Monday, June 28, 2010

Risks Tied to Law Firm and Lawyer Use of Social Media and Social Networking Sites

We've explored risks, surprises and evolving thinking tied to law firm and lawyer use of social networking and new communications technologies in the past. While these tools create new opportunities for firm growth and success [see here and here], a few recent articles remind us of the new risks and challenges these technologies create:
  • Minimizing the Legal Risks of Using Online Social Networks -- provides a good checklist of legal issues those who use social networking sites (or allow/encourage firm personnel to do so) should consider.
  • Social Networks Pose E-Discovery Risks  -- Explores discovery risks and challenges these new tools create. The article includes a summary commissioned by Deloitte of 337 U.S. IT, legal, risk, and compliance professionals.
  • Over the web, loose lips can sink more than ships -- Paints a hypothetical story to highlight how simple mistakes can compound to create serious problems. In this case, a lawyer's "fat fingers" publish confidential information not meant for wide distribution and open the door to several serious problems and potential liability...

Thursday, June 24, 2010

California Supreme Court Upholds Ethical Screening (Kirk v. First American Title)

Interesting news for those following ethical screening developments in California the recent decision accepting ethical walls as a rebuttal of imputation. By a 6-1 vote, the California State Supreme Court just declined to review the Court of Appeal decision in Kirk v. The First American Title Insurance Company (2010) 183 Cal.App.4th 776. (Hat tip to for the PDF of the Court of Appeal's written decision).

While acknowledging inconsisten case law, the Court noted that a narrow view that disqualified a conflicted lawyer, but did not impute knowledge and disqualify the entire firm so long as an effective ethical wall was in place, was most prudent.The case was referred back to the trial court to determine if the ethical wall that the firm in question created was in fact effective.

Tuesday, June 22, 2010

Data Privacy Regulations: Trends & News

With the the HITECH Act and state data privacy laws going into effect in the US, many organizations are paying closer attention to rules affecting the standard of care they must exercise with the sensitive information they manage. Law firms are responding to client demand for privacy expertise by expanding client-facing privacy practice groups (see Hunton & Williams announcement). But firms should also carefully consider their own internal information risk management practices for managing both client and internal data.

Here are some interesting updates on evolving international data privacy rules and related resources:
  • Canada -- (via Canadian Privacy Law Blog) -- is proposing adding breach notification provisions to its data privacy law, the Personal Information Protection and Electronic Documents Act (PIPEDA). If the changes are adopted, notice would need to be provided to affected parties and the Privacy Commissioner of Canada.
  • Mexico -- (via Reed Smith) -- has passed the Federal Law for Protection of Personal Data (FLPPA), which includes provision for collection, management, sharing, safeguards, notitification and non-compliance penalties.
  • Russia -- (via Hunton & Williams) -- is considering updating its data privacy laws. Though, at this point it's unclear if the results will be stronger rules or relaxed requirements for activities like collecting individual consent for data sharing. The local regulators have pointed out a high rate of existing non-compliance and are presently collecting feedback from the business community.
  • See also: an interview Brian Hengesbaugh, Partner with Baker & McKenzie, on data privacy considerations.

Tuesday, June 15, 2010

Risk Roundup: Conflicts, Ethical Screens, Electronic Discovery + More

  • Failure to properly ethically screen results in firm disqualification from $285 million matter: In this case, a judge found fault with a New York firm's screening practices. The judge ruled that while the firm did take steps to restrict internal information sharing, it did not provide sufficient internal notification regarding the screen and failed to inform required external parties.
  • From the New York Law Journal comes an interesting story about a judge ordering Blank Rome to set up a "Chinese Wall" in response to a disqualification motion. What's interesting about this ruling is that the judge said there was no conflict in this case of a divorce where the husband's company was represented by the same firm now representing his wife. The husband argued the firm had access to sensitive personal financial information through its corporate activities. However the judge disagreed, even though there was no conflict or sensitive information: "Nevertheless, citing the 'unusual set of circumstances,' [the judge] directed that the firm erect a Chinese wall in order to protect the parties interests and privacy."
  • From PinHawk Law Technology Daily Digest comes a link to a story about "the importance of lawyers understanding ediscovery." It provides an excellent overview of the evolving and complex world of electronic discovery rules, including "safe harbor" provisions that have recently made news.

