Tuesday, July 31, 2012

Malpractice Drama Continues (Act IV)

Longtime readers may remember the roots of this story, see: "What a Piece of Work is Risk" for more history of this star-crossed tale involving allegations of simultaneous representation of adverse parties in an active lawsuit, e-discovery malpractice, and confidentiality breaches.

Now, a year later, come new developments in the same performance, reported by ACEDS: "Ex-McDermott client sues disqualified Sheppard over fees logged after conflict exposed." 
  • "Some might call it the height of chutzpah: A law firm disqualified by a US district judge for representing a party adverse to its client sues the client for fees billed after its conflict of interest was exposed."
  • "Sheppard objected to the motion to be relieved of its representation of J-M, but US district Judge George Wu, after hearing from the objecting plaintiff and the law firm at a hearing, disqualified the firm in July 2011 from representing J-M."
  • "During the 17 months that it represented J-M, Sheppard billed the company roughly $3.9 million in fees, although it took no depositions in the case that was set for trial in December 2011 and involved multi-million-dollar claims of approximately three dozen plaintiffs."
  • "J-M stresses prior knowledge of conflict by Sheppard. On June 21, Sheppard sued J-M in California Superior Court in Los Angeles for $1.19 million in fees that it says are due for services rendered in the False Claims Act case after its conflicted representation was exposed by the relator’s disqualification motion.
  • "J-M has filed a cross-complaint in the same court against its former lawyers for willfully concealing a long-running relationship with one of its adversaries."
See the full article for more intricate details and fascinating commentary.

Monday, July 30, 2012

Another Jurisdiction Adopts Ethical Screens

Law.com reports new rule changes going into effect January 1, 2013 in Connecticut: "New Conn. Rule Will Ease Conflict-of-Interest Concerns When Lawyers Switch Firms."
  • "Connecticut's Practice Book is being amended to create a procedure that will allow the job-changing attorney to promise to stay away from a case without his whole new firm risking disqualification. Following a similar move implemented a few years ago by the American Bar Association, the amendment was recently approved by the Judges of the Superior Court, the Judicial Branch's rule-making body."
  • "Legal industry observers say it's likely to bring an added degree of comfort to large firms when making hiring decisions. That, in turn, could help employment mobility for lawyers in a tight job market. 'It's going to give some guidance, especially to some of these bigger firms that have been taking on lateral hires,' said Patricia King, chief disciplinary counsel for the Judicial Branch."
  • "The new Connecticut rule will codify that practice and theoretically avoid taking up court time with disqualification motions. As of January 1, the lawyer changing firms will provide written notice to a former client when the potential for conflict arises. In the notice, the client will be informed that the attorney has been screened from the matter and be assured that no information is being shared with or gained from that attorney."
Interestingly, the new rule contains language that implies notified parties may have the rights to verify compliance and investigate the specific measures taken by screening firms. George O'Brien Jr., head of Littler Mendelson's New Haven office, weighs in on those concerns:
  • "However, O'Brien is somewhat concerned over language in the amendment that states that a client has the right to 'ascertain' whether a former lawyer has complied with conflict-of-interest rules. O'Brien pondered whether a client might interpret that phrase to mean something that the rule makers didn't intend."
  • "'I trust that these [written notices offered by the lateral partner] will suffice to enable the former client to 'ascertain compliance,' O'Brien said. 'And that the rule will not be interpreted to allow the former client to root around in the firm's internal affairs, since that could be a source of mischief.'"

Monday, July 23, 2012

Executing Successful Information Security Projects -- IntApp White Paper

The July 2012 issue of the International Legal Technology Association's monthly white paper features an article entitled "Managing the 'People' Side of Information Security Projects," written by IntApp's Sam Suri (Director of Product Strategy) and Odette van Ommen (Senior Field Consultant).

The article shares insights and key lessons for planning and executing successful confidentiality management projects, developed over the past eight years through 150 implementations.

