Friday, January 23, 2015

Conflicts Waivers – "Still Waiving After All These Years"

The New York Law Journal Reports: "Judge Rejects Disqualification of Law Firm in Joint Defense" --
  • "A Commercial Division judge has rejected a motion to disqualify a law firm from representing parties in a joint defense because 'virtually all conflict waivers would be unenforceable' if the court did so."
  • "The Ridgeline parties argued that Eilender and his firm should be disqualified, even though a waiver of conflict was signed. Eilender represented Ridgeline and other parties who were once codefendants in a lawsuit challenging the sale of a company that owns a biodiesel refinery in Carthage, Mo. But now they on the opposite sides in litigation."
  • "Justice Shirley Werner Kornreich  rejected that request for disqualification in an opinion earlier this month in Gem Holdco v. Changing World Technologies, 650841/2013: 'If disqualification was warranted in this case, it would follow that virtually all conflict waivers would be unenforceable, a result which is at odds with this state's legal policy,' Kornreich said. 'Such a result would significantly impair the ability of co-defendants to mount a joint defense, leading to significant litigation inefficiencies and increased legal costs for litigants, who would unnecessarily have to hire more lawyers to perform duplicative and expensive work.'"
  • "Eilender said in an interview that the motion to disqualify his law firm was 'completely a litigation strategy' undertaken by a 'sophisticated consumer of legal services.'"
  • "While there is a school of thought that rejects advance waivers of conflicts of interest, Eilender said his firm's engagement letter was meant to deal with the uncertainty of the future and plan ahead for conflicts arising between the jointly represented parties. If his firm's letter had been rejected by the judge, there was no way the firm could ever represent multiple clients without being conflicted out, Eilender said. 'The contract actually meant what it was supposed to mean and the court backed it up,' Eilender said."

Thursday, January 22, 2015

On Subject Matter Conflicts

The IPethics and INsights blog provides another update worth noting: "Massachusetts Supreme Court To Tackle Thorny Issue Of Subject Matter Conflicts In Patent Prosecution" --
  • "This action arose from a civil malpractice lawsuit filed in April 2012 in federal court by a sole inventor and his assignee against an IP law firm and several of its attorneys. The complaint alleged that the inventor hired the IP firm to file and prosecute a patent application on an allegedly new eyeglass hinge invention. The complaint further alleged that during the same time it was representing the inventor, the law firm also was representing another client in a similar invention, albeit using different attorneys working from a different office."
  • "The complaint alleged that the invention disclosed in the other client’s patent was 'similar in many important respects' to plaintiff’s  invention.  The complaint further alleged that the law firm had a conflict of interest which 'should have been disclosed before and during” the representation and that, due to the purported conflict, the law firm was unable to “fully and without restraint represent' the inventor and his assignee. The complaint still further alleged that plaintiff was unable to market his product as a result of the 'similarities' between the other client’s invention and plaintiff’s invention."
  • "Whether two inventions handled simultaneously by the same law firm are 'similar' enough to raise an ethical conflict of interest is an issue of considerable importance to the intellectual property bar and clients of IP services. To be sure, Baker Botts recently found itself facing a malpractice award of $41 million due to a patent subject matter conflict of interest (the firm escaped liability after the court determined the claim was barred by limitations)."
For more information about subject matter conflicts and how technology can be used to identify and mitigate risks as the conflicts landscape evolves. See Intapp's risk bulletin: "Beyond Adversity — On Business, Positional and Subject Matter Conflicts" --
  • "Managing conflicts is integral to the new business intake and lateral onboarding processes at every law firm. Over the years, firms have honed procedures and adopted software to search and identify potential adversity to avoid malpractice risks by resolving conflicts or turning down matters or lateral hires. Increasingly, however, clearing conflicts requires much more than simply identifying legal conflicts."
  • "To manage these business, positional, subject matter and playbook conflicts successfully requires firms to keep abreast of industry trends, update procedures, collect and manage new information and leverage new technology to streamline compliance."

Thursday, January 8, 2015

Will Big Breaches Create More Trickle Down Impact for Law Firms?

A reader sent in world of today's report in the Wall Street Journal: "Puzzle Forms in Morgan Stanley Data Breach." (With additional detail here.) The articles dig into the details of an internal breach (and associated allegations of what did or did not happen next):
  • "... [A] financial adviser named Galen Marsh started to sift through the account records of some 350,000 of the firm’s clients. Virtually none of them were his own. In what some security experts are saying is likely the biggest data theft at a wealth-management firm..."
  • "By December, some of that account information appeared on a text-sharing website, with the offer to trade it for an obscure virtual currency." ["Speedcoin" for the cyptocurrency geeks out there.]
  • "Twelve days later, a different item provided a sample of the information that was available, giving details from 1,200 accounts that Morgan Stanley said were tied to 900 clients."
  • "Already, the episode is having ramifications within Morgan Stanley: On Tuesday, people familiar with the matter said the firm has tightened access to its client database so that individual advisers no longer have access to such wide swaths of account data."
  • "It isn’t uncommon in the wealth-management industry for advisers to squirrel away information about clients before leaving for another firm, since a stable of wealthy clients is the lifeblood of any successful advisory practice."
Two potential thoughts flow from this situation. Firstly, when Bank of America feared it was about to see internal information shared via Wikileaks in 2011, it (and others) went on an OCG and law firm audit push that sent ripples across the legal industry. (Background and refresher on our coverage of that here and here.)

Will we see even greater focus on the firms that hold and manage this sensitive data? Morgan Stanley has already hired: "an outside consulting firm to increase its capacity to take calls from clients concerned about the breach and provide credit and identity-theft protective services." Will it feel the need to similarly demonstrate its commitment to security by announcing additional 'belt tightening' that will trickle down to its outside counsel and other vendors?

Secondly, this highlights the very real impact of unfettered internal access to sensitive information.

There has been a growing legal industry shift towards adopting "members only" internal security models, where only individuals that are members of a particular matter team can access sensitive client data, or "hybrid" models where matters in specific practice groups or geographies default to closed access, while others remain open.

According to the just-published ILTA technology survey, the number of firms moving to a "pessimistic" security model grew by 50% in the past year. (Though, for context, we note that the survey reports that 6% of firms have embraced the closed or hybrid confidentiality model.)

(For more information about how technology can be used to implement closed or hybrid models, to read a white paper on OCG trends, or to access a recorded webinar on this topic, see Intapp's resources on client confidential matters.)

