Wednesday, September 30, 2015

Information Security News – Law Firm Hacked, Data Ransomed

In August, LegaltechNews noted: "Heightened Risk of Cyberattacks Puts Pressure on Law Firms to Bolster Defenses" --
  • "On a scale of one to 10, the risks law firms are facing are an 11, according to Daniel Solove, professor at George Washington Law School and organizer of the Privacy + Security Forum. Underscoring this urgency is data from Mandiant, a division of FireEye, which finds that 80 of the 100 biggest law firms in the U.S. have been hacked since 2011."
  • "Law firms have become a bigger target for cybercrime... Those sentiments have been echoed by the New York State Department of Financial Services (NYFDS) and others, which view law firms as a secondary access point for criminal activity due to the volume and sensitivity of data they deal with..."
Now comes a startling story posted in the Legal IT Network LinkedIn Group by a consultant: "Security incident in a law firm" --
  • "A few days ago one of the largest Polish law firms experienced a serious IT security breach. They were blackmailed then by hackers demanding ransom in BTC to stop publishing data stolen from the law firm servers. The hackers published 500 MB of sensitive data and threatened to expose further 100 GB if their demand is not met."
  • "The attack went through servers of IT company that delivered its services to the law firm. Lawyers from some other big law firms commented that they were also attacked, however the hackers failed to steal data."
See the full post for extensive community from that community, including a pointer to a 2013 Canadian article: "Law firms targeted in top 10 worst cyber attacks"

Tuesday, September 29, 2015

Disqualification News: Lawyer Facing His Former Firm

The New York Law Journal notes: "Lawyer Disqualified From Suit Against His Former Firm" --
  • "A Long Island attorney cannot represent plaintiffs in a lawsuit against his former law firm because he was working there when the plaintiffs opted out of a class action settlement against the firm, Eastern District Judge Kiyo Matsumoto ruled." 
  • "In August 2014, eight months after his employment as managing attorney at the firm was terminated, Pashkin filed suit against Cohen & Slamowitz on behalf of two plaintiffs who rejected the class settlement and one who asserted a claim similar to those argued in the class action case."
  • "The firm moved to disqualify Pashkin in Liew v. Cohen & Slamowitz, 14-CV-4868, saying he had participated in critically important confidential discussions between the firm and its insurance counsel. Those discussions involved the firm's ability to pay a judgment in the class action, efforts to define the class as broadly as possible to forestall subsequent litigants with similar claims, and general strategy the firm employed in responding to such claims."
  • "But Matsumoto held Tuesday that "Mr. Pashkin's insistence that his tasks in the [class action] matter were rather circumscribed is misplaced, because the operative question is whether he likely had access to relevant confidential information... The judge said the undisputed facts were sufficient to grant the disqualification motion, because mere access to the confidential information was an adequate reason."
See: Liew v. Cohen & Slamowitz, 14-CV-4868.

Monday, September 28, 2015

Risk News: Playbook Conflicts (Hinted at), Unauthorized Practice Flagged

From the always vigilant Bill Freivogel comes a playbook reference: "Former Client (posted September 16, 2015) Sonos, Inc. v. D&M Holdings Inc., 2015 WL 5277194 (D. Del. Sept. 9, 2015)." --
  • "Patent infringement case involving wireless audio technology. Law Firm 1 filed this case and later withdrew. Plaintiff is now represented by Law Firm 2."
  • "Law Firm 1 formerly did work for the defendants in this case. Lawyers A, B, C, & D left Law Firm 1 to form Law Firm 2. Prior to leaving Law Firm 1 Lawyers A, B, & C had done patent work for the defendants. However, the defendants had not acquired the technology involved in this case until after Lawyers A, B, & C had left Law Firm 1."
  • "In denying a motion to disqualify Law Firm 2, the court found that the work A, B, & C had done for defendants was not substantially related to this case. The earlier work involved different technologies. In an oblique rejection of the playbook theory, the court said familiarity with the defendants' 'general strategy for handling patent litigation' was not enough to justify disqualification."
From Karen Rubin at Thomson Hine comes a reminder: "Unauthorized practice — a continuing risk for unregistered in-house lawyers" --
  • "We’ve written before to remind in-house lawyers that even if you don’t sign pleadings or appear in court on behalf of your corporate employer, you are still practicing law when you give advice and participate in business transactions on your employer’s behalf.  If you do so without being duly licensed, you are straying into unauthorized practice, in violation of ethics rules — and in many jurisdictions, in violation of statutory law.  Here are the two latest cautionary tales."
  • "The lawyer was general counsel of a company headquartered in Massachusetts.  When the company relocated its HQ to Philadelphia, the  GC moved there and continued to work, but failed to obtain the “Limited In-House Corporate Counsel License” required under Pennsylvania law. Here’s the kicker:  the GC only advised the company on issues under Massachusetts and federal law, and referred issues concerning Pennsylvania law to outside legal counsel."
  • "The second tale of disciplinary woe comes from North Dakota, where last month a lawyer was admonished for violating North Dakota’s version of Rule 5.5, based on merely having been “held out” in a press release as authorized to practice there when he was not."
  • "These rules are technical, and can appear to be designed to guard state borders in a way that can seem monopolistic; but you ignore them at the risk of inconvenience and embarrassment, at the very least."

Thursday, September 24, 2015

Managing Increasingly Stringent Client Terms of Business

At the recent ILTA conference, Intapp made several announcements, including introducing a fresh approach to managing terms of business:

With clients issuing increasingly stringent guidelines, it’s critically important that firms take their compliance responsibilities seriously. But keeping up with every rule and condition across multiple clients and matters can create significant overhead for lawyers and staff — which translates to real risk.

It’s not uncommon to hear stories of client requirements documentation ending up in a drawer — metaphorically or even literally… Or of instances where potentially alarm-raising client mandates, like indemnity clauses, go overlooked without proper review and consideration. No firm wants to live with the worry of missing a critical detail and facing a serious surprise when clients come knocking…

Clients Rule – So Deliver a Consistently Exceptional Experience
Ideally, everyone in the firm who interacts with clients — whether it’s lawyers, finance, risk or IT teams — should be aware of their specific rules of engagement and how they impact day-to-day service delivery. And everyone should also have a clear understanding of what success means to each client — top of mind and at their fingertips. Intapp Terms makes this possible (and practical).

Available as a stand alone product, or integrated with the full Intapp Open business acceptance suite, Intapp Terms enables firms to programmatically capture, index, report on and enforce client obligations throughout the matter lifecycle. These can include:
  • Formal outside counsel guidelines
  • Internal requirements and standards firms wish to institute
  • Overall client expectations and definitions of success
The Future of Client Success – Clear Rules, Full Service, Can't Lose
Intapp Terms of Business provides a structured approach for storing, indexing, analyzing and then enforcing client mandates and other firm requirements. A straightforward workflow, which can be integrated directly into the new business acceptance process, allows firms to transform paper or electronic policies and engagement conditions into structured rules, which can then be categorized, reported on and executed by matter teams.

