Wednesday, August 16, 2017

Latest News: Records, Russia, Risk (and Elvis)

Greetings from the annual ILTA conference. Here in "Jane, get me off this crazy thing"-Las Vegas.

We'll try to keep the gambling-risk metaphors to a minimum. Elvis is not in the building. In fact, today marks the 40th anniversary of his departure from the earth, which was the same day my wife was born. So, Happy Birthday, honey! (Hey, if I were a songwriter, I'd write you a song. But, I'm just a simple blogger. So: "And you can tell everybody, this is your post... " >smile<)

Many of the usual suspects are here at the conference. (No one has yet attempted the secret risk blog handshake, but there is still time.) The folks at FileTrail have earned some new attention from LegalTech News for "Legacy Battle: FileTrail Aims to Attract LegalKEY Users With New Updates" --
  • "Companies such as FileTrail are fine-tuning their platform’s user interface and features to meet the demands of longtime LegalKEY users in a bid to capitalize on what they see as the legacy platform’s shortcomings. The move speaks to legal clients’ evolving demands in the record management space, as well as the pull which long-used platforms still hold for many in the industry."
  • "Mervau doesn’t believe that tailoring FileTrail’s UI to mimic that of LegalKEY is the prime selling point that will drive clients toward FileTrail. Such motivation to change is happening on its own because LegalKEY is “an older platform that hasn’t been updated [for years],” he said, and it “isn’t meeting the needs of today’s firms."
  • "Nancy Beauchemin, founder of information governance consultancy and legal solutions provider InOutsource, who handles the implementation of FileTrail at large law firms, noted that these needs are twofold. The first, she said, is that 'law firms have now adopted information governance and record retention policies, so they need their record platforms to enable compliance with that, and LegalKEY has limited functionality in this area.' The second is that more firms want solutions to be cloud-based, so “you don’t have to do an install of the software on a workstation,” can access the solution on mobile devices, and have a lower deployment and management costs, she said. LegalKEY can only be installed on premise.'"
"Wilmer Ends Work for Manafort as Ex-Partners Press Russia Probe" --
  • "Paul Manafort, President Donald Trump’s former campaign manager, is no longer being represented by Wilmer Cutler Pickering Hale and Dorr while special counsel and former Wilmer partner Robert Mueller III continues his probe into the Trump campaign’s Russia ties. Instead he’ll be represented by Miller & Chevalier, a Washington, D.C., boutique with a focus on international law, tax and litigation that has represented Manafort in the past."
  • "The move comes a day after news broke that FBI agents raided Manafort’s house, and a few weeks after Wilmer partner Jamie Gorelick wound-down her representation of Trump’s son-in-law and adviser Jared Kusher in Russia-probe related matters."
  • "That change was precipitated by the potential appearance of conflicts between the firm and Mueller, a former Wilmer partner who now leads the Russia investigation at the Justice Department and has hired three other former Wilmer partners for the team."
  • "The Justice Department had decided Mueller had no actual legal conflicts in the case, and had not represented either Manafort or Kushner while at Wilmer. Yet the same appearance of conflict could have hindered the firm’s representation of Manafort."
"SDT to probe former Clydes partner over 'improper' money transfer claims"
  • "A former partner in Clyde & Co’s Guildford office has been referred to the Solicitors Disciplinary Tribunal (SDT) over an alleged “improper” transfer of funds."
  • "A spokesperson for the firm said: 'We are aware of the Solicitors Regulation Authority decision in relation to Charles Smith, a junior partner at the firm from May 2013 to November 2015. The decision relates to how Charles, in his capacity as a department risk partner, processed a number of aged residual client account balances on historic cases. At the time we were working with the Solicitors Regulation Authority to improve our processes in this area. It would not be appropriate to comment further while the tribunal is pending.'"
  • "In April, Clydes was hit by a £50,000 fine by the SDT and three of its partners were fined £10,000 each for breaching money laundering rules, by allowing the firm’s client account to be used as a banking facility."
"Jones Day Conflict Waived In GWB Scandal Figure's Appeal" --
  • "A New Jersey federal judge on Tuesday ruled that a former public official convicted in the George Washington Bridge lane-closing scandal has knowingly and voluntarily waived any potential conflict of interest with Jones Day attorneys representing her as appellate counsel in light of the firm's representation of the Port Authority of New York and New Jersey in related matters."
  • "U.S. District Judge Susan D. Wigenton made that finding after Bridget Anne Kelly, a onetime deputy chief of staff to New Jersey Gov. Chris Christie, confirmed during a brief hearing in a Newark courtroom that her waiver of any such conflict is knowing and voluntary and that she wanted Jones Day to continue representing her."
  • "The Third Circuit on Aug. 4 granted the government's motion for a limited remand to Judge Wigenton to determine whether Kelly has knowingly and voluntarily waived any conflict Jones Day might have by representing both her and an agency identified as a victim in the case. Jones Day is defending the agency in a putative consolidated class action in New Jersey federal court over the lane closures in which Kelly was also a defendant, prosecutors said in their remand motion brief; a default judgment has been entered against her in that case. Prosecutors sought the on-the-record waiver to ensure that Kelly cannot later complain on appeal that she did not receive effective assistance of counsel, court documents say."
"BASF Alleges Conflict, Says Rivera-Soto Shouldn't Serve as Asbestos Special Master" --
  • "In the latest special master dispute, defense lawyers said Rivera-Soto's firm, Ballard Spahr, is represented in a suit in the Philadelphia Court of Common Pleas, Ballard Spahr v. Symphony Health Solutions, by Williams & Connolly, which also represents Cahill Gordon in the present case. Therefore, Williams & Connolly has a fiduciary relationship to both Cahill Gordon and Ballard Spahr, according to a letter signed by Robert Ryan of Connell Foley, representing Cahill Gordon, and Justin Quinn of Robinson Miller, which represents BASF. In addition, before Rivera-Soto was appointed to the Supreme Court in 2004, he was with Fox Rothschild, one of the firms representing the plaintiffs in the present case, Ryan and Quinn wrote. Those circumstances 'require the court to select a different special master for the case,' the defense lawyers said."
  • "But Rivera-Soto said in his Aug. 11 letter to Linares that he did not know that Williams & Connolly was involved in the case, and added that the issues raised in the Aug. 8 letter do not disqualify him from serving as special master in the present case. He said he is not involved in the Symphony Health Solutions case or events leading up to the case. He said he and any other Ballard Spahr lawyer assisting him with his special master duties would be segregated by an ethical 'wall' from lawyers in his firm's Philadelphia office who are working on or involved with the Symphony Health Solutions case."
Thank you very much...

Monday, August 14, 2017

Malpractice Trends, Cyber Risk, Conflicts Allegations

"Legal Malpractice Claims Level Off as Conflicts and Cyber Claims Rise" --
  • "Statistics regarding the type, frequency and severity of legal malpractice claims submitted to insurers during 2016 were released at the end of June. From the law firm and attorney perspective, the news is generally good in that the number of malpractice claims has remained relatively steady. For insurers, however, the news is less rosy, because legal defense costs, claimed damages and settlement sums continue to climb."
  • "In its seventh annual survey, Ames & Gough, a risk and insurance adviser to the country's largest law firms, provides data relating to legal malpractice claims submitted last year. The survey includes information obtained by polling nine leading insurance companies that insure approximately 80 percent of the Am Law 100 firms."
  • "Indeed, the data show that legal malpractice claims are becoming more expensive, both in the potential damages and in the defense. With respect to damages, 6 out of 9 insurers reported claims for which they maintained reserves exceeding $500,000, and at least one insurer paid a claim exceeding $100 million."
  • "Conflicts remain the most common error resulting in legal malpractice claims. Nearly all participating insurers cited conflicts as either the first or second biggest cause of claims. Interestingly, about half of participating insurers witnessed an increase in conflicts claims involving lateral hires, some of which stemmed from inadequate resolution of a conflict of interest."
  • "Cyber-related malpractice claims have continued to rise, with the majority of insurers indicating more cyber claims last year than in prior years. Of those insurers, four noted that most cyber events involved hackers. This trend is not at all surprising, given the increasing number of news stories involving global hacking operations and ransomware threats."
  • "Claims involving conflicts are notoriously easy for a malpractice plaintiff to explain to a jury. Juries also appear to treat such claims seriously, because they suggest an attorney's violation of one of the utmost duties owed to clients: loyalty. As a result, it is worthwhile for firms to ensure that they have the proper systems in place to identify and resolve conflicts."
"Clifford Chance under investigation by the SRA over Excalibur case" --
  • "Clifford Chance (CC) is being investigated by the Solicitors Regulation Authority (SRA) over its controversial role in the long-running Excalibur case... CC was criticised by the CoA for its role advising Excalibur, after it emerged that there were family ties between CC’s lead partner, Alex Panayides, and one of the litigation funders."
  • "While the SRA regularly investigates individual lawyers, it is less common for the watchdog to probe major law firms."

