Wednesday, May 27, 2015

New York Event: CNA Large Law Risk Management Forum

Our colleagues at CNA write in with an invitation to attend their upcoming large law risk management forum, designed for firm management and senior risk professionals:
  • "We are pleased to invite you to a complimentary seminar focusing on law firm risk management. The seminar will feature multiple panels addressing today’s emerging law firm risks from various perspectives:
    • Trends in lawyers professional liability claims
    • Business continuity/business interruption planning
    • Information risk trends
    • Cyber event response
  • "CNA is the leading professional liability insurer of law firms in the United States, with more than 50 years of experience in providing insurance solutions and risk management services to law firms and attorneys."
The session is set for Wednesday, June 17, 2015 (1pm - 5pm) and features law firm speakers from Hunton & Williams, Fried Frank, Harris Beach, Baker Hostetler. For additional information and to RSVP, please see CNA's official invitation.

Monday, May 25, 2015

"Preposterous" Conflicts (Potentially Important Precedents)

Significant ink spilled in recent days on a conflict accusation facing Kirkland and Ellis. First, Kirkland responds to Mylan's disqualification attempt: "Kirkland Blasts 'Preposterous' Mylan Conflicts Claims Ahead of Hearing" --
  • "Kirkland & Ellis came out swinging this week against a lawsuit alleging that it ignored a conflict of interest by advising Teva Pharmaceutical Industries Ltd. in Teva's ongoing $42 billion bid for rival drugmaker Mylan N.V."
  • "Mylan's May 7 preliminary injunction motion, the firm says, is 'an unwarranted attack on the integrity and reputation of real people at Kirkland.'"
  • "In a statement earlier this month, Kirkland insisted that Mylan signed a conflicts waiver that covers the firm's representation of Teva. Monday's brief fills in the details, describing several cases in which Kirkland represented Teva and other companies that were adverse to Mylan without triggering any suggestion of a conflict."
But what's most interesting is the commentary on the pages of the Wall Street Journal: "Dealpolitik: Why Lawyers Need to Care About the Mylan-Kirkland Battle" --
  • "But sometimes it gets complicated, particularly in the corporate world where lawyers have many clients which in turn have many interests.  Big firms try to manage the issue by asking sophisticated clients to give their consent to some conflicts."
  • "Kirkland represents subsidiaries of Mylan, apparently in connection with some intellectual property litigation.  (Much of the court filings are filed under seal or redacted so the details of some of the dispute remain confidential.)  How can it then represent Teva in an attempted takeover of Mylan?  This where a law firm’s conflict management comes in.  Adverse representations can be permitted if the client has given informed consent."
  • "Mylan acknowledged in a court filing it gave consent to Kirkland in its engagement letter for certain adverse representations.  The consent is limited to matters which “are not related to the legal services that” Kirkland provides to Mylan.  In my own experience, this kind of generic waiver is commonplace at large firms, particularly those that have a significant takeover practice."
  • "Mylan’s position has far-reaching implications for takeover law firms.  Almost any representation of a corporate client involves its commercial and other strategies.  If the federal court throws Kirkland out of the deal, the decision could create doubt as to whether any law firm could work on a takeover fight where a client, or even a former client, is on the other side.  That outcome could be jarring to a number of large firms that have hundreds of clients but also have a thriving M&A practice."

