Monday, May 4, 2015

Conflicts News: Laterals, Waivers (or Not)


Several Monday updates to share. First, Pinhawk’s Jeff Brandt highlighted this ABA article on the increasingly complex lateral risk landscape, noting that data about lateral-driven malpractice claims highlights "the importance of a *great* conflicts system" – "Malpractice concerns spark heightened scrutiny of lawyers switching firms" --
  • "As law firms have become more wary about ethics considerations in making lateral hires, experts say the process of switching legal employers has become more complex."
  • "A major cause for the increased focus on ethics when it comes to hiring laterals is that a significant percentage of malpractice claims against firms are related to newer hires. 'Our malpractice carrier tells us that a disproportionate number of claims that member law firms report come from lateral attorneys—attorneys with less than five years with the firm,' says Timothy W. Callahan II, general counsel at Saul Ewing in Philadelphia."
  • "'Every time a law firm hires a lateral, that lateral brings with him or her some potential conflicts that may either affect the firm's ability to continue to rep-resent current clients or prevent the firm from representing some potential clients,' says Peter A. Joy, who teaches professional responsibility at Washing-ton University School of Law in St. Louis and has consulted with several law firms about conflicts issues arising from laterals. 'Potential conflicts are the major reason why law firms are more ethics-wary in hiring laterals. No law firm wants to see itself disqualified from continuing to work on a case in which it has invested time and its client has invested a lot of fees. In some instances, the law firm may have to return some of the fees earned—or if it is a contingency fee case, the firm may lose out on a fee.'"
And several sources are covering the case of allegedly waived alleged waiver: "Drug Maker Mylan Sues Law Firm Kirkland & Ellis" --
  • "Mylan NV sued Kirkland & Ellis LLP over the law firm’s role advising Teva Pharmaceutical Industries Ltd. , which is in a bitter takeover battle with the drug maker. Mylan said in a complaint, filed in Pennsylvania state court late Friday, that because Kirkland has represented the company in the past, it should be barred from working for Teva, which last month launched a $40 billion public bid that Mylan has rejected."
  • "'We are confident in the propriety of our representation of Teva Pharmaceutical in this matter,' Kirkland said in a statement. 'We have a written conflicts-waiver letter, signed by Mylan, regarding the work we have done for Mylan. These filings are without merit, and are simply tactical measures designed to impede the proposed transaction.'"
  • "According to the lawsuit, Mylan has had a relationship with Kirkland since January 2013, and the law firm has had " wide-ranging access to Mylan's business," including confidential information about its drug pipeline, pricing strategy and prospects for regulatory approval. The information allegedly includes details about Mylan's EpiPen allergic-reaction treatment, which Teva is now targeting with a competing product. Such information is typically considered valuable for a company pressing a takeover bid, helping it determine, for example, how much to offer and whether regulators will sign off."
  • "Suing a former adviser in a takeover battle is a rare move. Airgas Inc. in 2010 sued Cravath, Swaine & Moore LLP for representing Air Products & Chemicals Inc., arguing that Cravath's previous relationship with Airgas should have prevented it from working on the potential deal. That case was eventually settled on confidential terms after Air Products abandoned its bid. Cravath is now advising Mylan."

Tuesday, April 28, 2015

Engagement Letters: Firsthand Industry Perspectives


We've had a very engaging week on engagement letters so far. It's a topic that's resonating with the community, so it's fitting to continue the discussion. The Willis industry risk report we noted previously also includes commentary on engagement letters from several industry experts:

Glenda West, Willis Head of UK PI Claims: "Partners should at the very least check the engagement letter on every matter. The task should not be delegated solely to an associate or a member of the risk team given its importance. When there is a professional indemnity claim, the first thing insurers will look at is the scope of the retainer – what the firm was instructed to do and sometimes more importantly what the firm was not instructed to do."

David Halliwell, Director of Knowledge, Risk and Legal Services at Pinsent Masons: "Client engagement risks are very high up the agenda for us, so a lot of our work involves making sure that client identification and conflict checks are always undertaken and that appropriate engagement terms are in place. If you get that right at the outset then you save yourself potential time, effort and trouble down the line, because you’ve absolutely clarified what you will be doing, what you won’t be doing, who you will be doing it for, when you need to get it done by, what you are going to get paid and how. This is so important that we recently centralised the responsibility for conducting money laundering checks to the risk team and removed it from the operational team."

Chris Perrin, Executive Partner & General Counsel at Clifford Chance: "A risk that has really risen up the agenda is the terms of engagement certain large buyers of legal services seek to impose on law firms. We are increasingly seeing provisions in these that are unacceptable to us, such as being responsible for third parties we instruct on behalf of the client or providing an indemnity in respect of any error (as opposed to being liable for the usual measure of damage). Here at Clifford Chance the rule is that these sorts of terms of engagement must be reviewed by me or my team so that we can get consistency in what the firm will sign up to."

(For those that may have missed it, the recorded demo of automating engagement letter management is online here.)

Monday, April 27, 2015

Improving Engagement Letter Management (Webinar Recording Online)



Yesterday, we highlighted the Willis risk management survey report, which noted: "...a clear lack of consistency in establishing clear terms of engagements and undertaking client due diligence when retaining clients." This jibes with other conventional wisdom – see for example past coverage, such as the colorful commentary on this exact topic from US General Counsel at Dentons and former GC at Jackson Kelly.

Now from Intapp comes a recorded engagement letter webinar highlighting how Intapp Open enhances this important piece of business acceptance. It runs about 10 minutes and includes a software demonstration showing automating engagement letter creation.

Intapp Open makes it easy to broaden the use of engagement letters by tightly integrating and automating drafting and tracking activity as part of new matter inception. This allows organizations to increase the overall use of engagement letters, to reduce risk and protect revenue, while increasing internal efficiency and lawyer satisfaction by reducing overhead associated with traditional business intake processes. It:
  • Automatically generates draft engagement letters for new matters, using data gathered during the normal intake process (or additional detail gathered through questions integrated into normal form/workflow activity)
  • Supports multiple templates, using the relevant option based on firm-defined business rules (e.g. matter type, geography, jurisdiction)
  • Integrates document assembly, leveraging a firm’s existing investment in HotDocs or ContractExpress; or allowing organizations to secure a document assembly tool licensed for engagement letters
  • Manages review and approval of draft letters as part of the overall new matter review and intake process
  • Attaches generated letters to intake requests, creating a clear record and audit trail
Click here to access the recording.