"Client Intake: Know Your Client—Or Else" --
  • "What information about a new client does a lawyer need to obtain in order to make sensible decisions about whether or not to proceed? Two recent cases, one from New York and one from the U.K., have important lessons for lawyers, wherever they practice."
  • "In reviewing the English case, P&P Property v. Owen White & Catlin, 2016 WL 05484797 (UK High Ct. of Justice, Chancery Div. 2016), it is important to note that English lawyers operate within a regulatory framework that requires them to undertake detailed "know your client" investigations about prospective clients, based on U.K. anti-money laundering (AML) laws. In addition, if lawyers find that a prospective client may be seeking assistance to violate the AML laws, they are required to report their suspicions to the authorities—without regard to attorney-client confidentiality."
  • "Another all-too-familiar aspect of the matter also stands out: The prospective client was in a hurry. It is critical that firms avoid shortcutting whatever level of due diligence they ordinarily undertake in order to confirm the client's identity and the facts surrounding the transaction. This is particularly vital where the client is in another jurisdiction or country and the bulk of communications occur via email or telephone with little in-person contact."
  • "In the United States, the absence of "know your clients" rules does not negate the need for lawyers and firms to undertake serious enquiry about the bona fides of prospective clients before beginning to engage in substantive conversations with them."
  • "In Exeter Law Group v. Wong, 2016 NY Slip Op 32425(U), 12/9/ 2016, Supreme Court, New York County, the issue was different: What does a lawyer or law firm need to do to establish who is (and is not) the client in the matter."
  • "This case underscores the critical importance of specificity in engagement agreements. Had the agreement specified who was and was not the client, the corporations' claims would likely have been dismissed. The breach of fiduciary duty claim might well also have been disposed of had the agreement detailed what information counsel was authorized to disclose. Finally, the decision highlights the danger of suing non-clients for fees. Doing so may imply that specific tasks were undertaken for the benefit of the non-client and permit the non-client to state claims notwithstanding the fact that it was never a party to the engagement agreement."

Sunday, August 13, 2017

Risk News: Fines & DQ

"White & Case hit with record £250k fine for 'reckless' conflict of interest and confidentiality failures" --
  • "White & Case has been fined a record £250,000 by the Solicitors Disciplinary Authority (SDT) for failings around confidentiality and conflicts of interest, with one London partner fined an additional £50,000. The fine, which is the largest ever made by the SDT against a single firm, relates to a 2014 High Court case that saw the firm blocked from acting for Ukrainian client Victor Pinchuk, after it failed to identify a conflict of interest."
  • "An SDT statement said White & Case admitted acting 'recklessly' by allowing work to be carried out without taking adequate steps to ensure there were no conflicts or risks of conflicts, and by agreeing to to take on further work without properly protecting the confidentiality of client information given to the firm."
  • "The SRA did not allege that the firm or Goldberg acted dishonestly and did not pursue allegations of lack of integrity against either Goldberg or White & Case."
"Telecom Co. Seeks Mintz Levin DQ In Patent Dispute" --
  • "Telecommunications equipment company IPS Group on Monday asked a California federal judge to disqualify Mintz Levin Cohn Ferris Glovsky & Popeo PC as opposing counsel in a suit accusing a Milwaukee-based electronic parts supplier of infringing a parking meter patent, saying that the firm is familiar with the company's confidential information."
  • "IPS Group Inc. urged California’s Southern District to disqualify Mintz Levin, saying that the firm has violated its ethical obligations and loyalty and confidentiality duties by appearing in the instant case on behalf of defendants Duncan Solutions Inc. and Duncan Parking Technologies Inc., as well as appearing for the same defendants and CivicSmart Inc. in a related case."
  • "San Diego-based IPS also shot down Mintz Levin’s argument that it doesn’t consider IPS a client and that even if it did, an “engagement letter” excuses it, saying that IPS’ lawyer wrote to the firm in May to follow up on an ongoing project the firm had been handling and that IPS never agreed to waive conflicts involving its intellectual property in the letter."

Thursday, August 10, 2017

Uber Risk, Uber Accusations, Uber Conflict?

Here's a real rough and tumble one: "Uber’s Lawyers Should Be Booted After Aiding Coverup, Waymo Says" --
  • "Waymo claims Uber Technologies Inc. had an accomplice in the theft of invaluable driverless technology trade secrets — the ride-hailing giant’s own lawyers. Uber relied heavily on attorneys at San Francisco’s Morrison & Foerster LLP, or MoFo, to suss out and contain any proprietary information that may have been taken by one of Waymo’s lead engineers, Anthony Levandowski, when he abruptly quit last year. He later joined Uber, bringing with him other former engineers from the Alphabet Inc.unit’s self-driving unit... Waymo has alleged that the MoFo lawyers helped cover up the theft and said it wants to call them as witnesses."
  • "Waymo claims the law firm trafficked in stolen files –- or at least descriptions of stolen files -– when its lawyers helped structure the Ottomotto acquisition. That’s why MoFo’s lawyers should be required to testify and the firm as a whole should be disqualified from defending Uber, Waymo argues."
  • "Waymo has also accused Stroz and MoFo of violating court orders to turn over proprietary information, including files from the law firm’s representation of Levandowski in arbitration proceedings brought by Google last year. A hearing on those claims is scheduled for Aug. 16."
  • "Arturo Gonzalez, a MoFo partner representing Uber, said Waymo is trying to knock his firm off the case out of desperation. 'Having found no evidence to support their claims, they ask themselves ‘What do we do?'' he said. 'And someone raises their hand and says, ‘I know, let’s try to disqualify their lawyer.''"
A day later: "Alsup Says DQ’ing MoFo Not Necessary In Uber-Waymo Row" --
  • "U.S. District Judge William Alsup said Wednesday that he opposed disqualifying Morrison & Foerster LLP from representing Uber Technologies Inc. in its trade secret fight with Alphabet unit Waymo, even though the law firm is “a character in the story” jurors will hear at the October trial."
  • "Morrison & Foerster provided legal advice to Uber as it was acquiring OttoMotto LLC, a company founded by former Waymo engineer Anthony Levandowski. Waymo’s suit alleges that the day before Levandowski joined Uber, he illegally downloaded 14,000 Waymo documents, with the intention of bringing them to his new employer. Uber’s acquisition involved a lengthy due diligence and indemnity process during which Morrison & Foerster, as well as risk management firm Stroz Friedberg LLC, vetted Levandowski. Uber insists it implemented protocols that allowed it to stay ignorant of what firms learned."
  • "'The transaction is part of the trial, part of the story to be told to the jury. You can’t tell that story without MoFo being identified as such,' Judge Alsup said. 'It’s name is going to come up again and again. And I have a strong feeling that Uber is being cute here, because you’re going to show the jury that Uber took steps to immunize itself from the stolen intellectual property and set up this elaborate structure to protect yourself. ... So my thought is not disqualifying anyone, but having no holds barred when it comes to putting out the facts of the case.'"