All of this new control and capability is ingrained directly in business intake — which Intapp has modernized to deliver a more complete approach to business acceptance — so there’s no significant additional overhead.

With Intapp Terms of Business, firms gain more than the means to effectively comply with client rules — they gain a powerful competitive weapon. By highlighting their rigorous, programmatic internal compliance capabilities in business development contexts as a differentiator, law firms demonstrate a deep commitment to client success. And, in the process, can knock those lacking similar capabilities on their heels…

For more information, visit, and see this four minute overview video:

Wednesday, September 23, 2015

Conflicts Allegations Making News

  • "U.S. Securities and Exchange Commission Chair Mary Jo White is facing pressure to recuse herself from picking the next head of the regulator that polices accountants because of a potential conflict with her husband’s legal work."
  • "The Center for Effective Government, an advocacy group, said White should step aside because her husband, John White, sits on an official advisory group to the audit board. While the position is unpaid, it gives John White regular access to top PCAOB officials. His law firm, Cravath, Swaine & Moore, highlights the role in marketing materials."
  • "'The White family has to deal with this conflict,' said Jeff Hauser, who runs the Revolving Door Project at the Washington-based center that promotes government transparency and accountability. 'It makes Mary Jo White’s role choosing PCAOB officials problematic.'"
  • "The issue of potential conflicts between SEC Chair White and her husband’s law practice isn’t new. When Mary Jo White became head of the agency in 2013, John White stepped down as an equity partner at Cravath in an effort to minimize potential problems."
"Problems at United Airlines may stall GWB probe" --
  • "Turmoil at one of the largest airlines in the world, United Continental Holdings, could jam up a legislative investigation into the George Washington Bridge scandal and a $1.5 billion plan to add rail service between lower Manhattan and Newark Airport."
  • "The law firm hired by the Legislature to investigate the bridge scandal has warned that its work could come to a premature end because another client is facing scrutiny from U.S. Attorney Paul Fishman, according to a letter obtained by The Record on Thursday."
  • "Lawyers for Jenner & Block, the prominent firm retained last year by the Democratic-controlled Legislature, carried out a separate internal investigation for United. Their findings, which the airline did not disclose, led to the resignations of Chief Executive Jeff Smisek and two vice presidents this week."
  • "After being apprised by Jenner & Block of the potential for a conflict of interest stemming from the two matters, legislative leaders chose to keep the law firm on retainer earlier this year, according to the letter."
  • "The firm 'erected an ethical wall' to separate the two matters, and no attorneys involved in one case would participate in the other or share information, Schar said."

Tuesday, September 22, 2015

Chickens, Eggs, Laterals, Conflicts & Confidential Client Information

Excellent article by Don Foster, chair of Offit Kurman's business litigation practice group: "Limiting Disclosure of Client Information When Changing Firms" --
  • "When an attorney is contemplating moving from one law firm to another, both parties need to identify potential client conflicts, and will want to share baseline financial information about the other in order to assess the economic benefit behind the move, which invariably is the driving force behind the discussions in the first place. Both considerations are governed by the limitations contained within Rule of Professional Conduct 1.6. This article explores the tension between the desire to fully vet the economics of a potential lateral transfer and the need to protect client confidences."
  • Disclosing information about client relationships is no simple matter, and must be approached with care. Both the moving attorney and the receiving law firm are subject to ethical limitations on the form and content of the information exchanged."
  • "Before the moving attorney can consider sharing client-specific information—even the identity of the client (if not already publicly known)—the conversations must have progressed to the point where the two parties are ready to discuss specific deal terms."
  • "Unfortunately, many receiving firms do not want to wait until the point at which discussions get to such detail. Instead, they wish to analyze a prospective member's client list, and its revenue-generating potential, at the front end, under the guise of conducting a conflict check. As I mentioned above, the idea is presumably to find out whether it is financially worthwhile to go through potentially protracted discussions leading up to a lateral transfer."
  • "That said, such a request at the outset is improper under Rule 1.6(b)(7), and the moving attorney should resist agreeing to the request. Instead, the attorney should wait until 'substantive discussions' have taken place. That determination is somewhat subjective, but if the parties believe in good faith that they have met the first condition, the moving attorney may reveal the identity of his or her clients as well as such other information as is required by the receiving firm's normal conflict-checking procedures."
  • "Quantifying the potential economic benefit of a lateral transfer is obviously of critical importance to both the moving attorney and the receiving firm. One solution to overcoming the ethical proscription of Rule 1.6 could be to permit the moving attorney to aggregate his or her collections on an annual basis over the time period requested, without identifying which client paid how much."

Tuesday, September 15, 2015

Pro Bono Publico, Pro Conflicts?

Interesting coverage touching on several conflicts issues: "Big law already had a pro bono problem. Then the budget crisis happened." --
  • "A story from the last financial crisis illustrates the conflicts inherent in pro bono work at a big law firm—a nexus of pressures that continue today, when demand for volunteer services is more acute than ever."
  • "Mayer Brown, like most of the country's large firms, represents big banks, including JPMorgan Chase, Citigroup and Bank of America. So representing homeowners trying to halt foreclosures raised the possibility of a direct conflict of interest if the law firm also represented a bank that held the mortgage. It presented an indirect conflict, too: What if the lawyers won decisions that hurt the banks in future cases?"
  • "Such conflicts are bound to arise when attorneys at law firms that generate millions in annual revenue perform work pro bono publico—for the public good. There is no question that asking lawyers at big firms to volunteer their services to the disadvantaged brings real good. But at the same time, tensions exist in the volunteer model, and not just because law firms typically make money through hourly billings. Other factors that influence big firms' pro bono programs are time pressures, the types of cases lawyers choose to take and—as Mayer Brown experienced with foreclosure cases—client conflicts."
  • "Some lawyers say they simply feel freer to do pro bono work when accountable to no one but themselves. Steven Bashaw heads a real estate and foreclosure practice in Lisle, and he defends some foreclosure cases pro bono while training other lawyers to do the same work. His pro bono work was limited when he was a partner at McBride Baker & Coles, a Chicago firm that merged with Holland & Knight in 2002. Conflicts of interest prevented him from representing certain clients. So did the money-oriented culture of large law firms. Bashaw used to 'sneak around' to do his volunteering."

