Friday, June 9, 2017

On Client Selection (Presidential Edition)

Several interesting stories in the news. This one on client selection and risk management was certainly eye catching: "Four top law firms turned down requests to represent Trump" --
  • "Top lawyers with at least four major law firms rebuffed White House overtures to represent President Trump in the Russia investigations, in part over concerns that the president would be unwilling to listen to their advice, according to five sources familiar with discussions about the matter."
  • "Among them, sources said, were some of the most high-profile names in the legal profession, including Brendan Sullivan of Williams & Connolly; Ted Olson of Gibson, Dunn & Crutcher; Paul Clement and Mark Filip of Kirkland & Ellis; and Robert Giuffra of Sullivan & Cromwell."
  • "Others mentioned potential conflicts with clients of their firms, such as financial institutions that have already received subpoenas relating to potential money-laundering issues that are part of the investigation."
  • "Other factors, the lawyer said, were that it would 'kill recruitment' for the firms to be publicly associated with representing the polarizing president and jeopardize the firms’ relationships with other clients."
  • "Another lawyer briefed on some of the discussions agreed that the firms were worried about the reputational risk of representing the president. One issue that arose, this lawyer said, was “Do I want to be associated with this president and his policies?” In addition, the lawyer said, there were concerns that if they took on the case, “Who’s in charge?” and 'Would he listen?'"

Thursday, June 8, 2017

LegalKEY Replacement (Four Reasons Why)

From the team at FileTrail comes: "4 Reasons It’s Time To Replace LegalKEY" --
  • "If you haven’t heard, future development for LegalKEY is over. However, that’s no surprise to anyone still using LegalKEY. Although the company hasn’t announced their records management system is being sunsetted, customers haven’t gotten any significant upgrades or product enhancements in the last 5-7 years. To give you an idea of how little effort is going into LegalKEY these days, they’ve actually gone the way of ARM/FileSurf—by outsourcing product support."
  • "Keep in mind that staying with a product that has taken this road doesn’t bode well for the future. HP sunsetted ARM, with a final end of life in the past."
  • "Today, if you’re on LegalKEY you’re paying annual support and not getting anything in return. Plus, to get LegalKEY to run on a later version of SQL it will cost you time and money. (And we’re not talking SQL 2012, 14 or 16—this is just to get you to SQL 8.) While that might not be enough to convince you to make the switch, here are four other reasons why it’s a great time to get off LegalKEY."
“It has been many years since we have had any LegalKEY upgrades or significant product enhancements. Since future development is over, we have turned to FileTrail to replace LegalKEY. FileTrail provides the flexibility, continual development, software integrations and advanced reporting features we need to properly manage our records program going forward.” 
-- John Churchill, Records Department Manager, Nelson Mullins Riley & Scarborough     

Read the full article for detail on the top for reasons and opportunities FileTrail flags for making the change:
  1. Saving Money
  2. Automating Information Governance
  3. Integrating Document Management
  4. Scaling Systems and Processes

Monday, June 5, 2017

ITC Conflicts Allegation (Section 201)

Here's another interesting one: "Chinese solar company pitches conflict of interest claim in Section 201 case" (free subscription) --
  • "A Chinese solar panel producer is claiming that the law firm representing a U.S. solar company pursuing a Section 201 safeguard petition against foreign imports of solar products has a conflict of interest in the case, which it says should be dismissed."
  • "Suniva, which filed for Chapter 11 bankruptcy in April, wants the U.S. International Trade Commission to employ Section 201 of the Trade Act of 1974 and slap duties on imports of crystalline silicon photovoltaic cells (CSPV) and modules."
  • "But Wuxi Suntech Co., Ltd, in a May 14 letter to the ITC, claims that Suniva's law firm -- Mayer Brown LLP -- has a conflict of interest given its affiliation with both ‘pro and against Chinese solar PV manufacturers,’ the Chinese company said. Suntech claims to be one of the largest photovoltaic cell manufacturers and exporters to the U.S."
  • "'As a result of the bankruptcy reorganization of Suniva, Inc., the interests of Suniva and its shareholders are conflicted,' the letter states. 'The acting by Mayer Brown for the Chief Restructuring Offier (sic) of Suniva, Inc. clearly conflicted with the interests of its other client, Wuxi Suntech, which again has not been consented by us.'"
  • "Suniva Inc. and Suntech are owned and controlled by the same parent entity -- Shunfeng International Clean Energy. ‘It is to our shock that Mayer Brown continued to represent the Chief Restructuring Officer of Suniva, Inc. after it had entered into bankruptcy reorganization in April 2017, and filed a petition on behalf of CRO on April 26th 2017 for safeguard relief actions that may seriously affect our capacity to continue exports to the US market,’ Shuangquan He, president of Suntech, wrote in the May 14 letter."
  • "Mayer Brown fired back with a May 16 response to the ITC, claiming that it had been given consent to proceed with its representation of Suniva. ‘Accordingly, when Suniva, through the parent entity, asked the Firm to undertake this representation, we reminded Suniva’s parent of our work for Suntech and our need for an informed consent and waiver,’ the law firm wrote. ‘Suntech, through the parent entity, provided that informed consent waiver.’"

Sunday, June 4, 2017

When Conflicts Allegations Cut Deep (Or: From Russia... Again)

There's been a clear trend of the conflicts space becoming more of a "rough and tumble" kind of world. Here's a striking example of extreme, gloves-off escalation of allegation (and given the nature of the matter it's important to emphasize allegation), following our previous coverage of the underlying matter, comes:

"Former client says BakerHostetler lied to court to avoid disqualification"
  • "For nine months in 2008 and 2009, BakerHostetler represented the hedge fund Hermitage Capital Management in the investigation of a $230 million fraud scheme in Russia that began with the theft of the corporate identities of Russian companies in Hermitage’s portfolio. BakerHostetler earned $200,000 in the engagement."
  • "Now Hermitage is asking a federal judge to order its onetime lawyers to cough up $1.4 million in fees – not money Hermitage paid to BakerHostetler but legal fees Hermitage laid out to other lawyers in order to get BakerHostetler bounced from a U.S. government suit to recover some of the alleged proceeds of the Russian fraud. BakerHostetler represented the defendant in the forfeiture case, a Cyprus-based real estate holding company called Prevezon."
  • "In the fee motion filed Tuesday, Hermitage flat-out accused two prominent BakerHostetler lawyers of making 'repeated misrepresentations' to a federal trial judge and the 2nd Circuit in a misguided attempt to hold onto the firm’s Prevezon assignment. The motion, filed by Hermitage’s lawyers at Susman Godfrey, claims BakerHostetler partners John Moscow and Mark Cymrot falsely assured U.S. District Judge Thomas Griesa that the firm’s previous Hermitage assignment was related to a different Russian fraud scheme, not the fraud underlying the Prevezon case."
  • "And to compound the law firm’s betrayal, according to Hermitage, after it persuaded Judge Griesa to allow it to remain in the case for Prevezon, BakerHostetler demanded discovery from its onetime client Hermitage in order to portray Hermitage as the true villain of the story."
  • "Said BakerHostetler: 'We do not comment on pending litigation involving our firm. We will respond to the complaint - and our response will speak for itself.'"

