- "In the course of acting as a solicitor for law firms for over 30 years – both defending professional indemnity claims and advising on professional regulation – the author has encountered many issues arising from conflicts of interest; much pain has been endured by those who fell foul of the rules. When conflicts issues go wrong, they can be among the most damaging to a firm’s reputation – and reputation is the only thing we have to sell. Problems in practice fall into several categories, including:
- the conflict checking system failing to pick up the existence of a conflict, or significant risk of one, at all;
- acting for two or more clients, such as joint venture partners or husband and wife, and failing to spot either that their interests conflict at the outset or that they may do so further down the line;
- failing to spot when a conflict does arise in the future, as may happen when acting for lender and borrower, in some cases because the problem has unfolded gradually;
- taking on a small matter which precludes the firm from acting on something more substantial later;
- allowing a large client to impose its terms of business (or ‘outside counsel guidelines’) which impose more extensive duties than would apply at law and under the conduct rules;
- establishing systems which check for client conflicts, but fail to check at all for own interest conflicts, such as personal appointments as trustee or director;
- failing to spot that the solicitor’s own interests may conflict – perhaps the volume of work from one client, such as an insurer, and the desire not to offend it or appear uncommercial blinds the solicitor to the risk of conflict with the insured; and
- relying on information barriers when they are either not appropriate at all (because at most they may protect confidential information, but will not cure a conflict), or inadequate for the purpose they seek to achieve.
Monday, December 22, 2014
2014 law firm risk surveys. Intellectual Asset Management (IAM) features an interesting article by Frank Maher is a partner in Legal Risk LLP. "How well does your conflicts system work?" --
Posted by Dan at 6:51 AM
Thursday, December 18, 2014
Several stories showcasing the atypical. First up: "Leave to appeal granted in novel conflict of interest case" --
- "A Toronto law firm has obtained leave to appeal an order of a judge who removed it from a case on the basis of conflict of interest even if the traditional test for a conflict wasn’t met. On Nov. 27, Divisional Court Justice Barbara Conway found 'there is good reason to doubt the correctness of the motion judge’s order' to remove the firm despite the fact the party affected by the conflict wasn’t a former client or 'a near client' of the firm."
- "Superior Court Justice David Brown had removed Teplitsky Colson LLP as counsel of record for the plaintiff in a matter to do with alleged mismanagement of a hedge fund after finding it had obtained confidential information about the defendant company from an employee who was a former client of the firm."
- "A bombshell of a lawsuit goes in front of a Nashville judge Thursday as a pair of Nashville lawyers are suing their own ethics board for what they call ethical violations and a cover-up. That means they are suing the very people who punish lawyers for bad ethics."
- "It all started when one lawyer saw an email about his upcoming case sent to a judge without his knowledge... It was a secret email he knew nothing about."
- "'We discovered that the Board of Professional Responsibility was systematically engaging in unethical conduct. They, on a regular basis, were having secret conversations with judges, and now they are trying to cover it up,' Roberts said."
- "It's been a pretty wild ride the last few months over at the State Bar of California. First, the state Supreme Court pulled the plug on the rules commission that had worked for over a decade on a wholesale revision of the Rules of Professional Conduct. Not a single rule of the 67 submitted by the commission to the bar board in 2010 has been approved by the Court."
- "Then the Bar's board of trustees terminated Joe Dunn, its now-former executive director. Within a day of that news becoming public, Dunn—represented by high-profile, self-described 'criminal defense lawyer' Mark Geragos—filed a lawsuit against the Bar claiming he was a whistleblower."
- "There's much to speculate about, but a few things seem clear... whatever happens with l'affaire Dunn, the State Bar has to learn to be more responsive to lawyers who inquire about straightforward information and, especially, the public and the public's right to know. Lack of transparency may be convenient to Bar execs and board members, but opacity serves neither the interests of the legal system or the public."
Wednesday, December 17, 2014
First up, two partners at McKenna Long & Aldridge highlight a trend we've certainly witnessed here on the risk blog: "Motions to Disqualify: Four Things to Know" --
- "Few things are worse for an attorney than getting a new big matter, starting work, and then facing a motion to disqualify. In recent months, high-profile disqualification motions have appeared more frequently in various legal news publications and Internet news sites."
- "Many disqualification motions are well founded. Other times, disqualification motions are used as nothing more than a litigation tactic, forcing attorneys to scramble to protect valued client relationships."
- "More significantly, increasingly mobile lateral attorneys (with attorneys rarely spending their entire legal careers at a single law practice or firm) have triggered a host of issues that can be the basis of a motion to disqualify."
- "The best way to deal with motions to disqualify is to prevent them. Two important pre-motion strategies are effective. First, identify and resolve potential conflicts of interests including both multiple and successive representations prior to undertaking a representation or hiring a lateral. Where a conflict exists, an effective consent is the best defense to a motion to disqualify."
- "Second, take effective steps to mitigate, if not eliminate, risks that a former client's confidences and secrets might be accessible by attorneys working on a matter involving the former client. Increasingly, courts have recognized and accepted timely, effective ethics screens as a tool for addressing the risks inherent becoming adverse to a former client."
Next: "Publication of new IBA guidelines on conflict of interests in international arbitration – the key changes" --
- "The 2014 Guidelines, published on 28 November, do not mark a substantial departure from the Original Guidelines, and instead make refined changes to reflect and inform current debates on issues in modern arbitral practice, and 'the increased complexity in the analysis of disclosure and conflict of interest issues.' In clarifying the standards expected of arbitrators and parties, it is the aim of the 2014 Guidelines 'that arbitration proceedings are not hindered by ill-founded challenges against arbitrators' or that 'the legitimacy of the process [is] not affected by uncertainty and lack of uniformity.'"
- "Paula Hodges QC, Global Head of Herbert Smith Freehills’ International Arbitration Practice, says of the 2014 Guidelines that: 'we hope that these new Guidelines will prove useful in providing more clarity and a level playing field to parties and arbitrators, striking the right balance between impartiality and due process on the one hand and unmeritorious challenges on the other.'"