Wednesday, January 7, 2015

On Intra-firm Privilege

Several recent updates on questions regarding intra-firm privilege:

"Novel Privilege Issue Raised in Suit Against Law Firm" --
  • "A malpractice case against Schnader Harrison Segal & Lewis in Manhattan's Commercial Division has raised a broader issue for large firms: whether communications between a firm's general counsel and its attorneys are privileged from clients."
  • "On Dec. 5, Acting Supreme Court Justice Melvin Schweitzer in Stock v. Schnader Harrison Segal & Lewis, 651250/13, ordered Schnader to hand over to a former client internal firm communications between its general counsel and its attorneys. Schnader is appealing that decision, saying the issue of "in-house law firm attorney-client privilege" is a matter of first impression in New York state courts and deserves a second look."
  • "Howard Elman, a managing member at Matalon Shweky Elman who frequently defends law firms and who is not involved in this case, said this is a sensitive concern for firms. 'Law firms, I'm sure, will be paying attention to this case because the law is not clear in New York,' he said. 'Conflict of interest cases are coming up more and more in litigation, and I think conflict scenarios are the classic type of things that lawyers will go to their general counsel about. The notion that a general counsel's communications with an attorney can be open for discovery is not good one' for law firms, he added.
On the West Coast: "California Case Embraces Intrafirm Privilege for Consultation With Firm’s Inside Counsel" -
  • "The attorney-client privilege shields a lawyer's confidential communications with her law firm's in-house attorney about a dispute with a current client provided that a genuine attorney-client relationship exists between them, the California Court of Appeal, Second District, decided Nov. 25 (Edwards Wildman Palmer v. Superior Court (Mireskandari), 2014 BL 331662, Cal. Ct. App. 2d Dist., No. B255182, 11/25/14)."
  • "The ruling is the first published California appellate decision directly recognizing the attorney-client privilege for legal discussions within law firms about problems with a current client's representation."
And the ever watchful Bill Freivogel notes another recent decision on the topic:
  • "Moore v. Grau, 2014 N.H. Super. LEXIS 20 (N.H. Super. Ct. Dec. 15, 2014). Following recent high court rulings in Massachusetts, Georgia, and Oregon, the judge ruled that a law firm could assert privilege for internal communications during a representation. The opinion has a particularly good discussion of how smaller firms might structure things to keep the privilege."

Tuesday, January 6, 2015

2015 – New Year, Old Risks? (Conflicts + Insider Trading)

(Hope everyone had a risk-mitigated New Year's celebration. We took a few weeks off. Now, back to work.) First up: "Proskauer Cases Reflect Efforts to Put Firms on Defensive" --
  • "In recent motions, plaintiffs have either alleged malpractice or that the firm’s attorneys had conflicts of interest and should be disqualified. In a statement, a firm spokeswoman said 'these four matters are completely unrelated and, in some cases, relate to events that occurred nearly a decade ago. They either are transparently tactical maneuvers by adversaries or efforts to seek a windfall by plaintiffs who are unhappy with the consequences of their own business decisions.'"
  • "Proskauer is not the only law firm defending its practice. In recent weeks, there have been motions in professional liability cases involving Schnader Harrison Segal & Lewis, Sidley Austin and Wachtell, Lipton, Rosen & Katz."
  • "Howard Elman, a managing member at Matalon Shweky Elman said, 'big law firms are getting hit left and right these days.' He attributes a rise in claims against large firms to factors such an increase in conflict issues, clients not having the same allegiance to firms as in the past and an active malpractice plaintiffs bar."

See the full article for more detail on the specific cases. Next up, a look at how new rules may create new temptations and new risks. The author has no qualms taking a proactive position: "How to Make a Killing Trading on Insider Information - Legally" --
  • "I suspect most investors believe the use of insider information is illegal. If so, they are only partially correct. A recent decision by the U.S. Court of Appeals for the Second Circuit (United States of America v. Todd Newman, Anthony Chiasson et. al) will make it exceedingly difficult to prosecute a broad range of insider trading cases, even when insider information is used and huge profits are generated."
  • "Assuming that this opinion is not overturned by the Supreme Court and remains the governing precedent, maybe you can profit from it. If you have the good fortune to overhear a conversation at a posh restaurant between a CEO and an investment banker concerning the imminent takeover of a public company, you can trade on that information with impunity. Why? Because even if you know the information was coming from the CEO, the CEO did not disclose it in exchange for a 'personal benefit.'"
  • "Similarly, if you have a friend who is an attorney at a major law firm and he discloses confidential information about a publicly traded company that is a client of his firm, you can trade on that information as well. The lawyer presumably did not tell you where he got the information and he did not benefit from disclosing it to you. Of course, the lawyer violated both his legal obligation to his firm and his fiduciary obligation to his client."

Monday, December 22, 2014

Article: How well does your conflicts system work?

Conflicts management ranked as a key investment priority in our 2014 law firm risk surveys. Intellectual Asset Management (IAM) features an interesting article by Frank Maher is a partner in Legal Risk LLP. "How well does your conflicts system work?" --
  • "In the course of acting as a solicitor for law firms for over 30 years – both defending professional indemnity claims and advising on professional regulation – the author has encountered many issues arising from conflicts of interest; much pain has been endured by those who fell foul of the rules. When conflicts issues go wrong, they can be among the most damaging to a firm’s reputation – and reputation is the only thing we have to sell. Problems in practice fall into several categories, including:
    • the conflict checking system failing to pick up the existence of a conflict, or significant risk of one, at all;
    • acting for two or more clients, such as joint venture partners or husband and wife, and failing to spot either that their interests conflict at the outset or that they may do so further down the line;
    • failing to spot when a conflict does arise in the future, as may happen when acting for lender and borrower, in some cases because the problem has unfolded gradually;
    • taking on a small matter which precludes the firm from acting on something more substantial later;
    • allowing a large client to impose its terms of business (or ‘outside counsel guidelines’) which impose more extensive duties than would apply at law and under the conduct rules;
    • establishing systems which check for client conflicts, but fail to check at all for own interest conflicts, such as personal appointments as trustee or director;
    • failing to spot that the solicitor’s own interests may conflict – perhaps the volume of work from one client, such as an insurer, and the desire not to offend it or appear uncommercial blinds the solicitor to the risk of conflict with the insured; and
    • relying on information barriers when they are either not appropriate at all (because at most they may protect confidential information, but will not cure a conflict), or inadequate for the purpose they seek to achieve.
See the complete article for additional detail and analysis.