Thursday, June 1, 2017

Risk & Conflicts Updates (Presidential Edition)

Having recovered (mostly) from another amazing Inception experience (thank you to the enterprising reader who attempted the secret handshake!) we now return to our regular, semi-regular risk updates. Starting by catching up on various updates and allegations making news and stirring debate recently:

"Marc Kasowitz helped Trump through bankruptcy and divorce. Now he's taking on the biggest case of his career" --
  • "Now, President Trump is giving the $1,500-an-hour attorney a new assignment as his private counsel in the probe of Russia’s meddling in the 2016 presidential election. His hiring was first reported by Fox Business and ABC News."
Which played out in one way with: "Lieberman Withdraws From Consideration as F.B.I. Director" --
  • "Former senator Joseph I. Lieberman (I-Conn.) has withdrawn his name from consideration for FBI director. Lieberman cited the potential appearance of a conflict after President Trump hired his longtime attorney Marc Kasowitz — who is a partner at the same law firm where Lieberman is senior counsel — as his outside attorney in the ongoing investigations into Russian meddling in the 2016 election."
  • "'I have decided to withdraw my name from consideration for this nomination,' Lieberman said. 'With your selection of Marc Kasowitz to represent you in the various investigations that have begun, I do believe it would be best to avoid any appearance of a conflict of interest, given my role as senior counsel in the law firm of which Marc is the senior partner.'"
Next, ALM noted last week: "Robert Mueller, Jamie Gorelick and the Wilmer Problem" --
  • "Suddenly, it’s not so simple. Because until last week, Mueller was a partner at Wilmer Cutler Pickering Hale and Dorr—where his colleague in the firm’s Washington, D.C. office, a fellow member of both the strategic response and regulatory and government affairs groups, was Jamie Gorelick. Jared Kushner’s lawyer."
  • "That wasn’t such a big deal when Kushner was just President Trump’s son-in-law seeking assistance with conflict-of-interest issues and financial disclosures. Mueller didn’t personally represent him. But now, rumors are swirling that Kushner is the “significant person of interest” alluded to in a Washington Post report on Friday, “someone close to the president” under investigation for working with the Russians."
  • "If this is true—and I don’t know if it is; the best source appears to be New York magazine contributor Yashar Ali, who claims to have confirmed it with four people—it could present a substantial ethics conflict for Mueller."
Which was followed by: "DOJ: No ethics conflict for special counsel in Russia probe" --
  • "The Justice Department has determined that former FBI Director Robert Mueller's appointment as special counsel to oversee the federal investigation into Russian interference in the 2016 election complies with ethics rules."
But then this week the Washington Post notes (what some might call "the double yoink" maneuver): "The White House may claim Mueller has conflicts of interest. Oh, the irony." --
  • "But now the White House and its allies may be preparing to claim that former FBI director Robert S. Mueller III has conflicts of interest that prevent him from assuming his role as special counsel in the Trump-Russia investigation. Like so many of their other ethics claims, this one does not hold up."
  • "Their first argument is that Mueller must stand down from the investigation for at least a year because lawyers in the law firm from which he just resigned, WilmerHale, represent Jared Kushner and Paul Manafort, two people who may be involved in the investigation. It appears, however, that Mueller never represented either of these individuals nor obtained any confidential client information about either of them. Under the professional conduct rules of the District of Columbia, among the toughest in the nation on lawyers moving in and out of government, Mueller is free to leave the firm and, as special prosecutor, investigate and if appropriate prosecute either of these individuals represented by his former firm."
  • "Ironically, it is in just such a situation as the Mueller case — if the government officials involved are lawyers and therefore subject to bar ethics rules on the revolving door — that a conflicts waiver would be appropriate. If the White House were to resist granting such a waiver for Mueller and his staff while secretly approving waivers to lobbyists and others, that action would represent not only an abuse of government ethics rules but also yet another data point in an emerging pattern of obstruction of justice."
And on the related topic of legal service options: "West Wing aides brace for big attorney bills" --
"Longstanding conflict-of-interest restrictions limit White House employees from taking free or discounted legal advice, but aides who need lawyers have some options for getting help."
  • "Long-standing conflict of interest restrictions limit White House employees in many circumstances from accepting free or discounted attorney advice, and history is littered with examples of a president’s team buried under more than a hundred thousand dollars (George Stephanopoulos, under President Bill Clinton), if not millions (I. Lewis “Scooter” Libby, under President George W. Bush), in legal fees."
  • "Trump aides who can’t afford a premier $1,500-per-hour white-collar lawyer on their government salaries have options. They can file for public subsidies, lean on their homeowners’ insurance or tap lawyer friends for pro bono help. But even then, veterans of White House scandals stretching back to the Ronald Reagan era say that some of the staffers who get caught in Special Counsel Robert Mueller’s crosshairs will want to start pinching pennies."
  • "Trump aides can ask friends or family for free or discounted legal advice — with the caveat they must detail that help as a gift on their next financial disclosures forms. They also can seek out lawyers who historically have charged their government clients lower fees — though that set up is often wrought with ethics restrictions. Law firms that have business before the executive branch — a category that covers some of Washington’s bigger legal operations — present conflict of interest challenges for White House staffers who would need to recuse themselves from the firm’s issues."

Wednesday, May 24, 2017

EVENT: New York Risk Roundtable

Our next Risk Roundtable event will take place on Thursday, June 8th at the office of Shearman & Sterling LLP.

Centralizing Your Business Inception Process: Who, Why, What, How, When
  • More and more firms are looking to take the burden of conflicts review off of the shoulders of their fee earners. Some firms have been resistant to move this direction based on the assumption that the lawyer knows best. With the increasing amount of factors to consider and pressure to respond quickly, the winds of change appear to be blowing in the direction of a centralized clearance team.
  • The financial impact of freeing time for lawyers to do more billable work or pursue business development activities is of interest to most firms. The challenge of effectively staffing and making the transition to a new model can be frightening at the same time.
  • This roundtable intends to focus on these challenges by discussing and presenting real world experiences in making the move. We will be sharing ideas, best practices and technology tips to use when your firm is considering a move to a more centralized process.  Topics to be discussed include:
    • What clearance model works best for your team, and who should be involved
    • How to present the right information in context
    • What is the end result of the move and how did it benefit your lawyers
    • When is the best time to start thinking about other decisions in the new business process
And, as always, we’ll have plenty of time for open discussion, peer exchange and networking. Attendance is by invitation only and is limited to qualified law firms and personnel. Please contact for more details.

Sunday, May 14, 2017

Risk Doesn't Rest on Weekends (Lawyer Encryption, Lawyer Insider Trading and More)

With various other enterprises luring in our intrepid editor, and a pause in the action likely upon us, it felt like the right time to squeeze a week’s worth of content into a morning update. (This is a risk management blog, after all.) Here’s the latest that’s caught my eye recently:

"ABA Issues New Ethics Opinion on Encryption of Attorney-Client Email" --
  • "The ABA has released Ethics Opinion 477 (May 11, 2017) on encryption of attorney-client email."
  • "Those who do not want any rule requiring email encryption will rejoice if they skip down to the opinion's conclusion and read: 'A lawyer generally may transmit information relating to the representation of a client over the Internet without violating the Model Rules of Professional Conduct where the lawyer has undertaken reasonable efforts to prevent inadvertent or unauthorized access. However, a lawyer may be required to take special security precautions to protect against the inadvertent or unauthorized disclosure of client information when required by an agreement with the client or by law, or when the nature of the information requires a higher degree of security.'"
  • "They would be rejoicing prematurely at the absence of the words "email encryption required." The opinion notes that a hard and fast rule cannot be be crafted to apply to all situations, and therefore: 'A fact-based analysis means that particularly strong protective measures, like encryption, are warranted in some circumstances. Model Rule 1.4 may require a lawyer to discuss security safeguards with clients. Under certain circumstances, the lawyer may need to obtain informed consent from the client regarding whether to the use enhanced security measures ... In contrast, for matters of normal or low sensitivity, standard security methods with low to reasonable costs to implement, may be sufficient to meet the reasonable-efforts standard to protect client information from inadvertent and unauthorized disclosure.'"
  • "Walter "Chet" Little, who was a partner at the law firm Foley & Lardner when prosecutors said the trading took place, and Andrew Berke were charged with conspiracy and securities fraud in a criminal complaint filed in Manhattan federal court."
  • "Beginning in 2015, the complaint said, Little used Foley's document management system to access information about at least seven law firm clients including Oshkosh Corp and Harley-Davidson Inc, even though he billed no work for them."
  • "After learning about upcoming mergers, earnings and other corporate events involving those companies, prosecutors said, Little bought and sold stock and options ahead of public announcements, making more than $320,000 in profits."
  • "He also passed the inside information to Berke, prosecutors said. The SEC said Berke was an executive at a logistics company who has since 2013 lived in the same community as Little, Apollo Beach, Florida. Prosecutors said that by placing trades based on the inside information, Berke earned around $660,000."
  • "Daniel Farrell, a spokesman for Foley & Lardner, said in a statement that the 840-lawyer firm learned about the activity at issue in June 2016 and reported the matter to authorities. 'We take this matter very seriously, and we have zero tolerance for actions that violate our core values and the trust our clients place in us,' Farrell said."
Here's the full SEC complaint.