- Third Party Funders must disclose their identity, and share the “identity” of the party they are funding
- Arbitrators who are members of law firms, must also “bear the identity” of his or her law firm – this does not extend to barristers and their chambers
- "Advance waivers" by Arbitrators do not discharge an ongoing duty of disclosure
- 2014 Guidelines apply to non-lawyers sitting as arbitrators
- Disclosure of identity of parties’ counsel, including if the counsel is member of the same chambers as the arbitrator
- Duty of impartiality and independence extends to Tribunal Secretaries
- Arbitrator to consider making disclosure in situations falling outside of the time limits used in the Orange List
- Arbitrator and another arbitrator or counsel currently act or have acted together as co-counsel within the last three years
Posted by Dan at 7:21 AM
Tuesday, December 16, 2014
everything... Dukes, Vereins, Fee Splitting, Ethics Allegations, Cheese and a Platypus...) As Newsweek writes in: "Legal Swiss Cheese" --
- "Trademark lawsuits can be a little dry, but a California case in the fall has drawn attention not only because it involved John Wayne and a whiskey named 'Duke,' but also because it highlights a growing tussle over legal ethics."
- "In the Duke case, lawyers for John Wayne Enterprises argued in court documents last August that Norton Rose Fulbright, the verein law firm in which legacy firm Fulbright & Jaworski represented Duke University, was playing both sides of the fence—an ethical no-no."
- "Specifically, the Wayne lawyers asserted, Norton Rose, which formed the verein with Fulbright in mid-2013, had previously represented the distillery producing the Duke-branded bourbon in unrelated matters. Fulbright lawyers denied any conflict of interest, saying in court papers that verein 'member firms do not share privileged information with other member firms unless they are retained by and working together for a client on the same matter.' The judge did not address either side’s assertion."
- "The inner workings of vereins 'are going to be tested in courts, because someone’s going to be very unhappy,' says Edwin Reeser, a former managing partner at prominent law firm Sonnenschein Nath & Rosenthal LLP, who is now in private practice."
- "Still, the relative financial and operational opacity of vereins is the subject of increasing debate in legal circles. Peter Kalis, the chairman and global managing partner of non-verein K&L Gates, a major law firm, tells Newsweek, 'The business model for vereins is not yet proven.' Kalis has variously compared the mega-firms to a platypus (i.e. a freak of nature), a kaleidoscope, a “grand illusion” and a Potemkin village."
- "Law firms rushed into these network combinations because they sounded like a wonderful panacea” to the problem of expanding amid the post-2008 recession, Reeser says. 'But the U.S. law firms are going to be the losers in these structures because of conflicts of interests and ethics rules on fee splitting.'"
Posted by Dan at 7:09 PM
Wednesday, December 10, 2014
Rod Serling, the chances of a legal article _not_ touching risk issues making it to the blog are already high. Combine both, and, submitted for your approval: "Cybersecurity: Business Imperative for Law Firms" --
- "It is not difficult, then, as the late Rod Serling, host of the long-running television show "The Twilight Zone" asked viewers at the beginning of each episode, to 'imagine, if you will' the following scene:
- "A law firm's managing partner answers her phone on the first ring. It is 3 p.m. on the Wednesday before Thanksgiving and her husband wants to know when she'll be home... She clicks on the first email. It's from the chief technical officer of the bank that is the firm's biggest client. He is writing to advise that, due to increased cybersecurity scrutiny from New York State's Department of Finance and the Securities and Exchange Commission (SEC), he will be auditing the information security protocols of all of the bank's law firms."
- "He needs access to the firm's network and copies of all information security policies and procedures, along with materials used to train the attorneys and staff—current, of course—by the following Monday morning."
- "The managing partner swallows hard: There are policies, but they haven't been updated since BlackBerrys were the only smartphone allowed for firm business, five years ago."
- "She clicks on the second email. This one is from the chief information officer of a 100-hospital system that short-listed the firm for its national litigation counsel. His email says that the board has decided to review the information management policies of all the finalists. He apologizes but, he writes, after a recent incident in which another hospital system law firm inadvertently disclosed the information of 400 patients to Google, the board has decided not to award an engagement to any firm unless it can show that patient information will be adequately protected."
- "The managing partner picks up the phone, tells her husband she'll be working through the night and will also be leaving for the office right after the Thanksgiving meal, and offers that maybe one of the kids could help him cook."
- "With developments such as the requirements upon lawyers in the HIPAA omnibus rule and Superintendent Lawsky's letter requiring financial institutions to provide information about their law firms' information safeguards, the legal, ethical and business obligations come together. The question for law firms is not whether to become cybersecurity literate, but how quickly they can do so, in-house or with the assistance of outside experts and counsel, to the satisfaction of their clients and the clients' regulators."
Posted by Dan at 2:58 PM
Tuesday, December 9, 2014
Another post cribbing from the eagle-eyed Bill Freivogel, who notes a few interesting cases:
LADT, LLC v. Greenberg Traurig, LLP, 2014 WL 6686776 (Cal. App. Nov. 25, 2014)
- "Law Firm represented several parties in a transaction. At some point Law Firm wrote a letter to its clients mentioning possible conflicts of interest and eliciting a waiver from the clients. The letter also contained an agreement that any dispute regarding an alleged conflict of interest be subject to binding arbitration."
- "Later the clients sued Law Firm for malpractice (this case). The complaint made no mention of a conflict of interest. However, during discovery the clients answered 'yes' to a question whether Law Firm had had a conflict of interest. Upon receiving that response, Law Firm moved to compel arbitration."
- "The trial court denied the motion. In this opinion the appellate court affirmed holding that because the clients chose not to sue for a conflict of interest, the arbitration agreement did not apply to this case."
- "Lawyer served as law clerk in this court. While a clerk, Lawyer attended a settlement conference in this case in the presence of the magistrate judge who wrote this opinion. Lawyer left the court and joined Law Firm. After that, one of the parties, because its lawyer retired, hired Law Firm to handle this case. Because of the presence of Lawyer at Law Firm, the other party moved to disqualify Law Firm."
- "In this opinion the magistrate judge denied the motion. The court found that Law Firm erected a timely and effective screen pursuant to New York Rule 1.12. Of particular interest was the court’s discussion of New York cases considering whether smaller firms should be held to a different standard when evaluating the efficacy of screens. Here, the court held that Law Firm, which had twenty lawyers, did pass muster."
Posted by Dan at 10:11 AM
Monday, December 8, 2014
The folks at Paragon Brokers have submitted an interesting white paper : "Is Reputation Damage Insurable in Cyber Insurance for Law Firms?"