Wednesday, May 20, 2015

Book Review: Conflicts of Interest in the Practice of Law: Causes and Cures

Intapp principal consultant and legal industry veteran Alexa Kokinos writes in with her review of Richard E. Flamm's latest: "Conflicts of Interest in the Practice of Law: Causes and Cures" [direct link to complete review] [publisher's web site] --
  • "In Conflicts, Flamm surveys the development of conflicts of interest in the United States as a history where simple principles confront the complexity of facts, circumstances and interpretation."
  • "Conflicts offers a comprehensive, extensively researched examination of ten different aspects of conflicts rules and law, ranging from 'Concurrent Conflicts of Interest' to 'Conflicts Involving Former Clients,' 'Attorney-Client Relationships,' and 'Consent.'"
  • "Model Rule 1.9 on conflicts involving former clients, for example, states that a lawyer shall not 'knowingly represent a person in the same or substantially related matter.'"
  • "Flamm devotes two chapters overviewing how federal and state courts interpret 'substantially' and 'related' differently. When considering whether a conflict arises with prospective clients, a party alleging a conflict claim is expected to show that counsel went beyond 'initial and peripheral contacts' by acquiring confidential information that could be 'significantly harmful' to the prospective client."

Tuesday, May 19, 2015

Time On Your Side? (Sometimes, Sometimes Not) – Conflicts, Disqualifications & Billing Records

Several interesting updates to share. First up: "Tensegrity DQ'ed in Suit Against Former Weil Client" --
  • "It's been nearly 10 years since Matthew Powers and Steven Cherensky handled patent and trade secret cases for Micron Technology Inc. while working at Weil, Gotshal & Manges. But on Friday they were disqualified from a case against Micron and their former law firm over the same NAND flash technology. Despite the passage of time and updates to NAND, U.S. District Judge Richard Andrews ruled there was still too much risk that Micron's confidences could be used against the company."
  • "'In addition, the fact that Messrs. Powers and Cherensky might be required to depose and cross examine the very same witnesses they previously represented creates the appearance of switching sides,' Andrews wrote in Innovative Memory Solutions v. Micron Technology."
  • "It's the second time Powers has been disqualified from a case against a former client since leaving Weil Gotshal in 2011 to launch Tensegrity Law Group, a plaintiff-side intellectual property firm. Powers represented numerous big technology companies during his 18 years at Weil, so steering clear of conflicts at Tensegrity has posed some challenges."
  • "Powers and Chernesky billed 4,000 hours on patent and trade secret cases for Micron and Lexar, a company Micron acquired in 2006, according to Andrews' opinion. Micron intends to argue that the Innovative Memory patents can be traced to confidential trade secrets that leaked from Lexar, so that previous representation is directly at issue, Micron argues."
Next: "Sydney law firm ruled to be in conflict" --
  • "A Nova Scotia Supreme Court justice has ruled a Sydney law firm made a mistake in accepting a retainer from a client involved in a land dispute with another client represented by the firm. In a decision released Wednesday, Justice Frank Edwards granted the application by Jacqueline Lappin that the firm of Sampson McDougall was in a conflict and should not represent another client with whom Lappin was embroiled in a land dispute."
  • "In September, construction began and Lappin contacted senior and founding partner of the firm, Robert Sampson, who advised she had a good case for establishing an easement and that he would speak to the previous owner of the property. Further, Sampson said he would write to Bauer demanding he halt the construction of the fence."
  • "In a conversation with a firm representative later in the month, Lappin was advised the firm was in a conflict and would not be able to represent her."
  • "There is no evidence that, prior to accepting the respondent's (Bauer) retainer, Sampson McDougall conducted a conflict check and satisfied itself that it was not in possession of confidential information from the applicant (Lappin)," Edwards wrote, adding that from the outset he would disqualify Sampson McDougall on the basis of having represented Lappin in 2010...He said the evidence of Lappin was clear in that she considered herself to be an ongoing client of the firm, and that contact with firm members was in accordance with that belief."
Finally: "Billing Records Are Confidential Even if They Contain No Legal Advice" --
  • "Billing statements are 'confidential communications' within the meaning of California's attorney-client privilege statute and thus categorically exempt from disclosure under the state's public records law, the California Court of Appeal, Second District, held April 13."
  • "The ruling—which answers a question of first impression that has divided courts around the country—denied a petition that the ACLU of Southern California filed after Los Angeles County officials rejected an open records request for the billing invoices of law firms to which the county paid nearly $40 million in a single year to defend it against a spate of police brutality lawsuits."
  • "Writing for the court, Justice Richard D. Aldrich said the county validly invoked a statutory exemption that applies to records containing confidential communications protected by the attorney-client privilege."
  • "The court said there was no controlling case law on “whether billing statements qualify as privileged communications” under Cal. Evid. Code §952, which codifies the attorney-client privilege."

