Monday, April 24, 2017

Indemnity Increasing Indeed In OCGs

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

Thursday, April 20, 2017

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

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

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

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

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

Wednesday, April 19, 2017

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

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

Monday, April 17, 2017

New Business Intake – Thomson Snell & Passmore Selects Intapp

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

Sunday, April 16, 2017

Money Laundering Rules Shift, AML Breaches Cost Partners Money

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

Thursday, April 6, 2017

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

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

Wednesday, April 5, 2017

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

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

Tuesday, April 4, 2017

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

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

Monday, April 3, 2017

On Disqualifications: You win some, you lose some

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

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


Sunday, April 2, 2017

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

Saturday, April 1, 2017

Ethics and Litigation Finance

Regarding this interesting issue, increasingly making news, comes a survey report sponsored by an entity in the financing space, in conjunction with the news site Above the Law, offering a good overview of several risk and ethics issues: "A Litigation Finance Ethics Primer" --
  • "Lake Whillans recently partnered with Above the Law and conducted a survey on litigation finance to learn details on who is using it, impressions of their experience, who isn’t using it and why."
  • " firms with the most experience using litigation finance were the very largest and very smallest firms surveyed: law firm size of 500+ lawyers (48.57%) and law firm size of 2-5 lawyers (58.54%). Litigators whose practice concerns the energy industry had the highest proportion of firsthand experience followed by the technology sector; finance/banking had the lowest. A resounding 85% of those with firsthand litigation finance experience would use it again."
  • "In general, a lawyer can (but it is not obligated to) raise the prospect of litigation funding to a client who may lack funds or wants to hedge litigation risk (the two most off-cited reasons to seek litigation finance per our survey).  As the American Bar Association’s Commission on Ethics 20/20 put it in its informational report on litigation finance, 'if it is legal for a client to enter into the transaction, there would appear to be no reason to prohibit lawyers from informing clients of' the existence of litigation finance companies or referring clients to particular litigation funders. The lawyer should disclose the potential conflict between her interest in having her fees paid and the client’s choice to use litigation funding, disclose any relationship with a funder, and obtain informed consent as necessary."
  • "The prohibition on champerty–which has been defined by the U.S. Supreme Court as “[helping another prosecute a suit] in return for a financial interest in the outcome”– is fading in the United States where it ever existed at all. Federal law never adopted the prohibition; neither did states such as California and Texas."
  • "Communications with a funder are not per se protected by the attorney-client privilege, since the financier, while often comprised of trained attorneys, is not acting as the client’s legal counsel. There is an unsettled question as to whether the common interest exception would nonetheless apply; courts that have considered it have split on this issue."
The full report is also available online here.

In related news, the Second Circuit just upheld the ban on private investments in law firms.

And for those reading to the end (always recommended), a fascinating historical tidbit: "A Texas-Sized Centennial for Vinson & Elkins" --
  • "Three years later, in 1924, Elkins made arguably a bigger contribution to the firm’s growth by starting a bank, Harrington said. Called the Guaranty Trust Company, it eventually became First City National Bank, one of the largest banks in Texas by the 1970s. As the bank chairman, Elkins offered his law partners access to credit, and gave his law firm a steady stream of clients — any of his bank clients would be referred to Vinson & Elkins for their legal needs."
  • "'I couldn’t say definitely if Elkins was the only lawyer to start a bank, but it is definitely unusual,' said William Henderson, a law professor at Indiana University. 'Of course, in the 20s, there wasn’t the public’s concern over conflict of interest like there is now.'"