Evidently, there was a slide in a presentation at the ILTA conference this Summer that suggested that reputation isn't insurable under a cyber policy, and they wanted to set the record straight. (I guess that just delivered the spoiler to the question at hand... but the full paper is worth a review nevertheless.)
- "A data breach, network security or cyber event could render client or proprietary records unreadable, leave networks unavailable, expose sensitive data or transmit malware to others. In addition to exposing a law firm to increased costs of doing business, potential liabilities and regulatory scrutiny, a data breach, network security or cyber event could have an adverse impact on a law firm’s process, service, reputation, results of operations and financial condition."
- "Possibly one of the biggest 'cyber' exposures a law firm faces is to its reputation and there is a common misunderstanding that reputational damage cannot be insured in a cyber policy. This is not entirely correct, reputation loss can be insured when framed within the prerequisites of insurability, i.e., that loss is a) fortuitous, b) calculable & c) definite.
- How do insurers establish an insurable value to reputation?
- How do insurers establish reputation loss is “definite” i.e. that takes place at a known time, in a known place, and from a known cause?
- How is reputation loss of income adjusted?
- How can Cyber Insurance for Law Firms help?
Friday, December 5, 2014
"Million-dollar Lawsuit Rips Winstead Advice in NCPA Sex Scandal" --
- "In recent months, the National Center for Policy Analysis has worked hard to put a sex scandal involving its founder behind it... Now, however, the Dallas-based NCPA has filed a lawsuit against a prominent law firm and the firm’s chairman emeritus that revisits the sex scandal in detail. Among other things, the suit asserts that l’affaire Goodman caused the nonprofit organization to lose at least $2 million in fundraising—and nearly put it out of business."
- "In late November 2012, the suit alleges, when Winstead finally recognized that it had a conflict of interest in representing both Goodman and the NCPA, its general counsel, Don Campbell, decided that the firm could not represent both of them. His decision was conveyed to Goodman, the suit says, and Baggett then referred a proposed employment agreement and Goodman’s personal “release” document to a former Winstead partner to 'close the deal.'"
- "Flash-forward, then, to this past February, when Collins again complained that Goodman had sexually harassed her, the suit says, and Goodman again contacted Baggett to secure legal representation. Baggett agreed, telling Walker again in a voicemail message that Winstead could represent both Goodman and the NCPA without a conflict, and that it wasn’t necessary to inform the board about it, the suit says. Over the next two months, it continues, Winstead charged the NCPA nearly $31,000 for working on Collins’ 2014 sexual harassment claim."
- "General counsel at large multinational companies in Australia are under pressure from their foreign head offices to send their legal work to 'big name' global law firms instead of to leading Australian firms, a report by legal search firm Mahlab finds."
- "However, some global law firms that have opened their doors in Australia are falling short by failing to familiarise themselves with key multinational clients or to communicate with their cross-border colleagues."
- "Conflicts also emerged as a key difficulty for the major international law firms. Some general counsel said when they had tried to offer work to global firms in Australia, it was refused on the basis of a conflict — with partners unaware their company was an important international client. In some instances, the report says, global firms even acted against their multinational client."
Posted by Dan at 7:03 AM
Thursday, December 4, 2014
Much has been written about insider trading touching Wilson Sonsini (with headlines in 2011 for a lawyer, and more recently this year, for an IT staff member). Now comes an update on this latest chapter: "Wilson Sonsini employee pleads guilty to insider trading in N.Y." --
- "An information technology engineer at Wilson Sonsini Goodrich & Rosati pleaded guilty on Thursday to insider trading based on information he learned while working at the prominent Silicon Valley law firm."
- "Dimitry Braverman, 41, pleaded guilty in New York federal court to one count of securities fraud, two years after another Wilson Sonsini employee, attorney Matthew Kluger, received the longest insider trading prison sentence in history in a separate case in New Jersey."
- "Following Kluger's arrest, Wilson Sonsini's general counsel emailed employees to remind them of the firm's policies on insider trading, according to court documents."
- "Braverman had access to information about pending transactions through his job working on software for the firm's finance operations, prosecutors said."
No firm wants to see its name associated with these sorts of allegations, which is why an investment in policies, processes and tools that help prevent and identify inappropriate access to client confidential information are a prudent risk investment.
Posted by Dan at 7:17 AM
Wednesday, December 3, 2014
"Vikings Co-owners Seek Reversal of $103M Judgment" --
- "In New Jersey state court litigation that’s spanned three decades, the Wilf family, co-owners of pro football’s Minnesota Vikings, is making its case to upend a $103 million judgment against it last year for allegedly cutting off its business partners from the proceeds of a real estate deal."
- "In August 2013, after the lengthy trial, Morris County Superior Court Judge Deanne Wilson found that the Wilfs committed fraud, breach of contract and breach of fiduciary duty, and violated New Jersey’s anti-racketeering law, by shutting Reichmann out of the partnership, and also took more than $16 million out of the venture without disclosing the withdrawals to Reichmann and Halpern."
- "The Wilfs argue in their brief that Wilson wrongly allowed new claims into the case, failed to recuse despite a conflict and made numerous other errors, while the plaintiffs have cross-appealed Wilson’s reduction of the punitive damages and attorney fees, and her limitation of the scope of the racketeering claims."
- "The Wilfs further allege that Wilson should never have heard the case in the first place because of an unwaivable conflict of interest: During trial, Wilson’s husband, attorney Laurence Orloff, was involved in an unrelated matter as counsel for Lowenstein Sandler, the firm representing Jarwick and Reichmann."
- "'Judge Wilson’s disclosure to the parties of this obvious conflict of interest does not cure it,” they said in their brief. 'A financial connection between the trial judge and a party or law firm appearing before that judge is an unwaivable conflict.'"
- "A federal judge overseeing a battle between the sugar and high-fructose corn syrup industries has issued tentative findings on whether to disqualify Squire Patton Boggs due to conflicts that arose from its merger this year."
- "At a Tuesday hearing, U.S. District Judge Consuelo Marshall of the Central District of California found that Patton Boggs, which merged with Squire Sanders on June 1, had represented an opponent in the case in matters 'substantially related to the current lawsuit.'"
- "She also found that Patton Boggs had not obtained the consent of one of its clients, another opponent in the case, to waive potential conflicts arising from its June 1 merger with Squire Sanders."
