Thursday, November 29, 2012

Law Firm Conflicts from the Corporate Perspective


Earlier this year, we called out part one of this excellent overview written by Michael Downey at Armstrong Teasdale for the ACC. Now comes part two, worth reading in its entirety: "Dealing with Outside Counsel’s Conflict of Interest, Part II" --
  • "Part I of this article – Still Talking – dealt with the first three of eight considerations for corporate counsel when analyzing and responding to outside counsel’s conflict of interest."
Consideration IV – Terminate the Conflicted Firm.
  • "Normally one consequence of a serious conflict of interest is that the affected client terminates the conflicted firm… More often, however, the client terminates the conflicted firm later in the process, after the two sides fail to reach a resolution or accommodation. Although the law firm’s representation of that client ends with termination, the firm must continue to protect the client’s interests, including turning over client files and property."
  • "Sometimes it might be impractical to terminate a firm, even though termination is often an important step before filing a motion to prevent that counsel from representing an adversary. For example, a particular matter may require immediate attention, or lawyers at the conflicted firm may be the only ones who can properly handle a matter. In such circumstances, corporate counsel may retain the conflicted counsel, but should be prepared to make a strong case for why the firm should be disqualified from representing someone else. This includes distinguishing corporate counsel’s own situation – where disqualification is apparently impractical – from the adversary’s."
Consideration V – Forced Disqualification.
  • A client may need to force the termination of the law firm’s relationship with other clients whose representation created the conflict. When asking (as part of the warning letter) does not work, normally such protections must be sought through a motion to disqualify (for a representation involving pending litigation) or an injunctive action (when there is no pending litigation).

Wednesday, November 28, 2012

Law Firm and Government Conflicts -- Incidents Touch High-Level Officials in Canada and Australia

Two conflicts stories making news today:

Gillard law firm claims AWU case presented conflict
  • "SLATER & Gordon has confirmed that Julia Gillard [the current Prime Minister of Australia] faced a fundamental conflict of interest when she represented both a crony of her boyfriend and his union as a salaried partner of the firm in the early 1990s."
  • "Slater & Gordon released details of the opinion in response to persistent media questions regarding Ms Gillard's role in giving advice on the incorporation of the now infamous AWU Workplace Reform Association in 1992."
  • "A police investigation later revealed that her then boyfriend, senior AWU official Bruce Wilson, had stolen more than $400,000 from the association - including $100,000 spent towards the purchase of a Fitzroy property."
  • "As a partner and deputy head of Slater & Gordon's industrial department, Ms Gillard represented both the West Australian and Victorian branches of the AWU. But she confirmed on Monday that she had been representing Mr Wilson and Mr Blewitt personally when she helped them, for the association, buy the Fitzroy property - and denied she had acted without authority."
  • "In acting for the official the firm had obtained information that was confidential to the official and the disclosure of which to the union would have been a conflict between the interests of the union and the official."
  • "''Slater & Gordon ceased acting for both clients after it became aware of this conflict situation,' the [firm's] statement said."

Alberta premier accused of conflict in tobacco case
  • "Premier Alison Redford, while justice minister, personally chose her ex-husband's law firm for a government tobacco-litigation contract worth potentially tens of millions of dollars in contingency fees, a CBC News investigation has found."
  • "One of Canada’s top experts in conflict of interest says Redford was in a clear conflict and should have not made that decision."
  • "Redford’s former husband is Robert Hawkes, a partner in JSS, who served as her transition team leader after she won the Progressive Conservative Party leadership race in 2011 and ascended to the premier’s office."
  • "CBC News searched public records of political contributions and found JSS, Cuming & Gillespie, and Tim Wade, the lobbyist, gave tens of thousands of dollars to the PC Party, to Redford’s riding, and to her leadership campaign before and after her December 2010 decision to award the tobacco litigation to the consortium."

