Monday, October 24, 2016

Interview with a Conflicts Guru

Bill Frievogel was recently interviewed by Bloomberg BNA. An important voice in the risk community shares his latest thinking in: "Conflicts Guru Gives Lowdown on Firms' Top Frustration" --
  • "No other ethics issue has as wide an effect on the day-to-day business of law as do conflicts of interest. A conflict can mean turning away a great client or lateral hire, exposing you and your firm to malpractice liability, and even—in thankfully rare cases—criminal liability. It's no wonder that law firm general counsel cited conflicts as their top risk management concern in a recent study."
  • "Q.What are the most common types of conflicts for large firms? A.While I have not done a statistical analysis, I would guess former-client situations under Model Rule 1.9(a) and the application of the “substantial relationship” test—for law firms of all sizes. Related to that, in particular for larger firms, are lateral movements among law firms where the firms are opposing each other, and the lateral may be infected with having participated in the matter or has information about it. This implicates imputation under Model Rule 1.10 and the issue of whether a screen will cure the problem."
  • "Q.Can firms use screening mechanisms to avoid or deal with conflicts? A. About half the states specifically recognize non-consensual screens as a way to deal with lateral lawyers. Almost all states recognize screens in the case of lateral government lawyers and judicial personnel. Screens established with the consent of all involved should always work. Getting the consent is another issue."
  • "Q.What's the idea of “conflicts counsel”? A.In litigation where a law firm finds that a current or former client will be an adverse witness, and hostile cross-examination is probable, a few courts have allowed the law firm to stay in the case if another firm is brought in to conduct the cross-examination. Other courts disagree. In a Chapter 11 bankruptcy, a law firm may be able to represent the debtor or the unsecured creditors' committee if the firm will designate “conflicts counsel” who will be on call to handle a matter that might otherwise disqualify the law firm. Such was the case in Exco Resources, Inc. v. Milbank, Tweed, Hadley & McCloy LLP (In re Enron Corp.)"
  • "Q. When is a conflict of interest likely to engender a malpractice claim? A. The situations are many and varied. There are two prominent categories in my mind. First, where a law firm loses a litigation costing a client a lot of money. Then the client learns that the law firm had other representations or relationships possibly causing the law firm to “throw” the case, or not do the best job. The other category is a business failure where the failed client learns the law firm had other relationships, which caused the law firm to structure the business or transaction in a way to favor someone else, to the detriment of the client."
  • "Q.You're in Chicago. Are the Cubs going all the way? A. Argh! You would ask that. I am a lukewarm Cubs fan, because I grew up in Southern Illinois with Harry Caray and the Cardinals. The Major League playoffs can break your heart, but it would be a great party here."

Sunday, October 23, 2016

EVENTS: Risk Roundtables (New Chicago Session + DC Report)

We were pleased to announce the next Risk Roundtable. Our first session of the season took place in New York, and we recently hosted a Washington DC event that was quite successful. Here's a snapshot:

This series focuses on outside counsel guideline  and terms of business management.

Our next event in this series is set for November 9th in Chicago. As with the NY and DC events, we'll be featuring presentations and discussion lead by Anthony Davis from Hinshaw & Culbertson and Eric Nerland.

Attendance is by invitation only and is limited to qualified law firms and personnel. Please contact for more details.

Thursday, October 20, 2016

InfoScary (Part 4b) : Medical Issues, Personal Details (Compromised)

While no law firm is mentioned, this update certainly brings the risks of PHI and HIPAA compliance into view: "Another Way to Violate Privacy: PHI in Court Documents" --
  • "A recent court ruling illustrates yet another way patient privacy can be compromised. A federal court slapped WakeMed Health and Hospitals, a North Carolina healthcare system, with financial penalties for exposing patient information in filings it made for cases."
  • "The court also ordered WakeMed to send breach notification letters and offer one year of free credit monitoring to potentially thousands of adults and minors whose Social Security numbers or full dates of birth were included in court documents the healthcare organization filed between December 2007 and December 2015."
  • "Those documents, which were publicly available online via a subscription-based court records system, were filed in WakeMed's attempt to seek payment for debts allegedly owed by patients who had filed for bankruptcy protection."
  • "'There is a real tension between some 'public records' laws related to court filings and other kinds of laws,' says privacy attorney Kirk Nahra of the law firm Wiley Rein. 'Major advice is to always be incredibly careful whenever you are disclosing any kind of patient information in any kind of public setting - it is possible that you need to do it, but usually there is a better way.'"
  • "'The HIPAA training did not cover bankruptcy claims filing,' the court ruling states. 'Ms. Soles also had no supervision with respect to filing claims, and testified that no one else in her department knew how to file bankruptcy claims. There was no audit system in place, and Ms. Soles had no direct contact with the legal department of WakeMed.'"

Wednesday, October 19, 2016

InfoScary (Part 4a) : Medical Issues, Personal Details

Today, let's revisit the scary world of government regulation and personal health information. This September article in the Indiana Lawyer sums things up quite nicely:"Business associate classification and HIPAA liability for lawyers" --
  • "When business associates such as law firms come in contact with PHI from covered entities, they have to comply with regulations that include using the information only for the purposes for which they were engaged, safeguarding the information and helping the covered entity comply with its obligation under the privacy rule."
  • "PHI is interpreted broadly and includes any information about health status, provision of health care or payment for health care that can be linked to a specific individual. It includes any part of a patient’s medical record or payment history. Business associate agreements (BAA) are contracts between HIPAA-covered entities and business associates. BAAs are used to protect PHI in accordance with HIPAA guidelines."
  • "What is the impact of the business associate classification on lawyers and law firms?  The lawyer qualifies if he or she provides legal services to such covered entity other than as a member of the workforce of the entity... The commentary in the final rule provides insight into what qualifies an entity as a business associate by stating, 'a person becomes a business associate by definition, not by the act of contracting with a covered entity or otherwise.'"
  • "Therefore, liability for impermissible uses and disclosures attaches immediately when a person creates, receives, maintains, or transmits protected health information on behalf of a covered entity or business associate and otherwise meets the definition of a business associate.” If the answer is yes, then lawyers and law firms must ensure compliance with the HIPAA regulatory scheme."
  • "As for the security rule, it mandates that business associates address the following areas about their required security risk management program: administrative safeguards; physical safeguards; and technical safeguards. Business associates must implement security measures to reduce risks and vulnerabilities. For example, one measure provided by the security rule is the identification of a security official who is responsible for the development and implementation of the policies and procedures required for the covered business associate. This individual designated by a law firm manages the implementation of security rule requirements and safeguards. Under HITECH, the government is required to conduct random audits of business associates to determine if they are complying with the privacy, security and breach notification rules of HIPAA. In the event this occurs, the security official will be the person the government initially speaks with."
  • "As a business associate, a law firm must notify a covered entity if unsecured protected health information is breached, used, accessed, acquired, or disclosed in violation of the privacy or security rules. Lawyers and law firms that represent covered entities as clients must comply with all relevant HIPAA regulations. As business associates, law firms must adhere with the requirements established by HIPAA including the required security risk management program consisting of administrative safeguards; physical safeguards; and technical safeguards."
  • "First, administrative safeguards include implementing policies and procedures regarding security and confidentiality of PHI, training new and existing employees on security and protecting PHI, and adopting measures to identify and resolve security violations where individuals improperly access and/or disclose PHI. Second, physical safeguards such as facility access controls, secured floors, networks, offices and computers, security for work stations, and device and media controls should be implemented. Lastly, technical safeguards include computer access control, audit controls, data transmission security, secure password and encryption, network security, set up systems to automatically log off work stations, and assign unique user identifier to identify and track user activity."
  • "In light of this enforcement action and with Phase 2 HIPAA audits underway, law firms that qualify as business associates need to ensure compliance with HIPAA’s business associate provisions by reviewing current business associate relationships and executing written agreements (if not already in place) and by reviewing current policies and procedures related to business associates to ensure there are individuals who are monitoring, negotiating and documenting business associate relationships."