Thursday, March 30, 2017

REPORT: NY Risk Roundtable

We recently held a Risk Roundtable meeting in New York, graciously hosted by our colleagues at Cravath and co-sponsored by HBR Consulting. Pat Archbold, head of Intapp’s Risk Practice Group sent in highlights and thoughts:
  • Engaging and open discussion last week in New York. For conflicts management, there is a considerable level of interest among the firms in moving for a more centralized conflict clearance model. One firm that recently decided to centralize has hired a non-practicing lawyer to pilot this clearance approach with a small group of early lawyer adopters, with plans to expand service in 2018.
  • As part of that broader roll out, it will hire more lawyers on the conflicts review team. But by its calculations the financial benefits of centralization in terms of reduced risk and improved client vetting will more than pay for the investment.
  • Discussion turned to appropriate conflicts staffing levels (an area we’ll be revisiting at Inception in May). Generally, firms see non-practicing lawyers as best suited for analyst roles. One firm explained that they have different levels of staff aligned and mapped to specific scenarios. For example, one class of analyst conducts “first pass” review of patent matters, asbestos cases and restructuring matters, with the preliminary results then escalated and reviewed by non-practicing lawyer-analysts.
  • With firms looking at risk more broadly, including financial risk, one organization highlighted efforts to address time leakage. They explained that their firm has implemented a system where lawyers receive progressively increasing financial penalties for every week time entries are delayed, with monies gathered donated to charity. In addition to raising funds for good causes, the firm reported a materially positive impact to the bottom line.
  • There was a good discussion around the different types of third-party content that firms are incorporating in to their business intake process. In addition to corporate tree data, firms discussed how they are incorporating financial content to better assess financial risk in the onboarding process to help improve realization and reduce extended receivables.
  • One firm was kind enough to share some screen shots of how they are incorporating financial data in to their onboarding software and process.
  • There was also great discussion on improving client data captured before, during and after the on-boarding process to leverage that information for future business development efforts. One firm shared how they use Intapp Open to kick off a knowledge capture process after deal closing that then gets leveraged in pitch development by their business development team.
  • To capture this level of detail, firms discussed about how they assign associates, staff, or in one case professional support lawyers to capture this knowledge. Some firms assign an associate at matter opening, one firm is reviewing time entry data and looking for the associates that billed the most time to determine who would be best to able to articulate the specific details on an engagement. Overall I would say that there is more happening in this space among NYC firms than I have seen in the past.
  • One firm described how workflow managed by  Intapp Open, used for business intake, feeds a global experience management database used to prepare the firm for pitches. This is a natural alignment across intake and business development (which we’ve been investing in supporting with our experience management solution). All of that internal and external data on new matters has tremendous value for business development, pricing and targeting of future new business.


Wednesday, March 29, 2017

EVENT: Risk Roundtable in San Francisco

Our next Risk Roundtable event as co-sponsored by ILTA and will take place on Wednesday, April 5th at the San Francisco office of Morrison & Foerster.
  • Allison Martin Rhodes, Partner at Holland & Knight, will provide an overview of the common business intake practices firms at varying firm size bands are using to evaluate new clients and matters with procedures that fit the firm’s size, makeup and resources —  and the supporting internal firm process needed to streamline and enhance these approaches to benefit both firms and their clients.
  • Meg Block, Vice President of Risk Consulting at Intapp, will focus on the increasing ethical and business conflict principles that are driving firms to rethink their “conflicts clearing” process. 
And, as always, we’ll have plenty of time for open discussion, peer exchange and networking.

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

Tuesday, March 28, 2017

For the Record: Records Management System Swap Outs Continue (Latest Example)