Thursday, December 18, 2014

Close Encounters of the Ethical and Conflicts Kind

Several stories showcasing the atypical. First up: "Leave to appeal granted in novel conflict of interest case" --
  • "A Toronto law firm has obtained leave to appeal an order of a judge who removed it from a case on the basis of conflict of interest even if the traditional test for a conflict wasn’t met. On Nov. 27, Divisional Court Justice Barbara Conway found 'there is good reason to doubt the correctness of the motion judge’s order' to remove the firm despite the fact the party affected by the conflict wasn’t a former client or 'a near client' of the firm."
  • "Superior Court Justice David Brown had removed Teplitsky Colson LLP as counsel of record for the plaintiff in a matter to do with alleged mismanagement of a hedge fund after finding it had obtained confidential information about the defendant company from an employee who was a former client of the firm."
Next, only part of the story has come to light here, so judgment reserved: "Tennessee Ethics Board Sued" --
  • "A bombshell of a lawsuit goes in front of a Nashville  judge Thursday as a pair of Nashville lawyers are suing their own ethics board for what they call ethical violations and a cover-up. That means they are suing the very people who punish lawyers for bad ethics."
  • "It all started when one lawyer saw an email about his upcoming case sent to a judge without his knowledge... It was a secret email he knew nothing about."
  • "'We discovered that the Board of Professional Responsibility was systematically engaging in unethical conduct. They, on a regular basis, were having secret conversations with judges, and now they are trying to cover it up,' Roberts said."
And showing that those of us in California should not cast stones across state lines (but please send water): "Viewpoint: State Bar Intrigue Shows Little Concern for Transparency" --
  • "It's been a pretty wild ride the last few months over at the State Bar of California. First, the state Supreme Court pulled the plug on the rules commission that had worked for over a decade on a wholesale revision of the Rules of Professional Conduct. Not a single rule of the 67 submitted by the commission to the bar board in 2010 has been approved by the Court."
  • "Then the Bar's board of trustees terminated Joe Dunn, its now-former executive director. Within a day of that news becoming public, Dunn—represented by high-profile, self-described 'criminal defense lawyer' Mark Geragos—filed a lawsuit against the Bar claiming he was a whistleblower."
  • "There's much to speculate about, but a few things seem clear... whatever happens with l'affaire Dunn, the State Bar has to learn to be more responsive to lawyers who inquire about straightforward information and, especially, the public and the public's right to know. Lack of transparency may be convenient to Bar execs and board members, but opacity serves neither the interests of the legal system or the public."

Wednesday, December 17, 2014

Risk Updates: Conflicts Edition

First up, two partners at McKenna Long & Aldridge highlight a trend we've certainly witnessed here on the risk blog: "Motions to Disqualify: Four Things to Know" --
  • "Few things are worse for an attorney than getting a new big matter, starting work, and then facing a motion to disqualify. In recent months, high-profile disqualification motions have appeared more frequently in various legal news publications and Internet news sites."
  • "Many disqualification motions are well founded. Other times, disqualification motions are used as nothing more than a litigation tactic, forcing attorneys to scramble to protect valued client relationships."
  • "More significantly, increasingly mobile lateral attorneys (with attorneys rarely spending their entire legal careers at a single law practice or firm) have triggered a host of issues that can be the basis of a motion to disqualify."
  • "The best way to deal with motions to disqualify is to prevent them. Two important pre-motion strategies are effective. First, identify and resolve potential conflicts of interests including both multiple and successive representations prior to undertaking a representation or hiring a lateral. Where a conflict exists, an effective consent is the best defense to a motion to disqualify."
  • "Second, take effective steps to mitigate, if not eliminate, risks that a former client's confidences and secrets might be accessible by attorneys working on a matter involving the former client. Increasingly, courts have recognized and accepted timely, effective ethics screens as a tool for addressing the risks inherent becoming adverse to a former client."
  • "The 2014 Guidelines, published on 28 November, do not mark a substantial departure from the Original Guidelines, and instead make refined changes to reflect and inform current debates on issues in modern arbitral practice, and 'the increased complexity in the analysis of disclosure and conflict of interest issues.' In clarifying the standards expected of arbitrators and parties, it is the aim of the 2014 Guidelines 'that arbitration proceedings are not hindered by ill-founded challenges against arbitrators' or that 'the legitimacy of the process [is] not affected by uncertainty and lack of uniformity.'"
  • "Paula Hodges QC, Global Head of Herbert Smith Freehills’ International Arbitration Practice, says of the 2014 Guidelines that: 'we hope that these new Guidelines will prove useful in providing more clarity and a level playing field to parties and arbitrators, striking the right balance between impartiality and due process on the one hand and unmeritorious challenges on the other.'"
Revisions include:
  1. Third Party Funders must disclose their identity, and share the “identity” of the party they are funding
  2. Arbitrators who are members of law firms, must also “bear the identity” of his or her law firm – this does not extend to barristers and their chambers
  3. "Advance waivers" by Arbitrators do not discharge an ongoing duty of disclosure
  4.  2014 Guidelines apply to non-lawyers sitting as arbitrators
  5. Disclosure of identity of parties’ counsel, including if the counsel is member of the same chambers as the arbitrator
  6. Duty of impartiality and independence extends to Tribunal Secretaries
  7. Arbitrator to consider making disclosure in situations falling outside of the time limits used in the Orange List
  8. Arbitrator and another arbitrator or counsel currently act or have acted together as co-counsel within the last three years

Tuesday, December 16, 2014

Today's Hottest Risk Update: "Swiss Cheese," The Duke, Vereins & More

Today's post has everything. It's another example of general media coverage of risk issues we frequent. (And, perhaps, a suitable subject for SNL's Stefon, were he to summarize legal battles, as this one has everything... Dukes, Vereins, Fee Splitting, Ethics Allegations, Cheese and a Platypus...) As Newsweek writes in: "Legal Swiss Cheese" --
  • "Trademark lawsuits can be a little dry, but a California case in the fall has drawn attention not only because it involved John Wayne and a whiskey named 'Duke,' but also because it highlights a growing tussle over legal ethics."
  • "In the Duke case, lawyers for John Wayne Enterprises argued in court documents last August that Norton Rose Fulbright, the verein law firm in which legacy firm Fulbright & Jaworski represented Duke University, was playing both sides of the fence—an ethical no-no."
  • "Specifically, the Wayne lawyers asserted, Norton Rose, which formed the verein with Fulbright in mid-2013, had previously represented the distillery producing the Duke-branded bourbon in unrelated matters. Fulbright lawyers denied any conflict of interest, saying in court papers that verein 'member firms do not share privileged information with other member firms unless they are retained by and working together for a client on the same matter.' The judge did not address either side’s assertion."
  • "The inner workings of vereins 'are going to be tested in courts, because someone’s going to be very unhappy,' says Edwin Reeser, a former managing partner at prominent law firm Sonnenschein Nath & Rosenthal LLP, who is now in private practice."
  • "Still, the relative financial and operational opacity of vereins is the subject of increasing debate in legal circles. Peter Kalis, the chairman and global managing partner of non-verein K&L Gates, a major law firm, tells Newsweek, 'The business model for vereins is not yet proven.' Kalis has variously compared the mega-firms to a platypus (i.e. a freak of nature), a kaleidoscope, a “grand illusion” and a Potemkin village."
  • "Law firms rushed into these network combinations because they sounded like a wonderful panacea” to the problem of expanding amid the post-2008 recession, Reeser says. 'But the U.S. law firms are going to be the losers in these structures because of conflicts of interests and ethics rules on fee splitting.'"