Sunday, April 26, 2015

Risk Management Survey Report: Priorities, Attitudes & Approaches


Global insurance broker Willis has published: “Risk Barometer: A Study on how Attitudes And Approaches to Risk Management differ between U.K. Law Firms.” While the report focuses on the UK, the topics covered and findings are sure to be of interest regardless of your geography.
  • “This report aims to identify which risks concern U.K. law firms most and what strategies are being adopted to mitigate them. The report includes the following:
    • What keeps risk managers awake at night?
    • What are law firms doing to mitigate risk?
    • The role of insurance in risk management
    • How much resource should be allocated to risk management?”
On Risk Investment Levels
  • "Our survey data reveals that, on average, law firms with over 100 Partners dedicate 1.2% of total revenues to risk management."
  • "Three quarters of surveyed firms with more than 100 Partners plan to increase investment in risk management during the next 12 months." 
On Client Risk, Engagement and Terms of Business
  • "31% of surveyed law firms with over 100 Partners identified claims risk as their number one risk, more than the proportion citing any other area of risk. This is likely a direct result of the surge in claims against law firms in 2014. High Court data reveals 418 professional negligence claims were issued against UK solicitors in 2014, almost three times the number in 2013."
  • "Despite the importance of claims risk to UK law firms, our survey data reveals a clear lack of consistency in establishing clear terms of engagement and undertaking client due diligence when retaining clients."
  • "For example, only 76% of surveyed law firms with more than 100 Partners always ensure their work does not stray beyond the scope of their PII cover. Even less (62%) always ensure lawyers are adequately supervised and only 48% always define the scope of the retainer."
  • "Our survey data reveals that a large number of law firms are not undertaking relatively simple risk management measures as a matter of routine whenever clients are retained. This is surprising given claims risk was frequently identified as the top risk facing U.K. law firms."
  • "While nearly every surveyed law firm checks for conflicts of interest as part of CDD, a smaller proportion undertake other vital CDD checks or relatively simple client engagement procedures. For example, only 76% of law firms with over 100 Partners always ensure work does not stray beyond the scope of PII cover, only 62% always ensure lawyers are adequately supervised and only 48% always define the scope of the retainer."
On Information Security and Confidentiality Management
  • "Some 19% of surveyed law firms with more than 100 Partners identified cyber attack as their greatest risk, making it the joint-second most frequently cited risk behind claims risk... Encouragingly, 87% of surveyed firms with more than 100 Partners are currently strengthening internal data protection and client confidentially systems related to human processes."
  • "Almost 90% of surveyed law firms with over 100 Partners are strengthening internal data protection and client confidentiality systems related to human processes. This is the most common risk management initiative currently being undertaken by U.K. law firms with more than 100 Partners."
  • "The growing cyber threat has also forced a number of law firms interviewed for this report to seek ISO 27001 accreditation. This enables them to demonstrate to their clients that they are adopting best practice cyber security procedures."
On Anti-Money Laundering Compliance
  • "It comes as no surprise that over 90% of surveyed law firms of all sizes review the systems and controls in place to avoid the misuse of client assets and improper use of clients’ money at least once a year. However, our survey data reveals a wide discrepancy in the regularity of anti-money laundering training provided to fee earners – 52% of surveyed law firms with over 100 Partners provide anti money laundering training to fee earners less frequently than annually."
The full report, freely available from Willis, runs 48 pages and provides a wealth of additional detail, including data covering smaller firms and information on insurance trends.

Wednesday, April 22, 2015

Breaking Risk News: The "Appearances and Matters" Edition

 

Several updates on the theme appearance. First: "'Appearance of impropriety' is now dead in Kentucky" --
  • "In any event, the former Model Code included Canon 9, which stated 'A Lawyer Should Avoid Even the Appearance of Impropriety.' While not actually a Disciplinary Rule, the 'appearance of impropriety' was 'a favorite of some courts, which quoted it with great frequency over the years,' as Ronald Rotunda and John Dzienkowski note in their useful treatise, Legal Ethics — The Lawyer’s Deskbook on Professional Responsibility.  It was especially used as a basis for disqualifying lawyers for a broad range of conduct, ranging from conflicts to other kinds of misconduct."
  • "Earlier this month, in Marcum v. Scorsone, the Kentucky Supreme Court overturned 18 years of precedent, holding that 'disqualification based on an appearance of impropriety is inappropriate under the existing Rules of Professional Conduct,' and that if that were the standard, 'all the former client has to do is claim discomfort with the subsequent representation to create the appearance that something untoward is going on …'  Moreover, the court said, the standard 'creates the impression that courts are ruling based on appearances rather than facts.'"
  • "So the appearance of impropriety is dead — at least in Kentucky.  If faced with a disqualification motion — or if making one — you should research carefully to see how courts in your jurisdiction treat the old standard.  It will make a difference in how easy or hard it might be to prevail, whichever side of the motion you are on."
Next, from the fictional side, we were admittedly a little late to the Breaking Bad universe, but are tickled at the various coverage of "The Ethics of Saul Goodman," as flagged and further linked in the Legal Ethics blog. Turns out, one can find detailed discussions on this topic (with the enthusiasm only rapid hybrid TV-legal scholar fans can muster), addressing questions like "Did Kim Violate Conflict of Interest Rules?" and "Digging Through the Dumpster." For those so inclined, enjoy. (I am the one who blogs.)

And finally, bridging from fiction back to reality (or hypothetical reality), from the New York Legal Ethics Reporter comes a lengthy analysis: "'Illegal' Conduct Under Rule 1.2: When Does Advice to a Client Violate an Attorney's Ethical Obligations?" --
  • "Many attorneys have experienced situations in which a client has sought advice about proposed actions which 'push the legal limit' or are even clearly illegal. How far—if at all—may attorneys go in assisting a client to engage in questionable activity?"
  • "At first glance, the New York Rules of Professional Conduct (NYRPC) appear to provide some clear guidance. Rule 1.2(d) prohibits an attorney from counseling a client to engage in conduct that the attorney knows is 'illegal.' [NYRPC Rule 1.2(d).] In practice, however, application of Rule 1.2(d) is not always straightforward... A close look at the application of Rule 1.2(d) demonstrates the difficulty of defining 'illegal' conduct under the Rule and why some guidance would be beneficial."
  • "An important source for interpreting the meaning of NYRPC 1.2(d) is the history of the Rule, which would also involve an examination of the ABA Model Rule. The ABA Model Rule 1.2(d) is nearly identical to New York’s Rule 1.2(d) with a very important distinction: the ABA uses 'criminal' in place of 'illegal.'"
  • "Some types of civil “wrongs” would certainly appear to fall outside of the rubric of “illegal” conduct under the Rule. A good example is breach of contract."
  • "Ultimately, the authors do not take a position on how extensive Rule 1.2(d)’s prohibition should be. But if the Rule is going to continue to use the term 'illegal' instead of 'criminal,' instruction on the meaning of 'illegal' would be beneficial."