Legal IT Insider Reports: "Nelson Mullins Riley & Scarborough, LLP Selects FileTrail for Its New Records Management Solution" --
  • "FileTrail, a leader in information records management software for the enterprise, announces Nelson Mullins Riley & Scarborough, LLP has signed a multiyear contract. A large-scale, South Carolina-based law firm, Nelson Mullins will deploy FileTrail to manage its physical records and its information governance policies, as well as retention and disposition workflows for both electronic and physical records."
  • "According to John Churchill, Nelson Mullins’ Records Department Manager: 'Our team did a lot of research to find a records management solution to replace LegalKey, which isn’t fully supported anymore. We needed to move to something that was more dynamic and specifically designed to meet the needs of a large law firm. FileTrail really fit the bill.'"
  • "With 17 offices and over 500 attorneys, Nelson Mullins explored several possible records management options to make sure that its next solution aligned with its software needs: 'After evaluating numerous solutions, we kept coming back to FileTrail. In addition to its focus on law firms, what really made it stand out from the competition was its integration with NetDocuments. While other records management solutions were only in the process of developing that functionality, FileTrail has a longtime relationship with NetDocuments. That integration was its biggest selling point. FileTrail’s interface is very similar to NetDocuments, which will make it easy to use right from the start,' said David Worth, CIO of Nelson Mullins."
  • "Nelson Mullins worked closely with FileTrail to make sure the features and functionality met the law firm’s specific needs. InOutsource, a trusted information governance consulting company, is handling the implementation of FileTrail."
  • “FileTrail is the best choice for law firms looking to move to a new platform. Our solution uses the latest technology, can integrate with leading document management systems in the legal space and has a variety of unmatched information governance features. Other records management systems depend on older technology that still requires desktop installation and has little depth in terms of integrating with information governance requirements. You need to look at FileTrail before you replace your current old system with another old system,” said Darrell Mervau, president of FileTrail.

Monday, March 27, 2017

More Detail on Conflicts-driven Departures

"Breakaway Lawyers From Kasowitz Firm Point to Conflicts Dispute" --
  • "A group of lawyers known for celebrity divorces surprised the legal industry last spring when they announced they would leave the New York law firm led by Marc E. Kasowitz, a longtime lawyer for President Trump, after two decades at the firm. Now, the lawyers say their departure resulted from an internal dispute over conflicts of interest."
  • "They point to a ruling this month that disqualified the firm, Kasowitz Benson Torres & Friedman, from representing an opponent of the Georgetown Company in a $35 million real estate dispute because the law firm already represented one of Georgetown’s principals, Joseph B. Rose, in a divorce case."
  • "Ms. Alter’s practice was one of the few such family practices at a large law firm, where conflicts can occur between the business dealings and the private lives of the wealthy. Typically, a memo is circulated among all the partners of a firm to ensure there are no conflicts in taking on a new case. But, according to the legal papers, that was not done in Mr. Rose’s case, even though he had been a client for some time."
  • "The position of the Kasowitz firm, according to legal documents, was that there was no conflict between representing Mr. Rose’s personal dealings and representing his adversary in the legal dispute over a fee for development rights for a property in Manhattan’s Chelsea neighborhood."
  • "In the ruling this month detailing the disqualification efforts on both sides, Justice O. Peter Sherwood of the New York State Supreme Court sided with Mr. Rose, noting that his Kasowitz lawyers had 'been privy to Rose’s personal and financial information, including information about Georgetown and the fees at issue in this litigation.'"

Sunday, March 26, 2017

Conflicts Check Called Cause of Considerable Consequence

"Whoops! Client Conflict Check Creates $4B Merger" --
  • "Did a Big Law partner’s conflict check accidentally tip off a buyer to a deal in the works and result in one of the biggest media mergers of 2016? That very well could be the case, according to a letter that Comcast general counsel Arthur Block wrote to the Securities and Exchange Commission."
  • "Comcast purchased Dreamworks Animation SKG in April 2016 for roughly $3.8 billion in total. But that deal might never have come to pass if Comcast’s outside counsel at Davis Polk & Wardwell hadn’t called to make a routine conflict-check and accidentally spilled the beans that an Asian investment firm was on the verge of buying Dreamworks, according to Block’s letter. Neither Block nor anyone at Davis Polk & Wardwell are accused of any wrongdoing."
  • "According to the letter, Comcast’s outside lawyer William Aaronson at Davis Polk, learned on April 10 that the head of M&A at his firm, George R. Bason, Jr., was angling to represent one of the financial firms advising Dreamworks on its potential sale to an Asian private equity firm. Knowing that his client, Comcast, posed a possible conflict in such a representation, the next day, Aronson called a Comcast executive Robert Eatroff, who handled global strategy, to get permission for the firm to advise on the matter."
  • "According to the SEC complaint, on April 13, Comcast CEO Brian Roberts contacted Dreamworks about a possible sale and by April 28, a deal had been approved by Dreamworks’ board: Comcast paid $41 per share, beating the Asian private equity firm’s offer to pay $35 per Dreamworks share."
The LA Times provides more detail on the mechanics and speed of the deal itself: "How thhe Comcast DreamWorks deal came together so fast."