The authors bring signicant real-world experience to the topic:
  • Sam Suri was a corporate lawyer at Allen & Overy LLP, where she was involved in a broad range of corporate work, before focusing on enhancing internal firm working practices and business processes re-architecture. She has been called upon to advise legal governing bodies, including the Law Society of England & Wales, on the regulatory issues involved in the use of technology in risk management and the advancement of industry standards.
  • Odette van Ommen was previously a practicing litigation lawyer at City law firm, Davies Arnold Cooper LLP. She now works with law firms to address client confidentiality, regulatory compliance and risk management issues. She possesses extensive experience in policy formation, process creation and change management for large-scale information risk management and compliance initiatives. She too has been invited to advise multiple legal governing bodies in formulating best practice standards.

Wednesday, July 18, 2012

Confidentiality Management in the Cloud (Ethics Opinions & Professional Rules)


Several states have acknowledged the reality of lawyer use of cloud-based software services. Another state bar joins the growing list of those who've published opinions on the matter (which includes: Alabama, Arizona, California, Nevada, New York, North Carolina, Pennsylvania): "Mass. Joins Other States in Ruling that Cloud Computing is Ethical for Lawyers" --
  • "...the MBA’s opinion adds to the growing and unanimous list of lawyer-ethics panels that have concluded that lawyers may ethically use cloud applications and services, provided they take reasonable precautions to protect the confidentiality and security of the data."
On a related note, Nicole Black, of counsel to Fiandach and Fiandach and author of "Cloud Computing for Lawyers" wrote an excellent analysis of the past and potential future of online lawyer communication: "Will Encrypted Communications Using Cloud Computing Platforms Soon be Commonplace for Lawyers?" --
  • "Standard email is inherently unsecure and, surprisingly, many lawyers are unaware of this disconcerting fact... This is because emails are unencrypted and thus no more than mere postcards, their contents readily viewable by anyone who cares to look. This inherent security flaw in email as it now exists arguably places confidential client data at risk."
  • "As a profession, we first grappled with the issue of electronic communications in the mid-1990s... Recently, however, because of the rapidly changing technological landscape and the availability of newfound means to encrypt and protect electronic communications, the issue of an attorney’s obligations to protect confidential attorney/client communications is being revisited."

Tuesday, July 17, 2012

Legal Industry Developing Information Security Model

Evan Koblentz at Law Technology News writes about the International Legal Technology Association's efforts to push industry information security standards forward, connecting with Robert DuBois, IT Director at Devine Millimet, who serves as liaison between ILTA's LegalSEC initiative and its board of directors: "ILTA Developing Law Firm Security Model."
  • "Law firm security has been a prominent topics for several years. Its spotlight grew bright in January after reports of FBI officials meeting with top New York law firms and of hackers from China targeting Toronto firms Blake, Cassels & Graydon and Stikeman Elliott."
  • "Volunteers participating in LegalSEC include experts from law firms and legal technology companies such as IntApp, along with security research clearinghouse IANS and training specialist SANS, DuBois said. "The initiative is really to help the firms not spend countless hours recreating documents, procedures, policies, and processes that other firms have already done," he said. Until recently, "We were not really compliance-driven. But now we're being compliance-driven by clients," he noted."
  • IntApp's Pat Archbold, vice president of risk management, said his company's law firm clients are clamoring for the type of information LegalSEC aims to provide. "At the end of the day law firms do things for one of two reasons. Either they get their tail handed to them and their clients tell them they have do do something, or they see their peers doing it and it's a competitive issue." In the case of law firm security, he said, "We've seen the client pressure going through the roof."