- "The tentative decisions bode poorly for Squire Patton Boggs, which has made $12 million in fees so far from the case. Marshall said she would issue a final decision in a written ruling."
Tuesday, December 2, 2014
Sony Alleges Conflict Of Interest, Wants Acacia In-House And Outside Patent Litigation Counsel DQ’d" --
- "Motions to disqualify opposing counsel are not uncommon, especially in patent litigation... A recent disqualification motion filed in a patent infringement case pending in the Central District of California seeks to stretch the limits of the imputed disqualification rule beyond the usual contours. See Nexus Display Technologies LLC v. Sony Electronics Inc., No. 2:14-cv-05693 (C.D. Cal. July 17, 2014)."
- "On July 17, 2014, Nexus Display Technologies LLC (“NDT”) filed suit for patent infringement against Sony Electronics Inc. (“SEI”). NDT alleged that Sony infringed three patents. The complaint accused multiple Sony products, including Sony’s 'SXRD' projectors, of infringing NDT’s patents. The complaint was filed by Aliska Lipski of the law firm of Ahmad, Zavitsanos, Anaipakos, Alavi & Mensing P.C. (AZA). Ms. Lipski and AZA are the only counsel to have entered an appearance on behalf of NDT."
- "At least two threshold questions exist as to the applicability of Rule 3-310(E) to Mr. Siegel. First, the term 'member' means member of the California State Bar. See Cal. Rule Prof. Cond. 1-100. Mr. Siegel is not a “member” of the California bar. Interestingly, Mr. Siegel is a registered patent practitioner and thus is subject to the disciplinary jurisdiction of the USPTO."
- "The motion seeks to impute Mr. Siegel’s alleged conflict to NDT’s outside litigation counsel at AZA. The motion states that, 'Without such vicarious disqualification, Sony would unfairly be left to wonder what Mr. Siegel (or others at Acacia with whom he has discussed [NDT’s] case against SEL) may have disclosed to AZA concerning Mr. Siegel’s extensive experience defending SEL in patent cases and working with many of the same people who are potential witnesses and/or decision makers in the present suit."
- "Second, the motion fails to state or suggest that Mr. Siegel 'accept[ed] employment adverse to [his] former client' Sony, at least in the ordinary sense of those words. Yes, Mr. Siegel 'accepted employment' by Acacia. He did so, however, well before either NDT was formed or NDT filed its lawsuit against Sony. Rule 3-310(E) thus begs the question – what is meant by the term 'accept employment adverse to the former client?' The words appear literally to focus on the state of affairs at the time the 'member’s' 'employment' was 'accepted.' The motion to disqualify does not state Mr. Siegel’s “employment” was accepted at the time of, or with knowledge of, any adverse action against Sony."
- "A federal bankruptcy court judge dismissed a Chapter 11 case related to developer Patrick Turner's ambitious waterfront development in South Baltimore, clearing the way for a foreclosure on the property."
- "Attorneys for Inner Harbor West had argued that Ballard Spahr's involvement represented a conflict of interest, since the law firm worked on $160 million bond deal approved by the City Council and then-Mayor Sheila Dixon to pay for utility work, including roads, sewer and water lines, at the site."
- "Gordon said bankruptcy court was not the proper venue to resolve those claims, although he said, "I have to wonder why Ballard Spahr would not simply decline representation. … There was certainly enough on the surface to make a plausible allegation.'"
- "But Gordon said the dispute had no bearing on the bankruptcy. 'After mulling this over, I can't let the potential tail wag the dog — 'dog' a very appropriate word … for this Chapter 11 case — especially since there is no significant allegation made that the alleged conflict has any real impact at all on the debtor's ability to reorganize,' Gordon said."
Posted by Dan at 6:37 PM
Thursday, November 20, 2014
First, from Law360 (paywall/free trial): "Wiley Rein Fights Atty's DQ Bid In Continental Policy Suit" --
- "Wiley Rein LLP on Monday told a New York federal judge that the firm shouldn’t be disqualified from representing Continental Casualty Co. in a dispute with an attorney over a professional liability policy, saying that the attorney hadn’t shown that the firm would offer testimony prejudicial to him during trial."
- "Darius Marzec of the Marzec Law Firm PC had sought last month to disqualify the entire firm from representing Continental under the New York Rules of Professional Conduct’s witness advocate rule, which precludes attorneys from acting as advocates if they are likely to be a witness in the trial. Marzec had argued that the rule was triggered because the firm had represented Continental when it denied his claim for coverage."
- "But Wiley Rein argued that not only was Marzec’s argument premature because the rule is triggered only during a trial, he could only speculate as to the firm’s role in issuing Continental’s coverage correspondence."
- "'Mr. Marzec cannot possibly have personal knowledge of how Continental conducted its coverage investigation or made its coverage decisions. Thus, there simply is no factual basis for concluding that any of Continental’s attorneys are likely to be witnesses at a trial in this matter,' the motion stated."
- "The Chinese energy company China National Offshore Oil Corp. said it sanctioned one of its top lawyers for conflicts of interest with Baker & McKenzie, a U.S. law firm that has often represented it and that in Beijing is led by the woman’s husband."
- " Cnooc said it found that Karen Kang Xin violated unspecified national regulations and its corporate policies by accepting trips to Europe and Australia paid for by Baker, and that she subsequently helped the law firm win legal work. The note, which was reviewed by The Wall Street Journal, said Ms. Kang dated and then married Baker’s chief representative in Beijing, Stanley Jia Dianan, 'and did not withdraw from the conflict of interest after the marriage.'"
- "By citing the U.S. law firm by name in its allegations, Cnooc’s letter adds an international dimension to corruption investigations in China’s oil industry that have rocked the sector for more than year."
- "In response to questions Monday, Baker said in a written statement that it 'has strict rules and guidelines about professional conduct. Based on all of the information we have reviewed, we have not identified any breach of any professional rules or internal Baker & McKenzie rules by our attorneys or employees in this matter.'"
Posted by Dan at 7:02 AM
Wednesday, November 19, 2014
ILTA's recently published Fall White Paper features an article on the increasingly complex challenge of balancing compliance vs. convenience when it comes to law firm information security.
Co-authored by Rudy Moliere (Director of Records & Information at Morgan Lewis) and Mohit Thawani (Head of the Information Security Practice Group at Intapp), the article explores how firms can approach the trade offs between tightly controlling access to the sensitive internal information (which is increasingly distributed across offices, devices and even in third-party cloud services) and enabling lawyers and staff to be effective and avoid unnecessary barriers, overhead and inconvenience.