Monday, September 14, 2015

Risk News, Risk Thoughts, Risk Honors

Several updates to share coming out of the recent International Legal Technology Association conference (ILTACON), starting with a personal one:

Acknowledging the conflicts-like irony of taking a moment to self-report, I’m pleased to note that I was honored as the recipient of ILTA’s 2015 Distinguished Peer Award in the category of Vendor Thought Leader of the Year.

Said ILTA Executive Director Randi Mayes:
  • "I’m delighted to congratulate Dan Bressler of Intapp for being honored with the ILTA Distinguished Peer Award for Vendor Thought Leader of the Year."
  • "This award recognizes an exceptional individual who maximizes the value of technology in support of the legal profession, provides quality educational opportunities for ILTA members and ongoing learning to help organizations navigate a complex and changing environment."
  • "Dan has made an outstanding contribution to the community, and I applaud his hard work, dedication and vision."
Having been nominated by a kind soul, I was fortunate to have several members of the legal community from ranks including lawyers, IT leaders, risk leaders and insurance providers put in good words on my behalf as part of the application process.

While it is always exciting to be acknowledged publicly, those individual comments of support were the most gratifying part of the process for me. And those supporters have my sincere thanks. (As do all the participants in the Risk Roundtable, Risk Blog and other programs we produce and support.)

For more information, see the formal announcement.

And now, back to work.

– Dan

Friday, September 11, 2015

"Devilishly Difficult" and "a Lot of Work" – IP Conflicts Contentions

Coming off a short break to attend the excellent ILTA conference (risk news on that shortly), we resume the investigation of all intriguing things risk. Today is another IP day. First off: "Finnegan Takes Swipes in High-Stakes Malpractice Fight" --
  • "The Massachusetts Supreme Judicial Court didn't sound eager Tuesday to rewrite the conflict-of-interest laws for patent prosecution. While that may be good news to the many law firms that joined amicus curiae briefs in Maling v. Finnegan Henderson, it might not be enough to get Finnegan Henderson Farabow Garrett & Dunner off the hook for malpractice in a case where it helped two competitors obtain patents on similar inventions."
  • "Several justices suggested that Finnegan may have breached the standard of care—at least as pleaded in former client Christopher Maling's complaint—by failing to turn up Masunaga Optical Manufacturing Co.'s patent application in a search for prior art. Finnegan says the application was confidential when it did its initial prior art search for Maling, but a couple of justices pointed out it became public a few months later."
  • "Maling's case has caught the legal industry's attention because it presents an early test of state ethics rules after the U.S. Supreme Court divested federal courts of jurisdiction over patent malpractice cases in 2013."
  • "From the court's perspective, reframing the dispute as one of competent prior art searches might have appeal, said intellectual property ethics expert John Steele. That's because drawing up new conflicts rules for prosecuting 'similar' patents would be 'devilishly difficult,' he said. But searching for prior art is no small undertaking, and there's no clear-cut duty to perform searches on an ongoing basis. Some law firms might do it for big institutional clients, in part to win new business, he said. But for one-off inventors on a limited budget, repeated searches are typically 'outside the scope of the assignment.'"
Next comes: "Quinn Emanuel DQ'd From Urban Compass IP Theft Suit" --
  • "Quinn Emanuel Urquhart & Sullivan LLP was disqualified Thursday from representing an ex-business partner of Urban Compass founder Robert Reffkin, who allegedly stole proprietary information, after a former lawyer on the Kirkland & Ellis LLP team representing Reffkin and the rental search business jumped to Quinn."
  • "At a hearing Thursday on the defense's motion, New York Supreme Court Justice Jeffrey K. Oing said Quinn’s offer to provide the court with monthly affidavits attesting that client confidences were being maintained would be 'a lot of work.'"
  • "'A client has an absolute right to have a lawyer of their choosing ... but the facts of this case compel me to go the other way' and grant the disqualification motion, the judge said. 'I can’t sit here and learn what he learned in terms of confidential information.'"
  • "In their bid to disqualify Quinn, the defendants said Myre worked directly on two Urban Compass matters, including the Dorfman suit, and interviewed Urban Compass executives to develop defense strategies. Myre left Kirkland & Ellis in January for Quinn, after preparing Urban Compass’ motion to dismiss an amended complaint, according to the defense. By April, Quinn Emanuel had been retained to work with other plaintiffs counsel on the case."
For additional background on this case, see an earlier story laying out the facts and history.

Thursday, August 27, 2015

Syrup, Sugar, Sanctions, "Strategic," and Such

Interesting news via the National Law Journal: "Sanctions Sought Against Ex-Squire Patton Boggs Lawyer in Sugar Case" --
  • "Two corn refining companies that booted Squire Patton Boggs from its high stakes lawsuit against the sugar industry are claiming one of the law firm’s former attorneys is still on the case—in violation of a judge’s disqualification order."
  • "In a sanctions motion filed on Aug. 20, the refiners allege that Daniel Callister, who allegedly resigned from Squire Patton Boggs after the disqualification order in February, continues to represent the sugar companies as a "strategic advisor.'"
  • "At the entreaty of Ingredion and Tate & Lyle, which had been clients of Patton Boggs prior to its merger last year with Squire Sanders, U.S. District Judge Consuelo Marshall on Feb. 13 ordered Squire Patton Boggs disqualified from the case. The judge concluded that the firm had a conflict of interest since it had continued to represent one of the corn refiners following its merger and had handled matters for the other that were related to the case."
  • "'In the context of a spontaneous discussion initiated by Briscoe about whether further settlement discussions should take place between the parties, Briscoe admitted that Callister was still advising the sugar plaintiffs in this case and that, further, Callister would participate and advise the sugar plaintiffs in potential settlement talks,' wrote Michael Proctor, name partner of Caldwell Leslie & Proctor, in the motion. 'Thus, Callister essentially left the disqualified Squire Patton Boggs to coordinate the litigation on behalf of the sugar plaintiffs.'"
    "...lead counsel for the sugar companies, called the sanctions motion 'an absolute waste of court time and lawyer time.'"

Wednesday, August 26, 2015

On Effective Law Firm Risk Management (Structures, Policies & Approaches)

Our (gracious and understanding) friends at Paragon noted that the intra-firm privilege article we highlighted a few days ago was actually published quite some time earlier. (Your human editor clicked the wrong newsletter link in his haste to bring you the latest and greatest.)

