Thursday, August 29, 2013

On Client Engagement Agreements and Terms of Business

[h/t to Jeff Brandt at Pinhawk] for a link to: "Fee Tale: This Is Not Your Father’s Engagement Agreement," an essay on the increasing risks and complexities associated with client engagement management. Jeff notes:
  • "Why should anyone in IT care about the engagement letters the attorneys send out? Because it should govern aspects of the technology and information disposition - which IT people are typically responsible for. Collaborative technology (i.e., use/non-use of DropBox) and records disposition (physical and electronic) can and should be specified and agreed to with the client in advance of the engagement."
The article itself, written by a Senior Law Practice Advisor at the Massachusetts Law Office Management Assistance Program, goes into greater detail:
  • "There are, I suppose, any number of reasons why more lawyers don’t take full advantage of the ability to define the attorney-client relationship... However, lawyers spend their entire careers worrying about worst-case scenarios. So it’s always striking when they do not apply the same analyses that they offer to clients to their own practices."
  • "In many cases, however, neither clients nor their attorneys have the appropriate depth of understanding respecting the technologies that will be used in the representation. Including a provision within the fee agreement covering the technology that the law firm uses, and the security that is applied to the technology systems, can help both sides. The client becomes aware of the tools the lawyer will use, and the lawyer is forced to gain a more-than-cursory understanding of the technology applied — since she must explain it to the client."
  • "If you can educate your client while also acquiring informed consent respecting the technology you’ll apply for his case, you’re effectively killing two birds with one stone..."
  • "With the rising popularity of unbundled, discrete representations, it’s important to make sure that the scope provision of your fee agreement is clear, and clearly elucidated, to the client. As with all of these suggested fee agreement inclusions, this measure can be viewed as an aid to both client and practitioner, rather than as another administrative burden"
  • "Fee agreements are underused tools in the attorney’s arsenal. If you can update your fee agreements to address important management aspects of the modern practice, it will have a positive effect through the course of each representation and afterwards."

Wednesday, August 28, 2013

New Business Intake & Conflicts Management - New Developments

Marshall, Gerstein & Borun LLP has selected Intapp Open to streamline and automate its new business acceptance and conflicts management processes.

Said the Firm's IT Director, Kimberly Giertz:
  • "As a firm specializing in intellectual property law, we consistently take on a high volume of new matters and wanted to update our internal tools and processes to streamline business inception."
  • "We evaluated several software options for enhancing intake and conflicts management and quickly determined that the innovative approach offered by Intapp Open, with its modern architecture, quick configurability and polished user interface, would best position our firm to address our long term objectives."
Today, multiple market trends are putting new pressures on law firms to transform the way they evaluate and engage new business. These include clients with increasing service expectations, and a risk landscape with evolving regulatory rules, compliance requirements and professional standards. In response, firms are looking to increase the sophistication, efficiency and agility of their intake and conflicts management processes to better align client selection and terms of business with overall strategy, service models and internal policies.

Intapp Open replaces conventional approaches with an application specifically designed to streamline how new clients are evaluated and new matters are created. It offers an intuitive, audience-specific user experience, tuned for management, lawyer, IT and risk stakeholders.

An important pillar of the product's philosophy is supporting a broad network of independent service partners. (This is designed to addresses a too-common conflict of interest, where vendor-provided implementation and consulting services are treated as a profit center and organized to extract significant ongoing revenue, rather than enabling quick customer success.)
  • “We’re very pleased that Intapp has built a software delivery model that encourages us to work with the services partner that’s right for us,” added Giertz. “Our experience with Aurora North has been first rate. Chris Kave and his team bring an impressive mix of legal software, data management and business process expertise to the project.”
  • "Because it's specifically designed for business acceptance, Intapp Open provides law firms with a more effective way to handle client and matter onboarding and conflicts management than legacy products, which require extensive customization and expensive custom development," said Christopher Kave, Founder and Principal, Aurora North Software. "We're proud to partner with Intapp to deliver an innovative approach to inception to the legal community.”

Commenting on Marshall Gerstein's Decision, Product Manager Milan Bodbe  added:
  • "We've seen tremendous interest in the product from the legal community and have received consistently positive feedback about our professional services philosophy, which creates incentives that put customer interests first.."
Visit for more information on how Intapp Open enhances law firm new business intake and to request more information or a demonstration.