Report from Chicago Risk Roundtable

Yesterday, we held another Risk Roundtable session in Chicago. Many thanks to Foley & Lardner for hosting. Brian Lynch, IntApp Risk Practice Group Director, moderated discussions and sends this timely summary:
  • Dan -- I'm pleased to report back on a very productive Risk Roundtable session in Chicago, where we had a chance to discuss risk trends affecting US firms.
  • As we've done in our other meetings this month, we focused on reviewing the findings of the recently-published Risk Roundtable surveys, comparing and contrasting US results with UK findings.
  • The first hour we discussed Information Risk, one of top cited concerns.  The second hour we dedicated to Conflicts and "Bad" Clients. It feels like we could explore these topics for days, but we had a good and productive discussion during the time we had, and participants shared some interesting perspectives. 
  • Client demands have driven information risk to the forefront, whether through Requests For Proposal ("RFPs"), Outside Counsel Guidelines, or security audits. All three are on the rise, and firms are finding different methods to standardize their approaches and prepare effectively. Clients have become more aggressive in their demands, and this trend appears to be increasing with a recent study from Lexis Nexis finding large law firms responding to more than 21 RFPs per month.
  • The parallel challenge is bringing in the right kind of client, with a due diligence process that ranges from ethical conflicts, to business conflicts, to industry alignment. This is not an easy assessment, and firms spend a significant amount of time tapping into institutional knowledge to ensure that they aren’t tripping on less obvious conflict situations. IP work has proven to generate complicated situations, and some firms have opted out of patent prosecution work altogether to avoid conflicts that are not always easy to discern.
  • Thanks again to our host, Foley & Lardner, for hosting an excellent forum.

Tuesday, November 27, 2012

Data Breaches In the News -- Managing the Risk

Judy Selby, a partner at Baker Hostetler, argues in Law Technology News: "Why Risk Data Breaches? Insurance against data breaches in a new era of data insecurity." --
  • "Data breaches can occur in a variety of ways, some by accident, some motivated by profit or political belief, and some simply for the sport of it. A breach can result from a malicious attack designed to destroy or disable a network or to steal private, competitive or proprietary information; from a disgruntled employee out for revenge; from the negligence of a vendor handling data; or from a laptop or thumb drive being left accidentally in a cab or airport."
  • "As all entities, particularly health care providers, law firms, financial institutions, and retailers, continue to gather and store more and more personal and protected information every year, the risk of a data breach grows in turn... Data breaches can have serious financial effects, including business interruption losses, regulatory and credit card company fines, legal defense costs, and civil damages. Further complicating the situation are federal and state laws imposing fines for and/or mandating public disclosure of data breaches to the affected parties and law enforcement. The Health Information Technology for Economic and Clinical Health Act (HITECH), the Health Insurance Portability and Accountability Act (HIPAA), and Gramm-Leach-Bliley, among other federal laws, can be implicated by a breach."
  • "Reputational damage resulting from a data breach can be devastating as well. Recent studies report that significant numbers of customers said they will terminate their relationships with companies after being notified of a data breach."
  • "Given this environment and the exponential growth of electronically stored information, the necessity of implementing, monitoring and updating systems and practices to safeguard sensitive data cannot be overstated."
  • "Recently, however, insurance companies have begun to offer policies specifically designed to provide coverage for data breaches, cyberattacks and similar incidents, so-called cyberinsurance...Coverage under cyberpolicies can extend to violations of privacy laws, including (where permitted under law) payment of fines."

Tuesday, November 20, 2012

Playbooks, Disqualifications & Ethical Screens

Earlier this year we pointed out an interesting discussion between Monroe Freedman, Professor of Law at Hofstra Law and John Steele, publisher of the Legal Ethics Forum. See: Conflicts of Interest -- Is "Playbook" Information (aka "Special Insight" into Former Client Thought Patterns/Strategies) a Basis for Disqualification?

