchdog to probe major law firms."

"Client Intake: Know Your Client—Or Else" --
  • "What information about a new client does a lawyer need to obtain in order to make sensible decisions about whether or not to proceed? Two recent cases, one from New York and one from the U.K., have important lessons for lawyers, wherever they practice."
  • "In reviewing the English case, P&P Property v. Owen White & Catlin, 2016 WL 05484797 (UK High Ct. of Justice, Chancery Div. 2016), it is important to note that English lawyers operate within a regulatory framework that requires them to undertake detailed "know your client" investigations about prospective clients, based on U.K. anti-money laundering (AML) laws. In addition, if lawyers find that a prospective client may be seeking assistance to violate the AML laws, they are required to report their suspicions to the authorities—without regard to attorney-client confidentiality."
  • "Another all-too-familiar aspect of the matter also stands out: The prospective client was in a hurry. It is critical that firms avoid shortcutting whatever level of due diligence they ordinarily undertake in order to confirm the client's identity and the facts surrounding the transaction. This is particularly vital where the client is in another jurisdiction or country and the bulk of communications occur via email or telephone with little in-person contact."
  • "In the United States, the absence of "know your clients" rules does not negate the need for lawyers and firms to undertake serious enquiry about the bona fides of prospective clients before beginning to engage in substantive conversations with them."
  • "In Exeter Law Group v. Wong, 2016 NY Slip Op 32425(U), 12/9/ 2016, Supreme Court, New York County, the issue was different: What does a lawyer or law firm need to do to establish who is (and is not) the client in the matter."
  • "This case underscores the critical importance of specificity in engagement agreements. Had the agreement specified who was and was not the client, the corporations' claims would likely have been dismissed. The breach of fiduciary duty claim might well also have been disposed of had the agreement detailed what information counsel was authorized to disclose. Finally, the decision highlights the danger of suing non-clients for fees. Doing so may imply that specific tasks were undertaken for the benefit of the non-client and permit the non-client to state claims notwithstanding the fact that it was never a party to the engagement agreement."

Sunday, August 13, 2017

Risk News: Fines & DQ

"White & Case hit with record £250k fine for 'reckless' conflict of interest and confidentiality failures" --
  • "White & Case has been fined a record £250,000 by the Solicitors Disciplinary Authority (SDT) for failings around confidentiality and conflicts of interest, with one London partner fined an additional £50,000. The fine, which is the largest ever made by the SDT against a single firm, relates to a 2014 High Court case that saw the firm blocked from acting for Ukrainian client Victor Pinchuk, after it failed to identify a conflict of interest."
  • "An SDT statement said White & Case admitted acting 'recklessly' by allowing work to be carried out without taking adequate steps to ensure there were no conflicts or risks of conflicts, and by agreeing to to take on further work without properly protecting the confidentiality of client information given to the firm."
  • "The SRA did not allege that the firm or Goldberg acted dishonestly and did not pursue allegations of lack of integrity against either Goldberg or White & Case."
"Telecom Co. Seeks Mintz Levin DQ In Patent Dispute" --
  • "Telecommunications equipment company IPS Group on Monday asked a California federal judge to disqualify Mintz Levin Cohn Ferris Glovsky & Popeo PC as opposing counsel in a suit accusing a Milwaukee-based electronic parts supplier of infringing a parking meter patent, saying that the firm is familiar with the company's confidential information."
  • "IPS Group Inc. urged California’s Southern District to disqualify Mintz Levin, saying that the firm has violated its ethical obligations and loyalty and confidentiality duties by appearing in the instant case on behalf of defendants Duncan Solutions Inc. and Duncan Parking Technologies Inc., as well as appearing for the same defendants and CivicSmart Inc. in a related case."
  • "San Diego-based IPS also shot down Mintz Levin’s argument that it doesn’t consider IPS a client and that even if it did, an “engagement letter” excuses it, saying that IPS’ lawyer wrote to the firm in May to follow up on an ongoing project the firm had been handling and that IPS never agreed to waive conflicts involving its intellectual property in the letter."

Thursday, August 10, 2017

Uber Risk, Uber Accusations, Uber Conflict?