To understand the Benjamin Franklin featured in the clip art, read on in: "Information Security and the Spirit of Compromise" --
- "A security program that includes more stringent controls will inevitably have some impact on lawyer and staff behavior, habits and productivity. Everyone must understand how an innocent mistake could have drastic consequences."
- "They must also make informed decisions on how much risk the firm is willing to accept to maintain normal levels of productivity, and, conversely, how great a hit on efficiency the firm can accept to achieve a desired level of security."
- "As security becomes a business issue, IT and security professionals must also adapt their approach, doing less watching around the perimeter and more negotiating with those inside it about the level of security required."
- "There is no better way to do that than to align security with firm strategy, to remind leadership that today's clients expect strong controls and will readily take their work to another firm with a more confident security posture."
Tuesday, November 18, 2014
When it comes to expert Bill Freivogel, we're not exactly sure when he has time to do things other than legal research (though we know he does). Here are several recent decisions he's flagged:
- "HLP Props., LLC v. Con. Ed. Co. of N.Y., Inc., 2014 U.S. Dist. LEXIS 147416 (S.D.N.Y. Oct. 16, 2014). Law Firm found itself representing Parent Co. on corporate matters and against Subsidiary Co. on a long-running environmental matter (this case). Sub Co. moved to disqualify Law Firm in this case. In this opinion the court denied the motion. First, the court found that Parent and Sub were one for conflicts purposes, noting, among other factors, that they shared a law department. In effect, the court applied a balancing/'no harm, no foul' test. First, the court noted how prejudiced Sub’s client would be if it lost Law Firm in this case. Second, the court noted that different offices and different lawyers were involved at Law Firm and that there was no sharing of Parent’s information. Though ruling for Law Firm, the court said that Law Firm’s failure to obtain waivers from Sub and Parent when it began representing Parent was 'troubling.'
- "Anderson & Anderson LLP-Guangzhou v. N. Am. Foreign Trading Corp., 2014 N.Y. Misc. LEXIS 4611 (N.Y. Sup. Ct. Oct. 20, 2014). Client hired Lawyer to collect an arbitration award. Lawyer drafted the contingent fee agreement between Lawyer’s law firm 'Law Firm') and Client. Law Firm, representing itself, brought this action against Client to enforce the fee agreement. Client moved to disqualify Lawyer in this case. In this opinion the court disqualified Lawyer and Law Firm under Rule 1.9 (former client rule). The court also ruled that Lawyer, but not Law Firm, was disqualified under Rule 3.7 (lawyer as witness)."
- "The Copper Cellar Corp. v. Ole Smokey Distillery, 2014 U.S. Dist. LEXIS 146054 (E.D. Tenn. Oct. 14, 2014). Trademark case. Lawyer for Defendant has in the past done trademark work for Plaintiff. Plaintiff moved to disqualify Lawyer in this case. In this opinion the magistrate judge denied the motion. In a fact-intensive analysis the court noted that Lawyer’s work for Plaintiff involved different trademarks and said that “[t]he Court is not prepared to find that all trademark matters are substantially related” within the context of Rule 1.9."
Posted by Dan at 7:53 AM
Monday, November 17, 2014
Macfarlanes, a leading London law firm ranked amongst the top 20 most innovative law firms in Europe by the Financial Times, serving clients on a full range of corporate, commercial and dispute matters as well as on their private affairs, has implemented Intapp Open for new business intake and conflicts management.
Macfarlanes selected the Intapp Open platform after the product was launched in 2013. Intapp Open was rolled out firm-wide this year, following a successful pilot. Client matter inception at Macfarlanes is centrally managed by a team of six individuals across the conflicts and client due diligence (‘CDD’) processes; the same team also manages the training and rollout process throughout the firm.
Said the Firm's Head of Risk, Jo Riddick:
- "Quality of service is critical for Macfarlanes’ clients. Since going live with Intapp Open in May, we’ve been able to streamline our new business intake and conflicts management processes, capitalising on the synergies generated by the conflicts and CDD teams working from a common platform."
- "Working with Intapp, we’ve configured Intapp Open to support our bespoke client matter inception processes. The new system has given desktop-based visibility to our internal stakeholders, who can now see where ‘their’ client/matter opening process has got to, at a glance, and we have a one-stop client/matter inception audit trail for compliance."
Said Intapp President, Dan Tacone:
- "We’re delighted that Macfarlanes has migrated to Intapp for new business intake and conflicts, joining the growing community around Intapp Open. By using technology to automate, search, share and analyse information where appropriate, Intapp Open is helping to transform new business acceptance at leading law firms worldwide."
Visit Intapp.com for more information on Intapp Open new business intake and conflicts management software, or to request a demonstration.
Thursday, November 13, 2014
HP shareholder wants scrutiny of Wachtell role in controversial settlement" --
"Mike Pero stops his law firm from acting against him" --
"Webinar: ILTA and ARMA Present: Information Governance: A Revenue Opportunity"
- "If you are the most profitable corporate law firm in recorded history, with a habit of loudly defending the business judgment of corporate boards, you have to expect to take more than your share of shots. Wachtell Lipton Rosen & Katz is the Goldman Sachs of the law biz: When someone claims the firm has done something wrong, it’s news."
- "...a brief filed this week by a plaintiffs’ lawyer whose client opposes Hewlett-Packard’s controversial settlement of shareholder derivative claims stemming from the company’s disastrous $11 billion acquisition in 2012 of the British software company Autonomy."
- "Wachtell negotiated the settlement, which called for shareholders to release all claims against HP’s directors and officers but also for plaintiffs’ lawyers from Cotchett Pitre & McCarthy and Robbins Geller Rudman & Dowd to team up with HP in litigation against former Autonomy officers. (Plaintiffs’ lawyers were originally slated to be paid $18 million for their efforts.)."
- "HP is Wachtell’s client. It does not represent HP’s directors, who have their own lawyers. But according to dissenting shareholder A.J. Copeland and his lead lawyer, Richard Greenfield of Greenfield & Goodman, Wachtell was actually acting in the interest of HP’s board members, not the company itself, when it made a deal to release shareholder claims against HP directors."
