Friday, October 28, 2011

Upcoming Roundtable Sessions Set for Toronto, Atlanta & Houston

Our next Risk Roundtable events are now scheduled for:
  • Atlanta -- November 10, hosted by Ogletree Deakins
  • Houston -- November 11, hosted by Baker Botts
  • Toronto -- November 15, hosted by Fasken Martineau
The Atlanta and Toronto sessions will follow our standard approach of a brief update on industry risk news and trends, followed by moderated group discussion concerning issues of interest to attendees. We always invite registrants to participate in a pre-meeting survey, to help shape each session's agenda.

Based on local firm interest, the Houston session will focus on the ISO 27001 information security standard for law firms, building on the success of the recent New York Roundtable the same topic. It will feature a presentation by Andrew Rose, Principal Analyst, Forrester Research:
  • Andrew is a leading expert in information security and risk management, ISO27001 frameworks, information security strategy; and governance, risk, and compliance (GRC) initiatives. Prior to joining Forrester, Andrew was a CISO in the legal sector. He transformed security management for two major global law firms, leading them both to ISO27001 certification.
Event attendance is by invitation only and is limited to qualified law firms and personnel. Please contact dan@riskroundtable.com for more details.

Thursday, October 27, 2011

Risk News & Updates: Conflicts, Advance Waivers & More

  • Firm’s Agreement With Opposing Party Creates Unconsentable Conflict – "The U.S. Court of Appeals for the Second Circuit held that an agreement between an opposing party and a law firm which called for the firm to aggregate its clients’ claims created a unconsentable conflict ... This opinion demonstrates how a conflict of interest can help form the basis for certain civil claims."
  • Loyalty under Attack: The Pernicious Prospective Waiver[h/t Legal Ethics Forum] – Lawrence J. Fox, a partner with Drinker Biddle offers provocative words against advance waivers and informed client consent: "Can one imagine a more Orwellian definition of informed consent? You’ve given informed consent because you are a sentient being who knows he or she is uninformed. The entire argument makes a mockery of the rules, in effect saying, not that these lawyers have obtained 'informed consent' but that these lawyers are above the rules, that when one deals in the rarified air of AmLaw 100 law firms and their clients, there are no ethical boundaries."
  • "Inexcusable" ABS delay could cost [UK] law firms – "The 'inexcusable delay' in enabling the Solicitors Regulatory Authority to start licensing alternative business structures (ABSs) could make private investors think twice about entering the legal sector, the head of corporate finance at accountants Baker Tilly said this week."

Wednesday, October 26, 2011

Report from Yesterday's San Francisco Risk Roundtable Session Hosted at Orrick

Yesterday we held, a Risk Roundtable session in San Francisco. Many thanks to Orrick for hosting. Brian Lynch delivered a presentation updating attendees on current risk issues and trends, and moderated group discussion. He sent his customary summary of the wide ranging group discussion:
  • Dan – We returned to San Francisco with our Risk Roundtable series. Today at Orrick we discussed legal trends in the US, UK, and Canada, spending a good portion of our time on disruptive technologies, more extensive client requirements, and defensible solutions for reducing the risk of insider trading.
  • Mike Guernon of Orrick shared with the group their approach for using technology to simplify the risk management process. In many ways, the volume and complexity of information barriers was becoming very difficult to manage, and technology played a key part in freeing up the risk group to focus on other pressing issues.
  • One of our attendees spoke about the dangers of disruptive technologies, how it's affecting the way lawyers work, and the security concerns they raise. With the recent breach at Dropbox, all firms should definitely take a look at where their lawyers are storing client work product outside of the four walls of their firms.
  • It was a productive forum for risk professionals to ask their peers how they approach different issues, like balancing knowledge sharing and security or ensuring compliance with outside counsel guidelines. A good session with lots of food for thought.
We'll be announcing several regional additional Risk Roundtables Shortly...