Here's a real rough and tumble one: "Uber’s Lawyers Should Be Booted After Aiding Coverup, Waymo Says" --
  • "Waymo claims Uber Technologies Inc. had an accomplice in the theft of invaluable driverless technology trade secrets — the ride-hailing giant’s own lawyers. Uber relied heavily on attorneys at San Francisco’s Morrison & Foerster LLP, or MoFo, to suss out and contain any proprietary information that may have been taken by one of Waymo’s lead engineers, Anthony Levandowski, when he abruptly quit last year. He later joined Uber, bringing with him other former engineers from the Alphabet Inc.unit’s self-driving unit... Waymo has alleged that the MoFo lawyers helped cover up the theft and said it wants to call them as witnesses."
  • "Waymo claims the law firm trafficked in stolen files –- or at least descriptions of stolen files -– when its lawyers helped structure the Ottomotto acquisition. That’s why MoFo’s lawyers should be required to testify and the firm as a whole should be disqualified from defending Uber, Waymo argues."
  • "Waymo has also accused Stroz and MoFo of violating court orders to turn over proprietary information, including files from the law firm’s representation of Levandowski in arbitration proceedings brought by Google last year. A hearing on those claims is scheduled for Aug. 16."
  • "Arturo Gonzalez, a MoFo partner representing Uber, said Waymo is trying to knock his firm off the case out of desperation. 'Having found no evidence to support their claims, they ask themselves ‘What do we do?'' he said. 'And someone raises their hand and says, ‘I know, let’s try to disqualify their lawyer.''"
A day later: "Alsup Says DQ’ing MoFo Not Necessary In Uber-Waymo Row" --
  • "U.S. District Judge William Alsup said Wednesday that he opposed disqualifying Morrison & Foerster LLP from representing Uber Technologies Inc. in its trade secret fight with Alphabet unit Waymo, even though the law firm is “a character in the story” jurors will hear at the October trial."
  • "Morrison & Foerster provided legal advice to Uber as it was acquiring OttoMotto LLC, a company founded by former Waymo engineer Anthony Levandowski. Waymo’s suit alleges that the day before Levandowski joined Uber, he illegally downloaded 14,000 Waymo documents, with the intention of bringing them to his new employer. Uber’s acquisition involved a lengthy due diligence and indemnity process during which Morrison & Foerster, as well as risk management firm Stroz Friedberg LLC, vetted Levandowski. Uber insists it implemented protocols that allowed it to stay ignorant of what firms learned."
  • "'The transaction is part of the trial, part of the story to be told to the jury. You can’t tell that story without MoFo being identified as such,' Judge Alsup said. 'It’s name is going to come up again and again. And I have a strong feeling that Uber is being cute here, because you’re going to show the jury that Uber took steps to immunize itself from the stolen intellectual property and set up this elaborate structure to protect yourself. ... So my thought is not disqualifying anyone, but having no holds barred when it comes to putting out the facts of the case.'"

Wednesday, August 9, 2017

Conflicts & Duties (Bridgegate, Burners & "Friends")

"GWB Figure Must Address Jones Day Conflict, 3rd Circ. Says" --
  • "The Third Circuit on Friday ordered a former public official convicted in the George Washington Bridge lane-closing scandal to appear before a district court and address any potential or actual conflict of interest with Jones Day attorneys representing her as appellate counsel in light of the firm's representation of the Port Authority of New York and New Jersey in related matters."
  • "In a one-page order issued without explanation, a circuit panel granted the government's motion for a limited remand to New Jersey federal court to determine whether Bridget Anne Kelly has knowingly and voluntarily waived any such conflict that Jones Day might have by representing both her and an agency identified as a victim in the case."
  • "Prosecutors are seeking an “on the record” waiver to ensure that Kelly cannot later complain on appeal that she did not receive effective assistance of counsel, court documents state."
  • "Kelly, a former deputy chief of staff to New Jersey Gov. Chris Christie, and William E. Baroni Jr., former deputy executive director of the Port Authority, were found guilty at a trial in November of conspiracy and related charges that they misused the resources of the Port Authority, committed wire fraud and deprived Fort Lee, New Jersey, residents of their civil rights to travel freely."
  • "'A law firm that simultaneously represents a victim of an offense and a person who committed that offense has at least a potential conflict of interest, if not an actual one,' the government said in its brief. Referring to the proposed class action, Kelly's lawyers responded Wednesday in their brief, 'Jones Day does not represent Ms. Kelly in the civil suit, and she and the Port Authority are not adverse to one another in that matter.'"
"Lawyers must take reasonable steps to protect client info in US border searches, ethics opinion says" --
  • "Lawyers should take reasonable measures to avoid disclosure of client data in the event U.S. border agents search electronic devices, according to an ethics opinion by the New York City Bar. And if confidential or privileged material is disclosed, lawyers will have to notify affected clients."
  • "The reasonable precautions that should be taken in advance will vary based on factors such as the sensitivity of the information, the likelihood of disclosure, and the cost and difficulty of implementing safeguards, the July 25 opinion says. At the border, lawyers should take reasonable measures when an agent seeks to search a device with confidential information, including making an attempt to dissuade the agent, the opinion says."
  • "The simplest precaution is not to carry any confidential information across the border, the opinion says. Other options might include carrying a blank 'burner' phone [ed: What is this, The Wire??] or laptop computer, securely removing confidential information from devices, signing out of cloud-based services, uninstalling applications allowing remote access to confidential information, storing confidential information in secure online locations rather than locally on devices, and using encrypted software."
"Appeals court considers removal of judge who is Facebook friends with lawyer" --