Now we bring you Paragon's latest latest article: "Reflections On a Few Common Elements of Effective Law Firm Risk Management," written by Gilda Russell, previously Holland & Knight LLP's longtime Ethics and Conflicts Counsel. The entire piece is indeed worth reviewing, here are some highlights:
  • "In terms of structure, many large firms delegate risk management responsibilities to a General Counsel’s Office, Legal Department, or some similar type of risk management “team” within the firm... Other large firms choose to follow a model where there are fewer specialized partners on the risk management team... Medium to smaller firms may follow similar models or divide risk management tasks among only a few individual partners, perhaps even a committee, and professional staff."
  • "Each of these approaches can lead to effective risk management, and there may be many reasons why a firm’s risk management program is successful.  This article does not attempt to designate the best approach or discuss all of the reasons for success.  Rather, the analysis below points out a few common elements of effective risk management and, where appropriate, notes how different approaches might fare with regard to these elements."
  • "While effective risk management may have many reasons for success, there are at least a few common elements to any approach that is taken:
    • Firms should make it very clear who the members of the risk management team are and what their respective responsibilities entail and should regularly circulate and update such information;
    • Firms should formally designate one or more members of the risk management team as in-house counsel and clearly indicate the team members acting under the authority of in-house counsel;
    • Risk management team members should communicate regularly among themselves as to matters they are handling;
    • Risk management team members should have a high degree of expertise in the specific subject areas of their responsibility; and
    • Risk management team members should operate in a way that engenders firm support through involving firm management, being available and responsive to firm lawyers, giving firm lawyers the opportunity to be heard and reheard on risk management decisions with which they disagree, assisting firm lawyers in communicating risk management decisions to their clients, and collaborating with other departments of the firm."

Tuesday, August 25, 2015

Wave Goodbye to Waivers (Says One GC)

The title in this one says it all: "Gilead Sciences’ GC Is Sick of Conflict Waivers" --
  • "For Brett Pletcher, Executive Vice President and General Counsel of biotechnology giant Gilead Sciences, advance conflict waivers are a big pet peeve. 'I’ve always pushed back on these with the firms, saying, ‘Look, how can you ask me to waive something? I don’t even know what the conflict is.'”
  • "He estimated that 95 percent of law firms require conflict waivers, and his negotiations with firms usually occur 'around the edges... Firms are trying to preserve a level of optionality to either represent me or represent somebody else, or represent both at the same time,” he said. 'I have a big problem with that.'"
  • "'My biggest pet peeve right now — which pretty much every law firm I’ve worked with does — is pre-waiver of conflicts. Firms want me to sign a contract with them that says they reserve the right to take on matters adverse to Gilead, and I waive my objection to those adverse matters now, without knowing what that matter might be.'"
  • "'I’ve always pushed back on these with the firms, saying, 'Look, how can you ask me to waive something? I don’t even know what the conflict is.' I’ve been very reasonable about waiving conflicts when I know what they are, and believe that these really aren’t conflicts.'"
  • "'It drives a bit of a wedge with me, because it makes me think, “Okay, what work am I going to send to this firm? Because I’m not sure exactly what could come up adverse to me within that firm that could be a problem... All these firms that have gotten big enough that they’re fearful that if they represent me, it’s going to cut out a lot of other work for people that might want to be adverse to me, and so they ask for these waivers up front.'"

Sunday, August 23, 2015

ILTA Conference: Sessions of Note (Part 2)

Another group of ILTA sessions worth a look:

Successfully Selling an Information Governance Program
September 1 (11am – 12:30 pm. Roman Ballroom I. #ILTACON #056)
  • What is the secret to selling the idea of implementing an information governance program at your organization? A panel of experts will discuss the business drivers relevant to getting people on board, including key indicators of success.
  • Featuring:
    • Beth Chiaiese, CRM - Foley & Lardner LLP
    • Rudy Moliere - Morgan, Lewis & Bockius, L.L.P.
    • Sharon Keck - Polsinelli PC

The Client’s Perspective on Maintaining Data Security Aug 31 (1pm – 2pm. Milano Ballroom III. #ILTACON #016)
  • Confidential information faces greater security threats than ever before, and the dangers to lawyers and their firms are significant. Sophisticated attacks can come from many sources, including hackers, cybercriminals, economic spies or trusted insiders who are dishonest, bored or simply fooled by a clever malware program. What do your clients think about the way you protect their data? This program will include the voice of the client to help law firms and law departments understand and address client concerns about data security and confidentiality.

Handling Lateral Lawyers and Matter Transfers in a World of Mergers and Movement
September 3 (11:00am – 12:00 pm. Milano Ballroom III. #ILTACON #143)
  • Lawyers are moving from firm to firm to capitalize on legal practice innovations, regional relationships and professional advancement. Here we'll present a fresh view on some of the latest issues facing law firms when lawyers cut ties, including who "owns" non-traditional content (such as Web posts or calendar items), whether the firm should consider retaining copies of any materials, how to handle a departure that is less than amicable, what technologies can make the division of content more precise and timely, and more!
  • Featuring:
    • Rudy Moliere - Morgan, Lewis & Bockius, L.L.P.
    • Charlene Wacenske - Morrison & Foerster LLP
    • Julie J. Colgan - Nuix
    • Al Pica - Ropes & Gray
    • Leigh Isaacs - White & Case LLP

Thursday, August 20, 2015

Risk News: Threats & Waivers Edition

A few interesting updates to share. First, from Hinshaw: "Future Conflict Waiver Allows Firm to Representation Adverse to Former Client" [GEM Holdco, LLC v. Changing World Technologies, L.P., 46 Misc. 3d 1207(A), 7 N.Y.S.3d 242 (Sup. Ct. New York County Jan. 9, 2015), aff'd, 2015 WL 4112529 (1st Dep't 2015)] --
  • "A law firm represented two sets of codefendants who later became adversaries; the firm then continued to represent one of the sets of defendants against the former clients. The New York Supreme Court, Appellate Division, First Department, held that because the defendants had specifically waived any conflicts that might arise from the joint defense arrangement, the firm would not be disqualified from its representation of the defendants."
  • "Accordingly, Danzik signed a "retainer letter" with Schalm Stone. The letter expressly contemplated future conflicts between the CWT Defendants and the Ridgeline Defendants."
  • "New York courts have recognized that where a valid waiver exists, the traditional concerns about confidential information are inapposite. The Ridgeline Defendants argued that the confidential information shared with an attorney in a joint representation inherently gives rise to the unfair advantages that Rule 1.9 seeks to prohibit, and warranted disqualification. But the court concluded that if the transmission of confidential information vitiated the validity of a conflict waiver notwithstanding the retainer letter's disclaimers to the contrary, virtually all conflict waivers would be ineffectual."
  • "The court upheld the waiver of future conflicts of interest, and allowed the continued representation of one client against the former client, even if information obtained during the joint representation from the former client could result in an advantage for the continuing client."
And then from Karen Rubin at Thomson Hine's blog comes an update (it might be a shame not to read, if some sort of accident should happen, that is...): "Threat to file disciplinary complaint can backfire" --
  • "We’ve all been there. Opposing counsel has acted like a jerk throughout your case.  But now, counsel has crossed the line with conduct that you think is not merely uncooperative or dilatory, but also unethical."
  • "Thinking of telling your opponent that you’re going to file a complaint with disciplinary authorities about that unethical conduct?  You should probably take some deep breaths and think again about that threat.  As a recent ethics opinion from the Association of the Bar of the City of New York (ABCNY) points out, making that threat may be unethical conduct on your part, if:
    • 'you are ethically required to actually report another lawyer’s misconduct, and you instead, threaten a disciplinary complaint to gain some advantage or concession from the lawyer; or'
    • 'you lack a good faith belief that the other lawyer is engaged in conduct that has violated or will violate an ethical rule; or'
    • 'your threat of disciplinary charges has no substantial purpose other than to embarrass or harm; or'
    • 'your threat of disciplinary charges violates other substantive laws, such as criminal statutes that prohibit extortion.'