Monday, May 11, 2015

In Conversation: The Business Case for Investing in Business Acceptance (or How to Succeed in Business Intake with a Bit of Trying)

Here's another interview piece: "Intapp In Conversation – Business Acceptance: The Case for Investment" -- James Perkin, COO at Procopio sits down with Pat Archbold, head of Intapp's risk practice group. Jim discusses the drivers behind his firm's decision to invest in enhancing intake and conflicts management.

Topics include:
  • Efficiency drivers
  • The lawyer experience
  • Supporting AFAs and pricing initiatives
  • Product evaluation considerations
  • Benefits of a best-of-breed solution vs. bundled practice management tools


  • Pat:
    • "Good point about looking at the overall picture. I think in many case intake projects have been led by people in the risk. The historical question is 'Can we take this on?' and maybe not 'Should we take it on?'"
    • "Traditional workflow tools focus on routing a form from Point A to Point B, but they don't really leverage that underlying data both from an efficiency perspective, and to support the strategic use of information, like for pricing."
  • Jim:
    • "I think all firms are looking for the holy grail of a system that pulls everything together and works together seamlessly. Our philosophy is to get the best in breed in each area. That can be accounting, that could be conflicts, client intake, etcetera. That's been our approach."
    • "We looked at best in breed and the way Intapp integrates intake and conflicts. And we made the decision that we would have both modules under one roof, as opposed to two separate entities. So we’re now moving conflicts from Elite into Intapp over the next six to eight months."
    • "As far as in what we're using and from a financial point of view, I think we've got to have our intake smarter. We actually look at accounts receivable now."
    • "We selected Intapp Open because we want to do this more efficiently while also have a lot more direct control over the software versus a system like Metastorm."
    • "We want to get ahead of the game by knowing how we can price based on history through the database because we all understand a lot of the clients are ahead of us on this through their e-billing systems. They're coming to us and telling what we can charge for a matter. I think we're all trying to catch up quite fast on how to get ourselves ahead of the game here."
The complete article is definitely worth a read..