- "This brief isn’t the first time in the HP case that Copeland and Greenfield have raised questions about Wachtell’s supposed conflict of interest. They advanced the same argument in a brief last month, asking for permission to intervene in the case."
"Mike Pero stops his law firm from acting against him" --
- "Mike Pero has successfully stopped a major law firm acting in a court case brought against him by the mortgage business he set up more than 20 years ago."
- "The allegations in the proceedings were kept under wraps last month by a High Court judge when Pero applied to stop law firm Buddle Findlay acting for the mortgage business in the case."
- "Pero had enjoyed a relationship with Buddle Findlay for seven years, the court heard, and the firm was already acting for Pero on unrelated litigation in Christchurch when it was instructed by the mortgage business for the present disputes. Pero told the Herald this morning that Associate Judge Associate Judge Matthews yesterday restrained Buddle Findlay from acting for the mortgage business."
- "'I thought from the beginning they could not possibly be serious. I spent weeks trying to persuade Buddle Findlay against what I considered to be unethical. I wasn't so much worried about my information being shared as the loyalty factor. I'm in business like thousands of others in New Zealand. I have respect for my customers and I would never consider trying to attack them while they are paying me for my professional services,' Pero said."
"Webinar: ILTA and ARMA Present: Information Governance: A Revenue Opportunity"
- "Law firms are under increased financial pressure due to a highly competitive market and clients demanding fixed-fee contracts. Information governance (IG) offers firms the opportunity to not only create a new practice, but also tap into a new source of revenue by leveraging existing relationships and experience."
- "Join us to learn about the impact of IG, opportunities for information governance at law firms and how law firms can help their clients with IG."
Wednesday, November 12, 2014
"Squire may be forced off major case after conflict check error in Patton Boggs merger" --
- "A multimillion dollar legal battle between the sugar and corn syrup industries is turning out to be anything but sweet for Squire Patton Boggs. This week, a California judge is slated to consider whether Squire, the law firm that has represented the sugar industry since it filed the lawsuit in 2011, should be thrown off the case because of two client conflicts stemming from Squire’s June acquisition of Patton Boggs — the Washington lobbying powerhouse that turned out to be representing the very companies Squire is suing in the case."
- "For nearly two months, between June 1 and July 31, Squire was inadvertently representing both the plaintiffs and the defendants in the lawsuit. Squire’s attorneys say it was 'an innocent error in a conflict check.'"
- "If the judge rules to disqualify Squire, the firm would be forced to give up a major chunk of business — a client that has paid the firm more than $12 million for this case alone — as a result of the Patton Boggs merger. Squire attorneys and paralegals have collectively spent more than 20,000 hours working on the case."
- "In court papers, Squire conceded that the firm made mistakes in the conflict check process for the merger, during which they used computers to run checks on more than 15,000 clients to screen for conflicts."
- "Law firm Ballard Spahr LLP has filed documents sharply disputing accusations made by developer Patrick Turner that the firm had a conflict of interest in representing Turner's opponent in his Westport Waterfront bankruptcy case."
- "The documents, filed in U.S. Bankruptcy Court on Thursday, question the timing of the claim made by Turner and argue that Turner is engaging in a "desperate tactic" because he is unable to defend himself from losing the 42-acre property to foreclosure. Ballard Spahr attorney Timothy McCormack also appears to be building a case that Turner's attorneys filed the motion in bad faith, which Judge Robert A. Gordon said Friday would result in sanctions from the court."
- "In an email noting Turner's attorneys' failure to respond to Ballard Spahr questions over the facts behind the case, McCormack warns Turner attorney Stuart Levine about the consequences for making court filings in bad faith."
- "Gordon has scheduled a hearing on Turner's filings for November 21."
Posted by Dan at 3:07 PM
Tuesday, November 11, 2014
We're pleased to announce the publication of the 2014 Law Firm Risk Survey. Four reports are now available, each presenting results from a specific geography, including the United States, United Kingdom, Canada and Australia. Over 2,300 professionals from leading law firms were invited to participate.
Produced by the Law Firm Risk Roundtable program and sponsored by Intapp, the Law Firm Risk Survey provides statistical information and commentary about the top priorities and concerns for law firm risk, IT and management stakeholders. The reports are designed to provide insight into how firms in each country are addressing key issues such as regulatory compliance, information security and confidentiality requirements, outside counsel guidelines, and new business acceptance.
Some of the trends identified in the 2014 Law Firm Risk Survey include:
- Law firms have been making significant investments in risk management. The trend is particularly striking in the UK, where 83% of firms responded that they had a dedicated risk management budget, up from only 45% in the 2012 survey. In Canada, 42% of firms reported having a dedicated risk management budget. Those firms that lack a dedicated risk budget typically draw resources from other departments, such as IT and finance.
- Information security and conflicts are ranked as the top risk management priorities for firms worldwide. Information security was the most frequently mentioned priority by a large margin in the UK, where 50% of respondents cited it as their top concern. In the US, 37% identified information security as their No. 1 priority, followed by conflicts management, which was the top concern for 22% of respondents. Meanwhile, in Canada, nearly 60% of respondents identified conflicts as their top risk management priority.
- Client-driven audits are becoming increasingly common, indicating a steady trend since 2012. Approximately 50% of respondents in the US and Australia indicated that their firm’s risk and security practices have been subject to an external audit, either by a client or regulatory body. Most client audits are performed by financial services entities in these countries.
Said Pat Archbold, head of Intapp's Risk Practice Group:
- "The 2014 Law Firm Risk Survey results offer a multifaceted view of the current risk management landscape. From information security and conflicts to outside counsel guidelines, today’s risk and compliance teams are under significant pressure to manage a wide range of client-driven requirements. This underscores the importance of a more holistic approach to new business acceptance – selecting clients and evaluating new matters with a 360° view of the firm’s business, and closely managing all the requirements attached to individual matters throughout their lifecycle."
- If you (or someone from your firm) participated in the survey, you should receive a copy of the final report shortly, via postal mail.
- If you did not participate in the 2014 exercise, we hope you'll make a New Year's resolution in 2015 to do so! (We all benefit from broad participation. Let's not let the tragedy of the commons take hold... Everyone do their part!)
- If you're not sure, but receive our mailers, watch your mailbox for a more detailed report summary and instructions on how to request the full report.
- Or you can write in to: firstname.lastname@example.org to be connected with details.