Monday, June 14, 2010

Science Fiction? One Take on Risk Management and Technology in the Year 2020

The latest edition of ILTA's quarterly journal features several articles considering what law firms will look like in the year 2020. One article in particular explores issues relevant to the risk community. A Letter from the Future: Risk Management and Technology in 2020, explores how current trends in risk management and technology predict what might come in the coming decade... and steps firms can take to best prepare and protect themselves. Interesting reading for both risk and IT stakeholders.

Thursday, June 10, 2010

News and Opinions on Conflicts and Ethical Screening for Law Firm Paralegals

The Texas Court of Appeals published an interesting decision regarding the extent to firms must actively enforce ethical screens in the case of paralegals with conflicts based on clients and matters they've worked on at prior employers.

As background, industry expert Bill Frievogel notes at that: "...most state courts and ethics committees that have considered this issue as to non-lawyers have given non-lawyers more slack and have approved screening." And, in keeping with this logic, Frievogel notes that while Texas does not allow unilateral screening of conflicted lawyers absent client consent, case law does support such screening for paralegals.

In this particular Texas case, a paralegal who had worked on one side of a matter joind the firm representing the adverse party. Facing a disqualification motion by the original employer, the second firm argued that its blanket instruction to all incoming paralegals to avoid work on matters they were exposed to prior to joining the firm was a sufficient screening measure.

The court held that such a blanket policy was insufficient as an "effective" screening measure. It highlighted this fact by noting that the paralegal in question actually worked on the same matter at the new firm. That alone was sufficient to rebut the presumption that the paralegal shared confidential information with the new firm, regardless of whether such sharing occured. (For details, see: In re Guaranty Insurance Services Inc., Tex. App. 3d Dist., No. 03-09-00640-CV, 4/16/10)

As with lawyer screening, paralegal screening rules vary by state. In 1988, the ABA endorsed unilateral paralegal screening in Informal Opinion 88-1521. More recently, the ABA commentary on the newly-revised Model Rule 1.10 argues that imputed disqualification should not apply to paralegals and other non-lawyer personnel. (See Comment 4. See also National Federation of Paralegal Associations Opinion 95-3.)

Tuesday, June 8, 2010

Are State Bar Ethics Opinions Sufficiently Accessible to the Lawyers They Affect?

Very interesting discussion this week on the ABA Ethics 20/20 mailing list about the accessibility of state bar ethics opinions. The discussion was sparked by a sole practitioner who expressed frustration at having to join multiple state bar associations in order to access written opinions. This individual highlighted the lack of centralized, open materials. In some instances, opinions may even be subject to copyright and restricted from open distribution. Several participants concurred with the argument that ethics opinions, by their very nature, should be accessible to any and all parties. Participants pointed out several existing resources including:
Discussion then turned to the fact that resources like these may provide citations to ethics opinions, but individuals must still obtain the written opinions themselves, which may be accessible only through commercial services like Westlaw. A representative from BNA also suggested that this service provides the most thorough collection of ethics opinions (and links to resources), but acknowledged that even with that resource, individuals must still go "from website to website" to track down specific text. Part of the reason for this, he argued, is that demand for ethics opinion information resources is low, so commercial services don't feel the need to invest in collecting, indexing and presenting this information.

One participant in the discussion summed up the reason why access is important: "Many states follow each other as examples and some are asked to address certain issues long before others. Attorneys would benefit greatly from being able to review the guidelines and suggestions found in the comments of the ethics opinions of different states... the ability to search for these opinions across states would be a valuable tool for attorneys..."

Sunday, June 6, 2010

Conflicting Conflicts Concerns?

Hinshaw's recent risk newsletter points out a recent ABA Opinion: "Disclosure of Conflicts Information When Lawyers Move Between Law Firms." It's an interesting question to consider -- how much information about past clients and matters can (or should) a lawyer share with a new firm? On one hand, the lateral must disclose enough information to identify and clear potential conflicts, on the other, the lawyer should be cautious about sharing information or details which may run afoul of the primary duty of loyalty to their clients.

The Georgetown Journal article linked below along with several other resources poetically summarizes this potential Catch-22,citing comments from one law firm parter: "See, I can't ask an associate, 'What clients have you worked on?' That would be a breach of ethics for them to disclose it to me. I don't know how to do that. That's a good question."