Wednesday, December 10, 2014

NY Law Journal on Law Firm Information Security

With a hook invoking the late, great Rod Serling, the chances of a legal article _not_ touching risk issues making it to the blog are already high. Combine both, and, submitted for your approval: "Cybersecurity: Business Imperative for Law Firms" --
  • "It is not difficult, then, as the late Rod Serling, host of the long-running television show "The Twilight Zone" asked viewers at the beginning of each episode, to 'imagine, if you will' the following scene:
  • "A law firm's managing partner answers her phone on the first ring. It is 3 p.m. on the Wednesday before Thanksgiving and her husband wants to know when she'll be home... She clicks on the first email. It's from the chief technical officer of the bank that is the firm's biggest client. He is writing to advise that, due to increased cybersecurity scrutiny from New York State's Department of Finance and the Securities and Exchange Commission (SEC), he will be auditing the information security protocols of all of the bank's law firms."
  • "He needs access to the firm's network and copies of all information security policies and procedures, along with materials used to train the attorneys and staff—current, of course—by the following Monday morning."
  • "The managing partner swallows hard: There are policies, but they haven't been updated since BlackBerrys were the only smartphone allowed for firm business, five years ago."
  • "She clicks on the second email. This one is from the chief information officer of a 100-hospital system that short-listed the firm for its national litigation counsel. His email says that the board has decided to review the information management policies of all the finalists. He apologizes but, he writes, after a recent incident in which another hospital system law firm inadvertently disclosed the information of 400 patients to Google, the board has decided not to award an engagement to any firm unless it can show that patient information will be adequately protected."
  • "The managing partner picks up the phone, tells her husband she'll be working through the night and will also be leaving for the office right after the Thanksgiving meal, and offers that maybe one of the kids could help him cook."
The article proceeds to serve up a healthy helping of analysis, covering current trends, new standards and growing scrutiny placed on law firm compliance:
  • "With developments such as the requirements upon lawyers in the HIPAA omnibus rule and Superintendent Lawsky's letter requiring financial institutions to provide information about their law firms' information safeguards, the legal, ethical and business obligations come together. The question for law firms is not whether to become cybersecurity literate, but how quickly they can do so, in-house or with the assistance of outside experts and counsel, to the satisfaction of their clients and the clients' regulators."

Tuesday, December 9, 2014

Recent Conflicts & Screening Decisions

Another post cribbing from the eagle-eyed Bill Freivogel, who notes a few interesting cases:

LADT, LLC v. Greenberg Traurig, LLP, 2014 WL 6686776 (Cal. App. Nov. 25, 2014)
  • "Law Firm represented several parties in a transaction. At some point Law Firm wrote a letter to its clients mentioning possible conflicts of interest and eliciting a waiver from the clients. The letter also contained an agreement that any dispute regarding an alleged conflict of interest be subject to binding arbitration."
  • "Later the clients sued Law Firm for malpractice (this case). The complaint made no mention of a conflict of interest. However, during discovery the clients answered 'yes' to a question whether Law Firm had had a conflict of interest. Upon receiving that response, Law Firm moved to compel arbitration."
  • "The trial court denied the motion. In this opinion the appellate court affirmed holding that because the clients chose not to sue for a conflict of interest, the arbitration agreement did not apply to this case."
 Am. Tax Funding, LLC v. City of Schenectady, 2014 WL 6804297 (N.D.N.Y. Dec. 2, 2014)
  • "Lawyer served as law clerk in this court. While a clerk, Lawyer attended a settlement conference in this case in the presence of the magistrate judge who wrote this opinion. Lawyer left the court and joined Law Firm. After that, one of the parties, because its lawyer retired, hired Law Firm to handle this case. Because of the presence of Lawyer at Law Firm, the other party moved to disqualify Law Firm."
  • "In this opinion the magistrate judge denied the motion. The court found that Law Firm erected a timely and effective screen pursuant to New York Rule 1.12. Of particular interest was the court’s discussion of New York cases considering whether smaller firms should be held to a different standard when evaluating the efficacy of screens. Here, the court held that Law Firm, which had twenty lawyers, did pass muster."

Monday, December 8, 2014

Commentary: Law Firm Cyber Risk Insurance -- Rumor vs. Reality

The folks at Paragon Brokers have submitted an interesting white paper : "Is Reputation Damage Insurable in Cyber Insurance for Law Firms?"

Evidently, there was a slide in a presentation at the ILTA conference this Summer that suggested that reputation isn't insurable under a cyber policy, and they wanted to set the record straight. (I guess that just delivered the spoiler to the question at hand... but the full paper is worth a review nevertheless.)
  • "A data breach, network security or cyber event  could render client or proprietary records unreadable, leave networks unavailable, expose sensitive data or transmit malware to others. In addition to exposing a law firm to increased costs of  doing  business,  potential  liabilities  and  regulatory  scrutiny,  a  data  breach,  network  security  or  cyber  event  could have an adverse impact on a law firm’s process,  service, reputation, results of operations and financial condition."
  • "Possibly  one  of  the  biggest  'cyber' exposures  a  law  firm  faces  is  to  its  reputation  and  there  is  a  common misunderstanding that reputational damage cannot be insured in a cyber policy. This is not entirely correct, reputation loss can be insured when framed within  the prerequisites of insurability, i.e., that loss is  a) fortuitous, b) calculable & c) definite.
Read more for Paragon's commentary on the following questions:
  • How do insurers establish an insurable value to reputation?
  • How do insurers establish reputation loss is “definite” i.e. that  takes place at a known time, in a known place, and from a known cause?
  • How is reputation loss of income adjusted?
  • How can Cyber Insurance for Law Firms help?

Friday, December 5, 2014

Concerning Conflicts that Can Cost (Continued)

"Million-dollar Lawsuit Rips Winstead Advice in NCPA Sex Scandal" --
  • "In recent months, the National Center for Policy Analysis has worked hard to put a sex scandal involving its founder behind it... Now, however, the Dallas-based NCPA has filed a lawsuit against a prominent law firm and the firm’s chairman emeritus that revisits the sex scandal in detail. Among other things, the suit asserts that l’affaire Goodman caused the nonprofit organization to lose at least $2 million in fundraising—and nearly put it out of business."
  • "In late November 2012, the suit alleges, when Winstead finally recognized that it had a conflict of interest in representing both Goodman and the NCPA, its general counsel, Don Campbell, decided that the firm could not represent both of them. His decision was conveyed to Goodman, the suit says, and Baggett then referred a proposed employment agreement and Goodman’s personal “release” document to a former Winstead partner to 'close the deal.'"
  • "Flash-forward, then, to this past February, when Collins again complained that Goodman had sexually harassed her, the suit says, and Goodman again contacted Baggett to secure legal representation. Baggett agreed, telling Walker again in a voicemail message that Winstead could represent both Goodman and the NCPA without a conflict, and that it wasn’t necessary to inform the board about it, the suit says. Over the next two months, it continues, Winstead charged the NCPA nearly $31,000 for working on Collins’ 2014 sexual harassment claim."
And an interesting story from down under: "Global law firms favoured by head office but often fall short " -- [try via google if the direct link doesn't work] --
  • "General counsel at large multinational companies in Australia are under pressure from their foreign head offices to send their legal work to 'big name' global law firms instead of to leading Australian firms, a report by legal search firm Mahlab finds."
  • "However, some global law firms that have opened their doors in Australia are falling short by failing to familiarise themselves with key multinational clients or to communicate with their cross-border colleagues."
  • "Conflicts also emerged as a key difficulty for the major international law firms. Some general counsel said when they had tried to offer work to global firms in Australia, it was refused on the basis of a conflict — with partners unaware their company was an important international client. In some instances, the report says, global firms even acted against their multinational client."