Thursday, November 6, 2014
Survey: Data Security Is Tech Chiefs' Top Worry" --
- "Worries about data security have reached new heights, our annual technology survey shows, with potential threats coming from outside the firm, and within."
- "Yet one topic dominates the discussion. In response to our question asking technology directors about their biggest challenges, 55 percent cited security, by far the most frequent answer. And overall, 74 percent of the chiefs say they are more concerned about security now than they were two years ago. Their clients are concerned too. While security was a leading topic on last year’s survey [“A Secure Location,” November 2013], the focus has only become more intense—and more time- and budget-consuming."
- "'Five years ago, we didn’t have client security audits,' says Gary Becker, the chief information officer at Reed Smith. 'We’ve had over 15 of them this year.'"
- "For law firm CIOs, the result is often a to-do list of remedial measures—new security hardware and software that must be deployed to satisfy the client, whose hypervigilance, several chiefs said in follow-up interviews, stems from multiple sources, including headlines hammering companies that suffered data breaches and beefed-up regulations, particularly in the finance and health care sectors."
- "But it is also time- and resource-consuming. Reed Smith now has three full-time staffers 'dedicated to meeting the security requirements of clients,' says Becker. 'That’s three people I didn’t have five years ago.'"
- Other firms have similarly bulked up on security experts. Vinson & Elkins, for instance, now has a full-time security director it didn’t have a few years ago. 'There are a lot of steps we need to do now to meet client expectations on security,' says the firm’s CIO, Dennis Van Metre. It’s not just a matter of installing the systems the client asks for, he says, but also 'asking the questions our clients will ask us' whenever a new tool, service or product is evaluated, from cloud computing to tablets to online deal rooms.
Posted by Dan at 1:12 PM
Wednesday, November 5, 2014
A grab bag of stories to share today. First, from Hinshaw comes: "No Duty to Defend Based on Insured's Material Misstatement at Time of Renewal" --
- The U.S. District Court for the Central District of California ruled that an insurer's duty to defend against a malpractice claim was not triggered by the insured's material misstatement about the nonexistence of a potential claim when the insured entered into a tolling agreement that gave notice that there were allegations which could lead to a malpractice claim."
- "Supreme Court of Puerto Rico rejects proposal to adopt ABA Model Rules"
- "Puerto Rico Supreme Court invalidates statute that made Bar Association membership mandatory"
And finally, with the midterm elections concluded, and states continuing to make policy in this arena, the North Dakota State Bar Association has noted : "ND State Bar opinion finds use of medicinal marijuana is a violation of the rules of conduct even if the use is legal according to state law."
Posted by Dan at 9:34 PM
Monday, November 3, 2014
Last week we highlighted international law firm Eversheds' successful implementation of Intapp Open for new business acceptance. Now, hot off the presses, comes a case study providing more detail from their Head of Operations, Kerry Kendall: "Eversheds Speeds New Business Acceptance with Intapp Open" --
- "Acutely aware of inefficiencies in the firm’s existing internal process for evaluating and clearing conflicts, the Conflicts and Compliance team at Eversheds was ready for a change. According to Kerry Kendal, Head of Operations, the previous conflicts software tool they were using was 'no longer fit for purpose, and generated a lot of data.' With the old system, the Conflicts team was unable to rank data by relevance or eliminate irrelevant search results. As a result, lawyers received lengthy conflict reports that were difficult and time consuming to read. Sifting through them could take hours of valuable time. Kendal adds, "You could develop a false sense of security, if the most important result had been pushed down to #174.'"
- "Partners evaluating new matters found themselves forced to manually look up client information and financial data – a tedious process that added hours to the conflicts evaluation process. 'With our previous system, we didn’t have access to past search records – so there was no record of our institutional knowledge across the firm,' says Kendal."
- "The net result was that the Conflicts team found themselves functioning mainly as conflicts administrators who ran searches for the legal teams, and had to undertake extensive quality checks to work around the limitations of the old system – to reduce the firm’s exposure to risk. 'We wanted to move toward a more efficient model where conflicts experts were doing more of the conflicts analysis – not the legal teams,' says Kendal. A more efficient process would save both the lawyers and the Conflicts team time and resources, reduce risk for the firm, and ultimately deliver a better service to clients."
Posted by Dan at 6:58 AM
Friday, October 31, 2014
A conflicts-related editorial coming out of the Garden State : "The Record: Lawyers' conflicts" --
- "Imagine the fox is running the henhouse. Imagine the fox has ties to a poultry processing corporation. Now imagine you are the hen."
- "That pretty much sums up where taxpayers stand in New Jersey as long as there is no conflict-of-interest law prohibiting law firms from working for state government while they are also employed as lobbyists trying to influence state government."
- "While Republican Governor Christie's former top appointee at the Port Authority of New York and New Jersey, David Samson, is currently under the spotlight for possible conflicts of interest, Democrats and Republicans have taken advantage of this ethical loophole for decades."
- "Samson, as former Port Authority chairman, voted for projects that also benefited clients being represented by his law firm, Wolff & Samson. And as reported by The Record, governmental affairs agents affiliated with the law firm lobbied the Economic Development Authority for clients while Wolff & Samson was the EDA's bond council."
- "The scandal involving the George Washington Bridge has spawned numerous investigations – some related to the lane closures and others to the internal operations of the Port Authority. The bi-state agency would not be affected by a Jersey-only law, but Weinberg's bill would do much to put an end to a practice that too often is not in the spotlight."
- 'Whether anything illegal occurred at the Port Authority during Samson's tenure as chairman has not been determined. But the ethical question can be answered now: Conflicts of interest should be eliminated and avoided."
- "Weinberg said, 'The fact is that we have to put an end to this culture of influence-wielding, because we are paying a price for political favor-trading and governmental waste and abuse by individuals who seek to enrich themselves on the backs of taxpayers.'"
Posted by Dan at 7:12 AM
Thursday, October 30, 2014
An excellent article published by the ABA/BNA Lawyers' Manual on Professional Conduct
"Clearly Enforceable Future Conflicts Waivers" --
- "We therefore set out to write what we believe to be a future conflicts waiver letter that should withstand virtually any imaginable ethical or legal attack. This article is the result."
- "Before turning to the letter itself, we will review three authorities from 2013 that uphold future conflicts waivers. After discussing these authorities, the article will first identify the general preconditions or helpful conditions for effective future conflicts waivers and then turn to the specific draft language."