Wednesday, August 19, 2015

Risk Experts Share Expert Risk Advice

BNA published a wonderful summary of the recent Association of Professional Responsibility Lawyers (APRL) meeting: "Ethics Counsels Divulge Risk Management Tips." It's worth reading in its entirety, but here are some highlights --
On Conflicts:
  • "Many issues stem from risks and conflicts that come into the firm from potential clients, from lateral hires and from lawyers moving to another state while staying with the firm, they explained."
  • "As for exercising care in choosing whom to represent, panelist Eliza M. Rodrigues said in her firm the client intake process includes not only a report prepared by a conflicts analyst but also an analysis of the risks presented by the client. Rodrigues is associate general counsel and ethics counsel at Sedgwick LLP in San Francisco."
  • "Rodrigues said her firm's risk management committee, which she chairs, seeks out as much information as possible about potential clients, including credit checks and Internet searches. Because the committee includes partners from a number of different practice areas, she said, 'there's always someone with the right expertise.'"
On Engagement Letters:
  • "Mokriski [professional responsibility counsel at Proskauer Rose LLP] asked Rodrigues 'who is more difficult' in getting an engagement letter prepared and signed in a new representation—the clients or the firm lawyers?"
  • "Rodrigues said Sedgwick requires an engagement letter as part of its new business intake procedure unless an exemption is issued. Some partners, she said, have demurred on the ground that clients either do not want to sign an engagement letter or object to signing a new one for each new matter. 'There's pushback, because lawyers want to start doing work and billing,' she said."
  • "To address those issues, Rodrigues said she finds herself increasingly negotiating engagement terms directly with a member of the client's office of general counsel and has found it “very helpful” for her firm lawyers to tell clients that someone from the firm's general counsel office will be contacting them. 'We can talk at the same level' and work out whether terms such as an indemnification clause are needed in the engagement agreement, Rodrigues said."
  • She said firm lawyers are more 'difficult' with respect to engagement letters than firm clients, who she's found 'are willing to communicate and negotiate with you.'"
On Risk Roles:
  • "The panelists agreed that lawyers serving as their firms' ethics counsel should have the title to buttress their authority “and also so people will know who to go to,” Rodrigues added."
  • "Mokriski said a year into his duties he suggested to his firm's management that he should be given the title “Professional Responsibility Counsel.” Proskauer not only agreed but “apparently got some credit from our insurance carrier for it,” he said."
  • "Serving as firm ethics counsel, Mokriski said, requires the lawyer to know the rules, the underlying jurisprudence and case law developments, and also have “an eye for the unintuitive. Some rules seem a little strange.”"

Tuesday, August 18, 2015

ILTA Conference: Sessions of Note (Part 1)

The annual ILTA conference is nigh. (Alas, it's in the city of Las Vegas, which some, your editor included, would rather leave than arrive at. Still, it's by far one of the best educational events offered to the legal industry, across a broad range of topics.) Here are several sessions of note for risk readers attending. Mark your calendars.

Better Business Results Through Better Business Intake
Thursday September 3 (2:30 - 4:30pm. Milano Ballroom VII & VIII. ILTA Event Code: #169 )
  • Streamlining client intake and improving general business process efficiency is critical to the practice of law. Today firms face new pressures to transform how they operate. This session will discuss the role technology can play in enabling quicker, more adaptable business acceptance and workflow execution.
  • The two-part session will feature two panels, moderated by Intapp Risk Practice Group head Pat Archbold, and featuring participation by risk consulting expert Meg Block, Chad Ergun at Gibson Dunn, Paul Davis at Baker Donelson, and several others. The first will explore industry business, risk and financial drivers, along with technology considerations. The second will feature law firms discussing their specific experiences with intake and conflicts software.
Building Information Governance Like “Ocean's Eleven”
Aug 31 (1pm – 2pm. Milano Ballroom V. #ILTACON #020)
  • In the 2001 movie “Ocean’s Eleven,” George Clooney assembles the perfect team to pull off a spectacular Vegas robbery. In managing IT governance, risk and compliance (GRC), your firm also needs to assemble the perfect team.
  • How do you find and manage the key players in GRC, and how do you properly divide the varied responsibilities that must be shouldered? Together we can figure out how to build a team that prepares us for the heist (GRC program) of a lifetime.
  • Featuring:
    • Nancy Beauchemin - InOutsource
    • Beth A. H. Faircloth - Seyfarth Shaw LLP
    • Tim Schank - Vedder Price P.C.
    • Stuart Senator - Munger, Tolles & Olson LLP

Wednesday, August 12, 2015

On the Advantages of Centralizing Conflicts Management

Eric Mosca at InOutsource has published an excellent article in the latest ILTA Peer to Peer Magazine: "Centralize Your Conflicts of Interest" --
  • "Your firm’s attorneys are often kept from starting work with a new client because of dozens of pages of potential conflicts. Many law firms send that huge report to the requesting attorney and hope for the best, but there is a better way."
  • "Using internal administrative resources to support the conflicts clearance process ensures that due diligence is performed while also returning billable hours to attorneys who would otherwise lose them tracking down responses."
  • "Transitioning from a decentralized, requesting-attorney-led model of conflicts clearance can be daunting, but busy lawyers faced with ballooning conflicts reports and fewer available hours often welcome assistance even if the firm’s risk management personnel are wary."
  • "If you (or your firm’s partnership) are looking for cost justification for these additional resources, consider this: avoiding even a single conflict of interest claim, disqualification or disgorgement of fees can be a huge cost savings. Speeding the time frame needed to open new matters and ensuring that conflicts due diligence is complete before substantive work begins can also be a major benefit. Consider surveying your firm’s lawyers to quantify the non-billable hours spent on conflicts of interest analysis and review to gauge the amount of potentially billable hours that could be handed back to lawyers. Multiply this by billable rate, and the number looks very attractive."