Tuesday, April 21, 2015

Take the Disqualification, Leave the Cannoli


North Carolina Lawyers Weekly (subscription required) reports: "Blurred lines between corporate client and its CEO gets law firm disqualified" --
  • "In The Godfather, Michael Corleone assures his brother that 'It’s not personal, Sonny. It’s strictly business.' Law firms should take similar care to draw bright lines between work done for a business client and work done for the company’s officers in their personal capacities. A Greensboro law firm appears to have done a bit of both, and as a result was recently disqualified by the North Carolina Business Court from representing a longtime corporate client that’s currently suing its former CEO."
  • "Since 1987, Tuggle Duggins has served as corporate counsel for Kingsdown Incorporated, a mattress manufacturer based in Mebane that is suing its former CEO, Eric Hinshaw… In the decades that Hinshaw was CEO, Tuggle Duggins also advised him on several personal matters, including some now at issue in Kingsdown’s lawsuit. When Kingsdown brought its suit, Hinshaw moved to disqualify Tuggle Duggins as its counsel, arguing that he had a prior attorney-client relationship with the firm."
  • "But I must say no to you [ed: please give the NCLW headline writer a raise]… Bledsoe found this evidence lacking, however, since the firm conceded that Tuggle provided advice to Hinshaw but the firm never asked him for payment. 'Given the Firm’s provision of legal services to both Kingsdown and the Hinshaws without maintaining separate records to distinguish between the two, it comes as no particular surprise that the Firm's billing records do not reflect the Firm’s representation of the Hinshaws in connection with the transactions in dispute,' Bledsoe."
Complete decision here, for those with additional questions, just this once. (Such is the life we have chosen…)

Monday, April 20, 2015

Business Conflicts: One More Thing... Are You Feeling Lucky?

Following last week's discussion of advanced waivers comes discussion of the impact of business conflicts, the other side of the coin, in our backyard here in Silicon Valley: "In Google-Apple Rivalry, a Conflict Not Easily Waived" --
  • "Client conflicts can scuttle a lateral move, as any recruiter can tell you. But some conflicts run so deep, and are spread so wide, they split the entire Silicon Valley legal marketplace in two."
  • "For law firms, that reality requires calculations about the value of the business in hand versus other business that might be precluded. And for would-be laterals who do work for either company, it means recognizing that it may be hard, if not impossible, to move to a firm in the other camp."
  • "Only a few firms have done work for both companies since 2009: Morgan, Lewis & Bockius; Greenberg Traurig; O'Melveny & Myers; and Kasowitz, Benson, Torres & Friedman have handled intellectual property matters for each. Fish & Richardson has handled multiple litigation matters for Google, and has also done patent prosecution for Apple."
  • "The line between "Apple firms" and "Google firms" can put roadblocks in the way of partner movement, and narrow the field of options for would-be laterals. Recruiters tell stories of partners whose adversity to a big player boxed them out of just about every firm they were inclined to approach. In such cases, lawyers have little choice but to wait out the matter."
  • "Hiring a particular law firm can be tactical for large clients. By spreading work among elite law firms—and turning down conflict waivers—they limit the universe of firms their opponents can hire. Apple and Google have spread work to some 70 law firms since 2009, so lawyers need to step carefully."

Sunday, April 19, 2015

Events: Risk Roundtables (New York, Boston, Philadelphia & Dublin)


We're pleased to announce our upcoming Risk Roundtables set for New York, Boston, Philadelphia and Dublin.
 
Measure Twice, Cut Once: Improving the ROI in your COI (conflicts of interest) / business acceptance process
 
Evaluating new business becomes more and more challenging as firms grow. Client demands are changing and regulatory pressures continue to increase. Effective acceptance processes that deliver quick results and improve management visibility and control is critical to firm operations (and financial performance).
 
This session will discuss how firms are impacted by and responding to these new changes – and how they’re leveraging people, process and technology to deliver new value to their lawyers and clients. 
 
Industry expert, Meg Block, with Intapp, will provide an overview of trends and considerations facing firms looking to modernize their own practices, and share examples of different approaches organizations can take to execute these projects.
 
As always, we’ll have plenty of time for open discussion, peer exchange and networking.
 
Dates & Locations:
 
  • Friday, May 15th at the Boston office of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.
  • Thursday, May 14th at the New York City office of Cravath, Swaine & Moore LLP.
  • Wednesday, May 13th at the Philadelphia office of Post & Schell, P.C.
  • Thursday May 21st at the Dublin office of A&L Goodbody
Attendance is by invitation only and is limited to qualified law firms and personnel. Please contact info@riskroundtable.com for more details.

Thursday, April 16, 2015

The Cost of Risk – Malpractice Claims, Disqualifications & Sanctions



Two stories highlighting the costs. First, from The Recorder: "Legal Malpractice Claims Are Costing Firms Big Bucks" --
  • "Recent headlines from around the country reveal multimillion-dollar legal malpractice payouts, with firms facing big exposures arising out of predictable and avoidable problems. In difficult economic times, clients and former clients often look to attorneys—perceived as having deep pockets—to compensate them for failed businesses, lost homes or risky investments. This year, the number of large verdicts against attorneys confirms the risks of failing to follow effective risk management procedures for avoiding legal malpractice claims."
  • "Big firms face big risks. Unfortunately, neither the size of the firm nor the reputation of the attorney provides much insulation from legal malpractice exposure. Some of the bigger verdicts this year were against attorneys with excellent reputations who were part of well-regarded law firms."
  • "Oddly, it is often the most experienced attorneys with the best reputations that skirt firm protocols and ignore risk management procedures. Yet, according to the data, the attorneys who need to strictly adhere to risk management practices and procedures are experienced attorneys with significant clients and exposures. Big reputations backed by big firms do little to persuade a jury to find in an attorney's favor when the rules have not been followed or a mistake has been made."
  • "Conflicts of interest continue to drive up exposures. Juries do not like conflicts of interest, regardless of how they happen. In fact, even the appearance of a conflict of interest can, and often does, result in some of the largest legal malpractice verdicts."
  • "As these cases make clear, actions alleging a breach of the duty of loyalty result in stiff penalties for attorneys and law firms. There is no good substitute for clear conflict of interest identification procedures and effective protocols for documenting the resolution of identified conflicts."
  • "But not all the news is bad. Increasingly, legal malpractice data confirm that effective risk management procedures can substantially reduce these risks. These steps begin with effective client intake procedures and include conflict identification and resolution procedures."
Next, from DQED "Disqualification Retaliation: Sanctions for Seeking or Defending Disqualification" --
  • "The issue of disqualification can irritate many lawyers and judges.  For example, some fear that disqualification motions are invariably 'tactical' or 'strategic' moves that should be viewed with 'skepticism' and 'extreme caution.'  Others, however, tend to view the lawyers or firms at issue as ignoring their ethical responsibilities and rationalizing away clear conflicts of interest or other misconduct."
  • "Two very recent examples illustrate the infliction of sanctions. First, the Eastern District of Louisiana just concluded that a plaintiff had brought suit solely as a tactic to have his wife’s lawyers disqualified in a separate divorce proceeding and awarded attorneys’ fees as a consequence."
  • "Second, in an unpublished decision last week, the Second Circuit upheld a high-dollar attorneys’ fees award against Boies, Schiller & Flexner (BSF) for failing to withdraw (and instead making the opposing side file a motion to disqualify): ‘Host moved for sanctions on the grounds that BSF’s representation of Madison 92nd Street Associates, LLC (“Madison”) presented a clear conflict of interest in light of BSF’s earlier, substantially related representation of Host, and that BSF unreasonably refused to withdraw from its representation of Host until faced with a motion to disqualify. The district court agreed, concluding that '[a] clearer conflict of interest cannot be imagined” and that Host was entitled to fees and costs incurred in preparing the motion to disqualify BSF.’"
  • "As an interesting aside, although the district judge in her above ruling was clearly no friend to the large firm of BSF, she happened to be notably nice to another large law firm (namely, Sidley Austin, LLP) last week.  In short, the judge held that because Sidley screened a partner who had represented the other side in the same dispute, Sidley was not disqualified."