Tuesday, March 21, 2017

Public Firm, Public Conflicts Allegation

Touching on a multiple issues and topics we've previously covered: "Slater and Gordon accuses class action firm of conflict" -- 

  • "The $100 million legal battle over the share-price collapse of listed law firm Slater and Gordon has taken a bitter twist over an allegation of a serious conflict of interest. Slater and Gordon faces a class action led by its No.1 rival, Maurice Blackburn, after the collapse of its share price last year."
  • "The spur for the conflict-of-interest allegation was a move by Maurice Blackburn to apply to the Federal Court for details on Slater and Gordon's insurance policies and documents relating to the debt-strapped law firm's rescue deal with its bankers."
  • "Its application came after Fairfax Media revealed a rescue package for the debt-strapped law firm will use a legal precedent to ring-fence the company's assets from secondary creditors including class action claimants."
  • "Fairfax Media also revealed Slater and Gordon is expected to reach an in-principle agreement with its bankers for a debt-for-equity swap by March 17. Lawyer for Slater and Gordon, Leon Zwier of Arnold Bloch Leibler, said he had concerns about Maurice Blackburn representing shareholders and that should also be discussed in the mediation talks.
  • "'It's a serious issue,' Mr Zwier told the court. 'It's like asking Channel Seven to play a role in the reconstruction in Channel Nine.'"

Monday, March 20, 2017

IP Conflicts: Always challenging for the intellectual

Following the news about Ropes & Gray, BNA conducted an interview with Greg Sueoka, former Fenwick & West managing partner: "Prominent IP Lawyer on 100 Lawyers and Staff Leaving Ropes & Gray" --
  • "One of the big stories last week was Ropes & Gray’s announcement that it would spin off its patent prosecution practice, resulting in 100 lawyers and staff departing the large Boston-based law firm to form a new entity."
  • "On Friday, Big Law Business caught up with Greg Sueoka, the former managing partner of Fenwick & West, who has maintained a patent prosecution practice of his own and now operates the boutique, Patent Law Works, which he formed after leaving Fenwick in 2010."
  • "Sueoka: I loved the people at Fenwick, but one reason I left was because of conflicts of interest. As a patent prosecutor, I’ll deal with a decent number of start ups. Maybe their initial spend might be in the tens of thousands of dollars. But litigators and corporate folks say, ‘We don’t want that conflict.’  Patent litigation is a huge law firm revenue ticket item. When it comes to a conflict between my little tens of thousands, which might grow to half a million or more later, I was getting conflicted out of a lot of work."
  • "Sueoka: If you bring in, say, ten startups a year, in two years, five of those companies will be gone because they’re startups. Four years later, you only have three clients left, but those three clients will be good companies, generating a lot of revenue for you.  But that still creates conflicts when you have large numbers of companies coming in. Technology moves in waves. Everybody is trying to do the same thing at the same time, whether it’s Snapchat and messaging, Facebook — they all kind of come together at the same time and you don’t know who’s going to be the next Facebook or LinkedIn versus who are going to be the losers. The amount of conflicts we’re going to have here is relatively easy to manage compared to me competing with 1,000 other lawyers to bring a client into a big firm."