"Greenberg Traurig Accused of Trying to Invalidate the Same Patents It Prosecuted" --
  • "A former client has sued Greenberg Traurig, alleging the firm switched sides and used its knowledge of privileged intellectual property information from previous patent work to attempt to invalidate a patent for a new client’s benefit."
  • "And there’s the rub. In the past, Greenberg also performed extensive legal services for Apollo, according to the complaint. The work included two patents behind Apollo’s TrueCollect service, which gave the firm access to Apollo’s confidential, privileged information.
  • Now that Greenberg is representing Lantern, the complaint alleges that the firm advised Lantern not to pay and used the privileged information against Apollo to try to invalidate the patents so Lantern could avoid paying. According to the complaint, Greenberg has filed counterclaims seeking a declaratory judgment of invalidity and non-infringement of 'the very same patents that Greenberg helped to prosecute for Apollo.'"
  • "This lawsuit is based upon events that occurred more than 12 years ago and mischaracterizes the underlying facts,' the firm said in a statement. 'The issues raised in this lawsuit are already the subject of a pending motion in the litigation between Apollo and another party. We deny any wrongdoing and will contest this lawsuit.'"
  • "In addition, Lantern said that the sole remaining Greenberg attorney associated with Apollo’s provisional application, Bruce Neel, works in a different practice area group in an office hundreds of miles from Lantern’s attorneys, and has not conveyed any information regarding Apollo or its patents. After the firm learned of the potential conflict of interest, 'Greenberg immediately implemented an ethical screen barring any attorneys working on this lawsuit (or for Lantern in general) from access to any information or files relating to Greenberg’s prior representation of Apollo, and barring Mr. Neel from any access to or involvement with any legal work for Lantern or communication with Lantern’s litigation counsel about Apollo,' according to the court filing."
  • "'You cannot represent a new client against an old client if the work of the new client is substantially related to the work of the old client,' said [Michael] McCabe, who is the founder of McCabe Law, a firm that specializes in intellectual property ethics and disciplinary matters. “That prohibition lasts forever. … Whether it was one day ago or 20 years ago, it would still be a conflict to invalidate a patent you worked on.'"
And finally and overview of an issue I continue to find immensely fascinating: "Lawyer ethics and positional conflicts of interest" --
  • "ABA Standing Committee on Ethics and Professional Responsibility Formal Opinion 93-377- Positional Conflicts (issued in 1993) reviewed ethical issues when a lawyer represents one client in a matter in which the client’s interests regarding a substantive legal issue are directly adverse to a position the lawyer (or law firm) is advocating on behalf of another client on the same or similar issue."
  • "The opinion refers to paragraph (9) of the Comment to Rule 1.7 which stated as follows: 'A lawyer may represent parties having antagonistic positions on a legal question that has arisen in different cases, unless representation of either client would be adversely affected. Thus, it is ordinarily not improper to assert such positions in cases pending in different trial courts, but it may be improper to do so in cases pending at the same time in an appellate court.'"
  • "The opinion noted that representing two clients in different trial courts while advocating opposing sides of the same issue could also be a conflict of interest under Rule 1.7 just as if both matters were pending in the same appeals court.  A decision in a trial court could influence the outcome of a second matter in another trial court, and a decision in an appeals court could have an adverse effect on a matter pending in a trial court matter."
  • "Bottom line:  If the lawyer is considering taking a position for one client which is directly adverse to a position the lawyer (or law firm) is taking for another client on the same or similar issue, the lawyer must consider the potential conflict of interest and act accordingly."

Wednesday, May 10, 2017

More Risk Dreams...

Looking forward to seeing many readers next week at Intapp Inception. As always, if we cross paths, please feel free to say hello and attempt the secret risk blog handshake:
Well, maybe we should work on something a little more legal feeling... (How does one represent rules of professional responsibility
As noted previously, we have some great risk content in the works. I’ve been able to sit on a few panel prep calls and have been really impressed with the diversity of experience and insights the community is bringing to bear.
(This week there was one panelist who asked if the "gloves were off" in terms of being able to deliver uncensored opinion and commentary... We said yes. Perhaps not the best risk management decision, but definitely the right call for engaging and compelling content.)
We're also pleased to welcome several sponsors and partners who will be delivering sessions of their own design during mealtimes. I recently highlighted the Paragon track on cyber insurance.

Here are some others worth noting:
  • Tuesday Breakfast : American LegalNet. Best Practices in Calendar Management Workflows to Reduce Risk and Increase Efficiency 
  • In order to increase partner profitability, firms are focusing on efficiency. This means lower staffing ratios and greater centralization of functions. American LegalNet will discuss this development as it pertains to calendaring and docketing, specifically focusing on the move toward greater specialization and how it results in improved operations for many firms.

  • Wednesday Breakfast : Aurora North. Subject Matter Conflicts of Interest in Intellectual Property 
  • In this session, Becky Cacaci, Conflicts, Compliance and Records Attorney from Smith Moore Leatherwood, will join Aurora North Software to discuss techniques and best practices for spotting potential subject matter conflicts in transactional matters.

  • Wednesday Breakfast : Pinnacle. Making Better Decisions by Improving Data Quality in and with Intapp Flow and Intapp Open 
  • This session will focus on using the Intapp Open and Intapp Flow systems for data quality and stewarding. Pinnacle International Consulting will demonstrate how Intapp Open and Intapp Flow can be used to cleanse data in the PMS, particularly in preparing to migrate from Elite Enterprise.  We will also show how external data providers can be integrated to improve data quality and to drive risk assessment and client due diligence.
  • FileTrail (Lunch on Wednesday & Thursday): Future-Proof Your Law Firm's Records Management Software.
  • Being well-informed is the first step towards protecting law firms against future information governance risk. Don't miss out on the session "A Compelling Business Case for Deploying a New Records Management System." 
  • In this session, noted expert Patrick Tisdale will share his insights into how the most successful law firms take charge of this reponsibility, highlighing the process behind Dentons' recent decision to invest in and implement new records management software. He'll also cover how to law firms can ensure compliance with a range of outsides parties' needs (e.g., Outside Council Guidelines), as well as factors that will impact whether software works within their current ecosystems today and far into the future.
  • Patrick notes: "I am looking forward to meeting with law firm colleagues, and discussing how client expectations and regulatory demands are rapidly reshaping the nature of information governance as it has been practiced in firms - and the business transformation required to satisfy these demands."

  • Thursday Breakfast : Dun & Bradstreet. Beneficial Ownership - Why the Devil Really is in the Detail 
  • Do you know really your customers and suppliers? Are you confident your customer, supplier and partner data is robust enough to make your business compliant? Beneficial Ownership regulations are now placing enormous responsibility on businesses to truly understand the ultimate ownership of the organizations that they deal with. In this complex and rapidly evolving regulatory environment having the data to help your business make commercially sound and compliant decisions is critical. Join us to learn about rapidly changing regulatory landscape on Beneficial Ownership and how data and analytics can help you meet these changes.

  • Thursday Lunch: DocuSign. Intapp & DocuSign: Automate Client Intake and Improve Compliance with eSignature 
  • Learn how to use the pre-built integration between Intapp and DocuSign to reduce overall compliance risk, increase internal efficiencies and drastically improving overall client satisfaction. This session will include a working demonstration of the solution and in-depth discussion of eSignature legality and compliance. Learn how and why most of the Am Law 200 use eSignature today and will use it in the future.