Thursday, December 4, 2014

Risk News: Law Firm Insider Trading Redux

Much has been written about insider trading touching Wilson Sonsini (with headlines in 2011 for a lawyer, and more recently this year, for an IT staff member). Now comes an update on this latest chapter: "Wilson Sonsini employee pleads guilty to insider trading in N.Y." --
  • "An information technology engineer at Wilson Sonsini Goodrich & Rosati pleaded guilty on Thursday to insider trading based on information he learned while working at the prominent Silicon Valley law firm."
  • "Dimitry Braverman, 41, pleaded guilty in New York federal court to one count of securities fraud, two years after another Wilson Sonsini employee, attorney Matthew Kluger, received the longest insider trading prison sentence in history in a separate case in New Jersey."
  • "Following Kluger's arrest, Wilson Sonsini's general counsel emailed employees to remind them of the firm's policies on insider trading, according to court documents."
  • "Braverman had access to information about pending transactions through his job working on software for the firm's finance operations, prosecutors said."
As reported previously, Braverman "had computer and database systems access to confidential information about, among other things, the law firm’s clients in potential merger and acquisition activity, as well as information about the identities of the other parties to the potential deal."

No firm wants to see its name associated with these sorts of allegations, which is why an investment in policies, processes and tools that help prevent and identify inappropriate access to client confidential information are a prudent risk investment.

Wednesday, December 3, 2014

Conflicts Continued: When Conflicts (Alleged or Tentative) Carry Costs

"Vikings Co-owners Seek Reversal of $103M Judgment" --
  • "In New Jersey state court litigation that’s spanned three decades, the Wilf family, co-owners of pro football’s Minnesota Vikings, is making its case to upend a $103 million judgment against it last year for allegedly cutting off its business partners from the proceeds of a real estate deal."
  • "In August 2013, after the lengthy trial, Morris County Superior Court Judge Deanne Wilson found that the Wilfs committed fraud, breach of contract and breach of fiduciary duty, and violated New Jersey’s anti-racketeering law, by shutting Reichmann out of the partnership, and also took more than $16 million out of the venture without disclosing the withdrawals to Reichmann and Halpern."
  • "The Wilfs argue in their brief that Wilson wrongly allowed new claims into the case, failed to recuse despite a conflict and made numerous other errors, while the plaintiffs have cross-appealed Wilson’s reduction of the punitive damages and attorney fees, and her limitation of the scope of the racketeering claims."
  • "The Wilfs further allege that Wilson should never have heard the case in the first place because of an unwaivable conflict of interest: During trial, Wilson’s husband, attorney Laurence Orloff, was involved in an unrelated matter as counsel for Lowenstein Sandler, the firm representing Jarwick and Reichmann."
  • "'Judge Wilson’s disclosure to the parties of this obvious conflict of interest does not cure it,” they said in their brief. 'A financial connection between the trial judge and a party or law firm appearing before that judge is an unwaivable conflict.'"
And more on the Squire Patton Boggs matter: "Judge: Patton Boggs Rep'd Opponent in 'Substantially Related' Matter"--
  • "A federal judge overseeing a battle between the sugar and high-fructose corn syrup industries has issued tentative findings on whether to disqualify Squire Patton Boggs due to conflicts that arose from its merger this year."
  • "At a Tuesday hearing, U.S. District Judge Consuelo Marshall of the Central District of California found that Patton Boggs, which merged with Squire Sanders on June 1, had represented an opponent in the case in matters 'substantially related to the current lawsuit.'"
  • "She also found that Patton Boggs had not obtained the consent of one of its clients, another opponent in the case, to waive potential conflicts arising from its June 1 merger with Squire Sanders."
  • "The tentative decisions bode poorly for Squire Patton Boggs, which has made $12 million in fees so far from the case. Marshall said she would issue a final decision in a written ruling."

Tuesday, December 2, 2014

Conflicts & Disqualifications (When Patent Counsel Goes In-house + More)

The IPethics and INsights blog provides a very interesting update and extensive analysis: "Sony Alleges Conflict Of Interest, Wants Acacia In-House And Outside Patent Litigation Counsel DQ’d" --
  • "Motions to disqualify opposing counsel are not uncommon, especially in patent litigation... A recent disqualification motion filed in a patent infringement case pending in the Central District of California seeks to stretch the limits of the imputed disqualification rule beyond the usual contours. See Nexus Display Technologies LLC v. Sony Electronics Inc., No. 2:14-cv-05693 (C.D. Cal. July 17, 2014)."
  • "On July 17, 2014, Nexus Display Technologies LLC (“NDT”) filed suit for patent infringement against Sony Electronics Inc. (“SEI”). NDT alleged that Sony infringed three patents. The complaint accused multiple Sony products, including Sony’s 'SXRD' projectors, of infringing NDT’s patents. The complaint was filed by Aliska Lipski of the law firm of Ahmad, Zavitsanos, Anaipakos, Alavi & Mensing P.C. (AZA). Ms. Lipski and AZA are the only counsel to have entered an appearance on behalf of NDT."
  • "At least two threshold questions exist as to the applicability of Rule 3-310(E) to Mr. Siegel. First, the term 'member' means member of the California State Bar. See Cal. Rule Prof. Cond. 1-100. Mr. Siegel is not a “member” of the California bar.  Interestingly, Mr. Siegel is a registered patent practitioner and thus is subject to the disciplinary jurisdiction of the USPTO."
  • "The motion seeks to impute Mr. Siegel’s alleged conflict to NDT’s outside litigation counsel at AZA. The motion states that, 'Without such vicarious disqualification, Sony would unfairly be left to wonder what Mr. Siegel (or others at Acacia with whom he has discussed [NDT’s] case against SEL) may have disclosed to AZA concerning Mr. Siegel’s extensive experience defending SEL in patent cases and working with many of the same people who are potential witnesses and/or decision makers in the present suit."
  • "Second, the motion fails to state or suggest that Mr. Siegel 'accept[ed] employment adverse to [his] former client' Sony, at least in the ordinary sense of those words. Yes, Mr. Siegel 'accepted employment' by Acacia.  He did so, however, well before either NDT was formed or NDT filed its lawsuit against Sony.  Rule 3-310(E) thus begs the question – what is meant by the term 'accept employment adverse to the former client?' The words appear literally to focus on the state of affairs at the time the 'member’s' 'employment' was 'accepted.' The motion to disqualify does not state Mr. Siegel’s “employment” was accepted at the time of, or with knowledge of, any adverse action against Sony."
And for those who recall an earlier conflicts allegation ("Ballard Spahr denies conflict of interest in Pat Turner's Westport case") -- the judge essentially took a pass on the question: "Bankruptcy dismissed in Westport development suit" --
  • "A federal bankruptcy court judge dismissed a Chapter 11 case related to developer Patrick Turner's ambitious waterfront development in South Baltimore, clearing the way for a foreclosure on the property."
  • "Attorneys for Inner Harbor West had argued that Ballard Spahr's involvement represented a conflict of interest, since the law firm worked on $160 million bond deal approved by the City Council and then-Mayor Sheila Dixon to pay for utility work, including roads, sewer and water lines, at the site."
  • "Gordon said bankruptcy court was not the proper venue to resolve those claims, although he said, "I have to wonder why Ballard Spahr would not simply decline representation. … There was certainly enough on the surface to make a plausible allegation.'"
  • "But Gordon said the dispute had no bearing on the bankruptcy. 'After mulling this over, I can't let the potential tail wag the dog — 'dog' a very appropriate word … for this Chapter 11 case — especially since there is no significant allegation made that the alleged conflict has any real impact at all on the debtor's ability to reorganize,' Gordon said."