Wednesday, April 15, 2015

Advanced Waivers – On the Offensive



University of California, Hastings College of the Law professor Richard Zitrin takes to the pages of The Recorder to take great offense: "Viewpoint: Law Firms Put Themselves Before Clients With Advance Waivers" --
  • "Despite the [California] rules, which clearly prohibit almost all such waivers, clients—particularly big, institutional clients—are routinely being asked by law firms, principally larger firms, to agree to broad, open-ended advance waivers."
  • "By the new millennium, large law firms were pushing for a liberalization of the advance waiver concept. They reasoned that given the wide-ranging list of clients and possible future clients in their books of business, it was more than reasonable to ask their clients to consent to an open advance waiver, even though neither the firm's future client, nor the future case, would be discernible to the current client."
  • "In 2002, the American Bar Association modified its own conflicts rule, Model Rule 1.7, to require 'informed consent, confirmed in writing.' But it also gave substantial recognition to the concept of a broad advance waiver by adding Comment 22, which, edited, says in part: 'If the consent is general and open-ended, [and] if the client is an experienced user of the legal services involved and is reasonably informed regarding the risk that a conflict may arise, such consent is more likely to be effective.' The ABA followed this broad comment with Formal Opinion 05-436, which liberalized prospective waivers substantially, particularly where the client is a "sophisticated" user of legal services."
  • "Yet, over the past five to seven years, I have seen what seems like innumerable advance waivers presented routinely to so-called 'sophisticated' clients by California law firms. These waivers take the 'substantial relationship test,' long used to determine whether a firm could be adverse to a former client, whether the former representation is "substantially related" to the new representation, and use it to define law firm adversity against a current client."
  • "These law firms have conflated a never-accepted proposal for a comment to a rule—not even in the rule itself—into a broad conflicts waiver they see as an enforceable document. But the problem of informed consent does not go away merely by signing a consent that does not inform. The waivers I have seen generally ask clients to consent to the firm representing any new client in any matter against the current client, so long as the representations are not substantially related."
  • "At this point, matters have not gone nearly that far. And, at least from a de jure perspective, advance waivers have still not been widely approved, with only a few jurisdictions formally accepting a broad formulation. But it is clear that in day-to-day practice, many law firms with "sophisticated clients" have jumped the gun on the rules. That may mean the best interests of clients, big and small, sophisticated or not, are taking a back seat to the best interests of law firms."

Thursday, April 9, 2015

Risk News: Law Firm Insider Trading, Disqualification Discussions



Several interesting updates to share. First, an interesting question and paper flagged by the always excellent Legal Ethics Forum: "When Should eDiscovery Vendors Be Disqualified?" --
  • "As a general proposition, courts have inherent authority to disqualify parties and their representatives and consultants from participating in litigation. Attorneys, expert witnesses, and litigation consultants may face disqualification motions in the event of a conflict of interest. With the rapid expansion of the eDiscovery industry, however, a new question has arisen: If an eDiscovery vendor has a potential conflict of interest, when should it be disqualified? What standard should apply?"
  • "To put the problem in perspective, imagine that you manage discovery at a law firm representing the defendant in a contentious wage and hour dispute, and you recently hired an eDiscovery vendor to assist you in scanning and coding your client’s documents, at a cost of $50,000. Two months later, you receive notice from your vendor that the plaintiff’s counsel has requested its services in connection with the same case. How would you react? Would you expect a court to disqualify the vendor if it accepted the engagement? This scenario occurred in Gordon v. Kaleida Health, resulting in the first judicial order squarely addressing vendor disqualification. The Kaleida Health court ultimately denied the defendant’s motion to disqualify, allowing the vendor to continue participating in the case."

Next, two partners at McKenna Long raise several interesting issues in an article well worth the read : "Who Should Represent a Law Firm Against a Motion To Disqualify?" --
  • "When disqualification motions do come, attorneys should be prepared, hopefully having foreseen the issues.  But  “going it alone,” and not seeking the representation or advice of independent counsel, is the one most common mistake that increases the chance of turning a potential conflict of interest into a lost representation, a bar complaint and/or an action for legal malpractice.  Below are a few reasons why this approach is not the most effective."
  • "A Fool for a Client: Some may say that a law firm defending itself against a motion to disqualify has a fool for a client.  Here is what happens. When a motion to disqualify is filed, the targeted law firm ends up with two clients in the litigation.  The law firm continues to represent its original client.  In addition, however, the law firm now represents its own interests in attempting to continue the representation of the client."
  • "The law firm is not listed on the pleadings as a party, but it nonetheless has an interest in the outcome.  At that moment, the law firm has two clients whose interests may not completely align."
  • "In some situations, the law firm’s client might be better served financially or otherwise by other counsel.  On the other hand, in most situations, the law firm’s best interests are likely best served by the continuation of the representation.  The stage is set for, at the very least, a perceived potential conflict."
  • "The safer course is for the law firm to advise the client of any potential differing interests, including the advantages and disadvantages of hiring a new firm to contest the motion to disqualify.  Because the law firm has a financial (and potentially other) interest in the outcome, the law firm should avoid giving any advice in connection with the client’s decision on how to proceed."
  • "These risks could include members of the law firm being called as witnesses, unexpected fees and costs, or unknown restrictions imposed as a condition of the law firm’s continued participation.  The firm should not put itself in the position of  advising both itself and its client on these issues absent the full disclosure and consent required for multiple representation."