Monday, May 8, 2017

Public Conflicts about Conflicts Allegations

A few conflicts stories making news. First, continuing the battle of words: "'Straight Outta Compton' Lawsuit: Greenberg Traurig Rips Disqualification Bid" --
  • "Greenberg Traurig, the law firm representing co-defendant NBCUniversal in the defamation lawsuit targeting the N.W.A biopic Straight Outta Compton, is facing a disqualification motion over a supposed conversation that happened 25 years old concerning Ice Cube's "No Vaseline." On Monday, the firm had its own outside counsel file a blistering response that ran the gamut from confidentiality to ethics."
  • "The typical conflict analysis would typically turn on whether there is a "substantial relationship" between prior and current representation."Putting aside that Mr. Katz denies advising Mr. Heller on that subject [of 'No Vaseline'], such a conversation could not possibly be substantially related to Plaintiff's claims regarding Straight Outta Compton, a movie that did not even exist at the time of those alleged communications," states Greenberg Traurig's response"
  • "Greenberg Traurig has several other arguments why the disqualification bid is meritless. The firm seizes on word that others — including Terry Heller, Jerry's nephew and the executor of the estate — were present at the supposed meeting. 'As a matter of black letter law, the presence of third parties destroys the privilege and thereby the confidentiality of any attorney client communication, unless such third parties were necessary participants," argues Greenberg Traurig's lawyers at Jenner & Block. "In addition, there is nothing confidential about the lyrics of 'No Vaseline,' which continued the very public airing of long-running grudges involving the group N.W.A. [sic]. Indeed, in the years since the alleged meeting with Katz occurred, Heller himself publicly disclosed the details of his relationship with N.W.A. in memoirs, screenplays and other public activities.'"
Read Greenberg's full response here.

Next: "One potato, two potato; hot potato brings DQ in Mississippi federal case" --
  • "Even though a Mississippi lawyer’s conflict of interest lasted only one day, that was enough for a U.S. magistrate judge to disqualify him from representing a client adverse to Allstate Insurance Co. on a coverage claim, in a ruling issued last week."
  • "Sending a termination letter to the insurer the day after accepting the new client’s case didn’t help the lawyer.  The judge found that the lawyer’s duty of loyalty required him to turn down the case, in light of the fact that he had pending cases in which he was directly representing Allstate."
  • "In the Mississippi case, the court said that the lawyer’s conduct was understandable:  he hadn’t received any new work from Allstate in over a year; his firm was wrapping up its work on the “handful” of cases it still had, the majority of which were near the end of their life-spans; and the firm planned to end its relationship with the insurer based on the fact that it was not getting new work. Nonetheless, said the judge, the lawyer and his firm had an attorney-client relationship with Allstate when the lawyer signed a contract to represent the claimant against the insurer, and he couldn’t abandon his existing client by dropping it like a hot potato."
Finally: "FBI To Quiz Holland & Knight Duo In Energy Tax Credit Case" --
  • "The FBI may question and audiotape a Holland & Knight LLP partner and lobbyist on a potential conflict of interest in the pair's defense of a businessman charged with wire fraud and tax evasion concerning renewable energy tax credits, a Pennsylvania federal judge said Thursday."
  • "David Dunham is seeking to have his indictment for wire fraud, tax evasion and obstruction of justice tossed on the grounds that federal prosecutors knew or should have known his original defense attorney, Holland & Knight partner John Brownlee, had a serious conflict of interest given Dunham had taken advice from Brownlee's colleague Michael McAdams, a Holland & Knight senior policy adviser, on some matters at issue in the case."
  • "The businessman has said in court papers that the government gained a significant tactical advantage after a conflicted Brownlee urged Dunham into proffer sessions with prosecutors with an eye toward a guilty plea."
  • "A spokeswoman for Holland & Knight did not respond Thursday to a call seeking comment."

Sunday, May 7, 2017

Inception Session: Cyber Risk Panel

Inception is nearly upon us (May 15-18 in San Francisco). We've previously covered the extensive risk content which will be presented as part of the main conference program.

I wanted to take a moment to spotlight a lunch track briefing sponsored by Paragon. The session will ask and answer: "Is Reputation Damage Insurable in Cyber Insurance?" --
  • "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. 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."
  • "Loss arising from a data breach, network security or cyber event can certainly be fortuitous; the main challenges to insurability are therefore 1) agreeing a monetary value to reputation and 2) agreeing a period of loss which is definite. There are cyber policies which now provide coverage for loss of income arising out of adverse publicity following a data breach."
A panel of expert speakers will play various roles in an interactive review of the topic:
  • Lyndsey Bauer, Partner - Paragon International Insurance Brokers Ltd
  • Dixon Grier, Partner – MDD Forensic Accountants
  • Christina Terplan, Partner – Clyde & Co
  • Lisa Phillips, National Practise Advisor – Wells Fargo Insurance
(I've received a preview/overview last week and am now very curious to see how it plays live...)

Wednesday, May 3, 2017

Another Firm Modernizes Business Intake & Conflicts Management

"Dickinson Wright PLLC Partners with InOutsource to Implement Intapp Open" --
  • "InOutsource, an industry-leading global legal consulting firm, today announced Dickinson Wright PLLC has worked with the company to implement Intapp Open for both Intake and Conflicts. InOutsource enacted a comprehensive analysis, planning and implementation program for the Am Law 200 firm to reduce risk as well as automate and streamline its business intake and conflicts clearance processes."
  • "'InOutsource was hands-down the first choice for an Intapp Open implementation partner. They acted as a guide for best practices and proved invaluable as we moved from an outdated system to a modern one that can address our firm’s requirements. InOutsource helped our firm standardize and automate the new business intake process and subsequently reduce the risk associated with it,' said Michael P. Kolb, chief information and security officer for Dickinson Wright. 'I recommend InOutsource over other consultants I’ve worked with, and I’ve been doing this for 20 years.'"
  • "The Intapp Open implementation process began and concluded within a tight time frame – less than nine months for both Intake and Conflicts to launch – and finished under budget. InOutsource helped to refine business processes, identify and establish custom workflows, update the conflicts model, conduct a data integrity analysis and apply best practices and recommendations."
  • "Dickinson Wright, which has grown to more than 450 lawyers in 17 offices, previously relied on shared knowledge of cases and a 12-year-old software solution that was challenging to support internally. Intapp Open, a web-based application, will streamline management of the new business acceptance life cycle with a solution that is easy for administrators to configure, simple for lawyers, professionals and staff to execute and effortless for risk and management stakeholders to track and oversee."

Sunday, April 30, 2017

Hollywood Hip Hop Conflicts (Encore)

("Only [judges] can judge me.")

"Glaser Weil Conflict to be Reconsidered in Tupac Biopic Lawsuit" --
  • "An L.A. County Superior Court judge should have looked a little harder at the relationship between law firm Glaser Weil and its former client before denying a motion for disqualification, an appellate panel has ruled. The firm represented Randall Emmett, George Furla and their combined production company, Emmett/Furla Productions, in an arbitration in 2012 — and now is up against them in a lawsuit over a Tupac biopic on behalf of Morgan Creek Productions."
  • "'Plaintiffs contend the trial court abused its discretion in failing to determine whether there is a substantial relationship between the Fox arbitration and Morgan Creek matter,' writes presiding justice Tricia Bigelow.  'We agree and remand for further proceedings.'"
  • "'The evidence and representations in the record regarding Emmett and Furla’s role in securing financing through an entity they owned, combined with aspects of the Morgan Creek litigation thus far, make it necessary for the trial court to determine whether there is a substantial risk Glaser Weil’s representation of Morgan Creek against plaintiffs will involve Emmett and Furla’s confidential information acquired in the course of Glaser Weil’s prior representation,' writes Bigelow."
Here's the full opinion.

(For those playing along, we note that judge's name is aptly poetic...)

Thursday, April 27, 2017

Hollywood Conflicts Allegations Always Make Headlines

(You are about to witness the strength of risk knowledge.)