Monday, July 16, 2012

Law Firm Conflicts -- News & Updates

In matters relating to the dissolution of Dewey & LeBoeuf, Reuters reports that the firm was denied its choice of counsel. It continues to navigate the bankruptcy process, including attempts to recover funds from former partners who left the firm. (See the complete article for additional interesting detail about Dewey's efforts to destroy records that have yet to be claimed by former clients.)
  • "Dewey could have claims against partners who received hefty salary guarantees, as well as partners perceived to have taken value from the firm when their clients followed them to new firms."
  • "[U.S. Bankruptcy Judge] Glenn also denied Dewey's application to retain Proskauer Rose LLP to represent it on some employment law matters. The judge said Proskauer could have a conflict of interest because it had absorbed more than 60 former Dewey lawyers."
The Times Tribune reports that Eckert Seamans has been disqualified from its representation of Lackawanna County, Pennsylvania in a matter involving the sale of a Triple-A baseball franchise:
  • "Luzerne County sued Lackawanna and the stadium authority in August 2010, contending it is entitled to half of the proceeds from the then-pending sale of the Scranton/Wilkes-Barre Yankees franchise under the 1986 purchase agreement that brought minor league baseball to the region. Each county had chipped in $1 million to buy the franchise."
  • "Lackawanna County petitioned the court in October to disqualify Eckert Seamans from representing Luzerne in the suit because the law firm represented Lackawanna as bond counsel as recently as 2010."
  • "Judge Thomson, who heard arguments on the petition Thursday, agreed with Lackawanna's position and disqualified the firm as Luzerne's counsel."
In the court of public opinion, the Palm Springs-based Desert Sun argues:
  • "Grover Trask, Riverside County's district attorney for 24 years, is well-respected. On the surface, he would appear to a fine choice to investigate possible recruiting violations by the College of the Desert football program. But the firm he works for, Best Best & Krieger, represents COD. It defends the trustees who selected him against potential litigation."
  • "The law firm also works for Palm Desert and would be the firm to defend the city against a potential lawsuit by the family of Frank Tanuvasa, a COD defensive lineman from Alaska who was killed by a sheriff's deputy on Feb. 23. It's a clear conflict of interest."

Thursday, July 12, 2012

High Stakes Information Barriers (Ethical Walls) -- Clifford Chance + Libor


According to Reuters, the Libor case is creating significant work for lawyers. As LegalWeek reports, in some instances firms are representing multiple parties: "Clifford Chance takes on double Libor role for Barclays and RBS with Chinese wall" --
  • "Clifford Chance (CC) is advising both Barclays and the Royal Bank of Scotland (RBS) on the fallout from the Libor scandal, with a Chinese wall set up to avoid potential conflicts."
  • "CC’s role for Barclays has included advising the bank on its £59.5m settlement with the Financial Services Authority (FSA)... It is understood that the magic circle law firm is fielding a multi-disciplinary team including banking lawyers, litigators and white-collar crime specialists. Meanwhile, CC is also advising longstanding client RBS on Libor-related issues. One partner told Legal Week that the firm has been acting as defence counsel to RBS in relation to Libor-linked litigation – including several ongoing class actions in the US - for a number of months."
  • "In order to service both banks, the firm has adopted a so-called ‘Chinese wall’ to divide two completely separate teams working for their respective clients. Law firms are permitted to set up such information barriers within their offices to avoid a direct conflict, providing they have client consent."

Tuesday, July 10, 2012

Ethical Screens for Non-Lawyer Staff


Last month we pointed out an article published by the ABA: "Screen nonlawyer employees for conflicts of interest," which provides an initial overview. This month, the ABA brings us part 2 in its July Newsletter which includes more detailed analysis:
  • "In this month's column, we discuss how different state bar ethics opinions, rules of professional conduct and case law address both the appropriateness and effectiveness of screening for nonlawyers."
  • "In addressing screening of nonlawyers, many state bar ethics opinions look to Model Rule 5.3 Responsibilities Regarding Nonlawyer Assistants, which requires a lawyer who has supervisory authority over nonlawyer employees to 'make reasonable efforts to ensure that the firm has in effect measures giving reasonable assurance that the person's conduct is compatible with the professional obligations of the lawyer.'"
  • "Some state bar opinions provide specific guidance as to how to set up a screen. See e.g. Los Angeles County Bar Association Opinion 524 (2011)..."
  • "Some recent case law also endorses the idea of formalizing screening rules for nonlawyers. See, Zimmerman v. Mahaska Bottling Co., Kan., No. 83,554, (2001) (Kansas Rule of Professional Conduct 1.10(b) applies to nonlawyernext hit employees as well);"
  • "...state rules of professional conduct, ethics opinions and case law all provide guidance on both the appropriateness and effectiveness of screening for non lawyers when they move from one firm to another. These sources of authority can vary state by state. If these questions ever arise in your practice, check your local rules, ethics opinions and case law. You might also consider contacting your state or local bar association for further guidance and information."
Again, see the complete article for more background and a hefty serving of links and citations across multiple jurisdictions.