The ever-watchful Bill Frievogel highlights a recent case where a playbook play played a key role (Yhan v. Hovensa, L.L.C., 2012 U.S. Dist. LEXIS 161593 (D.V.I. Nov. 12, 2012). He summarizes:
  • "A lawyer in the plaintiffs' law firm ("Lawyer") worked at the defendant's law firm for three years until November 2011.  While at the defendant's firm Lawyer worked on employment related cases for the defendant, but not this case.  The defendant moved to disqualify the plaintiffs' law firm. 
  • The magistrate judge granted the motion, implicitly adopting the playbook approach to the substantial relationship test. 
  • The magistrate judge also rejected the plaintiffs' claim that Lawyer had been screened at her new firm, because the firm had not complied with the notice provision of MR 1.10 (territorial courts and the federal District of Virgin Islands have adopted the ABA Model Rules). 
  • In this opinion the district judge vacated the magistrate judge's order and remanded the case to the magistrate judge to develop more fully the evidentiary basis for the magistrate judge's finding of substantial relationship.  The district judge did not address the screening issue."
It's unclear if an effective screen would have prevented the disqualification. The notification requirements of Model Rule 1.10 include requirements that:
  • (ii) written notice is promptly given to any affected former client to enable the former client to ascertain compliance with the provisions of this Rule, which shall include a description of the screening procedures employed; a statement of the firm's and of the screened lawyer's compliance with these Rules; a statement that review may be available before a tribunal; and an agreement by the firm to respond promptly to any written inquiries or objections by the former client about the screening procedures;
  • (iii) certifications of compliance with these Rules and with the screening procedures are provided to the former client by the screened lawyer and by a partner of the firm, at reasonable intervals upon the former client's written request and upon termination of the screening procedures.

Monday, November 19, 2012

Report from Toronto Risk Roundtable

Last week, we held another Risk Roundtable session in Toronto. Many thanks to Stikeman Elliott for hosting. Brian Lynch, IntApp Risk Practice Group Director, moderated discussions and sends this summary:
  • Dan -- I'm pleased to report back on a very productive Risk Roundtable session in Toronto, where we had a chance to discuss risk trends affecting Canadian firms, who are negotiating ever-more complicated legal requirements.
  • We focused on reviewing the findings of the recently-published Risk Roundtable surveys, comparing and contrasting Canadian results those with results presented in the UK and US reports.
  • Conflicts of interest, rogue partners, information risk, and undesirable clients were cited as top risk management concerns. Non-paying clients were included in the "undesirable client" category, and Risk Partners have become involved in preventing further exposure.
  • A growing trend is the increased scope of client requirements or Outside Counsel Guidelines. US companies have led this charge with required FCPA questionnaires, security restrictions, and representation edicts i/r/t subsidiaries and competitors. Many firms have seen an uptick in information barriers driven by client demand, rather than legal requirements. Some firms automatically apply extra security to certain types of files based upon the nature of the work and the perceived risk. US firms have been wrestling with this trend for the past couple of years, and US clients are now pressing their Canadian counsel to abide by these standards, as well.
  • Laterals have proven to be a tricky topic, as well, as different firms apply different approaches to the client information that can be shared to determine whether a transferring lawyer can join another firm. There are currently a number of initiatives underway to provide clarity and consistency. Sue Grundy (Blake, Cassels & Graydon) and Malcolm Mercer (McCarthy T├ętrault) shared some of the progress on those fronts.
  • Finally, many were waiting to hear how the new IFRS accounting standards would affect audit responses. Simon Chester (Heenan Blaikie) explained that the new standards could be months or years away and that every firm would need to take a closer look at their current audit response process when that change was due to arrive.
  • Thanks again to our host, Stikeman Elliott, for hosting an excellent forum.

Thursday, November 15, 2012

Report from California Risk Roundtables

Last week, we held Risk Roundtable sessions in Los Angeles and San Francisco. Many thanks to Paul Hastings and Gordon & Rees for hosting. Pat Archbold, Head of IntApp’s Risk Practice Group, delivered a presentation about the risks associated with default-open document management systems.

He was joined by Adam Carlson and Matt Wolf of Carlson & Wolf, who discussed the importance of human factors in managing a coordinated information security program. Kathryn Hume, a member of the IntApp risk practice team was on hand for both events and sends this report:

  • Dan -- We held two stimulating and informative Risk Roundtable sessions this week in Los Angeles and San Francisco. Both were well attended by a mix of Risk Management and IT leaders from multiple firms.
  • In Los Angeles, discussion focused on real-world challenges of and approaches for managing internal access to sensitive documents and information. Several participants described the tension between competing demands of fostering knowledge sharing vs implementing effective security. Overall, group consensus supported the idea of adopting a hybrid approach, using business rules to grant users access to content on a need-to-know basis. Everyone agreed that the primary challenge going forward will be cultural: IT leaders are looking for ways to convince lawyers that locking down certain sensitive information will not hamper knowledge transfer, but could lead to unanticipated new developments. The team from Carlson and Wolf also underlined the importance of training and awareness to alert lawyers to covert dangers in malware like Trojan horses, spear phishing, and Ransomware.
  • In San Francisco, there was an in-depth discussion about increasing information security audits from clients in financial services, hi-tech and energy sectors, and the measures firms are forced to adopt to survive close examination. One firm mentioned that it required months of preparation to pass a recent audit conducted by a major financial institution. Discussion also touched on new ethical requirements recommended by the ABA 20/20 commission. Lawyers now have an actual ethical duty to alert clients to the risks entailed by using certain technologies, and to prevent possible unauthorized disclosure of confidential information.
  • In both session, representatives from ILTA's LegalSEC initiative were on hand to update attendees on progress towards developing industry security standards and recommended practices. A special thanks to Steven Shock, Chief Technology Officer at Irell & Manella, and Kevin Moore, Director of IT at Fenwick & West.

Wednesday, November 14, 2012

Webinar Recording: Managing Litigation Holds

For those who missed the live presentation and discussion, we have a recording of the recent webinar on Managing Law Firm Litigation Holds. In this session, Brian Lynch with IntApp moderated a panel comprising speakers from Foley & Lardner, Holland & Knight, and Sidley Austin who reviewed legal hold requirements and discussed methods firms can use manage holds.

Facing the need to effectively manage litigation holds, law firms are increasingly replacing legacy approaches with structured, managed and automated systems. That’s because ad hoc and “manage-by-spreadsheet” hold processes don’t always provide suitable audit trails and create significant administrative burdens for risk staff, IT and lawyers. Those burdens include managing notifications, securing documents subject to holds and tracking details in a consistent and defensible manner.

Monday, November 12, 2012

Minneapolis Roundtable - Information Security Trends: ISO 27001


Our next event scheduled for Monday, November 19th in the Minneapolis office of Faegre Baker Daniels.

This session, presenting in collaboration with ILTA, will focus on ISO 27001 for law firms. Attend to:
  • Gain a real understanding of the value of ISO 27001 and the drivers behind it.
  • Learn about the various approaches taken by firms who have gone through the certification process.
  • Understand the value of ISO and its information security/client service needs, and whether it’s a fit for your firm.
Presentations will feature Pat Archbold, Head of IntApp's Risk Practice Group and Scott K. Larson (CISSP, CISM, CIPP, AME).

Scott brings and interesting history and perspective to the discussion, as a former Federal Bureau of Investigation (FBI) supervisory special agent who led the FBI's computer investigations and infrastructure protection program. He is well-known as a trusted adviser to Fortune 500 companies, law firms, nonprofits and government organizations in digital forensics, incident response, risk management, and other complex technical, legal and regulatory issues.

Attendance at these is by invitation only and is limited to qualified law firms and personnel. Please contact info@riskroundtable.com for more details.

Thursday, November 8, 2012

Burr & Forman Selects IntApp Wall Builder to Secure Microsoft SharePoint Document Management System

Burr Burr & Forman LLP, a Southeast regional firm with over 250 lawyers, has selected IntApp Wall Builder to enforce ethical screens and manage information security as part of its initiative to adopt Microsoft SharePoint as a document management system.

Said Burr & Forman CIO David Michel:
  • "Our firm made the decision to roll out Microsoft SharePoint for document management and needed a way to implement essential confidentiality controls, particularly the ability to explicitly grant and deny users access to specific information, and to update matter team membership over time."
  • "We chose Wall Builder because it's already being used by other organizations to secure Microsoft SharePoint DMS and we were confident that IntApp had the real-world experience to successfully execute our project on time and on budget."
Pat Archbold, Head of IntApp's Risk Practice Group added:
  • "Over the years, IntApp has made several enhancements to Wall Builder specifically engineered to address complexities in how Microsoft SharePoint stores, manages and secures information."
  • "We're pleased to apply the technology and experience we've developed by working with over 140 law firms to implement confidentiality management software, in support of Burr & Forman."
For more information, see the official news release.

Wednesday, November 7, 2012

Law Firm Conflicts Management Software -- ILTA Industry Survey

Here's additional interesting detail from the recently published ILTA survey of over 485 law firms. Well over 25% of participants weighed in on the question of which conflicts management software they use.