Tuesday, October 18, 2016

InfoScary (Part 3) : Insider (Trading) Threat, Tricks (No Treats)

Adding to our Halloween theme comes the coda to one story about insider threats, delivering a bit of punishment to address the crime: "Law firm employee sentenced in $5.6M insider trading scheme" --
  • "A former employee of a Manhattan law firm that deals in mergers and acquisitions was sentenced to nearly four years in prison Wednesday, after admitting he provided information used in an insider trading scheme to net $5.6 million in profits, U.S. Attorney Paul Fishman announced Wednesday."
  • "The employee, Steven Metro, 42, of Katonah, N.Y., who managed the firm's law clerks, was indicted in January 2015 and later pleaded guilty to two counts charging him with securities fraud and conspiracy to commit fraud. He was sentenced Wednesday to 46 months in federal prison by Judge Michael A. Shipp in U.S. District Court in Trenton, Fishman said."
  • "Like something out of an Oliver Stone film, prosecutors say that from 2009 to 2013, Metro searched the computer system of the firm, Simpson Thacher & Bartlett LLP, using key words like 'merger agreement,' 'bid letter,' and 'due diligence,' to find information on impending transactions involving companies represented or advised by Simpson Thacher."
We covered this episode when it first came to light, along with several other examples of the years about how unfortunate actors, taking advantage of internal access in pursuit nefarious ends.

These stories are not just about lawyers, several include staff: both support staff and even IT staff with administrator access to document repositories (raising even more complex questions about who watches the watchers).

Monday, October 17, 2016

InfoScary (Part 2) : Confidentiality Protection Matters

Information security is not just about preventing external breaches. It’s also about controlling and tracking internal access to and use of sensitive information (both client and firm data). Take protective orders.

Often coming into play during litigation, protective orders limit how sensitive information may be accessed with a firm or disclosed to external parties. In these instances, lawyers, internal staff and external expert witnesses may be required to read and sign the order and follow its guidelines. Such guidelines usually stipulate that only parties actively working on the matter may have access to designated materials in both physical and electronic form. Pleadings filed with the court referring to protected materials may need to be filed under seal. Firms must also control access to such work product during the creation process. This means restricting access to relevant work product stored in generally accessible information repositories such as document management libraries.
Here are a few recent related stories in the news

"Robins Kaplan Sued For $1M Over Disclosing Discovery Docs" --
  • "Robins Kaplan LLP was hit with a $1 million trade secrets suit in California federal court Thursday by two garment manufacturers that allege the firm publicly disclosed confidential discovery information the plaintiffs had filed in underlying copyright infringement suits."
  • "Garment manufacturers and distributors Ms. Bubbles Inc. and R&S Worldwide Inc. are accusing discount clothing retailer Rue 21 and its attorney, David Martinez — the co-chair of Robins Kaplan's retail industry practice groups — of publicly revealing the confidential company information in court filings, violating state and federal trade secrets laws, and causing them at least $1 million in damages."
  • "'Plaintiffs never would have produced the aforementioned information to Rue 21 or its counsel, even under an 'attorney's eyes only' designation, had they known that this information would be disseminated to the public at large through court filings,' the manufacturers contend."
  • "As part of those suits, both manufacturers provided Rue 21 with detailed information about their costs of goods, revenues and profits in response to interrogatories filed by Rue 21, with the expectation that the information would be kept for 'attorneys eyes only.'"
  • "The manufacturers also allege Rue 21 and Robins Kaplan are liable for breach of contract because they violated protective orders that were entered in both of the copyright suits specifically to keep the discovery responses at issue confidential."
  • "The U.S. International Trade Commission on Wednesday publicly reprimanded Quinn Emanuel Urquhart & Sullivan for 'pervasive problems at the firm' in safeguarding confidential business information from Apple Computers that it obtained while representing Samsung in patent litigation against the computer company. No monetary sanctions attached to the reprimand, which stemmed from the fact that the firm breached an administrative protective order issued by the ITC."
  • "The ITC summarized its reprimand: The Commission determined that the law firm of Quinn Emanuel Urquhart & Sullivan breached the Administrative Protective Order by failing to adequately control access to confidential business information ('CBI') in the investigation and litigation in [San Jose federal court]. As a result, Quinn Emanuel attorneys and [Samsung] employees … improperly disclosed CBI to more than 140 unauthorized persons over a 14-month period. Quinn Emanuel is being publicly reprimanded for pervasive problems at the firm in safeguarding CBI."
  • "The ITC also provided a more detailed version of events that related how a junior associate at Quinn Emanuel failed to redact confidential information in one document, which was then repeatedly shared with Samsung employees and at one point was disseminated in an Italian Court."
  • "Firm chair John Quinn issued the following statement: As stated in the ITC order, we had an associate who did not fully redact a small amount of information that had been designated as confidential from an expert report before sending it to our client. Although, as the Commission found, this was inadvertent, it was a serious matter.  Unfortunately, we missed opportunities to discover and remedy the problem, which was compounded when the report was later forwarded to many other lawyers and consultants working on related matters and some of the information was unknowingly included in other documents which were similarly distributed."

Sunday, October 16, 2016

InfoScary (Part 1) : A Pessimistic View on Information Security

With the success of "Shark Week" this past summer, our focus on Outside Counsel Guidelines and Terms of Business Management, and a brimming list of new updates to share on an old theme, we're kicking off the Halloween fright season with "InfoScary," and focusing on information security and confidentiality management.