Monday, July 9, 2012

Litigation Hold Best Practices


Hat tip to Jeff Brandt, editor of the PinHawk Law Technology Daily Digest, for the pointer to an article published in the Daily Record: "Litigation holds — the do’s and don’ts."

Several participants at recent Risk Roundtables have commented on efforts to review their firms' internal litigation hold processes. The article presents a good refresher on the topic, in the context of a malpractice case between Paul, Hastings, Janofsky & Walker LLP and  a client:
  • "New York law requires a party to preserve evidence that may be relevant to pending or reasonably anticipated litigation... The litigation hold was distributed in 2008 but it appears no one read it."
  • "In his own deposition, the individual that destroyed evidence confirmed he received the litigation hold in April 2008, and even sent it along to others. However, he was not informed by counsel to preserve evidence until more than two years after this litigation began. This is a great example of why it is not sufficient to solely send out a hold notice. It is prudent and necessary to verify the recipient not only read the notice but understands what must be done and not be done."
  • The judge in the matter notes: "A party’s discovery obligations do not end with the implementation of a ‘litigation hold’ — to the contrary, that’s only the beginning. Counsel must oversee compliance with the litigation hold, monitoring the party’s efforts to retain and produce relevant documents.
The author explores additional detail in the case at hand, along with a deeper dive into requirements and best practices, which he summarizes:
  1. It is critical to send out a litigation hold notice when a party can reasonably anticipate litigation.
  2. It is even more critical to survey each person that received the notice to ensure they fully comprehend its meaning and instructions.
  3. Engage the IT department early in the process as they are a vital component in the litigation process within most organizations.
  4. Trust, but verify. If the IT department and key players state they have suspended automated deletion practices and have preserved documents, it must be verified. The case depends on it!

Monday, July 2, 2012

Information Risk, Cybersecurity & Law Firms

IntApp's Brian Lynch, chair of our Law Firm Compliance Consortium, sent word of a recent article in the Wall Street Journal: "Lawyers Get Vigilant on Cybersecurity" --
  • "As hackers step up attacks on law firms, attorneys are being forced to master a subject few of them studied in law school: cybersecurity."
  • "For hackers bent on insider trading, targets could include lawyers at top law firms that handle mergers and acquisitions, such as Cravath, Swaine & Moore LLP, Skadden, Arps, Slate, Meagher & Flom LLP or Davis Polk & Wardwell LLP, says Mr. Friedberg, a former federal prosecutor."
  • "But current and former law-enforcement officials say cyberattacks against law firms are on the rise, as criminals and state-sponsored hackers launch increasingly sophisticated sorties aimed at gaining access to the valuable information entrusted to law firms. 'We've seen specific documents from law firms on specific deals being exfiltrated from cyberattacks,' the FBI's Mary Galligan said in April at a law-firm conference in New York."
  • "Few law firms will admit publicly to a breach. Thefts of confidential information strike at the core of the legal profession's obligation to safeguard clients' secrets, and can do considerable harm to a firm's reputation."
  • "That sort of internal vigilance could soon become a professional duty for lawyers. A handful of bar associations across the country have told their members that keeping up with technology and taking reasonable steps to protect client information from being stolen are part of lawyers' ethical obligations."