Tuesday, August 11, 2015

Business Moves, Business Conflicts

A few interesting updates to note. First, via The Recorder devotes ink to risk management associated with lateral movement: "Four Steps to Take When Changing Firms" --
  • "Most law firms and search firms use a formal lateral questionnaire, although not all do. (Every law firm that uses a lateral questionnaire should use it every time–without exception! Inevitably, the lateral hire who did not complete the questionnaire ends up with an impermissible conflict, putting both the law firm and the attorney in a very difficult situation.)"
  • "The bottom line is that potential and actual conflicts should be addressed before the negotiation progress. This means truthfully and completely sharing the necessary information for a complete conflicts analysis."
  • "Notably, the new law firm has more flexibility than the attorney in exchanging information necessary for the conflicts analysis. The most important information for the new firm to disclose to the attorney changing law firms is the identity (for whatever reason) of clients against whom the new firm cannot (or refuses to be) adverse."
  • "Contrary to what most law firms believe, an impermissible conflict can be created prior to the moment an attorney actually joins a law firm. Commonly, it arises from the inadvertent disclosure of confidential information during an interview process."
Next, earlier this year we noted a decision concerning economic (not necessarily ethical) adversity as a potential a class of conflict. Now Celgard, LLC v. LG Chem, Ltd., Case Nos. 14-1675, -1733, -1806 (Fed. Cir., Dec. 10, 2014) (Dyk, J.) is getting a fresh round of review and analysis from Professor Ronald D. Rotunda worth revisiting, see: "The Celgard Decision and Lawyer Disqualification" --
  • "In Celgard, the Federal Circuit disqualified the international law firm of Jones Day because it was representing Celgard in a patent dispute while it continued to represent Apple (another Jones Day client) in other matters. However, Apple was not a party to the Celgard patent case. Jones Day represented Celgard seeking a preliminary injunction against LG Chem, maker of lithium batteries, for alleged patent infringement. It turns out that Apple uses LG Chem’s batteries in its products."
  • "The court said, 'Because Jones Day’s representation here is ‘directly adverse’ to the interests and legal obligations of Apple, and is not merely adverse in an ‘economic sense,’ the duty of loyalty protects Apple from further representation of Celgard.' The court concluded that Apple was 'directly adverse' to Celgard in licensing negotiations related to that patent dispute and thus Rule 1.7(a) required disqualification."
  • "What does it mean to be 'directly' adverse and 'not merely adverse in an ‘economic sense''? Apple bought a product (lithium batteries) from LG Chem, but that alone should not create a conflict. As one comment noted, 'Jones Day argued that it would not be possible for a law firm to anticipate the economic consequences to a non-party client who happened to be in an opponent’s supply chain.' It added, 'the implications can be disturbing if read even a bit broadly,' because '[m]any litigations can have economic consequences for a non-party client, even foreseeable ones and here Apple was a client on unrelated matters. The case holds that as a client even on unrelated matters Apple had a right not to see Jones Day appear for another client in a matter in which Apple was not a party because of foreseeable economic harm to Apple.'"
  • "The Celgard precedent does not demand nor should it invite such a broad holding. Apple was concerned not merely that it could not buy batteries from LG Chem if Celgard was successful in this lawsuit. After all, Apple could presumably switch to Celgard as a supplier. However, the court noted that Apple faced 'additional targeting by Celgard in an attempt to use the injunction issue as leverage in negotiating a business relationship' (emphasis added)."
  • "The Celgard court made clear that there is no conflict for a law firm simply because another client of the law firm is part of the supply chain. 'Jones Day’s representation here is ‘directly adverse’ to the interests and legal obligations of Apple, and is not merely adverse in an ‘economic sense,’ the duty of loyalty protects Apple from further representation of Celgard.' (Emphasis added). The Federal Circuit specifically said that there is no conflict “merely because the client is up or down the supply chain . . . .'

Monday, August 10, 2015

Business and Boards Bring Conflicts (or at Least Concerns)

Interesting story via The Legal Intelligencer: "Law Firms Have Reined in Partner Board Memberships" --
  • "Board memberships have often been touted as great ways for attorneys to give back to the community and generate business contacts, but a recent situation involving Bill Cosby's defense counsel doubling as the chairman of Temple University's board highlighted why some firms have put tighter scrutiny on board affiliations."
  • "Law firm leaders have said their firms have exercised more control over the past several years to which boards partners are joining and whether anything involving existing board memberships could prove embarrassing enough to the firm that the partner should step down from the board."
  • Anthony E. Davis, a partner at Hinshaw & Culbertson in New York, advises attorneys and law firms on legal professional and ethics issues. He said there is no 'one-size-fits-all' approach to attorney participation on boards of directors."
    • 'There are certainly some firms out there that take what we might call an entrepreneurial approach and think it's great for lawyers to be on boards," Davis said. But "many firms are shying away from it now because of the very serious conflict of interest and other risks.'"
      "There could be several reasons behind such a hesitation, he said. Lawyers may find that their different duties as a director and as an attorney create complicated situations, or they may encounter a conflict if an attorney's firm wants to do legal work for the entity he or she is serving."
  • "Eckert Seamans Cherin & Mellott CEO Tim Ryan said his firm has had a board-membership policy in place for about a decade.'Part of that is to ensure that we can track what boards our lawyers are part of for conflict purposes, but also to make sure, in appropriate cases, the lawyers are provided with insurance for their board participation,' Ryan said. The firm has to notify its insurance carrier of board participation that is not covered by the external organization's insurer. In that case, Eckert Seamans' insurer will offer coverage, Ryan said."
  • "Dechert has a policy requiring a committee's approval of any request for a partner to serve on a for-profit corporation's board. There is a similar requirement at Saul Ewing where executive committee permission is required for for-profit board service."
  • "'There are ethical considerations, potential conflicts of interest, and D&O liability coverage issues that all must be considered and discussed prior to accepting such a position,' a Saul Ewing spokeswoman said. 'We have partners who serve on for-profit boards, but we want to ensure they consider all of the potential ramifications before making that commitment.'"