Tuesday, August 8, 2017

Risk News: Alleged, Costly Conflicts

"Hollywood Docket: 'Straight Outta Compton'" --
  • "A federal judge is allowing Greenberg Traurig to continue to represent Universal in former N.W.A manager Jerry Heller's defamation lawsuit over Straight Outta Compton."
    "After Heller died last year, his heirs brought a motion to disqualify Greenberg Traurig because one of its partners, Joel Katz, once advised Heller upon the release of Ice Cube's 'No Vaseline.'"
  • "Greenberg Traurig responded that any conversation by a transactional attorney a quarter century ago was not substantially related to Heller's claims of being defamed by the N.W.A biopic. The law firm further argued that nothing exchanged was confidential, that the disqualification motion came after substantial delay and that Greenberg Traurig had implemented an ethics wall to ensure that Katz would be screened from the ongoing litigation."
"Morgan Lewis Facing $30M Client Conflict Suit In Pa. Court" --
  • "An ex-Morgan Lewis & Bockius LLP client filed suit in Pennsylvania state court on Friday to disgorge some $30 million in fees it paid to the firm while attorneys allegedly worked against its interests and helped build a case against it on behalf of a Wisconsin-based hospital system."
  • "Towers Watson Delaware Inc. alleges that Morgan Lewis, after having represented the company for at least a year, agreed to defend Meriter Health Services Inc. in a class action over an allegedly flawed retirement plan Towers Watson’s predecessor company had designed, and went on to assist a second firm in putting together an eventual lawsuit against the company over the plan."
  • "Despite prior retainer agreements with Towers and its predecessor, Towers Perrin, requiring it to be informed of any potential conflicts between its interests and the interests of other Morgan Lewis clients, the company said it was never informed of the situation."
  • "On top of simply representing Meriter in the class action, the complaint said that Morgan Lewis actively assisted a second law firm, unidentified in the complaint, that Meriter brought on board to pursue potential third-party claims against Towers over purported deficiencies in the retirement plan at issue in the litigation."
  • "While the complaint pointed to emails from Morgan Lewis attorneys saying they could not comment or participate on any issues related to Towers, the company said that the attorneys 'regularly communicated with Meriter and [the second firm] to develop Meriter’s claims against Towers.'"
  • "Both an attorney for Towers Watson and a representative for Morgan Lewis declined to comment on the case when contacted on Monday."
"Reed Smith Battles Rival Firms Over Fees, Conflicts in SAC Capital Case" --
  • "Two plaintiffs firms are urging New York judges to deny Reed Smith's claim to $6.75 million in attorney fees for its work as co-counsel in a securities class action, claiming the traditionally defense-side firm misled them in stating it was free from conflicts."
  • "Wohl & Fruchter, a four-attorney firm that was class counsel with Pomerantz, contends Reed Smith should not be allowed any portion of a $27 million attorney fee award obtained in May in the class action against SAC Capital Advisors and other defendants."
  • "The fee dispute became heated in June when Reed Smith filed a lawsuit in Manhattan Supreme Court against Wohl & Fruchter and name partner Ethan Wohl, alleging tortious inference with a contract and unjust enrichment."
  • "Reed Smith claims that Wohl & Fruchter, when looking for co-counsel, realized that it was a small firm 'overmatched by the resources available to the SAC defendants,' represented by Paul, Weiss, Rifkind, Wharton & Garrison, Willkie Farr & Gallagher, Goodwin Procter and Bracewell."
  • "But Reed Smith asserts that when counsel for the SAC defendants at Paul Weiss mused about a possible conflict involving Reed Smith before Southern District Judge John Koeltl, the Wohl firm saw an opportunity to eliminate Reed Smith. '[Wohl] intentionally exploited Paul Weiss' statements in order to malign Reed Smith and to induce the lead plaintiffs to terminate the engagement agreement,' Reed Smith said. Wohl and his firm deliberately blocked and excluded Reed Smith from any interactions with the lead plaintiffs or opposing counsel in the SAC case, Reed Smith claims."
  • "But class counsel said McCarroll did not disclose that Reed Smith 'had in fact been aware for several months that a litigation associate,' Andrew Pfau, has previously represented the SAC defendants in a related government investigation."