First up, comes a fascinating story from the Legal Technology Insider (known also as "The Orange Rag," because of it's roots -- It was originally paper based... distributed on orange media to prevent photocopying). They note: "Dentons trials NetDocuments & pessimistic security model" --
  • "Dentons is set to launch a proof of concept of NetDocuments’ cloud-based document management system, as the 7,300-lawyer firm also moves closer to locking down its files to all but those immediately involved in its matters. Dentons is a long term iManage client but, as part of a five-year plan put in place by global chief information officer Marcel Henri, will review its DMS and knowledge management arrangements in two years’ time."
  • "The trial comes as Dentons also moves closer to a pessimistic security model, under which documents are only accessible by staff who are granted access by the firm. Fears over security, particularly sophisticated phishing attacks, where a hacker tricks staff into handing over confidential login details and assumes their privileges, have led a number of firms to discuss increasing their internal security measures. However, for reasons of convenience, cost, and resources, the vast majority of law firms still operate an optimistic security model, whereby documents are often restricted but the default position is that they are accessible across the firm."
  • "Henri told Legal IT Insider: 'There is a push within the firm for a completely pessimistic security model; it’s what clients expect. The business gets it but of course some parts of the business are resisting it because it limits your ability to share knowledge and content. Firms have invested heavily in search but what is a search if everything is locked down?'"
  • Dentons is currently trialing a pessimistic security model in Germany and Henri added: 'Whatever solution we go with, whether it be iManage or NetDocuments, it will most likely be under a pessimistic security model... ne scenario we have discussed is to draw a line in the sand and say that, from a given date, we will apply a pessimistic security model and lock things down. In order to be able to share best practice and model documents, you are going to have to put more effort in the qualification of those documents and you are going to have to clean them and profile them, which is an extra workload.'"
  • "he decision follows recent high profile security breaches and leaks such as the Panama Papers. Henri said: 'In light of the many recent security breaches that have made the headlines, I simply don’t think firms will have a choice.'"
We've covered these issues before, but it's fascinating (and quite informative) to see such a prominent firm so publicly discuss its plans in motion. We previously noted:
  • "There has been a growing legal industry shift towards adopting 'members only' internal security models, where only individuals that are members of a particular matter team can access sensitive client data, or 'hybrid' models where matters in specific practice groups or geographies default to closed access, while others remain open."
  • "According to the just-published ILTA technology survey, the number of firms moving to a "pessimistic" security model grew by 50% in the past year. (Though, for context, we note that the survey reports that 6% of firms have embraced the closed or hybrid confidentiality model.)"
I'd be remiss if I also didn't note that given the complexities associated with managing complex and often overlapping information access and security policies, firms look to commercial solutions. And the ILTA technology survey highlights the growing adoption of these solutions (and the market leader):
  • 81% of firms now report using software to manage ethical walls and internal confidentiality controls – a 16-point jump from last year.
  • Intapp continues to lead in this category, serving 79% of firms with 150+ lawyers using commercial information security software.
For more information about enhancing information security and confidentiality management, there's no better voice than webinars and case studies of peer firms: Intapp Walls Webinar Library.

Thursday, October 13, 2016

Insurance Matters (Mysteries Explored)

Hat tip to the Legal Ethics Forum for noting: "The Mystery of Mutual Insurers in Lawyers Professional Liability Insurance" --
  • "Large law firms in the U.S. rely heavily on lawyers-only mutual insurers to manage their malpractice risks. Yet, under classic economic theory, mutual insurers should not be able to compete with stock insurers, at least absent a market failure. Mutuals have less access to capital and thus less ability to spread risk. Also, mutuals demand much more law firm partner time."
  • "Our research into the lawyers’ professional liability (LPL) insurance market makes three contributions. First, while we find evidence consistent with the traditional explanations for mutual insurance — market failures related to moral hazard and adverse selection and a problem with long-term contracting, we also provide a new autonomy explanation. Many lawyers, and presumably other professionals, perceive that mutual insurance promotes professional independence in the face of the social control imposed by liability and insurance.
  • "Second, we crack open the windows on a secretive aspect of law firm risk management, revealing the variable, hybrid nature of LPL mutual insurance arrangements."
  • "Third, we reframe the scholarly understanding of the relationship between organizational forms. The corporate law and insurance literature typically views mutual and stock insurers solely as competitors. We show that they also play complementary roles, as all of these mutual insurers engage extensively with commercial insurers through reinsurance or excess insurance."
  • "At least in this context, mutual insurance is not an alternative to stock insurance, but rather a way to manage access to the powerful risk distributing potential of stock insurance. Indeed, the availability of mutual insurance may favorably affect the behavior of stock insurance companies even outside of their relationships with the mutual insurers. Accordingly, our research suggests that lawyers’ participation in their mutual insurers provides benefits not only to their firms, but also to the legal profession."

Wednesday, October 12, 2016

Recent Ethics Opinions: More Naming From Texas + Not-So-Well-Known Knowns

Several ethics updates to share. First, recalling a bit of fun poked back in 2014 when the state took aim and title inflation (aka "The Too Many Chiefs in Texas" saga), comes a new update from a state famous for not being messed with and doing things big: "Ethics Opinion Questions Use of Swiss Verein Firm Names in Texas" --
  • "Texas lawyers practicing at firms organized as a Swiss verein may change how they identify themselves because of a recent opinion issued by the State Bar of Texas Professional Ethics Committee. Opinion 663, issued in September, concludes that under the Texas Rules of Professional Conduct, Texas lawyers in an organization such as a Swiss verein may not use the name of the organization as their law firm name on pleadings or other public communication unless all names in the verein are current or former lawyers in the firm or a predecessor as permitted by Rule 7.01(a)."
  • "The opinion, issued at the request of a Texas attorney practicing at one of the vereins, would presumably affect Texas lawyers in a number of firms, including five firms on the Am Law 100 ranking of the nation's highest grossing firms. Firms identified as Swiss vereins on that list include DLA Piper, Baker & McKenzie, Hogan Lovells, Norton Rose Fulbright and Squire Patton Boggs."
  • "A Swiss verein is a corporate holding structure wherein the firms share activities such as strategy and branding but maintain financial independence."
  • "Mark Osborn, a partner in Kemp Smith in El Paso who chairs the committee, said Texas ethics opinions are considered advisory and not binding on the Texas Supreme Court. 'Literally nothing is going to happen unless someone else does something,' Osborn said. For instance, he said, a Texas lawyer could face disciplinary action if someone files a grievance against the lawyer for using a Swiss verein name in the wake of the opinion. That would be a 'rare' occurrence, Osborn said. More likely, firms will read the opinion and decide if they need to make changes because of it, he said."
That last quote about "doing something" almost begs for a joke about "drawing," or Jack Palance in Shane..