Thursday, June 3, 2010

Jurisdictional Rules and Considerations in the News

We've pointed to updates and news regarding lawyer mobility, cross-jurisdictional practice -- both across US state borders and internationally -- and related, unfolding trends . A few recent stories and opinions further highlight the need for firms with distributed offices and lawyers to pay attention to these evolving opinions and rules:
  • Via the Legal Ethics Blog: The ABA Commission on Ethics 20/20, a group that's undertaking a multi-year review of professional rules, is exploring and evaluating the extent to which the Model Rules should apply to foreign lawyers practicing in the United States. A Working Group developed some preliminary findings and framed questions "illustrating why and how foreign lawyers could be included within the current ABA Model Rules." At this point, the Commission has opted to solicit further public input before taking an official position. More detail and instructions for comment on their web site.
  • The ABA Journal has published an interesting story regarding physical presence and bar membership: "A lawyer can keep her membership with the bar of the U.S. District Court for the District of Maryland in spite of a local rule that would seemingly disqualify her because she's been telecommuting from Massachusetts since August 2007 but isn't licensed in that state." One analyst suggests that such rules are "outdated," but recent decisions, such as one issued in New Jersey, suggest that these matters are far from settled.

Managing Partner Risk Conference: June 8-9 in London

Managing Partner's latest law firm risk management conference takes place shortly (June 8-9 in London): "The need to invest in compliance and develop a formal compliance programme is of increasing importance, not only to address the constantly changing compliance burden but also to ensure the overall success of your firm. Are you therefore satisfied that your firm is complying with its obligations? Are you aware of the latest regulatory and compliance developments? Do you realise how serious the implications are if your firm fails to comply?"

Sessions on topics including:
  • The Solicitors Regulation Authority’s new approach to regulation and a new Code of Conduct
  • Anti-money laundering compliance updates
  • Assessing the risks and maintaining compliance with legal process outsourcing arrangements
  • Evolving your risk management response: Strategies for securing staff and technology resources to respond to compliance requirements. (This session will feature a case study presentation on confidentiality management and information barriers.)
Speakers include representatives from: BLP, Bevan Brittan, Burges Salmon, Herbert Smith, Hunton & Williams, IntApp, Lawrence Graham, Bird & Bird, and Taylor Wessing.

Wednesday, June 2, 2010

Continuing Evolution of UK Risk, Compliance and Regulatory Rules

  • New SRA Code of Conduct Published: Moving to a framwork that is "outcomes based," the SRA has published a draft code of conduct, now available on its web site. Firms are encouraged to review the proposal and submit feedback prior to August 20, 2010. Legal Futures provides an excellent summary of proposed changes and their potential impact.
  • Alternative Business Structures: Scotland Law Society votes to allow non-lawyers to hold minority ownership positions in law firms (up to 49%). Interestingly, on of the arguments for the change was enabling Scottish firms to remain competitive in terms of fundraising with organisations in jurisdictions moving to allow external ownership. For more details, see a summary in The Guardian.
Also see other recent UK risk and insurance updates.

Tuesday, June 1, 2010

Red Light on FTC Red Flag Rules

The FTC Red Flag Rules were already on hold for law firms, based on the successful challenge by the ABA. It looks like heat is off for the general populace as well. At least for the moment. The FTC just announced that enforcement of the rules will be delayed at least until January 1, 2011. While the rule went into effect for some entities in 2008:
  • "The Commission has issued several Enforcement Policies delaying enforcement of the Rule. Most recently, the Commission announced in October 2009 that at the request of certain Members of Congress, it was delaying enforcement of the Rule until June 1, 2010, to allow Congress time to finalize legislation that would limit the scope of business covered by the Rule. Since then, the Commission has received another request from Members of Congress for another delay in enforcement of the Rule beyond June 1, 2010."
Law firms are not the only organizations upset at the new regulations. Shortly after the ABA challenge, the accounting industry brought its own lawsuit. And the American Medical Association has just done the same.

Law Firm Compliance News and Notes

  • Monica Bay, Editor-in-Chief of Law Technology News recently noted: "...compliance is looming large over the legal industry. Once all of the related issues become clear, I suspect that compliance will make e-discovery look simple."
  • The Risk Roundtable Program reports great success at two recent events in New York and Philadelphia. These sessions focusedon how technology is transforming risk management for law firms. Over 60 participants gathered to talk about risks tied to common firm information and data lifecycle management practices, evolving industry rules, case law and complaince standards. Discussions also explored how ftechnology is being used to help combat the various risks (some of which it helped create in the first place). Follow-on Roundtable events are under development.
  • Hogan Lovells: Reports that the European Union, already home to strict data privacy, confidentiality and compliance tracking requirements, is looking to refine and extend its rules. Worth noting for organizations working or interacting with that geography. (Or for those who see EU style rules as a harbinger or model for what might spread overseas as US data regulations continue to evolve.