Fiually, another story of loose lips: "Insider Trading Case Involves Legal Secretary" --

  • "...a law firm administrative assistant had to work long hours and her boyfriend asked her why. She said her boss, a law firm partner, needed help with the merger of two insurance companies (Harleysville Group and Nationwide)... The boyfriend told his father. According to the SEC the father, Joel J. Epstein, then illegally traded on that information in advance of the deal going public."
  • "Epstein settled the civil action, according to the SEC. He will pay a total of $495,627, which is how much he and the four other tippees gained from the trading, a civil penalty plus prejudgment interest."
The Legal Intelligencer added:
  • "No charges have been filed against the son or the law firm administrative assistant and no allegations were made that the law firm did anything wrong."
  • "The girlfriend allegedly told her boyfriend about the deal and how it was causing her extra work and stress. She expected him to keep it confidential given their past history and practice of sharing confidences, according to the complaint."
  • "And, as in Epstein's case, the cases don't always involve firm employees misappropriating information. In a 2011 case, the SEC charged the father of a law firm attorney after the father, unbeknownst to the daughter, misappropriated information on a deal from documents the daughter brought home to work on over the holidays."
  • "Attorneys familiar with the work of the unit said these types of cases put professional service firms on notice that the SEC is paying attention to the misappropriation of insider information."

Wednesday, April 8, 2015

Disqualification News – Tainted, In-house Edition



Fascinating story about in-house counsel disqualification: "Acacia Feels Fallout From Schlumberger Ruling" --
  • "Patent licensing juggernaut Acacia Research Group [current market cap: $540m] suffered a blow last week when its lawyers—including its entire in-house legal department—were kicked off an infringement suit against oil field services company Schlumberger Ltd."
  • "Schlumberger’s lawyers at Latham & Watkins convinced U.S. District Judge Lee Yeakel in Austin to disqualify Acacia’s counsel in a case accusing Schlumberger of violating a patent related to three-dimensional geologic mapping. The judge also dismissed the suit, filed by Acacia subsidiary Dynamic 3D Geosolutions LLC, without prejudice."
  • "Schlumberger’s disqualification bid centered on the role that Acacia lawyer and executive Charlotte Rutherford played in Acacia’s decision to acquire the 3D-mapping patent in late 2013 and to sue Schlumberger in February 2014. Rutherford served as Schlumberger’s deputy general counsel for intellectual property for four years, until she joined Acacia and took the lead of its newly formed Texas energy practice in 2013. Schlumberger claimed Rutherford worked on matters related to Acacia’s infringement claims before making the move, and then counseled her new company about the litigation."
  • "Yeakel disqualified not only Rutherford, but also the rest of Acacia’s in-house legal team and its outside lawyers at Collins, Edmonds, Pogorzelski, Schiather & Tower. He then dismissed the case, ruling that 'although a harsh result,' Rutherford’s involvement had tainted the litigation."
  • "'This has been, to my knowledge, only the third case that’s been published where a disqualification has led to a dismissal,' said Latham’s Maximilian Grant, who argued the disqualification motion for Schlumberger at a November hearing."

Monday, April 6, 2015

Looking at Lateral Trends from Multiple Angles

An interesting slice of stories on laterals to share today, from several perspectives. First comes the client voice: "Newegg CLO: Lawyers Matter, Law Firms Don’t" --
  • "As it becomes more common for lawyers to hop between firms, corporate counsel are increasingly making decisions about whether to continue working with a firm or an individual lawyer. For Lee Cheng, chief legal officer at online retailer Newegg, Inc., the choice is simple: The lawyer, not the law firm is important."
  • "My philosophy and the philosophy of a growing number of in-house counsel, is that we hire lawyers, not law firms. As long as they demonstrate the same level of care, we are platform agnostic. The most important criteria is: Will they be able to continue to do the work that we hire them to do?"
Next, firm management, in the form of a video:

Paul Hastings Chairman Seth Zachary: "Zachary discusses his firm's approach to hiring laterals. He breaks down the code words of lateral hiring and explains why he'll walk away from a $20 million lawyer."

And, finally, another example of a lateral move making news: "Dechert Paris partner Mayer quits firm citing conflicts" -- 
  • "Dechert arbitration partner Pierre Mayer is quitting the firm’s Paris office to set up his own practice, citing his reasons for leaving as increasing conflicts of interest and a wish to focus on working as an arbitrator."
  • "He said that increasing numbers of conflicts of interest was one of the reasons for leaving Dechert. 'It's three times out of four that I have to refuse cases because there’s a conflict of interest,' Mayer said, adding that these conflicts were both actual and potential, commercial conflicts."
  • "He said that the problem had increased as Dechert had become more global and because the firm had toughened up its stance on commercial conflicts, notably in the energy sector where it was looking to protect existing and future clients."


Thursday, April 2, 2015

Risk News: Conflicts & Confidentiality



Firm Is Ousted as Counsel Against Nonclient Whose Secrets It Learned Via Related Case
  • "A law firm may not represent an expert suing a company for consulting fees where the firm learned significant amounts of sensitive information about the company when it represented a law firm against the company in a fee dispute arising out of the same underlying litigation, the California Court of Appeal, Fourth District, decided Feb. 27."
  • "While the firm never represented the company and did not acquire its secrets by wrongful means, the firm's 'wide-ranging access to privileged information in the first representation and the substantial relationship between the two matters' require its disqualification, Justice Raymond J. Ikola said in his opinion for the court."
  • "In ordering disqualification, the court pointed out that AlvaradoSmith had received substantial amounts of confidential and privileged information from Shared Memory Graphics when it represented the company's prior counsel, Floyd & Buss, in a fee arbitration proceeding arising from that same patent litigation."
  • "The trial court pointed out that the circumstances did not involve improper acquisition of confidences and that AlvaradoSmith was not accused of violating protective orders requiring the return of all confidential information at the end of the fee arbitration proceeding."

  • In the mass tort litigation context, where one plaintiff typically brings similar claims against numerous defendants within a particular industry, the coordination of defense efforts among codefendants can be a very prudent course of action."
  • "Additionally, in the absence of establishing preemptive safeguards prior to formulating a joint defense — namely a carefully tailored joint defense agreement — attorneys may run into a host of conflict of interest and waiver issues, unwittingly create an attorney-client relationship with other codefendants, and ultimately expose themselves to malpractice liability."
  • "Participation in a joint defense amplifies the risk that attorneys will encounter a conflict of interest. By way of example, if an attorney shares privileged communications with the joint defense group and is later determined to have a conflict of interest, that could result in potentially disastrous results for the entire group, up to and including disqualification of all attorneys involved in the joint defense agreement."