Next, speaking of names, North Carolina notes that: "Equity Stake Isn’t a Prerequisite for ‘Partner’ Label" --
  • "The North Carolina State Bar Association issued Formal Ethics Opinion 9 advising that professional corporations are allowed to designate lawyers in their firm as 'partner,' 'income partner,' and 'non-equity partner,' even if those lawyers do not own any interest in the firm and have no authority to vote on corporate governance matters."
  • "However, a lawyer who is designated as a partner must have been promoted based on legitimate criteria. Additionally, the Ethics Committee noted that any firm lawyer who has been promoted to “partner” will be held to all professional responsibilities that accompany that role, such as the supervisory responsibilities required by Rule of Professional Conduct 5.1."
Here in California, we sometimes like things complicated and nuanced, which brings us a reconfirmation of what might be called the "Not-So-Well-Known Knowns" principle: "California opinion reaffirms traditional view on the extent of the duty of confidentiality" --
  • "On that point, California's interim ethics opinion reaffirmed the old principle concluding that '[a] lawyer may not disclose his client’s secrets, which include not only confidential information communicated by the client to the lawyer, but also publicly available information that the lawyer obtained during or related to the professional relationship which the client has requested to be kept secret or the disclosure of which might be embarrassing or detrimental to the client.' More than a year later, the interim opinion has been officially published as Formal Opinion 2016-195 and it is available here."
Finally, from Iowa, comes a bit of truth or dare: "Lies to Counsel Violate Rule on Truthful Statements" --
  • "The ethics rule against making false factual statements to third persons covers lies to opposing counsel, the Iowa Supreme Court held Sept. 16 ( Iowa Supreme Court Attorney Disciplinary Bd. v. Barnhill , 2016 BL 305056, Iowa, No. 16-0731, 9/16/16 )."
  • "Rule 32:4.1(a) of the Iowa Rules of Professional Conduct forbids false statements to third persons about material facts when representing a client. Opposing counsel is a third person within the meaning of that rule, even though there’s a separate professional conduct rule on fairness to opposing counsel, Justice Daryl L. Hecht said."
  • "The opinion highlights the broad duty of honesty lawyers have towards anyone they deal with on behalf of on a client. Opposing counsel isn’t excluded from the universe of third persons to whom lawyers owe the obligation of truthfulness, according to the court."

Tuesday, October 11, 2016

Conflicts: Playbooks, Clerks, Screens & Clients (Current and Former)

Several conflicts updates to share, starting with two recent decisions noted by Bill Freivogel.

  • 473440 Alberta Ltd. v. Lenaco Homes Masterbuilder Inc., 2016 ABQB 435 (CanLII)(Ct. Q.B. Alberta Aug. 31, 2016).
  • This is a food fight among companies and individuals in the building business. Lawyer represents Defendants. Lawyer had previously done work for Plaintiffs on two other matters. Plaintiffs moved to disqualify Lawyer in this case. In this opinion the court disqualified Lawyer.
  • The evidence was conflicting, but, on balance, the court believed that Lawyer would have learned things about Plaintiffs in the earlier matter that would have been relevant to the tasks in this matter. In our view, this was essentially an application of the 'playbook' rule, as it is known in the U.S.
Screening an active client conflict:
  • Fabick, Inc. v. FABCO Equip., Inc., 2016 WL 5718252 (W.D. Wis. Sept. 30, 2016).
  • Lawyer at Law Firm had done some trademark work for Plaintiff. Lawyer remains “attorney of record” for the trademarks he had obtained. Lawyer also retained responsibility for maintaining the trademarks. In this trademark infringement case, Law Firm appeared for Defendant. Plaintiff moved to disqualify Law Firm.
  • Among other things, the court found that Lawyer’s continuing duty to maintain the trademarks makes Plaintiff a current client subject to Rule 1.7. Although screens are specifically provided for in former client situations only, the court allowed Law Firm to continue in this case provided it erect a screen between Lawyer and the lawyers working on this case.
And Karen Rubin at Thomson Hine notes: "Hiring student law clerks and avoiding disqualification — two states weigh in" --
  • "When a law clerk or a law school graduate you hire has clerked for a firm representing a party adverse to your client, what happens?  Is the student or newly-minted lawyer disqualified from working on your matter? Is your whole firm disqualified?  Can you screen the clerk/former clerk and solve the problem?  Two recent ethics opinions out of Texas and Ohio clarify the rules."
  • "The new Texas ethics opinion applied the new comment and ruled that when a firm hires a new associate who worked as a clerk for the firm representing the opposing party, the former clerk is disqualified from working on the case at the new firm, but that the new firm can screen the clerk and avoid imputation of the clerk’s conflict.  That sensible approach is good news for Texas firms and law clerks, and the comment is broadly aimed at other incoming non-lawyer employees, such as secretaries, too...Ohio’s Board of Professional Conduct issued similar advice earlier this summer."

Monday, October 10, 2016

Top Law Firm Risk Issues of 2016 (and Beyond)

Thanks to Chuck Lundberg for getting in touch following the OCG/Terms of Business interview we published last week. It's always nice to make new connections out there.

A legal ethics and malpractice expert, Chuck served for twelve years on the Minnesota Lawyers Board, including six years as board chair. He retired last year after 35 years of practice with Bassford Remele, and now advises attorneys and law firms through Lundberg Legal Ethics.

He has writes regularly for the Minnesota Lawyer, most recently publishing a timely update: "Quandaries and Quagmires: The hottest law firm exposure issues" --
  • "This, then, is a snapshot — as of September 2016 — of the hottest legal ethics and risk issues right now, gleaned from very recent and reputable sources. This list was compiled from a review of topics addressed (and to be addressed) at a number of recent (and future) national conferences on legal ethics and malpractice (where firm counsel from across the country gather to learn about the newest law firm exposure areas); from recent postings on national ethics list servs and blogs; and from the advance sheets of specialized reporters and press that track current developments in the law of lawyering."
  • "#1 Cyberliability / data breach: The received wisdom is crystal clear: All law firms should now be thinking in terms of when they will have to deal with a data breach emergency, not if they will. The April 2016 Panama Papers disaster is a great horror story to keep firm management up at night — 2.6 terabytes of extremely confidential law firm client information, all posted on the internet."
  • "#2 Client-imposed retainer provisions: This one is primarily a big-firm problem, at least for now. It comes up like this: Large corporate client, with a lot of excellent billable work, wants to retain you, but there’s a catch: The client wants your retainer agreement to incorporate some special new provisions, such as sweeping definitions of client identity to include numerous corporate affiliates uninvolved in the matter; redefining conflicts of interest more broadly than the ethics rules, including positional conflicts of interest; and provisions claiming client ownership and copyright protection for the firm’s work product, indemnification provisions, authority to conduct internal audits, and security requirements. Most recently, some clients have even sought to require advance waivers of any law firm privilege."
Other quandaries he flagged include risks tied to: Lawyer mobility, In-firm ethics training, Joint representation conflicts, #social media ethics and In-firm privilege issues.

Sunday, October 9, 2016

CONFLICTS: No Clearance, No Cash?