Straight out of the Hollywood Reporter comes: "Judge Asked to Disqualify Universal's Law Firm From 'Straight Outta Compton' Suit" --
  • "After a brief pause, thanks to the death of the plaintiff, former N.W.A manager Jerry Heller's defamation lawsuit over Universal's Straight Outta Compton is again live. The first order of business is a motion that aims to kick Universal's attorneys at Greenberg Traurig off the case."
  • "But before he died, Heller didn't appreciate Paul Giamatti's depiction of him in the N.W.A biopic Straight Outta Compton, so he filed a lawsuit claiming that the film defamed him by holding him responsible for breaking up the group and taking advantage of the artists, including Dr. Dre and Ice Cube."
  • "In a motion to disqualify on Monday, the plaintiff points to communications between Jerry Heller and well-known Greenberg Traurig partner Joel Katz and contends there's a conflict. 'Specifically, in or around 1992-1993, Ruthless Records and Jerry Heller engaged Joel Katz, and Joel Katz advised Jerry Heller regarding subjects of legal issues substantially related and material to this case, specifically, involving defamation allegations against Defendant O'Shea Jackson, Sr.. p/k/a/ 'Ice Cube.''"
  • "Nevertheless, according to the law papers, Katz provided advice to Heller about suing over the Ice Cube song "No Vaseline." Those who are N.W.A fans or who have seen Straight Outta Compton will recognize this track. It's the one that Cube authored after his departure from the group and was a direct attack on his former groupmates. In the film, after Giamatti's character listens to "No Vaseline," he's irate and even threatens to get the Jewish Anti-Defamation League involved."
And Law360 reports:
  • "The estate's motion to have Greenberg Traurig removed argues that Heller shared confidences with Katz relevant to the current suit, including details about Heller’s broken relationship with Ice Cube and money disputes. That information could give the defendants an unfair advantage against Heller or at least raise the appearance of a conflict of interest, the Heller estate said, calling on the court to “err on the side of caution” and disqualify Greenberg."
  • "'This motion is meritless, as we believe will be shown when the motion is fully briefed,' a Greenberg spokesperson said."

Wednesday, April 26, 2017

WEBINAR: Replace LegalKEY & ARM. Budget for FileTrail

Our expert risk consulting colleagues at InOutsource are co-hosting a webinar on replacing LegalKEY and ARM (FileSurf) records management systems.

We've covered some of the risks associated with legacy systems. For firms looking to plot a migration strategy, this session offers new insights and advice:

"Replace LegalKEY and ARM. Budget for FileTrail" --
  • LegalKEY and ARM (aka FileSurf) have come to an end. They will no longer be developed or the systems and servers will no longer be properly supported.
  • It’s time to change. FileTrail, a 100% browser-based solution, is the most modern and developed platform in legal. Designed to be deployed and operational in months, it includes:

    • Integrations with multiple Document Management Systems and the Intapp suite
    • New updates and features released every quarter – included in cost of maintenance
    • On-premise and cloud options
    • Process management and workflow tools that go way beyond circulating files
Join InOutsource, FileTrail’s implementation partner in legal, as they demonstrate FileTrail’s robust functionality.

To sign up, visit their registration page.

Monday, April 24, 2017

Indemnity Increasing Indeed In OCGs

"BigLaw Losing Fight Over Indemnity In Counsel Guidelines" --
  • "In a buyer’s market for BigLaw services, corporate clients are increasingly demanding — and getting — firms to shoulder the risk of unforeseen or unwelcome outcomes from legal work, experts said at a Thursday gathering of professional liability specialists."
  • "While broad indemnity provisions being built into outside counsel guidelines vary in breadth, the more onerous seek to force firms to take responsibility for costs of even unsuccessful challenges related to legal work, documents, or transactions, or lawyer 'mistakes' that don’t resemble malpractice."
  • "Anthony Davis of Hinshaw & Culbertson LLP and other panelists at an American Bar Association conference in Boston noted that the full risk of the rising tide of such indemnity agreements is still unclear, even as they have become a common feature of corporate counsel contracts. So far, only a single court has issued a ruling on the enforceability of a firm indemnity agreement with a client absent a finding of a legal error. But that ruling went against the firm, raising the specter that others will be forced to bear the costs of some unforeseen client dispute with only a distant relationship to their work."
  • "Speaking to about 60 malpractice specialists and insurance professionals at the ABA’s National Legal Malpractice Conference, Seyfarth Shaw LLP general counsel Lori Roeser said her worries about the new breed of guidelines include partners signing them without a careful look and then filing them away without notification to the business."
  • "The firm now requires all such guidelines to be submitted to her office, she said, and includes a reminder on conflict intake forms. Seyfarth also has an indemnity provision 'checklist' to determine if the guidelines could put the firm on the hook for future disputes not covered by their policy, and if so, for what."

Thursday, April 20, 2017

Dreams of Risk: Inception 2017 is Nearly Here (With an Amazing Risk Track...)

We're in the home stretch for Inception 2017, with exciting new information to share on the details of the conference program and the (near and dear to my heart) risk track.

I wanted to take a moment to highlight a slice of the great risk content that will be featured. Once again, we have a dedicated Risk Roundtable program track on Wednesday. That includes a GC breakfast session. (And we have a "risk day pass" option available for qualified attendees. Email: for details and check our program PDF for session descriptions, which you can download here:

Some key sessions, panels and topics which should incite interest:
  • Panel summary and discussion of key takeaways from the morning GC breakfast
  • Risk staffing approaches for conflicts management
  • Enhancing the business impact of risk management
  • Making the case for investing in risk
  • Expanding client evaluation (beyond conflicts, how to address client health, strategic alignment and other factors)
  • Enhancing intake through better client requirements and terms of business management
  • Integrating third party data into business acceptance
  • Case studies about migrating from legacy conflicts applications
  • Advanced topics and scenarios in new business intake
  • Advanced topics in conflicts management and compliance (AML, KYC, etc)
  • Addressing business intake/conflicts management as part of general Practice Management System (PMS) migrations and upgrades
  • Information security trends and drivers
  • Why Walls, information barriers and screens now matter more than ever
Complementing the risk content PDF, the latest agenda, event overview and a new “Dear Manager” letter template (for those who might need some assistance making the case for investment to their supervisors) are all online at:

(This is a great opportunity for the legal risk community to get together in an amazing and inspiring forum. Hope to see you there!)

Wednesday, April 19, 2017

Risk News Roundup (Professional Standards, Client Security Standards & More)

A smattering from my recent reading list, starting with: "Fate of California Rule Overhaul Now in Court’s Hands" --
  • "California’s multiyear initiative to update its standards governing lawyer conduct shifted to the state supreme court at the end of March when the California state bar sent the court a complete package of proposed professional conduct rules."
  • "California is the only state that hasn’t yet remodeled its lawyer conduct rules along the lines of the ABA templates."
  • "In an interview with Bloomberg BNA, commission member George S. Cardona, Los Angeles, highlighted several areas in which the proposed revisions would align California’s rules with the rules of other jurisdictions, including several conflicts rules, rules on supervision within law firms, the choice-of-law rule, and advertising rules."
  • "'We’ve adopted the ABA format and structure on conflicts on interest,” he [Commission member Mark L. Tuft] said. Regarding the current-client conflicts rule, the commission kept pieces from California’s existing rule but used the structure and format of Model Rule 1.7, Tuft said."
"What Companies Can Demand From Law Firms on Data Security: Association of Corporate Counsel releases first set of model cybersecurity practices."
  • "When hackers broke into the computer networks of two major law firms in New York last year, stealing confidential client information allegedly used for insider trading, cybersecurity jumped up on the list of issues keeping in-house counsel awake at night. The targeting of the law firms served as a wake-up call for the legal industry. Indeed, in surveys, the Association for Corporate Counsel has seen more and more in-house lawyers describe cybersecurity as 'extremely' important."
  • "The ACC, an organization representing more than 42,000 in-house lawyers, on Wednesday released its first set of model cybersecurity practices to help corporate legal departments ensure that outside firms safeguard their company’s confidential information. The guidelines read like a contract between a company and its outside counsel, spelling out how the law firm will handle sensitive information. Among the association’s “highly recommended” measures: Demanding that law firms encrypt all confidential information in their systems."
And Bill Freivogel notes:
  • "Jaskula v. Dybka, 2017 IL App (1st) 160014-U (Ill. App. Unpub. March 23, 2017). The trial court had disqualified Defendants’ lawyer. In this opinion the appellate court reversed. The opinion contains an unremarkable “substantial relationship” analysis along with noting a three-year delay in bringing the motion. Of most interest — at least to us — was the appellate court’s emphasizing the trial court’s error in considering the “appearance of impropriety” as grounds for disqualification. That standard is not in the current Illinois Rules of Professional Conduct and was specifically rejected in Schwartz v. Cortelloni, 685 N.E.2d 871 (Ill. 1997)."