Sunday, March 19, 2017

When the story ends... (Ethics opinion on firm dissolutions)

"Dissolving Firms Must Still Put Clients First, DC Bar Says"
  • "Despite numerous requirements facing attorneys during a law firm’s dissolution, the principal obligation for lawyers and the firm during the process must be to focus on the present and future needs of their clients, a new ethics opinion released Friday by the D.C. Bar said."
  • "The D.C. Bar said attorneys must not only attempt to see current matters through to completion, if possible, but are required fulfill their ethical obligation to notify clients of the impending dissolution. The opinion said a significant amount of responsibility in terms of client notification and representation also falls on the firms themselves, as in most cases they are the signatories of engagement letters with clients, not their attorneys."
  • "The ethics opinion addressed the responsibility of client notification in the event of a law firm dissolution. While it is difficult to pin down an exact time after a dissolution decision to inform clients, the bar said law firms must do so in a “timely” manner to comply with the D.C. Bar rules of professional conduct."
  • "The bar went on to say that this notice should be given to allow a client enough time to plan its next move as to future representation, especially when a matter is pending. Additionally, the opinion stated that notification should be given to all clients that could be affected by the dissolution. The bar said this even includes clients with inactive matters and closed files, as long as the files have been closed for less than five years, or in the event that the property held contains some sort of intrinsic value like a will or stock certificates."
Full text of the opinion at the DC Bar web site.

Sunday, March 12, 2017

WEBINAR: Replacing Your Records Management System

Our expert risk consulting colleagues at InOutsource are co-hosting a webinar on replacing legacy records management systems.

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

"Dare to Compare: Must-Have IT Requirements for RMS Replacement" --
  • Join Tim Clauss, Implementation Manager at InOutsource, and Jamie Richgels, VP of Engineering at FileTrail, as they review key considerations when evaluating a replacement Physical Records Management Solution.
  • This session will review total cost of ownership, project management, and implementation, as well as ongoing support considerations.
  • It will also include discussion of FileTrail as a modern replacement for legacy systems
  • They've noted: "FileTrail is a modern records platform that is easy to deploy with features to enable law firms to comply with their information governance policy. FileTrail’s retention review module stands alone in the marketplace. FileTrail is browser-based, offers both a hosted and on premise solution and integrates with a variety of systems used in law firms including iManage Work and NetDocuments."
To sign up, visit their registration page.