Wednesday, May 6, 2015

Interesting InfoSec Updates: Breaches, Disclosure Duties, Ethics Opinions & More

Several interesting updates on all things law firm information security to share. First: "Cybercrime at Firms Triggers Ethical Duties" --
  • "Law firms of all sizes are falling prey to hackers and Internet scams. Now the New York City Bar Association has released an ethics opinion clarifying that lawyers must report hacking or other breaches of their computer systems."
  • "The opinion makes clear that lawyers don’t violate their ethical obligations by reporting cyberfraud to enforcement authorities. The opinion also emphasizes that law firms must tell clients if their interests might be at risk."
The Association of Certified E-Discovery Specialists (ACEDS) has some interesting commentary on the same topic: "Tension between client confidentiality, public disclosure stifling law firm cyber-breach reporting" --
  • "As cyberattacks on law firms increasingly take on an air of inevitability, though their accounts are largely anecdotal, new questions center on how to respond to breaches of sensitive materials and how to responsibly disclose these incidents without jeopardizing client relationships, and running afoul of professional codes."
  • "Citigroup, for example, recently told its employees in an internal report that law firms are vulnerable hacking targets because they are clearinghouses of high-value information and possess relatively weak security measures, according to The New York Times. The Citi memo also said that law firm security generally falls below the standards of other industries — and pointed to a reluctance by law firms to publicly disclose breaches and the absence of formal reporting requirements in the legal field as reasons for silence."
  • "Attorney Gary Kibel, a partner at Davis & Gilbert, poses a hypothetical scenario. 'What if you had a breach of a client’s files, and that breach involved personal information of the client’s customers? Now what if there’s a requirement that you have to go tell the customers your firm was in possession of the client’s files in the first place? I have no doubt that some law firm is going to be faced with this at some point,' Kibel told ACEDS. 'We’re all going to have to research this information carefully or make an appeal to the state bar associations,' he said. 'I suspect that compliance of the law is going to trump attorney-client privilege — and that the client is going to be very perturbed.'"
  • "Right now I think there are a lot of law firms that just are not aware of how serious the threat can be. It’s still the mentality of, 'This can’t happen to us'," said Dana Post, special counsel for e-discovery and data management at Freshfields Bruckhaus Deringer, at a recent ACEDS New York chapter panel discussion on cybersecurity. Client pressure may prove to be among the most powerful forces in prompting law firms to bolster their security practices. Prospective clients are starting to ask about information security when shopping for legal representation, Post explained. 'he smart clients already ask the questions,' she said. 'But more are coming.'
  • "The inherent tension between maintaining client confidentiality and disclosing breaches where client confidences are directly at issue shows no signs of easing. As lawmakers eye legislation that would impose reporting requirements on breach victims, that conflict may be coming to a head."
It's these trends and shifting requirements that inform calls like this recent piece from Ryan Schlunz, Chief Innovation Officer, Stoel Rives: "It’s Time To Get Serious About Law Firm Cybersecurity" --
  • "Imagine if there were only two types of law firms in the United States today: those who have experienced a data breach and those who don’t yet know they have experienced a data breach. This scenario is actually not far from reality, and for most AmLaw 200 firms it is likely already accurate. However, many law firms don’t yet appear to appreciate the scale of the threat."
  • "Patent and insider deal information are not the only types of information at risk of cyber-attack. Stolen healthcare data sells for as much as $10 per medical record on the black market, and has fast become more valuable than credit card information. Even those firms who do not store healthcare and financial data, or data related to mergers & acquisitions or patents, are at risk of hackers coming after client information that could help them hack into client systems It’s time for law firms to wake up and make cybersecurity a top priority at all firms."
  • "How law firms ensure the security of data is already a critical issue for all clients. Having data security procedures in place – such as regular client audits that prove that data is secured properly – is quickly becoming an industry standard. Regulatory requirements are likely not far behind. It’s time for all law firms to get serious about cybersecurity." 