Thursday, July 30, 2015

Risk News: Client Success, Conflicts & Insurance

A potpourri of posts to present:

First, today, firms increasingly understand and feel the market pull to focus specifically on client success -- not just delivering the services they've been engaged to perform, but delivering outcomes (and ensuring clients feel understood, advised and well served). This interesting update highlights the intersection of risk into this business equation: "Legal Advice Must Allude to Client's Business Risks" --
  • "Lawyers aren’t business consultants, but they are subject to malpractice liability if they fail to give a client sufficient legal advice about business-related risks to allow the client to make informed business decisions, the U.S. Court of Appeals for the Seventh Circuit held July 7."
  • "The district court did not 'identify any principle of Illinois law that sharply distinguishes between business advice and legal advice,” Easterbrook wrote. “It is hard to see how any such bright line could exist,' he added, 'since one function of a transactions lawyer is to counsel the client how different legal structures carry different levels of risk, and then to draft and negotiate contracts that protect the client's interests.'"
In conflicts news: "CMS hit with "ground breaking" court application to be removed as KPMG lawyers" --
  • "An application has been made to the High Court to have CMS Cameron McKenna removed as the lawyers for two KPMG administrators over allegations that the firm’s role represents a conflict of interest."
  • "The application, made by Hausfeld client property developer Julie Davey, has been stayed by Mr Justice Henderson pending the outcome of Davey’s legal battle with the KPMG administrators, scheduled to be heard in October."
  • "The applicant claims CMS is conflicted in its role as lawyers to the liquidators as the firm is also closely aligned with Lloyds, and that without information barriers in place, information produced by KPMG administrators could be provided to the bank. She alleges this would prejudice any potential conflict with the bank."
Adding some interesting color and commentary on insurance trends: "Law Firms See Insurance as Bulwark Against Data Breach" --
  • "In May, the New York Times obtained and published an article about an internal report at Citigroup that suggested law firms are likely vulnerable targets for hackers, but that it was difficult to tell if data breaches are on the rise or not because there is no regulatory reporting requirement for the legal industry."
  • "'“Our law firm clients report being extorted or threatened with denial of service and being held hostage,' said Mark Greenwood, managing director with Aon Risk Solutions, which sells cyberinsurance to several dozen law firms."
  • "Greenwood declined to disclose which firms had reported a breach, but said the minimum cost of hiring a consultant to identify the hole in a cybersecurity system and to then fix it is $500,000. He further estimated that the largest law firms are paying for $5 million to $40 million in coverage, mid-size firms are purchasing up to $10 million in coverage, and smaller firms are buying  up to $5 million in coverage. The insurance provides firms with a “coach” who can take the lead if a breach occurs, crisis communication and PR specialists, as well as online training and support from IT professionals, according to Greenwood. In the last year alone, his group has signed up 30 new law firms for cyber insurance, he said."

Wednesday, July 29, 2015

Law Firm Insider Trading: New Allegations and News (and Now Jail Time)

Ex-Wilson Sonsini Staffer Seeks To Avoid Jail Over Trades --
  • "A former Wilson Sonsini Goodrich & Rosati PC information technology employee told a New York federal judge Wednesday he should not be sentenced to jail for trading on inside information about client deals and apologized for any damage to the firm’s reputation."
  • "According to the government, Braverman earned more than $300,000 by trading the stocks of several technology and pharmaceutical companies, as well as children’s clothing retailer Gymboree Corp. He was arrested in September 2014."
  • "He said he got the idea to trade on inside information while driving home from work one day, when he heard on the radio about a merger involving a Wilson Sonsini client."
  • [As previously noted]: "Braverman used computerized records at the law firm to identify companies involved in possible acquisitions, including Gymboree Corp., Inc., Epicor Software Corp. and Seagate Technology Plc, according to charges made public today in Manhattan federal court."
Ex-Fox Rothschild Partner Pleads Not Guilty to Insider Trading --
  • "A former Fox Rothschild lawyer who was with the firm during its handling of the 2012 Harleysville-Nationwide insurance merger pleaded not guilty in federal court to insider-trading charges."
  • "The indictment alleged that a day after Sudfeld learned the merger was going forward, he contacted his stockbroker and purchased 1,000 shares of Harleysville stock under his wife's account on the morning of Sept. 28, 2011. That afternoon, Sudfeld bought 2,000 shares of Harleysville stock from his own account. Sudfeld did not tell his broker that he was trading on inside information, the indictment said."
  • "Sudfeld did not tell his former firm about the stock purchases, the indictment alleged, and knew he was violating the firm's confidentiality rules by trading based on private information."
Update: This evening, the Wall Street Journal reports that a jail sentence has been handed down in the Wilson Sonsini matter: "A former employee at the law firm Wilson, Sonsini Goodrich & Rosati PC was sentenced to two years in prison Wednesday for insider trading, eight months after admitting to making illegal trades using data gleaned from the firm’s computer system."

Friday, July 24, 2015

Vereins: Very Interesting Conflicts Considerations (and News)

Bloomberg BNA has a fascinating update and analysis: "Dentons’ Disqualification and Legal Advertising: Stir But Don’t Shake" --
  • "The Swiss verein enables member firms operating under the Dentons brand to maintain their own finances while tapping into the global brand’s robust sales and marketing machine and technology. The structure also facilitates the firm’s rapid entry into new markets, helping it to circumnavigate potential regulatory roadblocks without seemingly breaking stride."
  • "But there are also downsides to the Swiss verein — not just for Dentons but also for the other half-dozen behemoth firms that share the structure. For example, profits cannot be shared between constituent partnerships, a constraint that removes incentives for lawyers in member firms to share clients and work with attorneys in other member participants operating under the global brand."
  • "Dentons stumbled recently when it was disqualified from representing an Ohio company in a patent suit against Gap, Inc., a current as well as long-time client. Conflicts are a serious challenge for all law firms; they are the most common basis for legal malpractice claims. The larger and more geographically dispersed a firm becomes, the more serious the potential for conflicts and the more pressing the need for uniformly applied prophylactic measures to avoid them. So what makes the Dentons disqualification so noteworthy that it could have a chilling impact upon the Swiss verein structure for law firms?"
  • "Judge Bullock ruled that Dentons should be disqualified. In so doing, he not only considered the procedural history above, but also rejected the Dentons contention that as a Swiss verein, its representation of Revolaze against Gap by its US member firm immunized it from conflict and access to Gap’s proprietary data resulting from the Dentons Canada representation of Gap."
  • "Translation: If you represent yourself to the public as Dentons, then you will be held accountable as Dentons whether you have a Swiss verein structure or not."
  • "The bottom line is there are inherent risks of conflicts and proprietary data disclosures endemic to the verein structure — risks which Judge Bullock’s decision makes clear cannot be avoided by asserting the legal separateness of member firms. This does not mean that the verein structure is necessarily doomed or inimical for law firm adaptation. It does, however, underscore the far more onerous burden on Swiss verein firms to ensure that conflicts are avoided and that maintenance and protection of proprietary client data is not subject to compromise even between and among the individual member firms within the global brand."