Thursday, March 9, 2017

Risk News: ABA + Insurance, Clients + Confidentiality

"ABA begins offering cyber liability insurance to lawyers, law firms of all sizes" --
  • "The American Bar Association has expanded its insurance offerings to include cyber insurance, adding a well-timed line of insurance to its coverage that already includes life, disability, dental, vision and travel insurance for law firms."
  • "The innovative insurance is underwritten by Chubb Limited and includes cyber coverage for a firm’s own expenses, such as network extortion, income loss and forensics, associated with a cyber-incident as well as for liability protection and defense costs. The coverage can be tailored to meet a law firm’s unique needs and also includes Chubb’s loss mitigation services both before an incident and following an incident."
  • "In recent years, the legal profession has become a popular target for hackers. Despite vigilance and increased awareness by law firms and individual lawyers, cyber-related risks have escalated based on the sensitivity and nefarious uses of that data. Last year, for example, the Manhattan U.S. attorney’s office unsealed indictments against three Chinese men who are accused of using stolen law firm employee credentials to access troves of internal emails at two law firms. The men, according to prosecutors, used details they obtained from partners’ emails about pending deals to make more than $4 million in illegal stock trades."
  • "'Cyber insurance coverage is a valuable and practical member benefit for lawyers offered through the ABA Insurance portfolio,' ABA President Linda A. Klein said. 'As the number of cyber breaches increases everywhere and throughout all industries, it is critical that lawyers and law firms that rely on vast amounts of electronic data are protected. As the legal profession evolves, the ABA remains at the forefront in providing attorneys the tools they need to thrive.'
  • "A whistle-blowing general counsel won an $8 million federal jury verdict earlier this month, in a case that might encourage other GC’s to call out corporate wrongdoing."
  • "After deliberating only three hours, the jury in Wadler v. Bio-Rad found that the GC had a reasonable basis for reporting his suspicions about the company’s Chinese sales operations to the organization’s audit team."
  • "But the jury found that the company had retaliated against the GC by firing him after the report, in violation of the Sarbanes-Oxley Act, and that absent the report, he would not have been terminated for legitimate reasons."
  • "The award to the GC included $5 million in punitive damages... the GC’s lawyer attributed the punitive damages to the company  CEO’s creation of a back-dated negative performance review; computer metadata proved that the review hadn’t been created until after the GC had been fired.Whether the Bio-Rad case will be upheld, and whether it is a trend or an outlier, remain to be seen.  But in the short run, it may encourage other GC’s to blow the whistle."
"Akin Gump, 2 Other Firms Face DQ Bid In Ameranth IP Row" --
  • "Akin Gump Strauss Hauer & Feld LLP, Alston & Bird LLP and Norton Rose Fulbright LLP should all be barred from serving as counsel in a consolidated suit over patents covering online-ordering technology, said Ameranth Inc. on Friday in California federal court, renewing disqualification bids put on hold by a three-year case stay."
  • "The Friday filings reiterate a 2013 disqualification bid centering around former Magistrate Judge Charles Everingham, who oversaw a separate Amaranth suit that targeted three of the four patents tackled by the consolidated litigation. Everingham later joined the private sector and became a partner at Akin Gump, where he worked with Stein before Stein left for Alston & Bird, according to the motion."
  • "In another Friday motion, Ameranth also asked to disqualify Jim Warriner and his current firm Norton Rose Fulbright LLP, saying Warriner previously clerked for Everingham during his tenure as a magistrate, thus connecting him to the previous patent litigation. Warriner represents hospitality defendants including Expedia, Hotwire and Fandango."
  • "According to the filings, Everingham presided over at least one precursory case, Ameranth v. Menusoft, from 2007 to 2011 and sat in on confidential settlement meetings with Ameranth’s principals before joining the law firm.'These facts call into question whether Akin Gump could have possibly adequately screened Mr. Everingham from the matters involving Ameranth,' the motion said."

Wednesday, March 8, 2017

Waivers standing there, frogs falling elsewhere (Disqualification News)

Hinshaw highlights: "Risk Management Issue: Can client A's waiver, given with informed consent, permitting lawyer to represent client A jointly with client B in the same matter be effective to permit lawyer's continued representation of client B in the future should lawyer no longer represent client A, where such continued representation will or may be adverse to now former client A?" --
  • "Because it was indisputable that the matters were "substantially related", the dispositive issue was whether Foltz had waived the apparent conflict of interest arising from Tom Cummings' current representation of Ryan. The engagement agreement's waiver provision stated that both Foltz and Ryan "hereby waive any actual or potential conflict of interest which currently exists or may arise out of Tom Cummings' representation of both of them." Foltz contended this provision was inapplicable to the instant case, however, because it only provided consent for Tom Cummings to represent him and Ryan at the same time, not for Tom Cummings to represent Ryan in the future should he no longer represent Foltz."
  • "The Court disagreed. Relying upon Oklahoma's statutory rules of contract construction, the Court did not construe the retention agreement and its waiver provision as narrowly as Foltz suggested. Foltz conceded that at the time Plaintiffs decided to hire Tom Cummings, both men "had competing interests for the same funds" at issue. With this recognition in mind, both plaintiffs agreed to waive any actual or future conflict of interest stemming from Tom Cummings' dual representation. The Court was satisfied that, with respect to Tom Cummings' current representation of Ryan, Foltz has given a knowing waiver, i.e., an 'informed consent' to such representation under Rules 1.7 and 1.9."
And, disqualification news: "Cooley DQ'd In Leapfrog’s Trademark Suit" --
  • "A California federal magistrate judge has granted Leapfrog Enterprises Inc.’s request to disqualify Cooley LLC from representing competing educational game company Epik Learning LLC in a trademark infringement suit."
  • "Magistrate Judge Elizabeth D. Laporte on Thursday decided that Cooley may not continue representing Epik in the case because the firm previously had a long-standing relationship with Leapfrog and had advised it in similar matters, but she refused to sanction the firm for not withdrawing sooner, saying the issue was not 'clear cut.'"
  • "In the opinion, the judge said it was a 'close call' but that the balance tipped in favor of Leapfrog because Cooley had acquired a substantial knowledge base of how the company operates over the years. Leapfrog said it considered Cooley its 'go-to firm' for two decades and that it has paid Cooley about $10 million in fees for various matters, but Epik contended that Leapfrog was late in speaking up about the potential conflict."