Wednesday, October 19, 2011

Concerning Conflicts...

An assortment of conflicts management scenarios in the news recently:
  • BofA seeks to oust AIG law firm from $10 billion case – They allege a partner working on behalf of AIG previously defended entities now owned by BofA: “…a London-based partner at Quinn Emanuel Urquhart & Sullivan. He is no longer working on the American International Group Inc case following Bank of America's objections, the bank said in the filing, made late on Monday.”
    • Fordham law professor and legal ethics expert James Cohen weighed in against the motion to disqualify : "I don't think there is a conflict. They are unrelated matters and his representation of Merrill and First Franklin is more than two years in the past. The mere claim that a lawyer developed a strategy for defending this kind of lawsuit does not mean the lawsuits are significantly related." He also noted "...it could prove 'problematic' if presiding judge Barbara Jones decided Becker was not screened fast enough, but that an effective screen could address this issue."
  • Firm disqualified 9 years after client interview – Prudential Insurance successfully disqualified a firm it argued received confidential information about the litigation at hand when it interviewed it as potential counsel: “Prudential representatives had spoken with lawyers from DeCotiis in November 2002 so that the firm could represent Prudential in the litigation, but Prudential decided to go with another firm the next day.”
  • John Edwards affirms retention of counsel accused of conflicts – “Earlier this month, federal prosecutors filed a motion with the court requesting a hearing on the government’s contention that Lowell’s previous representation of two likely prosecution witnesses could impact Edwards’ constitutional rights to an attorney free of conflicts.” (For his part, Edwards says he’s “waiving any such conflict.”)
  • Reexamining conflicts of interest in the current economic environment – Argues that clients should be cautious about identifying and waiving conflicts: “…one takeaway from the Great Recession, and specifically from the proliferation of litigation that has followed, is the importance of thoroughly vetting potential conflicts of interest when choosing outside counsel.” The author explores a recent case of a firm accused of representing both a mutual fund and advisor to the fund.
  • Do contingency agreements create conflicts? – DLA Piper tried to get King & Spalding disqualified, arguing that its contingent fee agreement would cause the firm to push back against a settlement offer short of its own $35m “break even” point. A judge denied the motion, citing factors including the high cost to the client of having to change firms five years into the litigation.

Friday, October 14, 2011

Report from Yesterday's Chicago Risk Roundtable Session Hosted at Foley & Lardner


Yesterday we held, a Risk Roundtable session in Chicago. Many thanks to Foley & Lardner for hosting. Brian Lynch delivered a presentation updating attendees on current risk issues and trends, and moderated group discussion. He sent his customary summary of the wide ranging group discussion:
  • Dan – We kicked off our Fall series of the Risk Roundtable at the Foley offices in Chicago. We discussed legal trends in the US, UK, and Canada, spending a good portion of our time on recent decisions regarding disqualification motions.
  • Outside counsel guidelines continue to be a growing source of work for risk teams - federal government agencies seem to be creating requirements that are much more aggressive than those from the private sector. "Outside counsel management" has become a cottage industry for consulting firms. [Ed: See our upcoming webinar on this topic.]
  • Foley shared with the group their approach for centralizing regulatory compliance. Many issues - ranging from unauthorized practice to lobbyist activity reporting to ITAR - fall within the scope of their Loss Prevention department. Kirkland & Ellis mentioned that they have a similar structure. It enables them to consistently apply appropriate controls and frees up lawyers to focus on billable work.
  • It was a productive forum for risk professionals to ask their peers how they approach different issues, like balancing knowledge sharing and security or ensuring compliance with outside counsel guidelines. A good session with lots of food for thought.
Our next Risk Roundtable meeting will take place October 24th in San Francisco. Watch this space for more details. (If you'd like to join us in San Francisco, or host a Risk Roundtable in your neck of the woods, please feel free to get it touch: dan@riskroundtable.com.)