From the California Lawyer, Kate G. Kimberlin and Jessica R. MacGregor, two lawyers at Long & Levit focused defending lawyers published an excellent overview for anyone who believes that getting paid is much better than the alternative: "Fee Disgorgement (Special Credit): Attorneys who fail to disclose conflicts to clients may lose their right to collect fees—and may have repay fees already collected." --
  • "In the Sheppard Mullin case [Sheppard, Mullin, Richter & Hampton, LLP v. J-M Manufacturing (2016) 244 Cal.App.4th 590], the appellate court found that a law firm’s failure to adequately disclose a conflict of interest between two existing clients was sufficient to deny the firm $3.8 million in fees billed for more than a year of work in a litigation matter."
  • "Attorneys in California risk disgorgement or forfeiture of their fees where they have engaged in violations of the Rules of Professional Conduct. However, California has no bright-line rule for determining whether a particular rule violation will result in disgorgement or forfeiture.  Rather, it is a question which must be addressed on a case-by-case basis.  It is therefore important to understand the cases on this subject and avoid the types of misconduct which the courts have highlighted as a basis for denial of fees."
  • "The last time the California Supreme Court offered its views on the subject of fee forfeiture was in Huskinson & Brown v. Wolf (2004) 32 Cal.4th 453. There, the Court observed that an attorney may be denied fees as a result of a violation of the Rules of Professional Conduct, but recognized that disgorgement is reserved for those cases in which the attorney violated 'a rule that proscribed the very conduct for which compensation was sought, i.e., the rule prohibiting attorneys from engaging in conflicting representation or accepting professional employment adverse to the interests of a client or former client without the written consent of both parties.' Huskinson & Brown, 32 Cal.4th at 463 (citing Jeffry v. Pounds (1977) 67 Cal.App.3d 6 and Goldstein v. Lees (1975) 46 Cal.App3d 614)."
  • "Three years after Huskinson & Brown, the Court of Appeals sought to further clarify matters in Mardirossian & Assoc., Inc. v. Ersoff (2007) 153 Cal.App.4th 257. There, an attorney agreed to represent two clients in litigation. Prior to taking the representation, the attorney identified various potential conflicts of interest which might arise.  Both clients signed separate, comprehensive documents consenting to the attorney’s joint representation despite the identified potential conflicts. When the attorney sought his fees from one of the clients, however, the client argued that the attorney should be prohibited from recovering fees because there had been an actual (rather than just potential) conflict of interest at the inception of representation in violation of Rule 3-310(C). The trial court ruled against the client, finding that, at most there had been a potential conflict of interest."
  • "Four years after Mardirossian, the court of appeal issued its decision in Fair v. Bakhtiari (2011) 195 Cal.App.4th 1135... In Fair, the attorney and clients entered into multiple real estate business arrangements over a ten-year period.  When the attorney sought to collect fees owed to him, the client alleged that the attorney had violated RPC 3-300, which prohibits attorneys from entering into business transactions with their clients without first obtaining the client’s informed, written consent. The trial court found that the attorney failed to comply with rule 3-300 because he had never disclosed his potential conflict of interest or obtained his clients’ written consent to the actual conflicts that arose in the course of their business dealings.  Id. at 1135.  As a result of the attorney’s rule violation, the trial court denied the attorney the ability to recover his outstanding fees on a quantum meruit theory."
  • Though not referenced in the Supreme Court’s 2004 Huskinson & Brown opinion, the courts of appeal often cite to Cal Pak Delivery, Inc. v. UPS, Inc. (1997) 52 Cal.App.4th 1, to answer the question of whether an attorney must forfeit all, or only a portion, of the fees earned as a result of a conflict of interest.  In Cal Pak, class counsel "admitted he had offered to sell out his client and the class which the client was seeking to represent for a payment to himself personally of approximately $8 to $10 million dollars." Despite the admittedly egregious conflict between the attorney and his clients, the court of appeal acknowledged that the attorney may have a 'right to recover fees for services rendered before his breach of duties to his client.'"
  • "Regardless of the eventual Supreme Court ruling in Sheppard Mullin, attorneys practicing in California would do well to examine their fee agreements, as well as their active litigation and transactional matters, to ensure there are no underlying potential or actual conflicts which have not been properly disclosed or documented with the clients’ written consent.  Precedent teaches a powerful lesson:  Failure to diligently follow the rules for disclosing such conflicts can be costly."

Wednesday, October 5, 2016

Risk Roundtables (New DC Event + NY Report)

We were pleased to host the first of several upcoming Risk Roundtables focusing on outside counsel guideline / terms of business management. Our first session took place a few weeks ago in New York.

Eric Nerland, Intapp Risk Practice Director, presented at the event and send these notes:
  • "About 30 legal professionals, mostly from the GC’s office, gathered to hear best practices on OCG’s, RFP’s and other client commitment documents.  The discussion largely centered on awareness of what firms have agreed to and how to ensure firm compliance."
  • "Most of the attendees agreed, that the bulk of the issue is making sure the firms is staying in-line with their “clients rules of the road” is a content challenge.  Informing various roles and group throughout the firm of the guidelines, and most recent updates, is an absolute must.  Moreover, making sure that attention is paid to more then just the billing terms is also needed – which historically has been hard to achieve in firms."
Our next event in this series is set for October 19th in Washington DC. As with the NY event, we'll be featuring presentations and discussion lead by Anthony Davis from Hinshaw & Culbertson and Eric Nerland.

Attendance is by invitation only and is limited to qualified law firms and personnel. Please contact for more details.

Tuesday, October 4, 2016

A New Conversation: On OCGs and Terms of Business

I was pleased to spend some time recently with Anthony Davis, partner at Hinshaw & Culbertson. We captured our discussion, which focuses on the growing prevalence of client-imposed outside counsel guidelines, and strategies for managing compliance with these increasingly stringent terms of business: "In Conversation: Focus on Outside Counsel Guidelines."


Anthony: Outside Counsel Guidelines (“OCGs”) are a serious and growing problem, and are causing havoc and distress in multiple areas of law firm operation. To use the words that the English regulators have used to assess this phenomenon, what’s going on really threatens the independence — in some instances, even potentially, the viability — of law firms that seek to represent large or increasingly, even mid-size corporations. It’s a significant problem, with a number of different dimensions.

In general terms, OCGs are a problem because clients are making demands that are, or may be:
  • impossible to agree to without putting the firms at risk
  • impossible to agree to without severely limiting the firms’ ability to practice for multiple clients
  • dangerous because of the controls and limits placed on the ways in which law firms actually provide services to their clients
  • increasingly burdensome administratively because of requirements such as the obligation to keep track and comply with the “guidelines” that firms do agree to accept.
You don’t speak with a firm of any size anywhere in the U.S. or the UK without hearing that it’s a problem. And a growing problem that is causing huge heartaches for law firms.

Wednesday, September 21, 2016

VIDEO INTERVIEW: Discussing Risk (Trends, Conflicts, OCGs & More)

VIDEO: "Law Firm Risk Discussion" -- At the recent ILTA conference, I had the pleasure of sitting down with Mike Guernon, director of new business and conflicts at Orrick, and seasoned Risk Roundtable veteran. This was part of the conference's "ILTACON TV" program.

(Alas, I don't they've quite closed the deal to secure Netflix streaming, so this is an internet-only affair... though, I did suggest jazzing up the introductory credits ala "Stranger Things" or "True Detective." Breaths will not be held on that front.)

In the video, we cover a variety of topics, including risk trends, conflicts management, risk staffing, outside counsel guidelines and more.