Thursday, November 20, 2014

Risk News: Conflicts & Disqualification (Accusations & Attempts)

First, from Law360 (paywall/free trial): "Wiley Rein Fights Atty's DQ Bid In Continental Policy Suit" --
  •  "Wiley Rein LLP on Monday told a New York federal judge that the firm shouldn’t be disqualified from representing Continental Casualty Co. in a dispute with an attorney over a professional liability policy, saying that the attorney hadn’t shown that the firm would offer testimony prejudicial to him during trial."
  • "Darius Marzec of the Marzec Law Firm PC had sought last month to disqualify the entire firm from representing Continental under the New York Rules of Professional Conduct’s witness advocate rule, which precludes attorneys from acting as advocates if they are likely to be a witness in the trial. Marzec had argued that the rule was triggered because the firm had represented Continental when it denied his claim for coverage."
  • "But Wiley Rein argued that not only was Marzec’s argument premature because the rule is triggered only during a trial, he could only speculate as to the firm’s role in issuing Continental’s coverage correspondence."
  • "'Mr. Marzec cannot possibly have personal knowledge of how Continental conducted its coverage investigation or made its coverage decisions. Thus, there simply is no factual basis for concluding that any of Continental’s attorneys are likely to be witnesses at a trial in this matter,' the motion stated."
Next, via the Lawyer comes: "China oil giant CNOOC breaks ties with Baker & McKenzie after internal investigation finds conflict of interest" with additional detail from the Wall Street Journal --
  • "The Chinese energy company China National Offshore Oil Corp. said it sanctioned one of its top lawyers for conflicts of interest with Baker & McKenzie, a U.S. law firm that has often represented it and that in Beijing is led by the woman’s husband."
  • " Cnooc said it found that Karen Kang Xin violated unspecified national regulations and its corporate policies by accepting trips to Europe and Australia paid for by Baker, and that she subsequently helped the law firm win legal work. The note, which was reviewed by The Wall Street Journal, said Ms. Kang dated and then married Baker’s chief representative in Beijing, Stanley Jia Dianan, 'and did not withdraw from the conflict of interest after the marriage.'"
  • "By citing the U.S. law firm by name in its allegations, Cnooc’s letter adds an international dimension to corruption investigations in China’s oil industry that have rocked the sector for more than year."
  • "In response to questions Monday, Baker said in a written statement that it 'has strict rules and guidelines about professional conduct. Based on all of the information we have reviewed, we have not identified any breach of any professional rules or internal Baker & McKenzie rules by our attorneys or employees in this matter.'"

Wednesday, November 19, 2014

White Paper: Law Firm Information Security & Confidentiality - Managing the Delicate Balance

ILTA's recently published Fall White Paper features an article on the increasingly complex challenge of balancing compliance vs. convenience when it comes to law firm information security.
Co-authored by Rudy Moliere (Director of Records & Information at Morgan Lewis) and Mohit Thawani (Head of the Information Security Practice Group at Intapp), the article explores how firms can approach the trade offs between tightly controlling access to the sensitive internal information (which is increasingly distributed across offices, devices and even in third-party cloud services) and enabling lawyers and staff to be effective and avoid unnecessary barriers, overhead and inconvenience.
To understand the Benjamin Franklin featured in the clip art, read on in: "Information Security and the Spirit of Compromise" --
  • "A security program that includes more stringent controls will inevitably have some impact on lawyer and staff behavior, habits and productivity. Everyone must understand how an innocent mistake could have drastic consequences."
  • "They must also make informed decisions on how much risk the firm is willing to accept to maintain normal levels of productivity, and, conversely, how great a hit on efficiency the firm can accept to achieve a desired level of security."
  • "As security becomes a business issue, IT and security professionals must also adapt their approach, doing less watching around the perimeter and more negotiating with those inside it about the level of security required."
  • "There is no better way to do that than to align security with firm strategy, to remind leadership that today's clients expect strong controls and will readily take their work to another firm with a more confident security posture."