Wednesday, April 1, 2015

Citibank Report Criticizes Law Firms on Information Security


  • "The unwillingness of most big United States law firms to discuss or even acknowledge breaches has frustrated law enforcement and corporate clients for several years. That frustration bubbled over in a recent internal report from Citigroup’s cyberintelligence center that warned bank employees of the threat of attacks on the networks and websites of big law firms."
  • "The report said bank employees should be mindful that digital security at many law firms, despite improvements, generally remains below the standards for other industries."
  • "The Citigroup team issued the report as other Wall Street banks are putting pressure on the legal profession to do more to prevent the theft of confidential client information."
  • "John P. Carlin, assistant attorney general for national security, spoke this month at an American Bar Association conference in New Orleans, impressing on the lawyers the need to promptly inform clients and law enforcement authorities of attacks that could compromise confidential information."

In an interesting twist, Citigroup added some additional commentary after a few law firms mentioned in the report offered exculpatory detail (such as one firm noting that a hack on their corporate web site, hosted by a third party, did not result in any confidential information being disclosed):
  • "Citigroup issued a statement on Thursday distancing itself from the report. A person briefed on the matter but not authorized to speak publicly said the bank had stopped distributing it: 'The analysis relied on and cited previously published reports. We have apologized to several of the parties mentioned for not giving them an opportunity to respond prior to its publication in light of the sensitive nature of the events described,' said Danielle Romero-Apsilos, a Citigroup spokeswoman."

Tuesday, March 31, 2015

New Webinar Recording: New Business Intake & Conflicts (Building the Business Case)


 
We saw tremendous interest in the recent webinar: New Business Intake & Conflicts (Making the Business Case to Invest).
For those unable to attend live, a recording is now available online via this link.
Session Details
Improving business acceptance can deliver significant value to law firms – including better financial performance, improved client service, reduced risk, and increased lawyer satisfaction.

But, while the benefits are substantial, getting key stakeholders to agree to investing in change is not always easy. In this session, speakers from three Intapp Open clients discussed how they successfully made the case within their firms, covering topics including:
  • Why their firms decided to make the investment in enhancing New Business Acceptance
  • Why treating intake and conflicts in an integrated manner made sense for them
  • Strategies and approaches they took to make the business case internally and secure buy-in
  • The impact on lawyer efficiency and return on their investment in Intapp Open
 
This session features speakers from Procopio, Lewis Roca Rothgerber and Miles and Stockbridge:
 


Monday, March 30, 2015

Engagements Matter (Conflicts, Disqualifications & "Hot Potatoes")


Interesting disqualification story including a bit of debate about engagement letters, a topic we've touched on repeatedly recently: "Greenberg Traurig Is Disqualified in 2 TitleMax Suits" --
  • "Greenberg Traurig and Atlanta partner Mark Trigg are fighting two judges' orders disqualifying them from defending auto title loan company TitleMax against lawsuits by competitors accusing it of unfair business practices."
  • "Watstein said there is no dispute that Greenberg Traurig represented Select Management Resources (SMR), an affiliate of the plaintiff companies (but not among the named plaintiffs). The sides also agree that last year SMR's general counsel specifically refused to waive Greenberg Traurig's conflict when the firm entered an appearance on behalf of TitleMax, the plaintiff companies' biggest competitor, Watstein said."
  • "There is also ample evidence that Greenberg provided substantial advice to some of the other plaintiff companies as part of its SMR duties, even though it did not have a written agreement with those entities, Watstein added."
  • "Greenberg Traurig has argued that it provided only sporadic representation to SMR. Over the course of eight years, its filings said, the firm billed for less than 34 hours involving five discrete issues handled by partners in its offices in Washington, D.C., and Houston. The firm added that no 'implied' attorney-client relationship existed between it and SMR's affiliates."
  • "Greenberg Traurig also has pointed to a 2006 engagement letter with SMR stating that it would serve as 'limited engagement-legal counsel' for 'matters that may be assigned to [the firm] from time to time.' No other entity is mentioned in that letter."
  • "Watstein responded that Greenberg Traurig "places a lot of emphasis on that initial engagement letter. But they subsequently provided substantial legal advice, which is the standard for proving an attorney-client relationship. I can't provide you a ton of legal advice, then claim, 'Sorry, I didn't represent you because we didn't have a signed letter identifying you as our client.'"
  • "Watstein said Greenberg's effort to dump SMR in order to take on TitleMax as a client violates the 'hot potato doctrine,' which bars any effort to avoid a conflict of interest by dropping one client to take on a more lucrative one."

Wednesday, March 18, 2015

More Conflicting Opinions on the Billable Hour – "Unkillable Business Poison"?



Several stories this week on economic matters touching risk issues. Following the article on business intake, client selection and revenue, yesterday we posted on "bombs waiting in our files," and today we continue the trend of pointing out provocative industry commentary, with a story in the Canadian Post: "The unkillable billable hour: How Canadian corporations are clinging to legal business ‘poison'" --

As detailed in the above article: "the Ontario Court of Appeal issued a ruling that questioned the traditional practice of hourly billing."
  • "'There is something inherently troubling about a billing system that pits a lawyer’s financial interest against that of its client and that has built-in incentives for inefficiency,' wrote Madam Justice Sarah Pepall in a decision that reviewed the size of a legal bill in the receivership of a London, Ontario-area cattle farm. The appellate decision confirmed a lower court ruling that had cut to $157,500 from $328,000 a bill that law firm Borden Ladner Gervais LLP had sent to PricewaterhouseCoopers for work done on a relatively simple matter that took two months to complete."
  • "Billable hours are 'poison' to the legal business because they’re an incentive for inefficiency, Mr. Carayiannis [head of Conduit Law PC, a firm specialising in AFAs] says. It makes more rational economic sense to connect the price of legal services with the value they bring to a client’s business... There is an inherent conflict of interest,” says Mr. Carayiannis of Conduit Law. 'It pits our clients’ interest in getting a fair value at a fair price for our services directly in conflict with the lawyer’s interest in maximizing his financial gain.'"
  • "Clients generally aren’t fussed about hourly rates if they’re content with the dollar amount at the bottom of the bill, Mr. Milstone [Cognition LLP] says. That might look okay on the surface, but it masks a problem. A firm’s hourly rates are typically based a firm’s need to cover overhead plus the profit expectations of the firm’s partners. Missing from the equation is the value the work is supposed to bring to the client. Mr. Milstone says an hourly rate might be a tool that helps begin a discussion on what a legal service should cost, but it shouldn’t be the only thing that goes into the mix."
  • "Amar Sarwal, vice president and chief legal strategist with the Association of Corporate Counsel, a Washington-based group that represents in-house lawyers at corporations around the world, believes Canadian in-house lawyers are in a unique position. With a small number of top-flight Bay Street firms serving Canada’s relatively short list of blue-chip financial institutions and corporations, the country’s in-house lawyers should have the marketing clout to bring rapid change to the legal industry. “Canada has a more concentrated legal market, and because of that, it has an opportunity to change faster than perhaps the U.S. market,” Mr. Sarwal believes."