It's about a 20 minute episode. No commercial breaks. No snarky parenthetical comments, which are reserved for blog readers only. (We'll see if any networks decide to pick us up for season two... or series two, for our international readers. >smile<)

Tuesday, September 20, 2016

Information Security: Certification, the Cloud and Clients

Two interesting security updates to share. First, Philip N. Yannella, Partner and co-leader of Ballard Spahr’s privacy and security group, writes: "Law Firms Are Seeking Data Security Certification (Perspective)" --
  • "In the wake of a number of high-profile data breaches involving law firms — including the recent Panama Papers breach — many U.S. law firms are moving toward obtaining ISO data security certification."
  • "Law firms did not consider ISO certification necessary to the practice of law. But now, as hackers take aim at the legal profession, many law firms are obtaining ISO certification in order to reassure their clients that the firm’s data security practices are adequate. Some firms are using ISO certification for business development purposes — as a means of differentiating themselves from other law firms."
  • "Since that time, the cyber threat landscape for law firms has increased. In March 2016, The Wall Street Journal reported that the FBI was investigating a series of data breaches involving major U.S. law firms, including Weil Gotshal & Manges and Cravath Swain & Moore. Reports indicate that hackers were targeting sensitive client information concerning upcoming deals."
  • "The coup de grace occurred in April 2016, when the Panama law firm Mossack Fonseca was hacked in the infamous Panama Papers attack. It resulted in the public release of more than 11 million documents, detailing the formation of off-shore accounts and other questionable, if not illegal, financial activities of international politicians, business people, and celebrities to shield income from taxation."
  • "To improve their data security practices, and provide assurance to jittery clients, many Am Law 100 law firms are seeking ISO certification. A March 2015 ILTA survey found that 18 law firms had obtained ISO certification, and that another 30 were in the process of obtaining the certification. It is likely that these numbers have increased since then. Many law firms are using the ISO certification for marketing purposes, touting the firm’s commitment to ensuring the same level of data security as their clients."
  • "The trend toward ISO certification is not likely to abate as long as law firms continue to be targets of hackers. In the future, obtaining ISO certification may be like obtaining malpractice insurance for law firms — a cost of doing business."
Expert Discussion (video):
One area often catalyzing security discussions is the cloud — where some see risk, others see potential advantage (shifting the burden of security management to dedicated vendors). The cloud also raises questions of control and jurisdiction. Here is an interesting video discussion, delivered by Microsoft's own legal team, which explores: cloud security, privacy & control, compliance and transparency.

Monday, September 19, 2016

Conflicts News: Consistently Checked, Sides Switched

Randy Evans and Shari Klevens, Dentons US partners remind us: "Consistent Conflicts Checks Are Critical" --
  • "Most lawyers dread the process of checking, evaluating and resolving conflicts of interest. Perhaps it's because 'conflicts' issues seem to focus on why a lawyer must (or should) decline a new representation rather than how to get the business in the door. And yet unidentified or unresolved conflicts cost lawyers and their firms clients, money, and headaches."
  • "Given the demands of modern legal practice and competition for new business, it is far easier to immediately undertake a new representation when a potential client walks in the door without performing even a rudimentary conflicts check. But when it comes to conflicts, haste really does make waste."
  • "Developing a conflicts system is relatively painless, but implementing and complying with it 100 percent of the time is challenging. As luck would have it, the one representation that escapes the system could be the one that creates the most problems. Oftentimes, the reasons for pushing aside the conflicts process for that one representation (too important, too complicated, too rushed) are the same reasons the conflicts analysis was so imperative."
Next up: "Polsinelli Hires Trigger Attys' DQ In Texas Employment Suit" --
  • "A Texas federal judge blocked Polsinelli PC and Novak Druce Connolly Bove & Quigg LLC attorneys Thursday from representing two plaintiffs with a breach of contract and employment suit against Parker-Hannifin Corp., saying that lawyers switching sides have created a conflict of interest."
  • "In considering Parker’s request for the removal of opposing counsel, the judge disagreed with the company’s argument that there were substantial similarities between work Novak Druce had done for the plaintiffs in the sale of their company and transfer of assets to Parker and the intellectual property matters Novak had handled for Parker."
  • "But U.S. District Judge Gray Miller said there was a reasonable chance that information held by Novak Druce from prior patent work for Parker would be used to the company's disadvantage in the current case, which includes a claim carrying potential damages that would be pegged to the value of the patents."

Sunday, September 18, 2016

EVENT: Law Firm General Counsel Summit (Portland, Oregon)

Portland, November 3 & 4: Law Firm General Counsel Summit [brochure] [registration] -- Hosted by Holland & Knight's Legal Profession Team, this summit is designed for the general counsel, ethics counsel or managing partner of small to midsize law firms.

Attorneys from Holland & Knight's Legal Profession Team, including Chris Cwalina, David Elkanich, Peter Jarvis, Allison Martin Rhodes, Calon Russell and Dayna Underhill, together with other industry practitioners, will lead interactive discussions to provide relevant and practical insights into the unique challenges of managing risk at firms employing between 30 and 250 lawyers.
  • Sessions on Day 1, November 3, will focus on substantive training and fundamentals of the position, recognizing that many lawyers who fulfill leadership and general counsel positions in small to midsize firms lack specific experience or training in the field. We call this "The Academy."
  • Sessions on Day 2, November 4, will be a roundtable format led by our faculty to discuss the broader common issues facing both the seasoned leaders and those new to the position. Our goal is to foster collaboration and the exchange of best practice strategies for the issues common to our attendees.
See the complete agenda for more detail on content.

Event sponsors: Holland & Knight, Intapp, Oswald Law, Paragon, Proquest.

This is a third-party event and a registration fee applies. CLE credit will be available (subject to the usual caveats across jurisdictions).