Wednesday, August 9, 2017

Conflicts & Duties (Bridgegate, Burners & "Friends")

"GWB Figure Must Address Jones Day Conflict, 3rd Circ. Says" --
  • "The Third Circuit on Friday ordered a former public official convicted in the George Washington Bridge lane-closing scandal to appear before a district court and address any potential or actual conflict of interest with Jones Day attorneys representing her as appellate counsel in light of the firm's representation of the Port Authority of New York and New Jersey in related matters."
  • "In a one-page order issued without explanation, a circuit panel granted the government's motion for a limited remand to New Jersey federal court to determine whether Bridget Anne Kelly has knowingly and voluntarily waived any such conflict that Jones Day might have by representing both her and an agency identified as a victim in the case."
  • "Prosecutors are seeking an “on the record” waiver to ensure that Kelly cannot later complain on appeal that she did not receive effective assistance of counsel, court documents state."
  • "Kelly, a former deputy chief of staff to New Jersey Gov. Chris Christie, and William E. Baroni Jr., former deputy executive director of the Port Authority, were found guilty at a trial in November of conspiracy and related charges that they misused the resources of the Port Authority, committed wire fraud and deprived Fort Lee, New Jersey, residents of their civil rights to travel freely."
  • "'A law firm that simultaneously represents a victim of an offense and a person who committed that offense has at least a potential conflict of interest, if not an actual one,' the government said in its brief. Referring to the proposed class action, Kelly's lawyers responded Wednesday in their brief, 'Jones Day does not represent Ms. Kelly in the civil suit, and she and the Port Authority are not adverse to one another in that matter.'"
"Lawyers must take reasonable steps to protect client info in US border searches, ethics opinion says" --
  • "Lawyers should take reasonable measures to avoid disclosure of client data in the event U.S. border agents search electronic devices, according to an ethics opinion by the New York City Bar. And if confidential or privileged material is disclosed, lawyers will have to notify affected clients."
  • "The reasonable precautions that should be taken in advance will vary based on factors such as the sensitivity of the information, the likelihood of disclosure, and the cost and difficulty of implementing safeguards, the July 25 opinion says. At the border, lawyers should take reasonable measures when an agent seeks to search a device with confidential information, including making an attempt to dissuade the agent, the opinion says."
  • "The simplest precaution is not to carry any confidential information across the border, the opinion says. Other options might include carrying a blank 'burner' phone [ed: What is this, The Wire??] or laptop computer, securely removing confidential information from devices, signing out of cloud-based services, uninstalling applications allowing remote access to confidential information, storing confidential information in secure online locations rather than locally on devices, and using encrypted software."
"Appeals court considers removal of judge who is Facebook friends with lawyer" --

Tuesday, August 8, 2017

Risk News: Alleged, Costly Conflicts

"Hollywood Docket: 'Straight Outta Compton'" --
  • "A federal judge is allowing Greenberg Traurig to continue to represent Universal in former N.W.A manager Jerry Heller's defamation lawsuit over Straight Outta Compton."
    "After Heller died last year, his heirs brought a motion to disqualify Greenberg Traurig because one of its partners, Joel Katz, once advised Heller upon the release of Ice Cube's 'No Vaseline.'"
  • "Greenberg Traurig responded that any conversation by a transactional attorney a quarter century ago was not substantially related to Heller's claims of being defamed by the N.W.A biopic. The law firm further argued that nothing exchanged was confidential, that the disqualification motion came after substantial delay and that Greenberg Traurig had implemented an ethics wall to ensure that Katz would be screened from the ongoing litigation."
"Morgan Lewis Facing $30M Client Conflict Suit In Pa. Court" --
  • "An ex-Morgan Lewis & Bockius LLP client filed suit in Pennsylvania state court on Friday to disgorge some $30 million in fees it paid to the firm while attorneys allegedly worked against its interests and helped build a case against it on behalf of a Wisconsin-based hospital system."
  • "Towers Watson Delaware Inc. alleges that Morgan Lewis, after having represented the company for at least a year, agreed to defend Meriter Health Services Inc. in a class action over an allegedly flawed retirement plan Towers Watson’s predecessor company had designed, and went on to assist a second firm in putting together an eventual lawsuit against the company over the plan."
  • "Despite prior retainer agreements with Towers and its predecessor, Towers Perrin, requiring it to be informed of any potential conflicts between its interests and the interests of other Morgan Lewis clients, the company said it was never informed of the situation."
  • "On top of simply representing Meriter in the class action, the complaint said that Morgan Lewis actively assisted a second law firm, unidentified in the complaint, that Meriter brought on board to pursue potential third-party claims against Towers over purported deficiencies in the retirement plan at issue in the litigation."
  • "While the complaint pointed to emails from Morgan Lewis attorneys saying they could not comment or participate on any issues related to Towers, the company said that the attorneys 'regularly communicated with Meriter and [the second firm] to develop Meriter’s claims against Towers.'"
  • "Both an attorney for Towers Watson and a representative for Morgan Lewis declined to comment on the case when contacted on Monday."
"Reed Smith Battles Rival Firms Over Fees, Conflicts in SAC Capital Case" --
  • "Two plaintiffs firms are urging New York judges to deny Reed Smith's claim to $6.75 million in attorney fees for its work as co-counsel in a securities class action, claiming the traditionally defense-side firm misled them in stating it was free from conflicts."
  • "Wohl & Fruchter, a four-attorney firm that was class counsel with Pomerantz, contends Reed Smith should not be allowed any portion of a $27 million attorney fee award obtained in May in the class action against SAC Capital Advisors and other defendants."
  • "The fee dispute became heated in June when Reed Smith filed a lawsuit in Manhattan Supreme Court against Wohl & Fruchter and name partner Ethan Wohl, alleging tortious inference with a contract and unjust enrichment."
  • "Reed Smith claims that Wohl & Fruchter, when looking for co-counsel, realized that it was a small firm 'overmatched by the resources available to the SAC defendants,' represented by Paul, Weiss, Rifkind, Wharton & Garrison, Willkie Farr & Gallagher, Goodwin Procter and Bracewell."
  • "But Reed Smith asserts that when counsel for the SAC defendants at Paul Weiss mused about a possible conflict involving Reed Smith before Southern District Judge John Koeltl, the Wohl firm saw an opportunity to eliminate Reed Smith. '[Wohl] intentionally exploited Paul Weiss' statements in order to malign Reed Smith and to induce the lead plaintiffs to terminate the engagement agreement,' Reed Smith said. Wohl and his firm deliberately blocked and excluded Reed Smith from any interactions with the lead plaintiffs or opposing counsel in the SAC case, Reed Smith claims."
  • "But class counsel said McCarroll did not disclose that Reed Smith 'had in fact been aware for several months that a litigation associate,' Andrew Pfau, has previously represented the SAC defendants in a related government investigation."

Monday, August 7, 2017

AML and Me and You

Kerry Kendal at Intapp sends an excellent summary of new AML rules that recently went into effect:

The 2017 Money Laundering and Terrorist Financing Regulations came into force in the UK in June. As law firms in the UK await the release of a guidance note from treasury, the Law Society has provided a summary of the key changes and suggested interim measures on their website as detailed below:  
The 9 key changes for UK firms:
  1. New requirement to have written risk assessments for each new client
  2. Revised reporting, record keeping and monitoring processes are now required
  3. Group level and internal controls - firms which are parent undertakings will be required to apply their policies, controls, and procedures to their subsidiaries and branches in the UK and overseas
  4. The circumstances in which simplified customer due diligence (CDD) is permissible will become more restricted - in a significant departure from the Money Laundering Regulations 2007 'automatic' simplified due diligence for certain transactions will end
  5. Enhanced due diligence- another major change is the creation of a list of high risk jurisdictions which, if involved in a transaction, will make enhanced due diligence (EDD) and additional risk assessment compulsory
  6. The definition of PEPs will now also apply to local and domestic individuals occupying prominent public positions
  7. Firms are required to undertake regular training to relevant employees and agents is crucial to ensure they are made aware of the law relating to money laundering, terrorist financing and data protection
  8. Corporate bodies and other legal entities will be required to maintain accurate and current information on their beneficial ownership
  9. Firms will be required to retain records of CDD documents and supporting evidence for at least five years after the end of the business relationship or occasional transaction. At the end of five years, there is a requirement to delete personal data (unless express consent is given to retain that data) or if the firm is otherwise required to retain the personal data (i.e. for the purposes of court proceedings).
The Law Society recommend that firms take the following steps in the interim:
  1. Initiate and document a risk-based assessment of money laundering
  2. Train staff on how to access the beneficial ownership registry
  3. Update policies and procedures to reflect the changes
  4. Add an audit function to test procedures
  5. Review all new policies by senior management