Monday, April 17, 2017

New Business Intake – Thomson Snell & Passmore Selects Intapp

"Thomson Snell & Passmore Selects Intapp Open for New Business Intake" --
  • "Thomson Snell & Passmore LLP, a leading law firm in the South East and the oldest law firm in the world, has selected Intapp Open for new business intake. Intapp Open is a new business intake (NBI) application which has been adopted by more than 200 firms worldwide, designed from the ground up to address the specific needs of firm management, lawyers, risk staff and IT stakeholders."
  • "With over 120 lawyers, Thomson Snell & Passmore offers a wide range of services to both private and commercial clients across 25 areas including wills, trusts and tax planning; property law; employment law; dispute resolution; and many others. Lights-On Consulting assisted TS&P with a thorough selection process for an NBI application, as part of a larger engagement to replace and upgrade its practice management system (PMS)."
Said Roland Millar, the firm's Finance Director:
  • "As we were evaluating new practice management systems, it became clear that the leading options would not be able to support our existing processes for new business intake."
  • "Intapp Open offers the functionality we need to maintain our existing workflow for client evaluation and AML risk assessments, and to add a further level of sophistication into our risk rating methodology. We especially like its ability to manage different workflows depending on the requirements of individual practice areas."
Said Chris Turk, Regional Vice President for UK/EMEA, Intapp:
  • "Forward-thinking firms are taking the opportunity to rethink and redesign their new business intake processes in tandem with upgrading their practice management systems."
  • "We’re pleased to work with Thomson Snell & Passmore in realising its vision for an NBI system that combines rigour with efficiency and an intuitive, modern interface for lawyers and staff alike."
Thomson Snell & Passmore will be working with Opes Consulting, an Intapp Certified Services Partner, on the implementation of Intapp Open.

Sunday, April 16, 2017

Money Laundering Rules Shift, AML Breaches Cost Partners Money

via Legal Risk Solicitors comes: "Anti-money laundering: a seismic shift" --
  • "HM Treasury published draft The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLR 2017) on 15 March 2017. These are intended to implement the provisions of the Fourth EU Anti-Money Laundering Directive with effect from 26 June 2017."
  • "The Regulations will introduce significant changes for any firm doing business in the regulated sector. All firms will have to undertake a thorough review of their anti-money laundering and counter-terrorist finance policies and procedures to ensure they are truly aligned to their own individual risk profiles. The changes are extensive and the draft runs to 106 pages, hence our reference in the heading to a seismic shift."
  • "Each firm will have to produce a written risk assessment taking account of a number factors prescribed in regulation 18, including its clients, countries where it operates and services – which the Solicitors Regulation Authority (SRA) will be required to check;"
  • "Firms will need to undertake risk profiling on client/matter engagement (and evidence it!) and apply customer due diligence not only to all new customers but also at appropriate times to existing customers on a risk-sensitive basis, or when the relevant circumstances of a customer change and in certain other circumstances specified in regulation 27;"
  • "Nobody should think they can escape under the radar: the SRA itself will be subject to review through a new Office for Professional Body AML Supervision, to be hosted by the Financial Conduct Authority (FCA).  We have advised firms on SRA investigations into alleged failures to carry out adequate due diligence and investigation of source of funds, and there have been a number of cases in the Solicitors Disciplinary Tribunal and SRA sanctions."
  • "We are already advising firms, including international, City and regional practices on implementing the new compliance requirements and training, and have advised hundreds of firms since the profession became subject to anti-money laundering regulation in 2004."
And, on this topic: "Three Clyde & Co partners receive £10,000 fines for money laundering breaches" --
  • "Three Clyde & Co partners have each been fined £10,000 by the Solicitors Disciplinary Tribunal (SDT) for breaching money laundering rules. [The partners] all of who are based in London, admitted that they had allowed the firm’s client bank account to be used as a banking facility, which breached a number of regulations under the SRA Accounts Rules 2011 and the Money Laundering Regulations 2007."
  • "Duffy and Purnell admitted that they had not heeded the Law Society’s Fraudulent Financial Arrangements warning or the Warning Notice on Money Laundering, in that they acted as escrow agent in transactions on behalf of a client that had the hallmarks of dubious financial arrangements or investment schemes."
  • "Clydes has also been ordered to pay £50,000 by the SDT for its failure to comply with accounting rules. The firm admitted that it failed to have in place adequate procedures to deal with dormant client balances, which breached the Solicitors Accounts Rules 1998."
  • Said the firm: "'We have worked constructively with our regulator, the SRA and we are confident that the circumstances which led to these breaches could not happen again. We have since reviewed and strengthened a number of aspects of our approach to risk management."

Thursday, April 6, 2017

Risk Grab Bag (Suing the Regulators, Lawyer Liability, Conflicts, Hot Potatoes & More)