Thursday, September 15, 2016

Disqualification Discussions, Part Deux

  • "A California judge rejected Friday [Aug 19] a former SpaceX welder’s bid to disqualify Orrick Herrington & Sutcliffe LLP from defending the aerospace company in her sexual harassment suit, saying there’s no evidence the firm did anything wrong in contacting the plaintiff's expert about working in another case."
  • "Before Friday's hearing began, Los Angeles Superior Court Judge Michael P. Linfield issued a written tentative ruling indicating he would deny plaintiff Zhoei M. Teasley's motion to recuse Space Exploration Technologies Corp.'s lead trial counsel, Orrick partner Lynne Hermle, because the firm had contacted Teasley's expert, Michael Robbins, about potentially working on a case in the future. Judge Linfield wrote that no case law presented by either side stands for the proposition that “any communication” between a party's expert and their opponent, in itself, is enough to warrant recusal."
  • "Parks [opposing counsel] said that Robbins was in discussions with Orrick about consulting on upcoming matters, and that even if he hadn't been formally retained in those cases yet, it still created a problematic relationship — one that Orrick had refused to divulge the details of."
  • "Judge Linfield said the fact that Orrick might have reached out to the expert previously about the potential of hiring him in the future simply wasn't enough evidence to show there was a relationship between them. The judge said that if Robbins had told Parks that he'd spoken to Orrick about the instant suit, it would be 'a totally different situation,' but that there wasn't any evidence of that, 'and that lack of evidence is telling to the court.'"
  • "Live Face on Web LLC urged a Pennsylvania federal judge Thursday to sanction and disqualify Venable LLP from representing the digital marketing company it is suing over a video software licensing agreement, saying the firm previously promised not to represent any party in the case."
  • "LFOW told U.S. District Judge J. Curtis Joyner that Venable is representing The Control Group Media Co. Inc. only because it has firsthand knowledge of LFOW’s copyright litigation practices. LFOW said Venable acknowledged a conflict of interest in a related matter in 2014 and at that time promised not to provide counsel to either side."
  • "'Venable expressly concluded a conflict existed that barred the representation of any party in this case in 2014, but has now entered this case just in time to share LFOW’s settlement strategies and privileged information with defendants at mediation.'"
  • "In its motion, LFOW said a Venable partner responded to its original letter in 2014 informing Control Group of copyright infringement. However, at the same time, Venable represented LFOW in two similar cases. Venable decided to sever ties with LFOW, Control Group and Instant Checkmate, indicating it would not represent or give legal advice to either party, LFOW said."

Wednesday, September 14, 2016

Disqualification Discussions

Via the New York Law Journal: "Big Firm/Small Firm—Size Matters for Attorney Disqualification" --
  • "When it comes to imputing conflicts of interest, size really does matter. This much is clear from two recent decisions of the U.S. District Court for the Southern District of New York. At one end of the spectrum, Judge Naomi Reice Buchwald disqualified a small firm, notwithstanding the firm's immediate creation of a substantial ethical wall when a lawyer with a conflict joined the firm. At the other extreme, Judge Jed S. Rakoff denied a motion to disqualify where a large firm concurrently represented both sides of a litigation, notwithstanding his finding that the firm had violated ethical rules and had been grossly negligent in failing to conduct an adequate conflict check."
  • "In contrast to Judge Buchwald's treatment of the small firm in Energy Intelligence Group, Judge Rakoff denied a motion to disqualify a large national firm in Victorinox v. The B & F System,4 where attorneys within the firm had represented opposing parties, albeit in different matters, without a formal screen."
  • "In November 2015, the defendant's Locke Lord lawyer in Texas received an internal email related to the New York litigation and recognized the conflict. He consulted with the firm's ethics partner, and sent a letter nearly a month later to the defendant terminating the representation, ostensibly for economic reasons, without mentioning the conflict of interest. The firm did not set up an ethical wall, and the Texas lawyer testified before Judge Rakoff that he set up his "own wall" separating himself from the New York lawyers in Locke Lord representing plaintiffs."
  • "Citing Hempstead Video, Judge Rakoff began his analysis with the observation that "[c]oncurrent representation of parties on opposing sides of a litigation is a prima facie conflict of interest." He found that Locke Lord's representation was a violation of the New York Rules of Professional Conduct, specifically Rule 1.7, and the court's Local Rule 1.5(b)(5). He went on to hold that these violations resulted from gross negligence because, when merging with the firm that originally represented plaintiffs, Locke Lord had limited its conflict check to matters on which that firm had billed $100,000 or more in one or both of the previous two years. Judge Rakoff remarked that the firm never completed a full conflict check "because the firm decided it was just not worth it to comply with its ethical obligations.""
  • "Finally, Judge Rakoff held that the letter from the Texas lawyer terminating the representation of the defendant was "misleading on its face," inasmuch as it cited economic reasons for ending the relationship when the conflict was the precipitating factor."
  • "Notwithstanding his obvious displeasure with Locke Lord's conduct on multiple scores, Judge Rakoff concluded that the Texas lawyer's conflicts should not be imputed to the New York team representing the plaintiffs and denied the disqualification motion. He found no evidence that there had been any exchange of pertinent information between the Texas lawyer and the New York lawyers representing plaintiffs, despite the presumption that the conflict should be imputed to the firm as a whole. Judge Rakoff also found, without elaboration, that the matters on which Locke Lord represented the defendant in Texas were "very substantially different" from the matter on which it represented the plaintiffs in New York. Finally, he was swayed by the fact that no present conflict existed because the concurrent representation ended in December 2015."

Tuesday, September 13, 2016

EVENT: Risk Roundtable (New York, OCG Focus)

We're pleased to announce the first of several upcoming Risk Roundtables focusing on outside counsel guideline / terms of business management. The event is taking place on Wednesday, September 21st in New York, and features:

  • Anthony Davis, Partner at Hinshaw & Culbertson LLP, who will provide an overview of how outside counsel guidelines present ethical dilemmas, as well as other risks, to law firms. He will also dive into the countless options firms have to combat these risks.
  • Eric Nerland, Risk Practice Leader for Professional Services at Intapp, who will focus on the increasing compliance pressures being imposed by clients and how a firm can deliver on key client commitments. He will also share a short update on Intapp Open terms of business management system, a solution that helps firms finally manage, centralize, classify and report on client terms, RFPs and communications in a structured fashion.
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.

Monday, September 12, 2016

On Conflicts: The "It’s Just Business" Update

It's time for business. The ABA/BNA Lawyers’ Manual on Professional Conduct reports: "Market Rivalry Isn't ‘Materially Adverse' Conflict"
  • "Lawyers aren't precluded from accepting a litigation matter just because the new client and a former client have generally competing economic interests, the New York state bar's ethics committee advised July 15 (New York State Bar Ass'n Comm. on Prof'l Ethics, Op. 1103, 7/15/16)."
  • "An attorney who previously represented a corporation can handle a new client's suit against another company, even though the former client and the new client are marketplace rivals and it would be in the former client's interest for the new client to lose the suit, the committee advised."
  • "The opinion addresses a conflicts question on which there's scant authority—that is, whether it's 'materially adverse' under the rule on former-client conflicts to handle litigation against a third party when the outcome would economically help a former client's competitor. The committee said no. General economic adversity poses neither a current-client conflict nor a former-client conflict, it advised."
  • "Because a lawyer may simultaneously represent current clients who are economic competitors, it follows even more so that a lawyer may subsequently represent a client whose economic interests are contrary those of a former client, the committee said."
  • "The committee said that Rule 1.9(a) would prohibit the attorney from defending current client B in the lawsuit brought by former client A if the current representation is substantially related to the former representation of A. This is because the “materially adverse” prong of Rule 1.9 is always met when a former client is on the opposite side of a lawsuit involving a substantially related matter, it said."