Tuesday, March 7, 2017

News juxtaposed, Information disclosed – whether or not they chose (and Texas)

"Metadata Fair Game in Texas?" --
  • "In a recent opinion, the Texas bar panel adopted the minority view on metadata, which states that there is not an obligation to inform opposing counsel that he has sent a document containing metadata. Moreover, Texas rules do not prohibit searching for and  in extracting metadata from documents. Of the nineteen jurisdictions that have issued opinions with specific requirements regarding attorneys’ obligation when transmitting or receiving documents containing metadata, Texas is the third state to opine that its rules do not require notification to the sender of the document."
  • "Additionally, the Texas opinion indicates that the ethics rules “do not prohibit a lawyer from searching for, extracting, or using metadata” embedded in documents sent from opposing counsel. Currently, ten other state’s opinions forbid searching for or extracting metadata from the documents."
  • "The Texas opinion acknowledge other state opinions and notes that . lawyers may be subject to metadata restrictions if they are subject to the rules of other jurisdictions."
"Putting Papers on File-Sharing Site Waived Privilege" --
  • "Putting sensitive materials on an unprotected file-sharing site waived a plaintiff’s attorney-client privilege and work product protection for those materials, a federal magistrate judge in Virginia held Feb. 9 ( Harleysville Ins. Co. v. Holding Funeral Home, Inc. , 2017 BL 39590, W.D. Va., No. 1:15cv00057, 2/9/17 )."
  • "However, the magistrate judge also ruled that defense counsel acted improperly by accessing the materials and using them without notifying the plaintiff’s counsel and asking for a court ruling. Disqualification isn’t warranted, but defense counsel must pay the parties’ costs in connection with the disqualification motion as a sanction, Magistrate Judge Pamela Meade Sargent decided."
  • "The court’s waiver ruling should make lawyers think twice before putting confidential documents in a file-sharing site without password protection. The case is also a reminder that lawyers generally aren’t free to secretly exploit inadvertently disclosed materials even if they believe the disclosure waived any privilege claim."
  • "The magistrate judge said the insurance company inadvertently disclosed the confidential material when an employee intentionally uploaded the case file to the Box site. The disclosure waived the attorney-client privilege under the multifactor waiver test set out in Virginia case law, the magistrate found. The employee should have known that the information uploaded to the site wasn’t protected in any way and that anyone who clicked on the hyperlink could access the case file, the magistrate said."

Monday, March 6, 2017

INCEPTION: Insights Inspire Inspection and Attention

 A brief note to remind readers that the early bird registration deadline for Inception 2017 (May 15-18) expires this Friday. With great turnout (and great feedback) from risk-focused attendees last year, it was inevitable that we’d increase our risk investment in 2017.

Indeed, we’re planning informative, instructive and inspiring sessions. These include a special Risk Roundtable track. (And a GC breakfast event, which I heard loudly and clearly that many non-partner, risk professionals wanted in on last year. Message received, see below.)

Some key sessions, panels and topics which should incite interest:
  • Panel summary and discussion of key takeaways from the morning GC breakfast
  • Risk staffing approaches for conflicts management
  • Enhancing the business impact of risk management
  • Making the case for investing in risk
  • Expanding client evaluation (beyond conflicts, how to address client health, strategic alignment and other factors)
  • Enhancing intake through better client requirements and terms of business management
  • Integrating third party data into business acceptance
  • Case studies about migrating from legacy conflicts applications
  • Advanced topics and scenarios in new business intake
  • Advanced topics in conflicts management and compliance (AML, KYC, etc)
  • Addressing business intake/conflicts management as part of general Practice Management System (PMS) migrations and upgrades
  • Information security trends and drivers
  • Why Walls, information barriers and screens now matter more than ever
While (full disclosure) some of these sessions have an Intapp focus (it’s the “in” thing these days, after all), many are broadly focused on approach and strategy, applicable to any risk professional.)