  • "Former Torys LLP lawyers Beth DeMerchant and Darren Sukonick are suing the Law Society of Upper Canada for damages totalling $22-million, alleging the regulatory body was malicious in its prosecution of them over alleged errors in their work for Hollinger Inc. more than 15 years ago."
  • "Former Torys LLP lawyers Beth DeMerchant and Darren Sukonick are suing the Law Society of Upper Canada for damages totalling $22-million, alleging the regulatory body was malicious in its prosecution of them over alleged errors in their work for Hollinger Inc. more than 15 years ago."
  • "The Law Society appealed the decision to the Law Society Tribunal Appeal Division, which dismissed the appeal in 2015. In January, 2017, the appeal division increased the costs awarded to the two lawyers from a total of $500,000 to $1.3-million to cover their legal fees."
  • "The lawyers, both of whom have since retired, filed a lawsuit this week against the Law Society, seeking general and special damages of $21-million and further aggravated and punitive damages of $1-million."
  • "The suit alleges the Law Society knew it didn’t have sufficient evidence to prosecute the pair after conducting an investigation, but pushed ahead in part because of public criticism that the organization hadn’t disciplined any lawyers over controversial Hollinger business transactions."
  • "Courts have typically ruled that defendants in legal proceedings cannot sue regulatory bodies and tribunals for prosecuting them in good faith, even if the prosecution does not succeed and the accused are cleared. But some cases have succeeded when there is evidence of negligence or wrongdoing by prosecutors."
"7th Circ. Wary Of Expanding Atty Liability In Mayer Brown Suit" --
  • "A Seventh Circuit panel had serious questions Thursday about a lawsuit brought against Mayer Brown LLP by lenders of a $1.5 billion loan held by General Motors Co., expressing concerns that reviving the class claims would dramatically expand attorney liability."
  • "The suit stems from an error a Mayer Brown paralegal had made as the firm drew up documents while representing GM in the payoff of a different loan. Rebooting the case would hold attorneys responsible for the way their errors impact people other than their own clients, judges said during oral arguments Thursday in the lenders’ appeal."
  • "The error, which had resulted in the inadvertent release of the lenders’ security interest in the $1.5 billion loan, came to light after GM filed for bankruptcy in 2009."
  • "The lenders argued that although Mayer Brown was representing GM in the loan payoff deal, the law firm had a responsibility to JPMorgan and the lenders that opened it up to liability. But that theory was rejected by a district court judge, a decision at least two of the Seventh Circuit judges seemed to agree with."
And, much like a certain doctor, one should never forget about the good work pursuing by Bill Freivogel, who has noted several updates:
  • " Prince v. Chatman, 2017 NLTD(G) (CanLII) (S. Ct. Newf. & Lab. March 2, 2017). Suit by Prince to quiet title. Chatman hired Law Firm to defend him. Prince moved to disqualify Law Firm. In this opinion the court denied the motion. The evidence was that in 1975 a senior partner in Law Firm had briefly represented Prince’s husband in an attempt to get several family members to agree on a division of the property in question. Both the husband and the senior partner have since passed away. In a fact intensive analysis the court held that the senior partner in 1975 would not have received “confidential information” from the husband that would be “relevant” to this proceeding or that a current member of Law Firm will use such information to the prejudice of Prince."
  • Lectric Ltd., Inc. v. DGW, Inc., 2017 WL 1149335 (N.D. Ill. March 28, 2017). Plaintiff is claiming that Defendants 1, 2, and 3 are breaching its common law trademark for “T-3” headlamps for classic cars. Lawyer initially represented all three defendants. Plaintiff moved to disqualify Lawyer because of possible conflicts among the three defendants. After receiving the motion Lawyer withdrew from representing Defendant No. 1. Defendant No. 1 never responded to Plaintiff’s motion. Defendants 2 and 3 are owned by one individual (“Owner”). In this opinion the court found violations of Rule 1.7 but ruled Lawyer could continue for 2 and 3 if Lawyer would obtain consents from all three defendants. The court also struck the pleadings Lawyer filed during the conflict and said they could be refiled after the requisite consents were produced. Among other findings, the court found that Lawyer’s dropping Defendant No. 1 violated the “hot potato” rule, thus making this a current client/Rule 1.7 situation. The court also found that Lawyer could have a conflict as to Defendants 2 and 3 even though they were owned by the same individual. Neither the court nor the parties appear to have raised, or addressed, the standing issue."
  • "Akagi v. Turin Hous. Dev. Fund Co., Inc., 2017 WL 1076345 (S.D.N.Y. March 22, 2017). This is a housing discrimination case brought against two groups of defendants. We will call them Owners and Managers. Law Firm started out representing both groups. Part way into the representation Law Firm filed a state court action for Owners against Managers. That case is related to this case. In the face of a motion to disqualify, Law Firm withdrew from representing Managers in this case. Nevertheless, certain parties have moved to disqualify Law Firm from representing Owners in this case. In this opinion the court granted the motion. The court viewed this as a current client conflict even though Law Firm had dropped Managers. The parties had signed a joint defense agreement and a conflict waiver. In parsing those, the court felt neither was an adequate waiver of this current client conflict."

Wednesday, April 5, 2017

Laterals Come, Laterals Go (Sometimes "Behaving Badly")

The ABA BNA Lawyers' Manual on Professional Conduct weighs in with: "Don’t Waive Protocols for Laterals, Speakers Say" -
  • "Law firms may regret it if they treat a prospective lateral hire with kid gloves just because the lawyer can bring lots of business to the firm and wants a quick decision, according to a March 2 panel discussion at the 16th Annual Legal Malpractice and Risk Management Conference."
  • "A law firm trying to land a star should still adhere to its usual protocols even if it means working overtime to clear conflicts of interest and check out the candidate, speakers said at a session entitled 'Tales From the GC’s Office: What’s Keeping Law Firm General Counsel Busy.'"
  • "An initial question that firms must confront when considering a lateral hire is how far to check back for conflicts of interest. In audience polling on this issue, the largest group of respondents—32 percent—said they look back three years, and another large group of respondents—25 percent—said they check conflicts going back more than six years."
  • "The cost of having conflicts staff work overtime and weekends is minor compared with the consequences of getting disqualified in a matter, Roskoski [deputy general counsel, Latham & Watkins] said."
  • "Meyer [partner, Hinshaw & Culbertson] polled the attendees on whether they conduct background checks on all lateral partners. Nearly a fourth of the respondents—23 percent—said they don’t do background checks on prospective laterals. Giokas [general counsel, Bryan Cave] said she found that surprising and expected that everyone would do background checks.Roskoski agreed. 'Our clients insist on it,' he said." Meyer noted that outside counsel guidelines in a lot of areas require background checks of all personnel, not just lateral partners."
"Texas IP Firm Gets Restraining Order Against Ex-Atty" --
  • "A state judge in Houston on Friday granted a temporary restraining order to an intellectual property law firm that filed suit a day earlier against one of its former attorneys, alleging he had stolen client information and used it to launch his own firm."
  • "Matthews Lawson McCutcheon & Joseph filed its lawsuit against Erik J. Osterrieder on Thursday, alleging that he violated an agreement not to run his own firm while employed at MLMJ, and also that he operated his firm, at least partially, from its office spaces."
  • "The temporary restraining order issued Friday prevents Osterrieder from using or deleting any of MLMJ's information in his possession, and requires he return the information this week. The order further prohibits Osterrieder from contacting any MLMJ clients and requires him to return any information related to those clients this week as well."
  • "According to the petition, the firm alleges that while Osterrieder was employed with the firm, he operated his separate firm from at least February 2016 until February 2017. Firm leaders asked him twice during 2016 if he was operating his own firm, and he denied it, the firm told the court in its petition. It was in February that the firm discovered Osterrieder was transferring its clients to his side firm, in violation of his written agreements with the firm, and in breach of his fiduciary duty to the firm."
  • "Ken Breitbeil, a shareholder in McFall, Breitbeil & Eidman who represents Matthews Lawson, said 189th District Judge Bill Burke of Harris County granted a temporary restraining order on Friday. He said his client is still determining how many client files Osterrieder may have opened for his personal firm while working at Matthews Lawson. 'It's an example of lawyers behaving badly,' Breitbeil said."
More via Texas Lawyer.

Tuesday, April 4, 2017

More (Clients + Government + Politics) = More (Client-Firm Conflicts + Press Risk)