Thursday, September 8, 2016

Conflict Best Practices: Centralization Rules

We've seen a general trend of firms moving to centralize conflicts teams and overall management. Here's the latest on this: "3 Ways Law Firms Can Avoid Conflicts Of Interest" --
  • "Law360 spoke with experts who shared advice on how to avoid such dilemmas. High-performing firms generally centralize the management of client intake and conflicts, according to Kent Zimmermann, a leading adviser on strategic growth planning at Zeughauser Group LLC. Although some firms pride themselves on being entrepreneurial and allowing partners to make the call on which clients to take or not, higher-performing firms realize that there are benefits to control, he said."
  • "'While many partners thinking about their individual interests are happy to bring in a client that benefits their own practice, it's in the firm's best interest before agreeing to work with a client that there's a view of the pluses and minuses of taking that client for the firm over time,' Zimmermann said."
  • "Firms often have a committee that oversees intake, and it's often to firms' benefit to keep those committees really small, Zimmermann said, since intake can be time-sensitive. He noted that firms should not only look at whether there's a present conflict with a potential client but also whether there could be future conflicts that could cause firms to lose money by having to pass up compelling relationships or other matters later on."
  • "Since certain companies, especially in the high-tech industry, don't want law firms to work for their competitors, according to Michael Rynowecer, president of BTI Consulting Group Inc., the most important thing a law firm can do to avoid a conflict of interest is to make sure they're in dialogue with their client so that there's no surprises on either side."
See the complete article for details on the other two recommendations: Be in Dialogue With Your Clients Think Institutionally.

Wednesday, September 7, 2016

Musical Conflicts: Tik Tok / Hear Me Roar

A few conflicts allegations making noise in the media. (Given the pop culture nature of the players involved, we now find ourselves linking, quite certainly for the first time, to reporting from “Teen Vogue.”)

Judge Who Tossed Out Kesha’s Dr. Luke Case May Have Had Conflict of Interest --
  • "Kesha has been going through a lengthy legal battle with Dr. Luke, in which she accused him of sexual assault. Earlier this month, it was reported that she dropped all charges against him and is choosing to focus on her music. Kesha explained to fans how she isn't going to let anything get in the way of her dreams and is happy with her decision to tour with her new band Kesha and the Creepies."
  • "However, reports are coming to light that the judge who dismissed her case in April may have had a conflict of interest. According to the New York Post, it appears New York Supreme Court Justice Shirley Werner Kornreich is married to Ed Kornreich, a partner at the Proskauer Rose law firm, whose clients include Sony/RCA Records — which own Dr. Luke's Kemosabe record label."
  • "'Judges are required under the New York state canon of judicial ethics to avoid even the appearance of impropriety,' legal expert Troy Slaten told E! News. 'This means judges are not supposed to preside over cases where they have an actual or potential financial interest in the outcome. The rules go so far as to say that even somebody in the judge's family should not have a financial interest in the outcome of litigation.' He went on to say, 'Kesha's lawyers could now be in a position to seek that every ruling of this judge be redone by a new neutral and impartial judge who does not suffer from potential or actual bias. Basically, Kesha can probably get a do-over if she wants.'"
Note: They Daily Mail observes: “Ed Kornreich does not do any sort of entertainment law and is instead head of  the Health Care Department at Proskauer Rose... What's more, it was also lawyers from Proskauer Rose who represented Kesha herself back in 2011 when she and Dr. Luke were being sued for breach of contract by her former managers.”

Next on the playlist: "Hard Candy Wants Jones Day Out Of Katy Perry Makeup Suit" --
  • "Cosmetics maker Hard Candy urged a Florida federal court Thursday to disqualify Jones Day as opposing counsel in a trademark suit over the design of Procter & Gamble's Katy Perry CoverGirl products, citing the firm's hiring of an attorney who previously handled its trademarks."
  • "In a motion to disqualify, Hard Candy LLC pointed to Jones Day's July 25 hiring of Erika Handelson two weeks after she resigned from law firm Coffey Burlington PL, which is representing the cosmetics company in the current matter. Having worked at her previous firm for five years, Handelson served as a 'key associate' for Hard Candy's trademark matters, including being listed as attorney of record with the U.S. Patent and Trademark Office for the trademarks at issue in this case, according to the motion."
  • "Handelson, who resigned from Coffey Burlington prior to the July 18 filing of the case, has not made an appearance for either side, but Hard Candy says she was involved in multiple discussions with Groisman regarding the suit, including legal theories underlying its trademark infringement claims and a review and analysis of both the allegedly infringing products and Hard Candy's products. She also had been responsible for day-to-day monitoring of Hard Candy's trademark holdings and took part in related litigation and strategic discussions on the strength of its trademarks."
  • "The lawsuit claims that beginning in spring 2016 The Procter & Gamble Co. infringed a number of Hard Candy’s design trademarks for lipstick and eyeliner products with a line of 'Katy Perry CoverGirl' products that use similar visual cues on the lipstick tubes."

Tuesday, September 6, 2016

Have Risk (Trends Report) Will Travel

A reader sent word noting the publication of the 2016: “Legal Innovation and Risk Management Report” published by Traveler’s and The Lawyer.
  • "It’s worth reflecting on why innovation is important. The first driver is external. Clients are increasingly demanding more competitive fees, greater choice when it comes to fee arrangements and of course a great service. Innovating, whether that be investing in technology, offering alternative fee arrangements or flexible working, can help address these client demands."
  • "The third driver is regulatory. Increased awareness of certain risks, including cyber-attacks, may result in increased attention by regulators. A certain amount of innovation, for example regarding management structures and internal controls, is then required to ensure compliance."
  • "Indeed 37% of surveyed UK law firms pinpointed ‘use of technology’ as their most innovative initiative in the last three years, more than double the number that stated any other area of innovation."
  • "Why are firms investing in new technology? Survey participants mentioned a huge number of reasons from improving conflicts and client management to marketing and business development."
  • "We also asked firms what the most innovative technology they have adopted is in the last three years and what benefits this has had. Some notable trends emerged. A large number of firms mentioned they had adopted technology or software to improve the efficiency and accuracy of case management, document management, billings management, conflicts management and risk management:
    • "Intapp Open. This product has transformed the way we take on new clients to create a more streamlined and effective system that is more compliant and has helped bring the firm up-to-date with technology.”
    • "Use of technology to manage file opening and deal with risk management of a matter from the outset. The benefit is seen in the reduced level of notifications."
    • "A new client inception programme (still being implemented). Benefit is a single end-to-end client take-on process which encompasses client due diligence, credit checking, billing regime, terms of business through to a letter of engagement."
    • "Conflicts Management (Intapp) - modernised and centralised conflict clearance."
    • "Use of cloud to enable remote working and collaborative work."
    • "AI for legal process management. Uniform and efficient integration of knowledge into legal delivery processes, delivering fixed fee work with greater certainty across practice streams."
The full report covers related areas including managing a remote workforce, outsourcing, innovating in management structures, and evolving business models. It also explores client attitudes and drivers  shaping firm innovation and risk management:
  • "Clients are focussing far more on efficiency and innovation in their firms, independent of whether this drives costs down for them. They want to know their strategic partners are innovative and efficient and to learn from them to improve the position of the in-house team and organisation as a whole. This is perhaps unsurprising given the expanded, strategic role of the GC in clients."