Tuesday, November 18, 2014

Decisions of Note: Conflicts Allegations & Disqualifications

When it comes to expert Bill Freivogel, we're not exactly sure when he has time to do things other than legal research (though we know he does). Here are several recent decisions he's flagged:
  • "HLP Props., LLC v. Con. Ed. Co. of N.Y., Inc., 2014 U.S. Dist. LEXIS 147416 (S.D.N.Y. Oct. 16, 2014). Law Firm found itself representing Parent Co. on corporate matters and against Subsidiary Co. on a long-running environmental matter (this case). Sub Co. moved to disqualify Law Firm in this case. In this opinion the court denied the motion. First, the court found that Parent and Sub were one for conflicts purposes, noting, among other factors, that they shared a law department. In effect, the court applied a balancing/'no harm, no foul' test. First, the court noted how prejudiced Sub’s client would be if it lost Law Firm in this case. Second, the court noted that different offices and different lawyers were involved at Law Firm and that there was no sharing of Parent’s information. Though ruling for Law Firm, the court said that Law Firm’s failure to obtain waivers from Sub and Parent when it began representing Parent was 'troubling.'
  • "Anderson & Anderson LLP-Guangzhou v. N. Am. Foreign Trading Corp., 2014 N.Y. Misc. LEXIS 4611 (N.Y. Sup. Ct. Oct. 20, 2014). Client hired Lawyer to collect an arbitration award. Lawyer drafted the contingent fee agreement between Lawyer’s law firm 'Law Firm') and Client. Law Firm, representing itself, brought this action against Client to enforce the fee agreement. Client moved to disqualify Lawyer in this case. In this opinion the court disqualified Lawyer and Law Firm under Rule 1.9 (former client rule). The court also ruled that Lawyer, but not Law Firm, was disqualified under Rule 3.7 (lawyer as witness)."
  • "The Copper Cellar Corp. v. Ole Smokey Distillery, 2014 U.S. Dist. LEXIS 146054 (E.D. Tenn. Oct. 14, 2014). Trademark case. Lawyer for Defendant has in the past done trademark work for Plaintiff. Plaintiff moved to disqualify Lawyer in this case. In this opinion the magistrate judge denied the motion. In a fact-intensive analysis the court noted that Lawyer’s work for Plaintiff involved different trademarks and said that “[t]he Court is not prepared to find that all trademark matters are substantially related” within the context of Rule 1.9."

Monday, November 17, 2014

Macfarlanes Goes Live with New New Business Intake and Conflicts Management Software

Macfarlanes, a leading London law firm ranked amongst the top 20 most innovative law firms in Europe by the Financial Times, serving clients on a full range of corporate, commercial and dispute matters as well as on their private affairs, has implemented Intapp Open for new business intake and conflicts management.
Macfarlanes selected the Intapp Open platform after the product was launched in 2013.  Intapp Open was rolled out firm-wide this year, following a successful pilot. Client matter inception at Macfarlanes is centrally managed by a team of six individuals across the conflicts and client due diligence (‘CDD’) processes; the same team also manages the training and rollout process throughout the firm.


Said the Firm's Head of Risk, Jo Riddick:
  • "Quality of service is critical for Macfarlanes’ clients. Since going live with Intapp Open in May, we’ve been able to streamline our new business intake and conflicts management processes, capitalising on the synergies generated by the conflicts and CDD teams working from a common platform."
  • "Working with Intapp, we’ve configured Intapp Open to support our bespoke client matter inception processes. The new system has given desktop-based visibility to our internal stakeholders, who can now see where ‘their’ client/matter opening process has got to, at a glance, and we have a one-stop client/matter inception audit trail for compliance."

Said Intapp President,  Dan Tacone:
  • "We’re delighted that Macfarlanes has migrated to Intapp for new business intake and conflicts, joining the growing community around Intapp Open. By using technology to automate, search, share and analyse information where appropriate, Intapp Open is helping to transform new business acceptance at leading law firms worldwide."
Visit for more information on Intapp Open new business intake and conflicts management software, or to request a demonstration.

Thursday, November 13, 2014

Where Risk and Revenue Connect (Conflicts, Records & More)

Several interesting stories to share, continuing this week's informal theme of risk costs, rewards and investment priorities. First: "HP shareholder wants scrutiny of Wachtell role in controversial settlement" --
  • "If you are the most profitable corporate law firm in recorded history, with a habit of loudly defending the business judgment of corporate boards, you have to expect to take more than your share of shots. Wachtell Lipton Rosen & Katz is the Goldman Sachs of the law biz: When someone claims the firm has done something wrong, it’s news."
  • "...a brief filed this week by a plaintiffs’ lawyer whose client opposes Hewlett-Packard’s controversial settlement of shareholder derivative claims stemming from the company’s disastrous $11 billion acquisition in 2012 of the British software company Autonomy."
  • "Wachtell negotiated the settlement, which called for shareholders to release all claims against HP’s directors and officers but also for plaintiffs’ lawyers from Cotchett Pitre & McCarthy and Robbins Geller Rudman & Dowd to team up with HP in litigation against former Autonomy officers. (Plaintiffs’ lawyers were originally slated to be paid $18 million for their efforts.)."
  • "HP is Wachtell’s client. It does not represent HP’s directors, who have their own lawyers. But according to dissenting shareholder A.J. Copeland and his lead lawyer, Richard Greenfield of Greenfield & Goodman, Wachtell was actually acting in the interest of HP’s board members, not the company itself, when it made a deal to release shareholder claims against HP directors."
  • "This brief isn’t the first time in the HP case that Copeland and Greenfield have raised questions about Wachtell’s supposed conflict of interest. They advanced the same argument in a brief last month, asking for permission to intervene in the case."

"Mike Pero stops his law firm from acting against him" --
  • "Mike Pero has successfully stopped a major law firm acting in a court case brought against him by the mortgage business he set up more than 20 years ago."
  • "The allegations in the proceedings were kept under wraps last month by a High Court judge when Pero applied to stop law firm Buddle Findlay acting for the mortgage business in the case."
  • "Pero had enjoyed a relationship with Buddle Findlay for seven years, the court heard, and the firm was already acting for Pero on unrelated litigation in Christchurch when it was instructed by the mortgage business for the present disputes. Pero told the Herald this morning that Associate Judge Associate Judge Matthews yesterday restrained Buddle Findlay from acting for the mortgage business."
  • "'I thought from the beginning they could not possibly be serious. I spent weeks trying to persuade Buddle Findlay against what I considered to be unethical. I wasn't so much worried about my information being shared as the loyalty factor. I'm in business like thousands of others in New Zealand. I have respect for my customers and I would never consider trying to attack them while they are paying me for my professional services,' Pero said."

"Webinar: ILTA and ARMA Present: Information Governance: A Revenue Opportunity"
  • "Law firms are under increased financial pressure due to a highly competitive market and clients demanding fixed-fee contracts. Information governance (IG) offers firms the opportunity to not only create a new practice, but also tap into a new source of revenue by leveraging existing relationships and experience."
  • "Join us to learn about the impact of IG, opportunities for information governance at law firms and how law firms can help their clients with IG."