Sunday, August 6, 2017

Risk News (Catch Up Edition: Screens, Privilege, President, Plots and More)

I thought it might be interesting to share a set of stories I found interesting enough to flag, but didn't get around to posting in June. So here's a bit of a grab bag worth exploring. In some instances, news has developed since the original stories posted, so there's a bit of before and after here. Treats inside:

  • "In deciding a disqualification motion based on a conflict of interest resulting from a lateral hire, the U.S. District Court for the Eastern District of California recently adopted a screening-friendly approach in National Grange of the Order of Patrons v. California Guild, No. 2:16–201 WBS DB, 2017 WL 2021762 (E.D. Cal. May 12, 2017) and National Grange of the Order of Patrons v. California Guild, No. 2:14–676 WBS DB, 2017 WL 2021731 (E.D. Cal. May 12, 2017)."
  • "The court reviewed the evidence and found that, although Ellis Law Group had "not been perfect in their efforts to isolate Valenti," there was proof that Valenti 'has not actively participated in this case.' The court decided against disqualification."
  • "The court stated that it must apply California law when reviewing a motion to disqualify. It turned to Kirk v. First Am. Title Ins. Co., 183 Cal. App. 4th 776 (2d. Dist. 2010), as the most recent California appellate decision to address this kind of disqualification issue."
  • "In so holding, the court stated that it was "guided in part by the Ninth Circuit's admonition" that courts should give consideration to a client's right to counsel of choice. The court also stated that the relevant issue was whether Valenti had, in fact, shared confidential information, and not the eight-lawyer size of the Ellis Law Group."
"Estate Asks Court to Disqualify Holland & Knight From Representing Wilmington Trust" --
  • "Holland & Knight allegedly violated three professional conduct rules, according to a motion filed last week to disqualify the firm from representing one of the nation's largest financial institutions in cases related to the estate of a deceased Coral Gables man... arguing the firm simultaneously represented adverse parties, communicated with Ramos concerning the litigation without appropriate disclosure and then used the information to file a petition to seize the proceeds of the sale."
  • "Another Holland & Knight attorney, Scott Ponce, began in January 2016 to work on a summary judgment to be filed against Lisa Ramos. While that was pending, the firm asked Ponce to represent Andy Ramos in unrelated litigation. Ramos spent days informing Ponce about his matters, said Jeff Gutchess, a founding partner of full-service boutique AXS Law in Wynwood, who leads the trial and litigation teams."
  • "Holland & Knight argues otherwise. 'The simple fact is there is no conflict of interest between our representation of Symx Healthcare Corporation in a contract dispute while simultaneously representing a creditor in an unrelated matter where one of the defendants in the matter was the wife of a shareholder of Symx," Holland & Knight said in a written statement. "Additionally, the claim that we learned confidential information is erroneous. Over a year ago there was a preliminary discussion about the possible engagement of the firm in connection with estate planning for Mr. and Ms. Ramos. That engagement was declined by the firm due to a potential conflict. That potential conflict was, or at least should have been, well known to the Mr. and Ms. Ramos because the litigation for which they seek to disqualify Holland & Knight had already been pending for over five months.'"
"3 Reasons Litigators Fear the Calif. Gibson Dunn DQ Ruling" --
  • "The California Supreme Court’s recent refusal to take up the disqualification of Gibson Dunn & Crutcher LLP amid a privilege dispute in a malpractice litigation has experts worried the case will create a new privilege minefield and invite sanctions for long-accepted practices around waivers and otherwise confidential materials shared with nonlawyers."
  • "Last year, a California judge disqualified Gibson Dunn from defending McDermott Will & Emery LLP from allegations that the firm had improperly helped one member of a family, who was in a dispute with his siblings and father, grab control of a family fortune. A split appellate panel agreed in April that Gibson Dunn crossed a hard ethical line when it treated an old email shared with a McDermott lawyer and nonattorneys before the case was filed as fair game, despite objections from the other side that the communication should be protected under attorney-client privilege."
  • "Among legal ethics experts, the decision has raised eyebrows because California’s Fourth Appellate District panel appeared to apply litigation-focused rules on inadvertent disclosures and waivers to information provided to a lawyer by its own client rather than opposing counsel. Ethics experts have since questioned the court’s reasoning that giving lawyers some discretion to make a call on waivers absent a court’s direction opens the door to abuse."
  • "Others have said the court seemed to apply attorney rules and conventions on potentially inadvertent disclosures — typically, an errant discovery hand-over or attorney email about a current case — to a widely shared document provided by a client. If that kind of reasoning were to spread to other courts, it would disrupt the basic assumption lawyers work under that a client’s own files, particularly documents obtained long before litigation began, are unlikely targets of privilege challenges."
And, plenty of ink has been spilled on Presidential matters, including: "Trump's Russia lawyer faces conflict-of-interest questions over $296m Kushner deal" --
  • "The lawyer privately advising Donald Trump on the investigation into Russia’s interference in the 2016 election is head of a law firm that was involved in the sale of a prestigious piece of New York real estate to Jared Kushner, the US president’s son-in-law, in a deal that could fall under the spotlight of the same inquiry."
  • "An investigation by the Guardian has found that Kasowitz’s law firm, Kasowitz Benson Torres, legally represented the owners of the former New York Times building in Times Square, Manhattan, in a 2015 deal in which part of the property was sold to Kushner for $296m."
  • "Questions have already been raised about possible conflicts of interest between the lawyer’s role as Trump’s private attorney in the Russian inquiry and his work for various other clients, among them Russia’s largest bank OJSC Sberbank, which he represents in a corporate dispute lodged in US federal court."
And, since that news, several related udpates including:
Biglaw Associate Indicted On Felony Charges Over Plot To Extort Partners Pleads Not Guilty
  • In late June, the Biglaw world was rocked by scandalous allegations against a former associate at Dentons. Michael Potere had been fired by Dentons, and allegedly decided to exact his revenge against the firm by threatening to leak sensitive information taken from the email account of the managing director of the firm’s Los Angeles office (although no partner names have been released, this is most likely Joel Siegel) — information that ranged from emails between partners to the firm’s quarterly financial reports to associate reviews — to Above the Law, unless he was paid $210,000 and given an expensive piece of artwork.
  • Potere was indicted on extortion and attempted extortion affecting interstate commerce as well as transmitting threatening communications with intent to extort, and he faces up to 22 years in prison for these two felony charges. He pleaded not guilty to those felony charges yesterday, with the assistance of his public defender, Asal Akhondzadeh.