Several updates this week about streams crossing across various domains. First: "Trump’s SEC Nominee Has a Major Conflict-of-Interest Problem: Jay Clayton is tied to big banks and corporations—and that could hold up fraud enforcement." --
  • "The dominant theme of Thursday’s Senate Banking Committee hearing with Jay Clayton, nominee for chair of the Securities and Exchange Commission, was conflict of interest. Not the well-documented conflicts of some of the more notorious members of the Trump administration but the conflicts of Clayton himself. A partner at the high-powered corporate law firm Sullivan & Cromwell, Clayton represented Wall Street banks throughout his career.
  • "But it goes further, because the executive order also forces recusal in any matter in which Sullivan & Cromwell, Clayton’s former law firm, is involved. And the firm’s roster of clients is massive. An analysis of its recent clients published by Allied Progress estimates that Clayton would have to withdraw “from cases involving nearly one-third of the institutions on the Financial Stability Board’s list of ‘global systemically important banks.’” Plus, as Warren points out, “any reasonably strategic company…could simply hire [Sullivan & Cromwell] to represent them before the agency, and you couldn’t vote for enforcement of that company.” Clayton mildly disputed this, but it’s accurate."
  • "Why is this important? Clayton promised at the hearing to “enforce the law strictly” and to “root out any fraud and shady practices in our financial system.” But without Clayton’s input, the committee would be down to an even number of Democratic and Republican appointees. Normally that would be a 2-2 split, but currently, there’s a vacancy on each side. And if those commissioners disagree along party lines, a deadlock would mean not moving forward on enforcement. So putting a chair on the SEC who has to constantly recuse himself on enforcement matters really advantages corporation, as a tie lets them off the hook."
Next: "Florida paid law firm for meeting with House speaker" --
  • "Blurring the lines between his role as an up-and-coming Republican legislator and his job as an attorney, the law firm of House Speaker Richard Corcoran once charged the state for a meeting with Corcoran in his capacity as a lawmaker."
  • "Newly-released billing records show that in October 2014 the firm of Broad and Cassel charged the state's economic development agency ahead of a meeting between its affiliate, the state Division of Bond Finance, and Corcoran — putting the meeting in the crosshairs of a new review by the governor of potential conflicts of interest. At the time Corcoran was not speaker but he already was viewed as one of the most powerful members in the Legislature."
  • "But the administration of Gov. Rick Scott is raising questions about Broad and Cassel's work on behalf of the state as a potential conflict of interest. The firm has earned nearly $300,000 in the last six years representing Enterprise Florida, the agency has said."
  • "The Tampa Bay Times first reported last week that the firm has been working on behalf of Enterprise Florida, which gets the bulk of its money from the state. Kim McDougal, the chief of staff for Scott, on Monday sent a letter to all state agencies demanding that they look at legal contracts with outside law firms, especially with those firms that have legislators on their payroll. 'The employment of a legislator by a law firm that conducts business with the state could easily be perceived as a conflict of interest,' McDougal wrote."
  • "A managing partner of the Jones Day law firm is striking back against Mayor Mike Duggan, calling him a “political hack” concerned only with “self-interest” amid the mayor’s claims the city was misled on assumptions that determined future payments to its pension funds."
  • "In a Feb. 23 letter to an attorney retained by the city and the mayor’s deputy chief of staff, Stephen Brogan of Jones Day called Duggan’s belief that a lawsuit against the global law firm could be viable a “delusion.” Brogan rejected Duggan’s assertion that former Emergency Manager Kevyn Orr and his team made efforts to mislead city officials on negotiated pension assumptions in the historic debt-reduction plan."
Putting a point on the meta-matters in play, Above the Law took its own editorial lens to the situation: "Jones Day Responds To Critics With Standard Petulant Hissy Fit" --
  • "That’s when the state hired Kevyn Orr, a noted Jones Day partner, to take on the mantle of unelected czar of Detroit, tasked with shepherding its bankruptcy to completion. Orr dutifully resigned from the firm before assuming his new responsibilities… and then he hired Jones Day to reap the multi-million dollar legal bills he would ring up during his tenure. Orr has since returned to the firm."
  • "In a purely legal sense, this isn’t a conflict. But there’s a reason we generally employ the maxim “to avoid even the appearance of impropriety.” From the perspective of the people of Detroit, the state threw over their future to a former law partner who sent millions to his old firm and then jumped back to share in that firm’s success. Not exactly endearing to his supposed constituents, and the sort of move that, understandably, puts every deficiency in his tenure under a microscope."
  • "Wow. I just… wow. Seriously, what does this serve? Why “poke the bear” of the potential adversary who has already pulled back? And it’s not just the matter of insulting Mayor Duggan himself — this letter accuses the people of Detroit of electing “a long line of corrupt Detroit politicians.” These people liked this guy so much they elected him as a write-in candidate.[1] When you insult him as incompetent and tell the city that they’re all stupid, it can only intensify the political pressure to take action against the firm, deserved or not. Brogan may spell out sound defenses against Mayor Duggan’s complaints, but the whole tone of this letter underscores the contempt everyone involved with the Emergency Manager process has for the citizenry they are supposed to serve."

Monday, April 3, 2017

On Disqualifications: You win some, you lose some

We know that it can be less than pleasant to find one's firm noted on these virtual pages in relation to a disqualification. (Though, a fictional character or two of note, known to be quoted from time to time, would likely suggest that in this arena most players understand that this is "all in the game.") With that, we find two timely examples, featuring a firm recently both winning and losing in this arena:

First: "Judge declines to disqualify Boston law firm in trademark suit" --
  • "Law firm DLA Piper should not be disqualified from representing the defendant in a trademark infringement suit even though one of its attorneys had represented the plaintiff in the past, a federal judge ruled after finding that the January retirement of the attorney removed any remaining risk of a conflict of interest."
  • "The plaintiff, California Association of Realtors, argued that disqualification was required because DLA Piper had represented it in the past and had not taken steps to close its “general advice” account until after the law firm became aware of the potential conflict with the defendant, website operator PDFfiller."
  • "But U.S. District Court Judge Indira Talwani concluded that the retirement of Jeffrey Shohet, the lawyer who handled the plaintiff’s account, in addition to ethical screens put in place to protect the plaintiff’s confidential information, warranted permitting DLA Piper’s continued representation of an opposing party in a matter unrelated to the firm’s prior work for the former client."
  • "The judge wrote that 'no attorney remaining at DLA Piper has confidential information material to the matter. For these reasons, as to future litigation, Shohet’s retirement removes the bar against DLA Piper attorneys’ representation here.'"
Next: "Judge Disqualifies Kasowitz and DLA Piper in Contract Dispute, Citing Conflicts of Interest for Both Sides" --
  • "A recent disqualification ruling that prevents Kasowitz, Benson, Torres & Friedman from representing InterActiveCorp in a property contract dispute with The Georgetown Co. had an unusual side effect: It revealed why a high-profile family law practice left Kasowitz last year."
  • "But the decision, issued by New York Supreme Court Justice O. Peter Sherwood, was unusual in another way: The judge also disqualified Georgetown's lawyers from DLA Piper, effectively barring counsel on both sides from representing their respective clients."
  • "At the time, Rose was also a client of Kasowitz's in a long-running divorce case handled by former partners Eleanor Alter, Adam Wolff and Jenifer Foley. The trio left Kasowitz along with a handful of others in May 2016 to form their own family law boutique, Alter, Wolff & Foley... Sherwood also disagreed with Kasowitz's position on the conflict question, and on March 3 disqualified the firm from continuing to represent IAC in the property rights case. 'In this case, Kasowitz seeks to represent a party whose interests are not merely competing but are substantially adverse to Rose,' the judge wrote."
  • "Sherwood's ruling didn't only include an analysis of Kasowitz, however. The judge also found that Georgetown's lawyers at DLA Piper had a conflict of their own, since the firm had previously represented IAC subsidiary in an unrelated case in California."
Of course, as a different fictional character, representing a literal figure, would likely also note: "When you got skin in the game, you stay in the game / But you don’t get a win unless you play in the game"


Sunday, April 2, 2017

Client Selection, Client Risks, Clients Trump reports that, with assets in excess of $150M and disclosed fees paid to the firm in excess of $75,000 in its past fiscal year, the Wallace Global Fund has parted ways with its law firm, citing matters tied to client selection and advocacy: "Investment Fund Fires Morgan Lewis for 'Enabling' Trump With Ethics Advice" --
  • "Morgan, Lewis & Bockius, you’re fired, client H. Scott Wallace told the firm’s leader this month in a scathing letter condemning its representation of President Donald Trump."
  • "The letter, dated Tuesday and first reported by Politico, appears to be the first public sign of client blowback directed at Morgan Lewis over partner Sheri Dillon’s work concerning the Trump family business and the president’s duties and ethical obligations."
  • "Addressing Morgan Lewis chair Jami Wintz McKeon, Wallace called the firm’s legal sign-off on Trump’s sons running his trust and other ethics issues 'an unprecedented invitation to corruption and an assault on our democracy... Americans deserve a president of undivided loyalty,' he wrote. 'Your firm has denied them that. We cannot be complicit in that.'
  • "Morgan Lewis declined to comment on Wallace’s three-and-a-half-page letter, which includes a bullet-pointed list of what he calls 'ethical carnage.' The list includes China’s sign-off on Trump-related trademarks days after he voiced approval for the 'One China policy; the Washington, D.C., Trump Hotel marketing to diplomats; potential connections to Russia; and a 'marketing bonanza' for Trump’s Mar-a-Lago resort, among others. 'It is painfully obvious that Trump is using his office for personal gain. And Morgan Lewis is enabling and legitimizing this,' Wallace wrote."