The latest agenda, event overview and a new “Dear Manager” letter template (for those who might need some assistance making the case for investment to their supervisors) are all online at:

Dan... Discounts?
I previously offered qualified and enterprising blog readers a path to an additional discount. And in the spirit of inclusion (today is a big post for “in” words), I’m extending the same offer this week, with a limited supply on hand.

If you’re interested... email: Tammy (and tell her that I sent you). (And watch for future updates on Inception 2017.)

And, for a bit more flavor on the event, see this 90 second recap video highlighting the 2016 experience:

Sunday, March 5, 2017

Conflicts Corrected, Conflicts Protested, Conflicts Clearance is Requested

Here's an update to a long running story we and others have had an eye on for several years: "Covington Pays to End 3M Conflicts Row. The deal puts an end to an unusually high-profile clash between a Fortune 100 client and its onetime law firm." --
  • "Ending a long-running conflict of interest dispute, Covington & Burling has agreed to settle claims that it betrayed its obligations to onetime client 3M Co...The unusual clash between a Fortune 100 company and its well-known former law firm had drawn attention from specialty law publications and legal ethics blogs, as well as more mainstream outlets such as the Minnesota Star Tribune and The Washington Post."
  • "Lead 3M lawyer William Brewer III of Brewer, Attorneys & Counselors said in a statement that Covington or the firm's insurer would provide some sort of payment to 3M as part of the settlement. Further details were not publicly available."
  • "The dispute began taking shape in 2010, when Covington, representing Minnesota on a contingency basis, sued 3M for allegedly polluting state waterways by its handling of fluorochemicals once used in such products as 3M's Scotchgard stain repellant."
  • "More than a year later, 3M's lawyers sought to have Covington disqualified from the case. The company maintained that in the years before the 2010 water pollution suit, Covington had advised 3M on regulatory issues related to fluorochemicals. Lawyers for 3M later filed a separate lawsuit, accusing Covington of 'side-switching' and breaching the firm's contractual and fiduciary duties to the company."
  • "Following multiple rulings and appeals, a Minnesota state judge determined in February 2016 that Covington could continue representing the state in the environmental suit. But the judge also found that Covington had violated its ethical duty to 3M."
Next an update to an item we noted last month: "Holland & Knight Protests DQ Bid To Judge’s ‘Dismay’" --
  • "A New York federal judge scolded Holland & Knight LLP for a letter it submitted in a case pitting First NBC Bank against ethanol distributor Murex LLC, saying the unsolicited filing contesting a bid to disqualify the firm did not reflect well on it and that its attorneys had 'abused the court's courtesy.'"
  • " Given that the current case is one of first impression, the letter goes on to say, 'there is ample risk that Murex's motion [to disqualify Holland & Knight] and the circumstances giving rise to it are tactically motivated.' Murex contends that Holland & Knight used confidential information obtained from consulting work performed by one of the firm's senior policy advisors to achieve an unfair advantage in a suit brought by FNBC."
  • "The judge told the firm at a Feb. 13 hearing that he found it likely that Holland & Knight had represented both sides. However, he said he would give the firm and its client some time to decide their next move. He was "not inviting substantive briefing" on the matter, but asked them to inform him of their "bottom-line determination.""
  • "On Tuesday, Judge Engelmayer said the firm abused the courtesy he had extended, and that he was "constrained to express dismay" at the tactic. 'While the court appreciates the strength of counsel’s views on the pending disqualification motion, HK’s resort to such a fait accompli, in support of its own self-interest, does not reflect well on the firm,' Judge Engelmayer said."