Thursday, August 3, 2017

Conflicts & Records: On LegalKEY Transitions


Several updates and resources of note for firms still on LegalKEY and looking to make a change. First, from FileTrail comes: "FileTrail Introduces New Features to Improve Firm Transitions Away from LegalKEY Records Management Systems" --
  • FileTrail, a leader in next-generation records management software, today announced the release of several new features to make it easier for firms to switch from their old system to FileTrail. The latest enhancements demonstrate FileTrail's commitment to ongoing product development to ensure law firm clients have access to the features they depend on but in a premier, modern records management system.
  • "Many of FileTrail's newest features are in response to the market need being created by legacy RMS products such as LegalKEY no longer being updated to address current industry standards. The risk to firms in keeping these older systems is significant, but some have been reluctant to replace them because of the useful features they offer.
  • "John Churchill, records department manager at Nelson Mullins Riley & Scarborough, says this about the firm's move to FileTrail: 'It has been many years since we have had any LegalKEY upgrades or significant product enhancements. Since future development is over, we have turned to FileTrail as a replacement. FileTrail provides the flexibility, continual development, software integrations and advanced reporting features we need to properly manage our records program going forward.'"
  • "The article provides additional detail on their enhnacements and new features including: Workspace, Reporting, Item View, Tabbed Views, Volume Numbers, Contents, Replication, Media-Container Restriction."
Next, InOutsource is hosting a session at the upcoming ILTA conference in Las Vegas:

InOutsource Builds Integration from Intapp Open to FileTrail Records Management System
  • Many firms struggle with a mechanism to pass client-provided guidelines from new business intake to the records management team. InOutsource, a leading provider of consulting and implementation services for law firms, leveraged their expertise with both Intapp Open and FileTrail Records Management System to provide firms with an integration between new business intake and records management so that information captured at matter opening can be passed along to the records system.
  • Not only is it possible to pass guidelines between systems but you can even automate requests within FileTrail directly from Intapp Open.
  • Join InOutsource as they demonstrate the functionality to pass outside counsel guidelines and other functionality, including new file creation requests, between Intapp Open and FileTrail.
  • Where: ILTACON 2017, Demo Room Breaker H
  • When: Monday (8/14) 2:00pm – 2:45,  Wednesday (8/16) 11:30 – 12:15

Wednesday, August 2, 2017

Summer Break is Over (Risks are Back, Lateral Edition)

Having emerged from a post-Inception slumber, our intrepid (and, admittedly, idiosyncratic) editor emerges from his Hobbit Hole, stretches, sees his shadow, wonders were July went, and returns to the brimming list of blog updates he's been meaning to get to, one of these days.

With thanks to a few regular readers who pitched in polite pings, including Charles Lundberg, who was recently published, in Minnesota Lawyer: "Quandaries and Quagmires: Carefully vetting lateral partner candidates."

(Bonus point to Chuck, for Inception-like article linking within his own article, making this an expanded post. Though the judges are mixed on the publication of the word "Bro" on this blog for the first time in its 900+ post history. But you go where the sources take you sometimes...) --
  • It’s the end of July 2017 — the bar exam was last week — and the hottest trending topic in legal ethics and risk management right now is this: How badly some law firms have screwed up in vetting new lateral partners. Here’s just a sampling of the most recent headlines in the legal press about lateral hire disasters:
  • "An even better example happened at the end of 2015, when Evan Greebel, a recent lateral hire at Kaye Scholer, made headlines when he was indicted — and his perp-walk televised on the national news2 — along with his client, Martin Shkreli (the notorious “PharmaBro,” a/k/a “the most hated man in America”)."
  • "The “Hiring Misfires,” article acknowledges that all these lateral-partner- turned-criminal-defendant situations may be just “extreme cautionary tales.” The bigger story is the shockingly high percentage of all lateral hires — 50 percent — that flop for more ordinary reasons, “lackluster business prospects, poor people skills or a missing cultural fit.” And the cost of a bad lateral hire can be substantial — two to four times the lateral’s annual compensation."
  • "In any event, the conclusion of the piece seems obvious: 'Many firms, including at the top end of the legal market, don’t do the kind of vetting that might stop a problematic hire in its tracks.'"
  • "And trust me about this: When a lateral does flop spectacularly, you do not want to be the subject of this angry question among your partners: 'Who was the genius who wanted to bring that lawyer into the firm?'"

Thursday, June 29, 2017

Video Update: Inception Retrospection

As US readers get ready for a brief July 4th break, I wanted to take a moment to thank everyone who joined us for Inception17 last month. The event grew 40% over 2016, with great participation and passion from the risk community.
Special shouts outs to:
  • Really everyone in the community who made the journey, helped produce content, sat on panels and posed probing questions driving the dialogue
  • Attendees at our session on AML compliance. (For pitching in "bucket brigade style" to move dozens of chairs a few rooms over, when the hotel flagged that the overflowing room was a bit of an issue, should the fire marshal come knocking -- talk about risk management in practice!)
  • The few that snuck up and attempted the secret risk blog handshake. (That really made my week. >smile<)
Here's a three minute highlight video featuring many familiar faces and key highlights from the experience:

(It's pretty slick.)

Friday, June 9, 2017

On Client Selection (Presidential Edition)

Several interesting stories in the news. This one on client selection and risk management was certainly eye catching: "Four top law firms turned down requests to represent Trump" --
  • "Top lawyers with at least four major law firms rebuffed White House overtures to represent President Trump in the Russia investigations, in part over concerns that the president would be unwilling to listen to their advice, according to five sources familiar with discussions about the matter."
  • "Among them, sources said, were some of the most high-profile names in the legal profession, including Brendan Sullivan of Williams & Connolly; Ted Olson of Gibson, Dunn & Crutcher; Paul Clement and Mark Filip of Kirkland & Ellis; and Robert Giuffra of Sullivan & Cromwell."
  • "Others mentioned potential conflicts with clients of their firms, such as financial institutions that have already received subpoenas relating to potential money-laundering issues that are part of the investigation."
  • "Other factors, the lawyer said, were that it would 'kill recruitment' for the firms to be publicly associated with representing the polarizing president and jeopardize the firms’ relationships with other clients."
  • "Another lawyer briefed on some of the discussions agreed that the firms were worried about the reputational risk of representing the president. One issue that arose, this lawyer said, was “Do I want to be associated with this president and his policies?” In addition, the lawyer said, there were concerns that if they took on the case, “Who’s in charge?” and 'Would he listen?'"

Thursday, June 8, 2017

LegalKEY Replacement (Four Reasons Why)

From the team at FileTrail comes: "4 Reasons It’s Time To Replace LegalKEY" --
  • "If you haven’t heard, future development for LegalKEY is over. However, that’s no surprise to anyone still using LegalKEY. Although the company hasn’t announced their records management system is being sunsetted, customers haven’t gotten any significant upgrades or product enhancements in the last 5-7 years. To give you an idea of how little effort is going into LegalKEY these days, they’ve actually gone the way of ARM/FileSurf—by outsourcing product support."
  • "Keep in mind that staying with a product that has taken this road doesn’t bode well for the future. HP sunsetted ARM, with a final end of life in the past."
  • "Today, if you’re on LegalKEY you’re paying annual support and not getting anything in return. Plus, to get LegalKEY to run on a later version of SQL it will cost you time and money. (And we’re not talking SQL 2012, 14 or 16—this is just to get you to SQL 8.) While that might not be enough to convince you to make the switch, here are four other reasons why it’s a great time to get off LegalKEY."
“It has been many years since we have had any LegalKEY upgrades or significant product enhancements. Since future development is over, we have turned to FileTrail to replace LegalKEY. FileTrail provides the flexibility, continual development, software integrations and advanced reporting features we need to properly manage our records program going forward.” 
-- John Churchill, Records Department Manager, Nelson Mullins Riley & Scarborough     

Read the full article for detail on the top for reasons and opportunities FileTrail flags for making the change:
  1. Saving Money
  2. Automating Information Governance
  3. Integrating Document Management
  4. Scaling Systems and Processes

Monday, June 5, 2017

ITC Conflicts Allegation (Section 201)