Wednesday, November 12, 2014

More (Potentially Quite Costly) Conflicts (Allegations)

"Squire may be forced off major case after conflict check error in Patton Boggs merger" --
  • "A multimillion dollar legal battle between the sugar and corn syrup industries is turning out to be anything but sweet for Squire Patton Boggs. This week, a California judge is slated to consider whether Squire, the law firm that has represented the sugar industry since it filed the lawsuit in 2011, should be thrown off the case because of two client conflicts stemming from Squire’s June acquisition of Patton Boggs — the Washington lobbying powerhouse that turned out to be representing the very companies Squire is suing in the case."
  • "For nearly two months, between June 1 and July 31, Squire was inadvertently representing both the plaintiffs and the defendants in the lawsuit. Squire’s attorneys say it was 'an innocent error in a conflict check.'"
  • "If the judge rules to disqualify Squire, the firm would be forced to give up a major chunk of business — a client that has paid the firm more than $12 million for this case alone — as a result of the Patton Boggs merger. Squire attorneys and paralegals have collectively spent more than 20,000 hours working on the case."
  • "In court papers, Squire conceded that the firm made mistakes in the conflict check process for the merger, during which they used computers to run checks on more than 15,000 clients to screen for conflicts."
"Ballard Spahr denies conflict of interest in Pat Turner's Westport case" --
  • "Law firm Ballard Spahr LLP has filed documents sharply disputing accusations made by developer Patrick Turner that the firm had a conflict of interest in representing Turner's opponent in his Westport Waterfront bankruptcy case."
  • "The documents, filed in U.S. Bankruptcy Court on Thursday, question the timing of the claim made by Turner and argue that Turner is engaging in a "desperate tactic" because he is unable to defend himself from losing the 42-acre property to foreclosure. Ballard Spahr attorney Timothy McCormack also appears to be building a case that Turner's attorneys filed the motion in bad faith, which Judge Robert A. Gordon said Friday would result in sanctions from the court."
  • "In an email noting Turner's attorneys' failure to respond to Ballard Spahr questions over the facts behind the case, McCormack warns Turner attorney Stuart Levine about the consequences for making court filings in bad faith."
  • "Gordon has scheduled a hearing on Turner's filings for November 21."

Tuesday, November 11, 2014

Now Available: 2014 Law Firm Risk Survey Reports (US, UK, Canada & Australia)

We're pleased to announce the publication of the 2014 Law Firm Risk Survey. Four reports are now available, each presenting results from a specific geography, including the United States, United Kingdom, Canada and Australia. Over 2,300 professionals from leading law firms were invited to participate.

Produced by the Law Firm Risk Roundtable program and sponsored by Intapp, the Law Firm Risk Survey provides statistical information and commentary about the top priorities and concerns for law firm risk, IT and management stakeholders. The reports are designed to provide insight into how firms in each country are addressing key issues such as regulatory compliance, information security and confidentiality requirements, outside counsel guidelines, and new business acceptance.
Some of the trends identified in the 2014 Law Firm Risk Survey include:
  • Law firms have been making significant investments in risk management. The trend is particularly striking in the UK, where 83% of firms responded that they had a dedicated risk management budget, up from only 45% in the 2012 survey. In Canada, 42% of firms reported having a dedicated risk management budget. Those firms that lack a dedicated risk budget typically draw resources from other departments, such as IT and finance.
  • Information security and conflicts are ranked as the top risk management priorities for firms worldwide. Information security was the most frequently mentioned priority by a large margin in the UK, where 50% of respondents cited it as their top concern. In the US, 37% identified information security as their No. 1 priority, followed by conflicts management, which was the top concern for 22% of respondents. Meanwhile, in Canada, nearly 60% of respondents identified conflicts as their top risk management priority.
  • Client-driven audits are becoming increasingly common, indicating a steady trend since 2012. Approximately 50% of respondents in the US and Australia indicated that their firm’s risk and security practices have been subject to an external audit, either by a client or regulatory body. Most client audits are performed by financial services entities in these countries.
Said Pat Archbold, head of Intapp's Risk Practice Group:
  • "The 2014 Law Firm Risk Survey results offer a multifaceted view of the current risk management landscape. From information security and conflicts to outside counsel guidelines, today’s risk and compliance teams are under significant pressure to manage a wide range of client-driven requirements. This underscores the importance of a more holistic approach to new business acceptance – selecting clients and evaluating new matters with a 360° view of the firm’s business, and closely managing all the requirements attached to individual matters throughout their lifecycle."

Survey Distribution:
  • If you (or someone from your firm) participated in the survey, you should receive a copy of the final report shortly, via postal mail.
  • If you did not participate in the 2014 exercise, we hope you'll make a New Year's resolution in 2015 to do so! (We all benefit from broad participation. Let's not let the tragedy of the commons take hold... Everyone do their part!)
  • If you're not sure, but receive our mailers, watch your mailbox for a more detailed report summary and instructions on how to request the full report.
  • Or you can write in to: to be connected with details.

Thursday, November 6, 2014

Am Law Survey -- Information Security a Top Concern

The American Lawyer has just published its annual technology survey: "Survey: Data Security Is Tech Chiefs' Top Worry" --
  • "Worries about data security have reached new heights, our annual technology survey shows, with potential threats coming from outside the firm, and within."
  • "Yet one topic dominates the discussion. In response to our question asking technology directors about their biggest challenges, 55 percent cited security, by far the most frequent answer. And overall, 74 percent of the chiefs say they are more concerned about security now than they were two years ago. Their clients are concerned too. While security was a leading topic on last year’s survey [“A Secure Location,” November 2013], the focus has only become more intense—and more time- and budget-consuming."
  • "'Five years ago, we didn’t have client security audits,' says Gary Becker, the chief information officer at Reed Smith. 'We’ve had over 15 of them this year.'"
  • "For law firm CIOs, the result is often a to-do list of remedial measures—new security hardware and software that must be deployed to satisfy the client, whose hypervigilance, several chiefs said in follow-up interviews, stems from multiple sources, including headlines hammering companies that suffered data breaches and beefed-up regulations, particularly in the finance and health care sectors."
  • "But it is also time- and resource-consuming. Reed Smith now has three full-time staffers 'dedicated to meeting the security requirements of clients,' says Becker. 'That’s three people I didn’t have five years ago.'"
  • Other firms have similarly bulked up on security experts. Vinson & Elkins, for instance, now has a full-time security director it didn’t have a few years ago. 'There are a lot of steps we need to do now to meet client expectations on security,' says the firm’s CIO, Dennis Van Metre. It’s not just a matter of installing the systems the client asks for, he says, but also 'asking the questions our clients will ask us' whenever a new tool, service or product is evaluated, from cloud computing to tablets to online deal rooms.

Wednesday, November 5, 2014

Risk News & Updates

A grab bag of stories to share today. First, from Hinshaw comes: "No Duty to Defend Based on Insured's Material Misstatement at Time of Renewal" --
  • The U.S. District Court for the Central District of California ruled that an insurer's duty to defend against a malpractice claim was not triggered by the insured's material misstatement about the nonexistence of a potential claim when the insured entered into a tolling agreement that gave notice that there were allegations which could lead to a malpractice claim."
Next, two updates from the Shining Star, via Professor Alberto Bernabe:
And while we (and others) had some fun at the expense of the Lone Star State, it appears that "Texas Will Revisit Ethics Opinion on Nonlawyer Law Firm Officers." But, until it changes its mind, we'll still advocate for clever workarounds. (Any takers for "Chief Information Burseg"?)

And finally, with the midterm elections concluded, and states continuing to make policy in this arena, the North Dakota State Bar Association has noted : "ND State Bar opinion finds use of medicinal marijuana is a violation of the rules of conduct even if the use is legal according to state law."