Monday, August 7, 2017

AML and Me and You

Kerry Kendal at Intapp sends an excellent summary of new AML rules that recently went into effect:

The 2017 Money Laundering and Terrorist Financing Regulations came into force in the UK in June. As law firms in the UK await the release of a guidance note from treasury, the Law Society has provided a summary of the key changes and suggested interim measures on their website as detailed below:  
The 9 key changes for UK firms:
  1. New requirement to have written risk assessments for each new client
  2. Revised reporting, record keeping and monitoring processes are now required
  3. Group level and internal controls - firms which are parent undertakings will be required to apply their policies, controls, and procedures to their subsidiaries and branches in the UK and overseas
  4. The circumstances in which simplified customer due diligence (CDD) is permissible will become more restricted - in a significant departure from the Money Laundering Regulations 2007 'automatic' simplified due diligence for certain transactions will end
  5. Enhanced due diligence- another major change is the creation of a list of high risk jurisdictions which, if involved in a transaction, will make enhanced due diligence (EDD) and additional risk assessment compulsory
  6. The definition of PEPs will now also apply to local and domestic individuals occupying prominent public positions
  7. Firms are required to undertake regular training to relevant employees and agents is crucial to ensure they are made aware of the law relating to money laundering, terrorist financing and data protection
  8. Corporate bodies and other legal entities will be required to maintain accurate and current information on their beneficial ownership
  9. Firms will be required to retain records of CDD documents and supporting evidence for at least five years after the end of the business relationship or occasional transaction. At the end of five years, there is a requirement to delete personal data (unless express consent is given to retain that data) or if the firm is otherwise required to retain the personal data (i.e. for the purposes of court proceedings).
The Law Society recommend that firms take the following steps in the interim:
  1. Initiate and document a risk-based assessment of money laundering
  2. Train staff on how to access the beneficial ownership registry
  3. Update policies and procedures to reflect the changes
  4. Add an audit function to test procedures
  5. Review all new policies by senior management

Sunday, August 6, 2017

Risk News (Catch Up Edition: Screens, Privilege, President, Plots and More)

I thought it might be interesting to share a set of stories I found interesting enough to flag, but didn't get around to posting in June. So here's a bit of a grab bag worth exploring. In some instances, news has developed since the original stories posted, so there's a bit of before and after here. Treats inside:

  • "In deciding a disqualification motion based on a conflict of interest resulting from a lateral hire, the U.S. District Court for the Eastern District of California recently adopted a screening-friendly approach in National Grange of the Order of Patrons v. California Guild, No. 2:16–201 WBS DB, 2017 WL 2021762 (E.D. Cal. May 12, 2017) and National Grange of the Order of Patrons v. California Guild, No. 2:14–676 WBS DB, 2017 WL 2021731 (E.D. Cal. May 12, 2017)."
  • "The court reviewed the evidence and found that, although Ellis Law Group had "not been perfect in their efforts to isolate Valenti," there was proof that Valenti 'has not actively participated in this case.' The court decided against disqualification."
  • "The court stated that it must apply California law when reviewing a motion to disqualify. It turned to Kirk v. First Am. Title Ins. Co., 183 Cal. App. 4th 776 (2d. Dist. 2010), as the most recent California appellate decision to address this kind of disqualification issue."
  • "In so holding, the court stated that it was "guided in part by the Ninth Circuit's admonition" that courts should give consideration to a client's right to counsel of choice. The court also stated that the relevant issue was whether Valenti had, in fact, shared confidential information, and not the eight-lawyer size of the Ellis Law Group."
"Estate Asks Court to Disqualify Holland & Knight From Representing Wilmington Trust" --
  • "Holland & Knight allegedly violated three professional conduct rules, according to a motion filed last week to disqualify the firm from representing one of the nation's largest financial institutions in cases related to the estate of a deceased Coral Gables man... arguing the firm simultaneously represented adverse parties, communicated with Ramos concerning the litigation without appropriate disclosure and then used the information to file a petition to seize the proceeds of the sale."
  • "Another Holland & Knight attorney, Scott Ponce, began in January 2016 to work on a summary judgment to be filed against Lisa Ramos. While that was pending, the firm asked Ponce to represent Andy Ramos in unrelated litigation. Ramos spent days informing Ponce about his matters, said Jeff Gutchess, a founding partner of full-service boutique AXS Law in Wynwood, who leads the trial and litigation teams."
  • "Holland & Knight argues otherwise. 'The simple fact is there is no conflict of interest between our representation of Symx Healthcare Corporation in a contract dispute while simultaneously representing a creditor in an unrelated matter where one of the defendants in the matter was the wife of a shareholder of Symx," Holland & Knight said in a written statement. "Additionally, the claim that we learned confidential information is erroneous. Over a year ago there was a preliminary discussion about the possible engagement of the firm in connection with estate planning for Mr. and Ms. Ramos. That engagement was declined by the firm due to a potential conflict. That potential conflict was, or at least should have been, well known to the Mr. and Ms. Ramos because the litigation for which they seek to disqualify Holland & Knight had already been pending for over five months.'"
"3 Reasons Litigators Fear the Calif. Gibson Dunn DQ Ruling" --
  • "The California Supreme Court’s recent refusal to take up the disqualification of Gibson Dunn & Crutcher LLP amid a privilege dispute in a malpractice litigation has experts worried the case will create a new privilege minefield and invite sanctions for long-accepted practices around waivers and otherwise confidential materials shared with nonlawyers."
  • "Last year, a California judge disqualified Gibson Dunn from defending McDermott Will & Emery LLP from allegations that the firm had improperly helped one member of a family, who was in a dispute with his siblings and father, grab control of a family fortune. A split appellate panel agreed in April that Gibson Dunn crossed a hard ethical line when it treated an old email shared with a McDermott lawyer and nonattorneys before the case was filed as fair game, despite objections from the other side that the communication should be protected under attorney-client privilege."
  • "Among legal ethics experts, the decision has raised eyebrows because California’s Fourth Appellate District panel appeared to apply litigation-focused rules on inadvertent disclosures and waivers to information provided to a lawyer by its own client rather than opposing counsel. Ethics experts have since questioned the court’s reasoning that giving lawyers some discretion to make a call on waivers absent a court’s direction opens the door to abuse."
  • "Others have said the court seemed to apply attorney rules and conventions on potentially inadvertent disclosures — typically, an errant discovery hand-over or attorney email about a current case — to a widely shared document provided by a client. If that kind of reasoning were to spread to other courts, it would disrupt the basic assumption lawyers work under that a client’s own files, particularly documents obtained long before litigation began, are unlikely targets of privilege challenges."
And, plenty of ink has been spilled on Presidential matters, including: "Trump's Russia lawyer faces conflict-of-interest questions over $296m Kushner deal" --
  • "The lawyer privately advising Donald Trump on the investigation into Russia’s interference in the 2016 election is head of a law firm that was involved in the sale of a prestigious piece of New York real estate to Jared Kushner, the US president’s son-in-law, in a deal that could fall under the spotlight of the same inquiry."
  • "An investigation by the Guardian has found that Kasowitz’s law firm, Kasowitz Benson Torres, legally represented the owners of the former New York Times building in Times Square, Manhattan, in a 2015 deal in which part of the property was sold to Kushner for $296m."
  • "Questions have already been raised about possible conflicts of interest between the lawyer’s role as Trump’s private attorney in the Russian inquiry and his work for various other clients, among them Russia’s largest bank OJSC Sberbank, which he represents in a corporate dispute lodged in US federal court."
And, since that news, several related udpates including:
Biglaw Associate Indicted On Felony Charges Over Plot To Extort Partners Pleads Not Guilty
  • In late June, the Biglaw world was rocked by scandalous allegations against a former associate at Dentons. Michael Potere had been fired by Dentons, and allegedly decided to exact his revenge against the firm by threatening to leak sensitive information taken from the email account of the managing director of the firm’s Los Angeles office (although no partner names have been released, this is most likely Joel Siegel) — information that ranged from emails between partners to the firm’s quarterly financial reports to associate reviews — to Above the Law, unless he was paid $210,000 and given an expensive piece of artwork.
  • Potere was indicted on extortion and attempted extortion affecting interstate commerce as well as transmitting threatening communications with intent to extort, and he faces up to 22 years in prison for these two felony charges. He pleaded not guilty to those felony charges yesterday, with the assistance of his public defender, Asal Akhondzadeh.