Here's another interesting one: "Chinese solar company pitches conflict of interest claim in Section 201 case" (free subscription) --
  • "A Chinese solar panel producer is claiming that the law firm representing a U.S. solar company pursuing a Section 201 safeguard petition against foreign imports of solar products has a conflict of interest in the case, which it says should be dismissed."
  • "Suniva, which filed for Chapter 11 bankruptcy in April, wants the U.S. International Trade Commission to employ Section 201 of the Trade Act of 1974 and slap duties on imports of crystalline silicon photovoltaic cells (CSPV) and modules."
  • "But Wuxi Suntech Co., Ltd, in a May 14 letter to the ITC, claims that Suniva's law firm -- Mayer Brown LLP -- has a conflict of interest given its affiliation with both ‘pro and against Chinese solar PV manufacturers,’ the Chinese company said. Suntech claims to be one of the largest photovoltaic cell manufacturers and exporters to the U.S."
  • "'As a result of the bankruptcy reorganization of Suniva, Inc., the interests of Suniva and its shareholders are conflicted,' the letter states. 'The acting by Mayer Brown for the Chief Restructuring Offier (sic) of Suniva, Inc. clearly conflicted with the interests of its other client, Wuxi Suntech, which again has not been consented by us.'"
  • "Suniva Inc. and Suntech are owned and controlled by the same parent entity -- Shunfeng International Clean Energy. ‘It is to our shock that Mayer Brown continued to represent the Chief Restructuring Officer of Suniva, Inc. after it had entered into bankruptcy reorganization in April 2017, and filed a petition on behalf of CRO on April 26th 2017 for safeguard relief actions that may seriously affect our capacity to continue exports to the US market,’ Shuangquan He, president of Suntech, wrote in the May 14 letter."
  • "Mayer Brown fired back with a May 16 response to the ITC, claiming that it had been given consent to proceed with its representation of Suniva. ‘Accordingly, when Suniva, through the parent entity, asked the Firm to undertake this representation, we reminded Suniva’s parent of our work for Suntech and our need for an informed consent and waiver,’ the law firm wrote. ‘Suntech, through the parent entity, provided that informed consent waiver.’"

Sunday, June 4, 2017

When Conflicts Allegations Cut Deep (Or: From Russia... Again)

There's been a clear trend of the conflicts space becoming more of a "rough and tumble" kind of world. Here's a striking example of extreme, gloves-off escalation of allegation (and given the nature of the matter it's important to emphasize allegation), following our previous coverage of the underlying matter, comes:

"Former client says BakerHostetler lied to court to avoid disqualification"
  • "For nine months in 2008 and 2009, BakerHostetler represented the hedge fund Hermitage Capital Management in the investigation of a $230 million fraud scheme in Russia that began with the theft of the corporate identities of Russian companies in Hermitage’s portfolio. BakerHostetler earned $200,000 in the engagement."
  • "Now Hermitage is asking a federal judge to order its onetime lawyers to cough up $1.4 million in fees – not money Hermitage paid to BakerHostetler but legal fees Hermitage laid out to other lawyers in order to get BakerHostetler bounced from a U.S. government suit to recover some of the alleged proceeds of the Russian fraud. BakerHostetler represented the defendant in the forfeiture case, a Cyprus-based real estate holding company called Prevezon."
  • "In the fee motion filed Tuesday, Hermitage flat-out accused two prominent BakerHostetler lawyers of making 'repeated misrepresentations' to a federal trial judge and the 2nd Circuit in a misguided attempt to hold onto the firm’s Prevezon assignment. The motion, filed by Hermitage’s lawyers at Susman Godfrey, claims BakerHostetler partners John Moscow and Mark Cymrot falsely assured U.S. District Judge Thomas Griesa that the firm’s previous Hermitage assignment was related to a different Russian fraud scheme, not the fraud underlying the Prevezon case."
  • "And to compound the law firm’s betrayal, according to Hermitage, after it persuaded Judge Griesa to allow it to remain in the case for Prevezon, BakerHostetler demanded discovery from its onetime client Hermitage in order to portray Hermitage as the true villain of the story."
  • "Said BakerHostetler: 'We do not comment on pending litigation involving our firm. We will respond to the complaint - and our response will speak for itself.'"

Thursday, June 1, 2017

Risk & Conflicts Updates (Presidential Edition)

Having recovered (mostly) from another amazing Inception experience (thank you to the enterprising reader who attempted the secret handshake!) we now return to our regular, semi-regular risk updates. Starting by catching up on various updates and allegations making news and stirring debate recently:

"Marc Kasowitz helped Trump through bankruptcy and divorce. Now he's taking on the biggest case of his career" --
  • "Now, President Trump is giving the $1,500-an-hour attorney a new assignment as his private counsel in the probe of Russia’s meddling in the 2016 presidential election. His hiring was first reported by Fox Business and ABC News."
Which played out in one way with: "Lieberman Withdraws From Consideration as F.B.I. Director" --
  • "Former senator Joseph I. Lieberman (I-Conn.) has withdrawn his name from consideration for FBI director. Lieberman cited the potential appearance of a conflict after President Trump hired his longtime attorney Marc Kasowitz — who is a partner at the same law firm where Lieberman is senior counsel — as his outside attorney in the ongoing investigations into Russian meddling in the 2016 election."
  • "'I have decided to withdraw my name from consideration for this nomination,' Lieberman said. 'With your selection of Marc Kasowitz to represent you in the various investigations that have begun, I do believe it would be best to avoid any appearance of a conflict of interest, given my role as senior counsel in the law firm of which Marc is the senior partner.'"
Next, ALM noted last week: "Robert Mueller, Jamie Gorelick and the Wilmer Problem" --
  • "Suddenly, it’s not so simple. Because until last week, Mueller was a partner at Wilmer Cutler Pickering Hale and Dorr—where his colleague in the firm’s Washington, D.C. office, a fellow member of both the strategic response and regulatory and government affairs groups, was Jamie Gorelick. Jared Kushner’s lawyer."
  • "That wasn’t such a big deal when Kushner was just President Trump’s son-in-law seeking assistance with conflict-of-interest issues and financial disclosures. Mueller didn’t personally represent him. But now, rumors are swirling that Kushner is the “significant person of interest” alluded to in a Washington Post report on Friday, “someone close to the president” under investigation for working with the Russians."
  • "If this is true—and I don’t know if it is; the best source appears to be New York magazine contributor Yashar Ali, who claims to have confirmed it with four people—it could present a substantial ethics conflict for Mueller."
Which was followed by: "DOJ: No ethics conflict for special counsel in Russia probe" --
  • "The Justice Department has determined that former FBI Director Robert Mueller's appointment as special counsel to oversee the federal investigation into Russian interference in the 2016 election complies with ethics rules."
But then this week the Washington Post notes (what some might call "the double yoink" maneuver): "The White House may claim Mueller has conflicts of interest. Oh, the irony." --
  • "But now the White House and its allies may be preparing to claim that former FBI director Robert S. Mueller III has conflicts of interest that prevent him from assuming his role as special counsel in the Trump-Russia investigation. Like so many of their other ethics claims, this one does not hold up."
  • "Their first argument is that Mueller must stand down from the investigation for at least a year because lawyers in the law firm from which he just resigned, WilmerHale, represent Jared Kushner and Paul Manafort, two people who may be involved in the investigation. It appears, however, that Mueller never represented either of these individuals nor obtained any confidential client information about either of them. Under the professional conduct rules of the District of Columbia, among the toughest in the nation on lawyers moving in and out of government, Mueller is free to leave the firm and, as special prosecutor, investigate and if appropriate prosecute either of these individuals represented by his former firm."
  • "Ironically, it is in just such a situation as the Mueller case — if the government officials involved are lawyers and therefore subject to bar ethics rules on the revolving door — that a conflicts waiver would be appropriate. If the White House were to resist granting such a waiver for Mueller and his staff while secretly approving waivers to lobbyists and others, that action would represent not only an abuse of government ethics rules but also yet another data point in an emerging pattern of obstruction of justice."
And on the related topic of legal service options: "West Wing aides brace for big attorney bills" --
"Longstanding conflict-of-interest restrictions limit White House employees from taking free or discounted legal advice, but aides who need lawyers have some options for getting help."
  • "Long-standing conflict of interest restrictions limit White House employees in many circumstances from accepting free or discounted attorney advice, and history is littered with examples of a president’s team buried under more than a hundred thousand dollars (George Stephanopoulos, under President Bill Clinton), if not millions (I. Lewis “Scooter” Libby, under President George W. Bush), in legal fees."
  • "Trump aides who can’t afford a premier $1,500-per-hour white-collar lawyer on their government salaries have options. They can file for public subsidies, lean on their homeowners’ insurance or tap lawyer friends for pro bono help. But even then, veterans of White House scandals stretching back to the Ronald Reagan era say that some of the staffers who get caught in Special Counsel Robert Mueller’s crosshairs will want to start pinching pennies."
  • "Trump aides can ask friends or family for free or discounted legal advice — with the caveat they must detail that help as a gift on their next financial disclosures forms. They also can seek out lawyers who historically have charged their government clients lower fees — though that set up is often wrought with ethics restrictions. Law firms that have business before the executive branch — a category that covers some of Washington’s bigger legal operations — present conflict of interest challenges for White House staffers who would need to recuse themselves from the firm’s issues."