Thursday, October 13, 2011

Facing Conflicts Allegations, Law Firm Representing Solyndra Cites Ethical Screen

Facts continue to come to light around the controversy underlying government loan guarantees to the now bankrupt Solyndra solar power company. Now Wilson Sonsini Goodrich & Rosati stands accused of a conflict in connecting with its work represented the company.

The firm worked with Solyndra on its aborted $300m IPO last year, among other matters, generating $2.4m in fees. As it turns out, a corporate partner at the firm was married to a senior official in the US Energy Department's loan guarantee oversight group (Steven Spinner). Information is coming to light alleging that Spinner exercised influence behind the scenes to push through loan guarantees for the firm.

As The American Lawyer reports: Spinner "...had pushed hard for the Obama administration to provide Solyndra with the loan that helped sink it."

When approached about the connect, Wilson Sonsini stated: "Allison [Spinner] did not work on the Solyndra transaction, nor has she ever worked with the company in any capacity... Also, the firm established an ethical wall around Allison with respect to [Wilson Sonsini's] representation of clients in matters involving [Energy Department] loan programs."

Furthermore, "No one from Wilson Sonsini was permitted to 'discuss or otherwise communicate' about those matters with Spinner, the firm said in its statement."

Wednesday, October 12, 2011

Screening & Confidentiality vs. Knowledge Sharing

Heenan Blaikie partner Simon Chester is an acknowledged leader in law firm professional responsibility and risk management issues. He recently published an article in Managing Partner Magazine entitled: "Managing Screens," which explores the tension between tightly controlling access to sensitive client (and firm) information and fostering internal sharing, which he characterizes as: "the potential of exploiting collective professional knowledge."
  • "What has changed is that, in the past decade, so-called ethical screens have proliferated within law firms. Ethical screens are what used to be called Chinese walls: institutional mechanisms combined with technological safeguards and personal undertakings which ensure that confidential information is tightly protected."
  • "These are also used when clients or courts require objective safeguards to ensure that confidentiality will be strictly maintained on a need-to-know basis. For example, firms which are retained to act on hostile takeover bids will generally open files under code names and limit access to market moving information."
  • "Most large Canadian law firms have over 500 screens at any one time and, once erected, they are notoriously slow to get dismantled."
  • "Why does this matter for KM? Because once a client and its matters are screened off, the entire contents of those files are unavailable for future use. It is as if that knowledge doesn’t exist in the firm."
He argues several provocative implications of the growing confidentiality trend: "At a certain point, the number of screens will not merely make KM impossible but will make the firm less than a partnership and more like a group of solo lawyers or small firms working within a scattered archipelago of practice."

And goes on to provide several suggestions and approaches for "creatively managing the tension between KM and professionalism."

Monday, October 10, 2011

Webinar: Responding to Outside Counsel Guidelines (CLE Eligible)

Following last month's webinar on managing risk tied to lateral hiring and law firm mergers, we're pleased to announced an October webinar on managing risk and response to outside counsel guidelines:

Date: Tuesday, October 18
Time: 9 am Pacific / 12 pm Eastern / 5 pm BST

Description: In the past five years, outside counsel guidelines ("OCGs") have become more commonplace and more stringent. The legal services world has shifted, as corporations (and their law departments) are being held to stricter budget accountability and risk management standards. Law departments have, in turn, held their external counsel to these same higher standards. In many ways, clients have become the true regulators.