Tuesday, May 5, 2015

Law Firm Disqualifications (Pursued or Achieved) Making News

First up, the case of the "Cat Came Back" -- "North Carolina Business Court: What Part Of Disqualification Do You Not Understand?" --
  • "The disqualified law firm had asked Judge Bledsoe to clarify his Order disqualifying it from representing the Plaintiff Kingsdown.  That was due to the firm's past representation of Defendant Hinshaw (the corporation's CEO) on a personal basis in the transactions which were the heart of the lawsuit."
  • "The law firm was not giving up its representation of its corporate client easily.  The Court's disqualification Order said that the law firm was disqualified from "further representation of Kingsdown in this matter against the Hinshaws."  Op. ¶56.  How far did the prohibition of that Order really go? The law firm argued that it should be allowed to continue in its role as Kingsdown's regular corporate counsel and to advise Kingsdown on the litigation against Hinshaw without appearing as counsel of record, so long as it did not disclose any of the confidential information it had obtained in the course of its representation of Mr. Hinshaw.
  • "Judge Bledsoe shot that argument down quickly.  He said: 'To the contrary, the Court intended that the Firm would cease all representation of Kingsdown adverse to the Hinshaws in this matter, whether as litigation counsel or otherwise. The Firm’s failure to satisfy Rule 10(b) of the Rules of Professional Conduct and the appearance of impropriety created by the Firm’s representation of Kingsdown do not disappear simply because the Firm is no longer counsel of record – as corporate counsel, the Firm is still representing a current client (Kingsdown) adverse to a former client (the Hinshaws) in a substantially related matter, and the ethical concerns attendant to that representation, including the appearance of impropriety, remain.'"
  • "So it looks like this entire lawsuit is radioactive to the law firm, despite the law firm's protestations that its client is being deprived of the counsel of its choice.  The Court responded to that point by saying that: 'the right of one to retain counsel of his choosing is secondary in importance to the Court’s duty to maintain the highest ethical standards of professional conduct to insure and preserve trust in the integrity of the bar. Avoiding a conflict and the appearance of impropriety are the best solutions.'"
"Affiliate Representation, Advance Waivers, Appearance of Impropriety, and Purloined Documents" --
  • "In short, the court determined that 'the facts weigh in favor of the conclusion that [subsidiary] and [parent] are a unified client. Hogan Lovells has advised [parent] on strategic decisions in matters that impact the entire corporate family, [parent] and [subsidiary] share the same legal department, and the company considers Hogan Lovells to be both its and its subsidiaries’ top strategic firm.' The court’s conclusion that the law firm represented both parent and subsidiary meant that the firm was engaged in a concurrent conflict of interest in the litigation at hand."
  • "The court stuck to this conclusion even over the parent’s signed representation agreement with the firm in 2005 stipulating to 'Client Identification' as follows: ‘You agree that the person or entity identified as engaging us in the Transmittal Letter is our client for the specific matters on which we are engaged, and that we shall not be deemed to represent any of its parents, subsidiaries, or other affiliates unless we expressly agree in writing to do so.'"
  • "The court disregarded this agreement because “the behavior of Hogan Lovells, [parent], and [subsidiary] since 2005 implies that all three understood Hogan Lovells was more than just [parent]’s law firm. Hogan Lovells’s relationship with [parent] may have started with the parent company alone, but its later representation of [subsidiary] and at least one other subsidiary . . . shows the expansion of their attorney-client relationship."
"Caesars Creditors Try to Disqualify Kirkland" --
  • "The committee has asked a judge to disqualify Kirkland, claiming the firm is conflicted because it has represented the casino company’s majority owners, Apollo Global Management LLC and TPG Capital, on unrelated matters. The committee is also claiming that the firm improperly received almost $10 million in fees on the eve of the company’s Jan. 15 bankruptcy."
  • "Bankruptcy is costly, and the spat over Kirkland is running up the bill. The firm said in court papers that it spent almost $10 million in the first six weeks since Caesars filed for bankruptcy. The disqualification fight will add to the cost without moving the case closer to a resolution."

Monday, May 4, 2015

Conflicts News: Laterals, Waivers (or Not)

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

Tuesday, April 28, 2015

Engagement Letters: Firsthand Industry Perspectives

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

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

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

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

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

Monday, April 27, 2015

Improving Engagement Letter Management (Webinar Recording Online)

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

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

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

Sunday, April 26, 2015

Risk Management Survey Report: Priorities, Attitudes & Approaches

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

Wednesday, April 22, 2015

Breaking Risk News: The "Appearances and Matters" Edition


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

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

Tuesday, April 21, 2015

Take the Disqualification, Leave the Cannoli

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

Monday, April 20, 2015

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

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

Sunday, April 19, 2015

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

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

Thursday, April 16, 2015

The Cost of Risk – Malpractice Claims, Disqualifications & Sanctions

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

Wednesday, April 15, 2015

Advanced Waivers – On the Offensive

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

Thursday, April 9, 2015

Risk News: Law Firm Insider Trading, Disqualification Discussions

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

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

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

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

Wednesday, April 8, 2015

Disqualification News – Tainted, In-house Edition

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

Monday, April 6, 2015

Looking at Lateral Trends from Multiple Angles

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

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

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

Thursday, April 2, 2015

Risk News: Conflicts & Confidentiality

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

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

Wednesday, April 1, 2015

Citibank Report Criticizes Law Firms on Information Security

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

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

Tuesday, March 31, 2015

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

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

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

Monday, March 30, 2015

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

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

Wednesday, March 18, 2015

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

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

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