Aggregate data on product adoption by firms with 150 or more lawyers:
  • Elite -- 40%
  • LegalKEY (OpenText) -- 28%
  • Aderant/CMS -- 23%
  • CA/MDY (Autonomy) -- 4%
  • Rippe & Kingston -- 2%
  • TMC -- 2%
  • Microsoft Access -- 1%
  • Rainmaker -- 1%
  • Compliguard Analyze (Frayman Group) -- 0%
Data broken out by firm size:

Firms with 700+ lawyers:
  • Aderant/CMS -- 14%
  • Elite -- 18%
  • LegalKEY -- 68%
Firms with 350-699 lawyers:
  • Aderant/CMS -- 27%
  • CA/MDY -- 10%
  • Elite -- 28%
  • LegalKEY -- 35%
Firms with 150-349 lawyers:
  • Aderant/CMS -- 23%
  • CA/MDY -- 2%
  • Elite -- 56%
  • LegalKEY -- 9%
  • Microsoft Access -- 2%
  • Rainmaker -- 2%
  • Rippe & Kingston -- 3%
  • TMC -- 3%
For information about ILTA’s 2012 Technology Survey, see their web site.

Tuesday, November 6, 2012

Law Firm Information Security, Ethical Walls, Information Barriers & Confidentiality -- ILTA Industry Survey

Today, polls, surveys and statistics will no doubt be in the news (at least in the US).

For the legal community, ILTA just published its annual law firm technology survey. It presents responses collected from over 485 law firms, comprising over 90,000 lawyers.

Report data show that the vast majority of firms using commercial software to secure internal access to confidential information (for ethical screens/information barriers, client confidential matters or regulatory compliance) have standardized on IntApp Wall Builder, including:
  • 70% of firms with 700 or more lawyers
  • 69% of firms with 350 to 699 lawyers
  • 58% of firms with 150 to 349 lawyers
Aggregate data on product adoption by firms with 150 or more lawyers:
  • Wall Builder (IntApp) -- 65%
  • CompliGuard Protect (The Frayman Group) -- 8%
  • iMPrivate (DocAuto) -- 6%
  • WincWall (Wertheim Global Solutions) -- 6%
  • GX2 (Worldox) -- 5%
  • Milan (Prosperoware) -- 4%
  • SecurityGuard (Olson Consulting) -- 2%
  • The Wall (Younts Consulting) -- 2%
  • MasterEthics (RBRO Solutions) -- 1%
  • NetDocuments (NetDocuments) -- 1%
For information about ILTA’s 2012 Technology Survey, see their web site.

Thursday, November 1, 2012

Conflicts (Senatorial, Alleged or Otherwise) Making News



"NFLPA fights to keep Paul Tagliabue from hearing bounty appeals"
  • “In a statement, the NFLPA said Tagliabue's involvement is a conflict of interest because the former NFL commissioner works for a law firm that has handled bounty-related matters for the league, and represented current Commissioner Roger Goodell in a defamation lawsuit by one of the four players, Jonathan Vilma.”
"Ex-senator backs out of San Bruno blast talks"
  • “Former Sen. George Mitchell and his law firm have offered to withdraw as mediator in talks over how much Pacific Gas and Electric Co. should be fined for the San Bruno pipeline explosion after the city and consumer watchdog groups voiced their opposition, officials said Thursday… City officials and consumer groups said the law firm represents an insurance carrier for PG&E, which they called a conflict of interest…Jackson and Long said utilities commission officials had told them that they would convey their continued opposition to DLA Piper, thus making the firm's withdrawal official.”
"Danforth's tie with law firm may tinge History Museum role"
  • “Danforth is a law partner at Bryan Cave, the same firm that has enjoyed a long business relationship with the museum. The firm counseled the History Museum in the controversial land deal with former Mayor Freeman Bosley Jr., and has performed the studies that have helped justify President Robert Archibald's compensation… Danforth says there is no conflict of interest…The mayor and county executive didn't ask him to investigate the property purchase or executive pay, he points out. They asked him to broker a deal between the History Museum's government-appointed commission and its nonprofit board of trustees.”