When outside counsel guidelines are not appropriately reviewed or are not well-communicated to affected groups, firms open themselves to significant risk and exposure. Facing a variety of guidelines, a constant flux of new client intake activity and diverse (and sometimes decentralized) procedures, prudent firms can work to limit their risk by taking steps including:

In this session, panelists from : Holland & Knight, Orrick, Herrington & Sutcliffe, and McKenna Long & Aldridge will explore topics including:
  • Establishing a firm committee or designee to review all OCGs before they are accepted
  • Keeping OCGs in an accessible repository, available to risk and account department personnel for review
  • Familiarizing risk management staff with any exceptional conditions laid out in these agreements, especially non-standard conflict protections or client information that should be treated as especially sensitive or confidential
  • Similarly familiarizing the accounting department with exception and non-standard conditions tied to rates, billing structures, or mandated technologies for invoice submission
IntApp's Brian Lynch will moderate this discussion featuring representatives from the Risk Roundtable Compliance Consortium, a working group focused on developing risk response guidelines:


CLE Credit: Certificates will be provided to attendees upon request. (Attendees outside of California are responsible for confirming CLE reciprocity in their particular jurisdiction.)

Attendance: Attendance is by invitation only. Risk Roundtable members and qualified parties are invited to request more information by emailing: dan@riskroundtable.com.

Wednesday, October 5, 2011

Risk News: Conflicts & Former Clients, Side-Switching Lawyers & Staff, New Data Privacy Bills

  • Ethically Speaking: Addressing conflicts of interest with former clients –  "One issue frequently encountered after years of practice is whether taking on a new client’s case will present a conflict of interest with a former client. Sometimes, it’s a tough call, especially when there are rarely ethics decisions directly on point."
    • The author explores this challenge in the context of the New York State Bar's Ethics Opinion 871 (issued May 31): "The committee then emphasized that the appropriate inquiry does not revolve around whether actual confidential information was obtained in the prior proceeding, but instead, the relevant inquiry is whether there was a perceivable risk that a competent lawyer handling the earlier matter would normally acquire information that would be adverse to the former client’s position in the current case."
  • Switching Sides from Corporate Work to Plaintiffs Firms – "How far will companies go to protect their secrets when employees leave? And how free are former employees to pursue jobs of their choosing?"
    • Reviews several interesting stories where lawyers and non-lawyers changed jobs, and faced significant opposition: "Robert Klein, a partner at Miami's Klein, Glasser, Park, Lowe & Pelstring, is not surprised by Allstate's aggressive posture. Klein represents lawyers who faced resistance from former clients when they switched sides. In recent years he's witnessed a dramatic increase in suits and disqualification motions by corporations against former lawyers. He says the complaints are often strategic, and many are lodged by insurance companies."
  • The Senate puts three data breach bills in play – For those tracking trends on state and federal data privacy laws affecting personal information many firms store and manage: "[In late September], the US Senate voted to approve three bills that deal with data privacy, security and breach notification. All three would preempt the existing state laws that deal with data breach notifications... this matters."

Monday, October 3, 2011

Canadian Firm Breaches Duty of Loyalty, but Fends off Disqualification

Hit tip to Malcolm Mercer, Partner and General Counsel at McCarthy T├ętrault, for pointing us to this interesting Canadian disqualification decision from the Court of Appeal for Saskatchewan (See: Wallace v. Canadian Pac. Ry., 2011 SKCA 108 (Ct. App. Sask. Sept. 28, 2011):
  • Law firm (McKercher LLP) takes on class action suit against several railways, including the Canadian National Railway (CN), claiming 25 year history of overcharging clients. In published accounts it was reported damages could potentially reach 1.75 billion dollars.
  • At the time, the firm was acting for CN on several unrelated matters (corporate, commercial, tax, debt, collection, real estate and litigation). So the railway moved to disqualify the firm.
The court evaluated three factors:
  • Did the firm obtain confidential information which could prejudice CN
  • Did the firm breach its duty of loyalty to CN?
  • If yes to both, should it be disqualified?
It ruled that no confidential information was shared, but that the firm did breach its duty of loyalty.

CN argued that the firm had confidential knowledge of the company’s “approach to litigation, its business practices and its risk perspective and tolerance.” But the court found answers to questions asking for specifics to be a bit evasive.

Given the standard set for disqualification, the firm was not disqualified. (Though the decision suggested CN complain to the Law Society about the firm’s breach.) See the extensive written decision for additional detail.