Tuesday, March 17, 2015

"Bombs Waiting in Our Files" – A Former Law Firm GC on Client Outside Counsel Guidelines


At the recent Risk Roundtable in San Francisco, I had an interesting discussion with two senior risk professionals about client restrictions on "positional conflicts," and their firms' response strategies when facing OCGs with such carve outs.

Now from BNA comes a timely, no-minced-words, no-holds-barred analysis on the state of Outside Counsel Guidelines: "Some Corporate Clients Are Going Too Far With ‘Guidelines' for Counsel" highlights a talk given by Simon Chester at the recent Hinshaw LMRM event. The full article is worth a read. Here are some highlights of the highlights --
  • "Law firms must explain, negotiate, argue, push back and ultimately be prepared to walk away from business dangled by corporate clients that insist on unreasonable “guidelines” for outside counsel, panelist Simon Chester said Feb. 26 during a program on outside counsel guidelines at the 14th Annual Legal Malpractice & Risk Management Conference"
  • "A show of hands from the audience in response to Chester's questions supported his thesis that corporate clients are increasingly presenting guidelines for representation to their outside counsel, that those guidelines are getting tougher and that few law firm members feel confident they are aware of guidelines to which their partners have agreed."
  • "Chester said that while general counsel at his former firm, he assigned his summer associates to search the firm's document management system for outside counsel guideline packages. 'There were hundreds of them,' he stated. He said he and the firm's management team 'had no idea' of the extent to which his partners had agreed to those 'bombs waiting in our files' that 'were setting the terms and conditions for our interactions with our clients.'"
  • "Chester said at his former firm 'we would tell associates not to use the term ‘research' on their billing records. Instead, they were instructed to substitute terms such as 'reviewing options' or 'conducting analysis.'"
  • "Clients increasingly require law firms to sign off on agreements to subject themselves to the same privacy laws that govern the clients, which may include HIPAA, financial privacy laws... Additionally, he remarked, clients frequently insert provisions that all of their data must be encrypted and none may be stored on any portable electronic device. 'How confident are you that [your] lawyers do that?' he asked."
  • "More often than not, Chester said, outside counsel guidelines stipulate that the firm owes a duty of loyalty not only to the client but to 'the entire conglomerate' and prohibit any legal services, even tax work, for competitors."
  • "Chester said guidelines are including provisions that they trump any other agreements with the firm, including engagement letters, and may state flat out that the client 'will not adhere to any guidelines or standard terms imposed by outside counsel.'"
  • "He said it's not unusual for firm lawyers working with the clients not even to read the guidelines. 'They're prepared to sign off on anything that's going to keep the gravy coming,' he stated."
  • "Chester warned the audience that individual partners — 'particularly partners looking for origination credits' — cannot be relied upon to protect the firm's interests when clients present them with unreasonable outside counsel guidelines."

Monday, March 16, 2015

Is the Billable Hour a Conflict of Interest?


From the interesting-arguments-in-ethics department comes this provocative opinion piece by Ralph Baxter, who concluded a 23-year tenure as Chairman and CEO of Orrick a few years ago, and was named one of the "Top 50 Big Law Innovators of the Last 50 Years" by The American Lawyer: "The inherent client conflict of interest caused by hours-based billing" --
  • "For some time I have been troubled by the potential conflict of interest that hours-based billing causes between the lawyer and the client. The more I focus on it, the more profound the problem appears."
  • "Let me start by saying that I have deep confidence in the dedication to ethical conduct of the members of our profession. My concern here is not with their fundamental professionalism. Instead, it is a concern that, notwithstanding that professionalism, the hours-based billing model can put them at odds with their clients in ways they do not intend, and in ways they may not recognize. It is a structural issue, not a moral issue."
  • "It is not just that what is bad for the client is good for the lawyer. The model incentivizes the lawyer to make it worse for the client."
  • "And law firms need to take responsibility for what they are permitting to occur. A material gap has developed between the costs incurred and fees charged and what those costs and fees could be. At some point the fundamental fidelity firms owe their clients and their ethical responsibility not to charge an unreasonable fee require them to revamp their business and service models."

Thursday, March 12, 2015

More on Clients, Fees & Conflicts



In yesterday's interview, Anthony Davis talked about the impact of "less than optimally managed" client selection on firm financial performance:
  • "First of all, the pressure to collect has led a number of firms to go further than they traditionally did, or safely should, go in suing clients for fees. Today, they [law firm general counsel] are beginning to say to management: “We're seeing the tail end of the problem when it comes to needing to withdraw when clients don’t pay or suing for fees. You can fix this by designating someone responsible for the client suitability question during intake. When we seek to withdraw in the middle of an engagement and especially when we sue for fees, we face increased claims. Our insurers can see that we're not looking at the whole picture at intake and increase premiums. Let’s address these issues up front. Give us or someone else in leadership the authority to address this issues before new clients are accepted.”
A reader sent word of an update from BNA on this very topic: "The Ethics and Financial Impact of Dropping a Client for Nonpayment of Legal Fees," which provides a very detailed overview, packed with citations and notes, of the who, what, when, where and why on the matter.

The story starts simply enough: "'Filing suit 'against a current client to collect a fee creates an untenable conflict under [Rule of Professional Conduct] 1.7 between the lawyer's duty to that client and the lawyer's 'personal interest' in collecting his or her fee.' In re Simon, 20 A.3d 421, 27 Law. Man. Prof. Conduct 409 (N.J. 2011)."

But then gets complicated quickly, as the article digs into topics including:
  • Grounds for suing clients for non-payment of fees
  • Intersection of fee non-payment and grounds for withdrawal (or not)
  • Treatment of fee agreements (and fees due) when withdrawals are successful, prior to the conclusion of fixed-fee and contingent matters
  • Lawyer ability to pursue fees when discharged by the client
  • Standards and approaches for determining "reasonable" fees in these complex scenarios

Wednesday, March 11, 2015

In Conversation: Legal Leaders on Risk, Revenue, Business Intake and More



Here's a fascinating and informative exchange between two experts in the field: "Intapp In Conversation – Focus on: The Business of Risk" --

Anthony Davis, partner at Hinshaw & Culbertson (known as the lawyers' lawyers) sits down with Pat Archbold, head of Intapp's risk practice group to discuss market trends.