Wednesday, May 24, 2017

EVENT: New York Risk Roundtable

Our next Risk Roundtable event will take place on Thursday, June 8th at the office of Shearman & Sterling LLP.

Centralizing Your Business Inception Process: Who, Why, What, How, When
  • More and more firms are looking to take the burden of conflicts review off of the shoulders of their fee earners. Some firms have been resistant to move this direction based on the assumption that the lawyer knows best. With the increasing amount of factors to consider and pressure to respond quickly, the winds of change appear to be blowing in the direction of a centralized clearance team.
  • The financial impact of freeing time for lawyers to do more billable work or pursue business development activities is of interest to most firms. The challenge of effectively staffing and making the transition to a new model can be frightening at the same time.
  • This roundtable intends to focus on these challenges by discussing and presenting real world experiences in making the move. We will be sharing ideas, best practices and technology tips to use when your firm is considering a move to a more centralized process.  Topics to be discussed include:
    • What clearance model works best for your team, and who should be involved
    • How to present the right information in context
    • What is the end result of the move and how did it benefit your lawyers
    • When is the best time to start thinking about other decisions in the new business process
And, as always, we’ll have plenty of time for open discussion, peer exchange and networking. Attendance is by invitation only and is limited to qualified law firms and personnel. Please contact for more details.

Sunday, May 14, 2017

Risk Doesn't Rest on Weekends (Lawyer Encryption, Lawyer Insider Trading and More)

With various other enterprises luring in our intrepid editor, and a pause in the action likely upon us, it felt like the right time to squeeze a week’s worth of content into a morning update. (This is a risk management blog, after all.) Here’s the latest that’s caught my eye recently:

"ABA Issues New Ethics Opinion on Encryption of Attorney-Client Email" --
  • "The ABA has released Ethics Opinion 477 (May 11, 2017) on encryption of attorney-client email."
  • "Those who do not want any rule requiring email encryption will rejoice if they skip down to the opinion's conclusion and read: 'A lawyer generally may transmit information relating to the representation of a client over the Internet without violating the Model Rules of Professional Conduct where the lawyer has undertaken reasonable efforts to prevent inadvertent or unauthorized access. However, a lawyer may be required to take special security precautions to protect against the inadvertent or unauthorized disclosure of client information when required by an agreement with the client or by law, or when the nature of the information requires a higher degree of security.'"
  • "They would be rejoicing prematurely at the absence of the words "email encryption required." The opinion notes that a hard and fast rule cannot be be crafted to apply to all situations, and therefore: 'A fact-based analysis means that particularly strong protective measures, like encryption, are warranted in some circumstances. Model Rule 1.4 may require a lawyer to discuss security safeguards with clients. Under certain circumstances, the lawyer may need to obtain informed consent from the client regarding whether to the use enhanced security measures ... In contrast, for matters of normal or low sensitivity, standard security methods with low to reasonable costs to implement, may be sufficient to meet the reasonable-efforts standard to protect client information from inadvertent and unauthorized disclosure.'"
  • "Walter "Chet" Little, who was a partner at the law firm Foley & Lardner when prosecutors said the trading took place, and Andrew Berke were charged with conspiracy and securities fraud in a criminal complaint filed in Manhattan federal court."
  • "Beginning in 2015, the complaint said, Little used Foley's document management system to access information about at least seven law firm clients including Oshkosh Corp and Harley-Davidson Inc, even though he billed no work for them."
  • "After learning about upcoming mergers, earnings and other corporate events involving those companies, prosecutors said, Little bought and sold stock and options ahead of public announcements, making more than $320,000 in profits."
  • "He also passed the inside information to Berke, prosecutors said. The SEC said Berke was an executive at a logistics company who has since 2013 lived in the same community as Little, Apollo Beach, Florida. Prosecutors said that by placing trades based on the inside information, Berke earned around $660,000."
  • "Daniel Farrell, a spokesman for Foley & Lardner, said in a statement that the 840-lawyer firm learned about the activity at issue in June 2016 and reported the matter to authorities. 'We take this matter very seriously, and we have zero tolerance for actions that violate our core values and the trust our clients place in us,' Farrell said."
Here's the full SEC complaint.

"Greenberg Traurig Accused of Trying to Invalidate the Same Patents It Prosecuted" --
  • "A former client has sued Greenberg Traurig, alleging the firm switched sides and used its knowledge of privileged intellectual property information from previous patent work to attempt to invalidate a patent for a new client’s benefit."
  • "And there’s the rub. In the past, Greenberg also performed extensive legal services for Apollo, according to the complaint. The work included two patents behind Apollo’s TrueCollect service, which gave the firm access to Apollo’s confidential, privileged information.
  • Now that Greenberg is representing Lantern, the complaint alleges that the firm advised Lantern not to pay and used the privileged information against Apollo to try to invalidate the patents so Lantern could avoid paying. According to the complaint, Greenberg has filed counterclaims seeking a declaratory judgment of invalidity and non-infringement of 'the very same patents that Greenberg helped to prosecute for Apollo.'"
  • "This lawsuit is based upon events that occurred more than 12 years ago and mischaracterizes the underlying facts,' the firm said in a statement. 'The issues raised in this lawsuit are already the subject of a pending motion in the litigation between Apollo and another party. We deny any wrongdoing and will contest this lawsuit.'"
  • "In addition, Lantern said that the sole remaining Greenberg attorney associated with Apollo’s provisional application, Bruce Neel, works in a different practice area group in an office hundreds of miles from Lantern’s attorneys, and has not conveyed any information regarding Apollo or its patents. After the firm learned of the potential conflict of interest, 'Greenberg immediately implemented an ethical screen barring any attorneys working on this lawsuit (or for Lantern in general) from access to any information or files relating to Greenberg’s prior representation of Apollo, and barring Mr. Neel from any access to or involvement with any legal work for Lantern or communication with Lantern’s litigation counsel about Apollo,' according to the court filing."
  • "'You cannot represent a new client against an old client if the work of the new client is substantially related to the work of the old client,' said [Michael] McCabe, who is the founder of McCabe Law, a firm that specializes in intellectual property ethics and disciplinary matters. “That prohibition lasts forever. … Whether it was one day ago or 20 years ago, it would still be a conflict to invalidate a patent you worked on.'"
And finally and overview of an issue I continue to find immensely fascinating: "Lawyer ethics and positional conflicts of interest" --
  • "ABA Standing Committee on Ethics and Professional Responsibility Formal Opinion 93-377- Positional Conflicts (issued in 1993) reviewed ethical issues when a lawyer represents one client in a matter in which the client’s interests regarding a substantive legal issue are directly adverse to a position the lawyer (or law firm) is advocating on behalf of another client on the same or similar issue."
  • "The opinion refers to paragraph (9) of the Comment to Rule 1.7 which stated as follows: 'A lawyer may represent parties having antagonistic positions on a legal question that has arisen in different cases, unless representation of either client would be adversely affected. Thus, it is ordinarily not improper to assert such positions in cases pending in different trial courts, but it may be improper to do so in cases pending at the same time in an appellate court.'"
  • "The opinion noted that representing two clients in different trial courts while advocating opposing sides of the same issue could also be a conflict of interest under Rule 1.7 just as if both matters were pending in the same appeals court.  A decision in a trial court could influence the outcome of a second matter in another trial court, and a decision in an appeals court could have an adverse effect on a matter pending in a trial court matter."
  • "Bottom line:  If the lawyer is considering taking a position for one client which is directly adverse to a position the lawyer (or law firm) is taking for another client on the same or similar issue, the lawyer must consider the potential conflict of interest and act accordingly."