- "Ahead of a looming merger vote with Locke Lord, a roughly 20-lawyer IP group from Edwards Wildman Palmer in Boston is poised to depart for Mintz, Levin, Cohn, Ferris, Glovsky and Popeo as a result of a conflict between their practice representing a large pharmaceutical company and Locke Lord’s work for a generic drug manufacturer, according to five sources familiar with the matter."
- "The Am Law Daily has learned that David Conlin, cochair of Edwards Wildman’s IP litigation practice in Boston, is head of a team that's conflicted out of a merger with Locke Lord. One of Conlin’s biggest clients is Japanese drug giant Takeda Pharmaceutical Company, whose North American unit fended off a generic challenge to its oral antidiabetic agent Actos in 2006 with the help of Conlin. In subsequent years, Conlin has continued to handle IP litigation work for Takeda."
- "Edwards Wildman declined to identify the lawyers affected by the conflicts issue or the case that it involved. The firm did, however, acknowledge the existence of an irreconcilable conflict. 'As is the case with any law firm merger, prospective client conflicts can be an issue,' said a statement provided to The Am Law Daily by Edwards Wildman. 'In this instance, we have identified a specific client conflict that would arise from the anticipated merger. As a result, some of our colleagues will be leaving the firm. We thank them for their contributions and friendship, and we wish them well in their new endeavors.'"
Posted by Dan at 6:56 AM
Wednesday, October 29, 2014
"Judge Tosses Shareholder Suit, Finding No Counsel Conflict" --
- "A federal judge in Newark has dismissed a shareholder suit claiming hotel operator Wyndham Worldwide failed to fend off breaches of its computer networks and then declined to litigate against the employees responsible for allowing the breaches based on advice from conflicted counsel."
- "The judge rejected the plaintiff’s claim that the law firm representing Wyndham in the shareholder suit, Kirkland & Ellis, had a conflict of interest because it also represented the company in a separate suit related to the hacking incidents that was filed by the Federal Trade Commission."
- "In an attempt to demonstrate Wyndham’s directors acted in bad faith, Palkon claimed that the company wrongly refused his litigation demand based on advice from conflicted counsel. He relied on Stepak v. Addison, an Eleventh Circuit case from 1994. In that case, a company’s outside counsel was found incapable of evaluating a shareholder demand because the same firm had represented the company in related criminal proceedings. The panel in Stepak found the law firm had divided loyalties to the client because its continuing duty to preserve the confidences of its clients in the criminal case hampered its investigation of the subsequent shareholder allegations."
- "But Chesler said Kirkland & Ellis did not face the same conflict as the firm in the Stepak case because its obligations were to act in Wyndham’s best interest in both the FTC case and the shareholder case, Chesler said."
- "A federal judge considering conflict-of-interest claims against Gibson, Dunn & Crutcher sided Thursday with the powerful law firm. Though she said Gibson Dunn 'engaged in troubling conduct' in HLP Properties LLC v. Consolidated Edison Company of New York, U.S. District Judge Lorna Schofield found no need to disqualify its lawyers from the case."
- "The finding comes in a lawsuit by Manhattan developer HLP Properties to make Con Edison's subsidiary pay $24 million for the cleanup of a site once known as the West 18th Street Gas Works."
- "Though Schofield found that Gibson Dunn lawyers had met with Con Edison representatives about the environmental dispute "on at least four occasions" between those years, Con Edison's subsidiary did not cry foul about the alleged conflict until 2014."
- "Schofield found "no indication of an actual or apparent conflict in loyalties," but said Gibson Dunn should have sought waivers from both parties to guard against the potential for one. The judge also suggested that Con Edison's lawyers may have drummed up controversy for "tactical" reasons. To avoid leaving HLP without its longtime legal team, Schofield refused to disqualify Gibson Dunn. 'Were it not for this consideration, the outcome of this motion might well have been different,' her opinion states."
Posted by Dan at 6:41 AM
Tuesday, October 28, 2014
Leading international law firm, with more than 4,500 legal and business advisers worldwide, Eversheds, has implemented Intapp Open software for conflicts management. Eversheds selected Intapp Open last year as part of a firm-wide programme to streamline business acceptance, and was recently shortlisted for the prestigious British Legal Awards 2014 "Best Use of Technology" award.
Now live and in production, the software has streamlined conflicts searches and accelerated the evaluation of new clients and matters for the firm. Using Intapp Open, the Conflicts and Compliance team at Eversheds now process an average of 160 conflicts searches a day, or approximately 42,000 annually.
- With 52 offices across 30 countries, Eversheds has a proven track record in conflicts management; however, its previous approach required lawyers to spend a great deal of time evaluating and responding to long, complex conflicts reports.
- Since implementing Intapp Open, the administrative burden on lawyers and staff has been reduced significantly. By automatically filtering and cleaning the data generated by conflicts searches, Intapp Open has enabled the Conflicts and Compliance team to create simplified, shorter reports which rank potential conflicts in the order of priority, and eliminate clearly irrelevant results. The system also provides the firm's management with visibility of similar conflicts searches being initiated across different parts of the business, enabling partners to align across various practice areas and regions as needed.
Said the Firm's Head of Operations, Kerry Kendal:
- "Once we switched the new system on, the benefits of using Intapp Open were immediately apparent to key stakeholders across the business – saving time and resources, reducing risk for the firm, and ultimately improving our responsiveness to clients,. The efficiency gains have allowed the Conflicts team to deliver an enhanced service, enabling lawyers to open matters faster, and enabling the Conflicts team to support the effective execution of the overall business strategy of the firm."
In July of this year, Eversheds launched an expanded new business acceptance programme, to help assess new client matters in terms of their financial viability, potential for growth, and fit with the long-term business goals of the firm. In addition, the Conflicts team has been tasked with extending the conflicts analysis programme beyond the UK and across Eversheds International.
Said the Intapp Risk Practice VP, Pat Archbold:
- "The Conflicts team at Eversheds has done an outstanding job of demonstrating how highly efficient conflicts analysis links to better business strategy and execution for the firm. We're very excited that Intapp Open has been central to enabling Eversheds's expanded business acceptance programme."
Visit Intapp.com for more information on Intapp Open new business intake and conflicts management software, or to request a demonstration.
Posted by Dan at 7:01 AM