Anthony shares several observations (coupled with practical advice and steps firms can take to improve business intake, reduce risk, and improve firm financial performance).

Topics include:
  • The changing legal business climate
  • Improving client evaluation and engagement to boost firm financial performance
  • Navigating growth tied to laterals and mergers
  • Changing internal perceptions of the role of risk management
  • Shifting priorities and staffing models
  • The role of engagement letters and fee agreements
  • Malpractice trends and insights
Sample:
  • Pat: To what extent are law firm general counsel considering broader factors than just ethical risk, including accounts receivable, when overseeing new client intake?
  • Anthony: General counsel have traditionally not been responsible for evaluating the whole issue of financial suitability. They've left it to the billing department to decide what billing standards to set, and traditionally general counsel did not see it as their role to look at the prospective client’s ability to pay as part of their role in managing intake.
  • Although this is new to them, they are starting to realize that these are issues – risks – that have to be addressed. And the question then is: Is it their domain? Is it their constituency? Or is it somebody else in the firm who should be making those determinations?
  • Because certainly general counsel are seeing the problem at the other end. Until recently, they often failed to see the connection between intake and fee suits until too late. When confronted with collection problems, they certainly say, "Why on earth did we take this client on?" but they didn't traditionally impose standards at the front end, because if they tried to, they were likely told by the business people and management: "Stay out of that, that's our problem." Except that it does become their problem at the end.
The complete article is definitely worth a read.

And those firms looking for more advice (and potentially assistance) from Anthony and his colleagues are encouraged to reach out directly.

Tuesday, March 10, 2015

Upcoming Webinar: New Business Intake & Conflicts (Making the Business Case to Invest)


 
Intapp is hosting a webinar featuring three law firm case studies: New Business Intake & Conflicts (Making the Business Case to Invest).
  • Date: Thursday, March 19th
  • Time: 9 am PST / 12 pm EST
  • Registration: Limited to select firms and partners. Please email Lea Schweitzer for more information.

Session Details

Improving business acceptance can deliver significant value to law firms – including better financial performance, improved client service, reduced risk, and increased lawyer satisfaction.
But, while the benefits are substantial, getting key stakeholders to agree to investing in change is not always easy. In this session, speakers from three Intapp Open clients will discuss how they successfully made the case within their firms, covering topics including:
  • Why their firms decided to make the investment in enhancing New Business Acceptance
  • Why treating intake and conflicts in an integrated manner made sense for them
  • Strategies and approaches they took to make the business case internally and secure buy-in
  • The impact on lawyer efficiency and return on their investment in Intapp Open
 
This session features from Procopio, Lewis Roca Rothgerber and Miles and Stockbridge, who will discuss the various business drivers, roadblocks and eventual paths to success they navigated at their firms:
 

Pat Archbold, head of Intapp’s risk practice group, will moderate the session, which will focus on these case studies and include time for audience Q&A. He also will provide a brief overview of Intapp Open and discuss how firms are using the software to achieve their strategic  goals including:
  • Evaluating new business in terms of profitability
  • Managing both financial and professional risk
  • Enhancing engagement letter management
  • Streamlining intake & conflicts for faster matter opening

Attendance is limited to select firms and partners. Please email Lea Schweitzer for more information.

Monday, March 9, 2015

More on Lawyers Leaving (Laterally or Otherwise) & Confidentiality


Following last weeks stories on lateral hiring and confidentiality issues, a reader sent notes to two related stories on the Lawyer Ethics Alert Blog. First: "Indiana Supreme Court imposes public reprimand on lawyer who required non-compete provision in associate’s employment agreement" --
  • "...the recent Indiana Supreme Court opinion which imposed a public reprimand on lawyer who required an associate to agree to a non-compete provision in an employment agreement and sent letters to the associate’s clients stating that he would be taking over the representation; however, he did not attempt to enforce the provision."
  • "According to the opinion, the lawyer’s law practice was primarily in social security disability law. He hired an associate in 2006 to work in his law office pursuant to an employment agreement which included a non-compete provision prohibiting the associate from practicing Social Security disability law for two years if his employment was terminated."
Next: "New York ethics opinion states that lawyers cannot reveal client confidences solely to respond to a former client’s criticism on a lawyer-rating website" --
  • "The opinion is: New York State Bar Association Committee on Professional Ethics Opinion 1032 (10/30/2014)."
  • "The opinion found that the above exception does not apply and that '(a) lawyer may not disclose client confidential information solely to respond to a former client’s criticism of the lawyer posted on a website that includes client reviews of lawyers.'"
  • "Bottom line: Lawyers be aware: according to this opinion, a lawyer may not include confidential information in responding to a negative posting by an ex-client (or current client for that matter) on a lawyer-rating website (or other third party website)."

Saturday, March 7, 2015

Breaking Bad Disqualification News


We first covered this story last September, involving efforts to disqualify a law firm working on behalf of the City of Chicago. It appears that coming out of the December denial of the attempt to disqualify the firm, the defendant drug companies have tried a different tack: "Judge won’t disqualify private lawyers representing Chicago in opioid lawsuit" --
  • "A federal judge on Monday denied a request for relief from a group of pharmaceutical companies being sued by the City of Chicago over the marketing of opioid painkillers."
  • "In the lawsuit that was later removed from state court to Chicago’s federal court, the City accused the companies of overstating the benefits of their drugs in a way that increased addiction and the city’s prescription and healthcare-related costs."
  • "The companies in September filed a joint motion, asking a judge to invalidate the contract between the City and Cohen Milstein Sellers & Toll – the law firm the City hired in 2013 to investigate and litigate the opioid matter – and issue an injunction barring the City from using the firm in this or any similar suit."
  • "They claimed they were entitled to this relief because the City improperly delegated governmental police power to a financially interested private party, with the police power being investigative subpoena power and the private party being Cohen Milstein."
  • "Further, the drug companies argued, the firm’s involvement violates city ethics rules and its financial interest in the outcome of the case creates a conflict of interest that violates their due process rights."
  • "In denying the motion, U.S. District Judge Jorge L. Alonso rejected those arguments and their latest attempt to get Cohen Milstein – a firm with 80 attorneys and offices in Washington, D.C., New York, Chicago, Philadelphia, Denver and Florida that is representing two California counties in similar litigation– booted from the case."