Thursday, July 23, 2015

Risk News: Disqualifications Denied

Several interesting updates to share on the disqualification front. First up, more on the Skadden front: "Judge Declines to Boot Skadden, Despite Alleged Conflicts" --
  • "A federal judge in Santa Ana ruled on Tuesday that Skadden Arps should not be disqualified from defending a former medical device company executive on criminal insider trading charges, despite suggesting a lawyer in the case committed 'perjury.'"
  • "In an 11-page ruling, U.S. District Judge Andrew Guilford stopped short of naming who was responsible for perjury, and concluded that regardless of the complex facts at issue, Skadden could remain in the case."
  • "'This Court has long been concerned about false statements under oath,' Guilford wrote, dropping a footnote to a law review article he authored on the subject, 'but here the right of a criminal defendant to pick his attorney requires denying the request to disqualify counsel... Despite the presence of complex conflicts issues that might serve as the basis to disqualify Skadden, none overcomes the strong right of a criminal defendant to pick his counsel.'"

Next: "Sidley Beats Patricia Cornwell's DQ Bid In Accountant Suit" --
  • "A Massachusetts federal judge on Thursday rejected best-selling author Patricia Cornwell’s argument that Sidley Austin LLP can’t represent an accounting firm she accuses of financial mismanagement because Sidley employs a former federal prosecutor who she says investigated her, and Cornwell announced she would seek immediate appeal."
  • "Cornwell had moved to disqualify Sidley from representing accounting firm Anchin Block & Anchin in a new trial ordered after U.S. District Judge George A. O’Toole Jr. last year set aside a verdict of nearly $51 million a jury had awarded the author and her wife, Staci Gruber."
  • "Cornwell argued that Sidley partner and former Deputy Attorney General James Cole had represented Anchin Block while he was a partner at Bryan Cave LLP, and that he 'continued to press Anchin’s agenda against Cornwell' at the U.S. Department of Justice while his nomination was pending. On Thursday, however, Judge O’Toole disagreed and denied the motion, according to both Cornwell and Sidley."
And from the always quotable Bill Frievogel comes:
  • "Malibu Media, LLC v. Tashiro, 2015 WL 4203328 (S.D. Ind. July 10, 2015). Plaintiff sued two defendants for copyright infringement. Lawyer appeared for both defendants. The issue in this opinion is whether Lawyer should be sanctioned because he had a conflict of interest, thus causing delay and expenses for Plaintiff. The court held that, although it was possible that the defendants could have blamed one another for the infringement, there was no conflict here because the defendants took the consistent position that there was no infringement."

Tuesday, July 14, 2015

On Containing Contractor Conflicts & Other Risks

Two good updates from the Daily Report on the topic of contractor lawyer risk management. First:
  • "For law firms that hire a contract attorney as an employee who works exclusively for the firm and its clients, conflict issues are relatively straightforward. The imputation rules apply equally to all attorneys in the law firm. The issue is more complicated for contract attorneys hired as independent contractors. One way to address this issue is to establish an ‘exclusive’ independent contractor relationship with a contract attorney so that the conflict analysis only involves one set of clients."
  • "Under this arrangement, the law firm and the contract attorney agree that the contract attorney will do work only for the one law firm. Not surprisingly, contract attorneys may expect some commitment from the law firm, whether in the form of compensation or a workload commitment. It is more complicated for firms that prefer to use contract attorneys on a purely ‘as needed’ or nonexclusive basis."
  • "To ensure that a contract attorney's conflicts are not imputed to the firm, it is important that the firm take steps to delineate the contract attorney's limited role. This typically means physical separation, such as working away from the office space or within a segregated area at the firm's office. Any access to firm databases or records should be limited to the specific project within the project attorney's assignment."
  • "Per D.C. Bar Ethics Opinion 352, if a contract attorney ‘is located in a firm's office space, works simultaneously on multiple projects for the firm, is listed on the firm's website or other directories, and has access to the firm's email systems and electronic documents,’ the attorney would likely be so associated with the firm that the attorney's conflicts are the firm's conflicts."
  • "Make no mistake: there is nothing inherently wrong, unethical or unprofessional about using contract attorneys. But the risks involved are unique and merit a different kind of attention. Here are more suggestions for addressing them."
  • Insurance Coverage: "For these reasons, it is especially important to precisely define the nature of the relationship between the law firm and the contract attorney, and confirm during the application process that the legal malpractice insurer will provide coverage should a claim arise."
  • 'Independent' Contractors: "Typically, negligence committed by contract attorneys in the furtherance of their employment is likely attributable to the law firm. Even in an "independent contractor" scenario, there is a risk of a claim for negligent supervision or hiring of an independent contractor. As a result, it is critical that attorneys from the hiring firm supervise and train contract attorneys."
  • Documentation: "One thing is certain if a legal malpractice claim arises out of work performed by a contract attorney: everyone will focus on the nature of the relationship between the contract attorney and the law firm. In the absence of documentation, such determination will be left to the general recollections of the parties involved, as well as what reasonable third parties might have believed. This creates risk."

Monday, July 13, 2015

Conflicts News: Skadden Partner Skedaddles, Some Seeing Serious Signs

We covered the underlying matter back in 2012 (see: More (Alleged) Insider Trading (Potentially) Linked to a Law Firm) and now note a substantive update: "Skadden Partner Retires Amid Questions about Conflicts" --
  • "In late May, Eric Waxman retired as a partner with Skadden, Arps, Slate, Meagher & Flom in Los Angeles — shortly after making what he described as 'deeply' regrettable corrections to earlier statements he had made in an insider trading case."
  • "Now, prosecutors are alleging Waxman made 'serial' misstatements in order to collect millions of dollars in legal fees and conceal evidence: For years, Waxman refused to give prosecutors potential evidence related to an interview he claimed was conducted at Mazzo’s behest and therefore protected by the work product rule. But earlier this year, Waxman reversed himself, and admitted the interview was also conducted at the behest of his other client AMO and not protected."
  • "Prosecutors say Skadden should be disqualified from representing Mazzo — who is awaiting criminal trial — as a result of what they describe as conflicts arising from Waxman’s dual representation and misconduct. While Waxman’s former partners insist that his mistakes were unintentional, they’re also distancing themselves from him and his conduct as they dispute prosecutors’ arguments. The imbroglio illustrates one problem that can arise when a law firm represents a corporation and an executive in the same matter."
The complete article is worth reviewing for more detail and background. Above the Law also offers its unique brand of commentary: "The Biglaw behemoth may have stepped into an ethical morass when a veteran partner withheld evidence from prosecutors for years, erroneously claiming it constituted work product... Oops. And the crux of Skadden’s defense is that they just kind of forgot who requested these interviews and if they were ever shared with AMO. And, hey, maybe that’s true. This is a complicated case. Lot of ins, lot of outs, lot of strands to keep in the ole Duder’s head. Unfortunately for Skadden, innocence doesn’t cut it for a top-tier firm."