Wednesday, May 10, 2017

More Risk Dreams...

Looking forward to seeing many readers next week at Intapp Inception. As always, if we cross paths, please feel free to say hello and attempt the secret risk blog handshake:
Well, maybe we should work on something a little more legal feeling... (How does one represent rules of professional responsibility
As noted previously, we have some great risk content in the works. I’ve been able to sit on a few panel prep calls and have been really impressed with the diversity of experience and insights the community is bringing to bear.
(This week there was one panelist who asked if the "gloves were off" in terms of being able to deliver uncensored opinion and commentary... We said yes. Perhaps not the best risk management decision, but definitely the right call for engaging and compelling content.)
We're also pleased to welcome several sponsors and partners who will be delivering sessions of their own design during mealtimes. I recently highlighted the Paragon track on cyber insurance.

Here are some others worth noting:
  • Tuesday Breakfast : American LegalNet. Best Practices in Calendar Management Workflows to Reduce Risk and Increase Efficiency 
  • In order to increase partner profitability, firms are focusing on efficiency. This means lower staffing ratios and greater centralization of functions. American LegalNet will discuss this development as it pertains to calendaring and docketing, specifically focusing on the move toward greater specialization and how it results in improved operations for many firms.

  • Wednesday Breakfast : Aurora North. Subject Matter Conflicts of Interest in Intellectual Property 
  • In this session, Becky Cacaci, Conflicts, Compliance and Records Attorney from Smith Moore Leatherwood, will join Aurora North Software to discuss techniques and best practices for spotting potential subject matter conflicts in transactional matters.

  • Wednesday Breakfast : Pinnacle. Making Better Decisions by Improving Data Quality in and with Intapp Flow and Intapp Open 
  • This session will focus on using the Intapp Open and Intapp Flow systems for data quality and stewarding. Pinnacle International Consulting will demonstrate how Intapp Open and Intapp Flow can be used to cleanse data in the PMS, particularly in preparing to migrate from Elite Enterprise.  We will also show how external data providers can be integrated to improve data quality and to drive risk assessment and client due diligence.
  • FileTrail (Lunch on Wednesday & Thursday): Future-Proof Your Law Firm's Records Management Software.
  • Being well-informed is the first step towards protecting law firms against future information governance risk. Don't miss out on the session "A Compelling Business Case for Deploying a New Records Management System." 
  • In this session, noted expert Patrick Tisdale will share his insights into how the most successful law firms take charge of this reponsibility, highlighing the process behind Dentons' recent decision to invest in and implement new records management software. He'll also cover how to law firms can ensure compliance with a range of outsides parties' needs (e.g., Outside Council Guidelines), as well as factors that will impact whether software works within their current ecosystems today and far into the future.
  • Patrick notes: "I am looking forward to meeting with law firm colleagues, and discussing how client expectations and regulatory demands are rapidly reshaping the nature of information governance as it has been practiced in firms - and the business transformation required to satisfy these demands."

  • Thursday Breakfast : Dun & Bradstreet. Beneficial Ownership - Why the Devil Really is in the Detail 
  • Do you know really your customers and suppliers? Are you confident your customer, supplier and partner data is robust enough to make your business compliant? Beneficial Ownership regulations are now placing enormous responsibility on businesses to truly understand the ultimate ownership of the organizations that they deal with. In this complex and rapidly evolving regulatory environment having the data to help your business make commercially sound and compliant decisions is critical. Join us to learn about rapidly changing regulatory landscape on Beneficial Ownership and how data and analytics can help you meet these changes.

  • Thursday Lunch: DocuSign. Intapp & DocuSign: Automate Client Intake and Improve Compliance with eSignature 
  • Learn how to use the pre-built integration between Intapp and DocuSign to reduce overall compliance risk, increase internal efficiencies and drastically improving overall client satisfaction. This session will include a working demonstration of the solution and in-depth discussion of eSignature legality and compliance. Learn how and why most of the Am Law 200 use eSignature today and will use it in the future.

Monday, May 8, 2017

Public Conflicts about Conflicts Allegations

A few conflicts stories making news. First, continuing the battle of words: "'Straight Outta Compton' Lawsuit: Greenberg Traurig Rips Disqualification Bid" --
  • "Greenberg Traurig, the law firm representing co-defendant NBCUniversal in the defamation lawsuit targeting the N.W.A biopic Straight Outta Compton, is facing a disqualification motion over a supposed conversation that happened 25 years old concerning Ice Cube's "No Vaseline." On Monday, the firm had its own outside counsel file a blistering response that ran the gamut from confidentiality to ethics."
  • "The typical conflict analysis would typically turn on whether there is a "substantial relationship" between prior and current representation."Putting aside that Mr. Katz denies advising Mr. Heller on that subject [of 'No Vaseline'], such a conversation could not possibly be substantially related to Plaintiff's claims regarding Straight Outta Compton, a movie that did not even exist at the time of those alleged communications," states Greenberg Traurig's response"
  • "Greenberg Traurig has several other arguments why the disqualification bid is meritless. The firm seizes on word that others — including Terry Heller, Jerry's nephew and the executor of the estate — were present at the supposed meeting. 'As a matter of black letter law, the presence of third parties destroys the privilege and thereby the confidentiality of any attorney client communication, unless such third parties were necessary participants," argues Greenberg Traurig's lawyers at Jenner & Block. "In addition, there is nothing confidential about the lyrics of 'No Vaseline,' which continued the very public airing of long-running grudges involving the group N.W.A. [sic]. Indeed, in the years since the alleged meeting with Katz occurred, Heller himself publicly disclosed the details of his relationship with N.W.A. in memoirs, screenplays and other public activities.'"
Read Greenberg's full response here.

Next: "One potato, two potato; hot potato brings DQ in Mississippi federal case" --
  • "Even though a Mississippi lawyer’s conflict of interest lasted only one day, that was enough for a U.S. magistrate judge to disqualify him from representing a client adverse to Allstate Insurance Co. on a coverage claim, in a ruling issued last week."
  • "Sending a termination letter to the insurer the day after accepting the new client’s case didn’t help the lawyer.  The judge found that the lawyer’s duty of loyalty required him to turn down the case, in light of the fact that he had pending cases in which he was directly representing Allstate."
  • "In the Mississippi case, the court said that the lawyer’s conduct was understandable:  he hadn’t received any new work from Allstate in over a year; his firm was wrapping up its work on the “handful” of cases it still had, the majority of which were near the end of their life-spans; and the firm planned to end its relationship with the insurer based on the fact that it was not getting new work. Nonetheless, said the judge, the lawyer and his firm had an attorney-client relationship with Allstate when the lawyer signed a contract to represent the claimant against the insurer, and he couldn’t abandon his existing client by dropping it like a hot potato."
Finally: "FBI To Quiz Holland & Knight Duo In Energy Tax Credit Case" --
  • "The FBI may question and audiotape a Holland & Knight LLP partner and lobbyist on a potential conflict of interest in the pair's defense of a businessman charged with wire fraud and tax evasion concerning renewable energy tax credits, a Pennsylvania federal judge said Thursday."
  • "David Dunham is seeking to have his indictment for wire fraud, tax evasion and obstruction of justice tossed on the grounds that federal prosecutors knew or should have known his original defense attorney, Holland & Knight partner John Brownlee, had a serious conflict of interest given Dunham had taken advice from Brownlee's colleague Michael McAdams, a Holland & Knight senior policy adviser, on some matters at issue in the case."
  • "The businessman has said in court papers that the government gained a significant tactical advantage after a conflicted Brownlee urged Dunham into proffer sessions with prosecutors with an eye toward a guilty plea."
  • "A spokeswoman for Holland & Knight did not respond Thursday to a call seeking comment."