Thursday, August 15, 2013

On Protecting Law Firms from Data Theft

A reader sent a link to the latest Harvard Journal of Law & Technology: "Hackers, Spies and Stolen Secrets: Protecting Law Firms from Data Theft" --
  • Cyberattacks are increasingly targeting lawyers, and the legal profession must respond more energetically to the threat than it has to date...The increasing number of data theft and espionage incidents in cyberspace has been widely reported,5 and law firms have become particularly attractive targets. One data security company reports that 10% of the advanced cyberattacks it investigated in the past 18 months were targeted at law firms."
  • "The risks to law firms are increasing for several reasons. First, computer-savvy intruders are drawn by the quantity and quality of documents available in law offices, routinely including investment plans, negotiation positions, business strategies, descriptions of technical secrets, and due diligence material on financing, transactions, and mergers. Infiltrating attorneys’ computer systems is an optimal method of obtaining sensitive material because '[l]aw firms have a tremendous concentration of really critical, private information,' ex- plains Bradford Bleier of the FBI’s cyber division.8 Large law firms routinely hold privileged and sensitive documents worth millions of dollars to foreign intelligence services."
  • "Second, law firms often have worse data security than their clients. 'It’s possible the information comes from a very secure source, a company with very good security. Then it goes to a law firm, and who knows what kind of security they are going to have,' says Lucy Thompson, chair of the American Bar Association’s Section of Science and Technology Law."
  • "Third, data thieves may choose law firms as targets in order to filter out low- value material. Large corporations routinely store so much digital data that an intruder may have trouble sorting the wheat from the chaff; however, a corporation’s outside counsel receives and stores a much smaller set of documents, carefully selected for their importance and
  • "This Note considers this problem and proposes some specific measures that the legal profession could deploy to address it. Part II examines the industry-specific challenges that lawyers face when at- tempting to achieve good data security. Part III discusses the existing statutory and professional rules, showing why they have so far been inadequate to address the problem. Part IV considers possible solutions such as government regulation, liability regimes, security certifications, and changes to professional standards. Part V concludes with recommendations for two changes to professional conduct standards that would help to address the threat."

Tuesday, August 13, 2013

Corporate Counsel on "Inconvenient Truths About Law Firm Compliance"

Two experts weigh in on an ongoing discussion about firm compliance on the pages of Corporate Counsel: "10 Inconvenient Truths About Law Firm Compliance." The entire article and linked history is worth a read. Here are some (provocative) highlights:
  • "1. When it comes to compliance risk, law firms aren’t all that 'special.' Fact 1: People create risks. Fact 2: Law firms have people. But beyond the risks that are typically associated with legal partnerships, what about those additional risks common to most organizations: e.g., sexual harassment, discrimination, fraud, theft, social media, privacy, and cybersecurity, insider trading, and even money laundering, bribery, and kickbacks? Don’t look now, but a quick Google search will turn up law firm scandals in all of these areas. Inconvenient truth: a code of professional responsibility is not the same as a code of conduct. A credible compliance program, starting with a meaningful risk assessment and a code of conduct, would proactively identify and manage all top risks of the law firm organization."
  • "9. The Big 4 accounting firms are way ahead of you. Somewhere along the way, the Big 4 accounting firms—PwC, Deloitte, Ernst & Young, and KPMG—figured out that if they are going to offer compliance services, they’d better have a compliance program, too. (Evidently, the Big 4 don’t regard themselves as too 'special' for compliance.) OK, maybe that’s too cynical. But it is also fair to note that these firms initially did not think any of this applied to them—until they started to get into serious trouble, saw the folks with guns and badges at the door, and decided maybe rigorous programs were a good idea. It’s clear that for whatever reason, the Big 4 have taken a purposeful approach to compliance and ethics, dedicating significant resources and talent to compliance and ethics programs, including confidential employee reporting lines. This has earned their CECOs speaking slots at the top compliance and ethics conferences, where they share details on some of their leading best practices. Go ahead, take a look, they’re waving at you from their rear-view mirror."
  • "10. Compliance is a competitive advantage. The first law firm that can boast of a robust compliance program will be unique in the field. That’s called competitive advantage. And perhaps this is not so far away, as the 22-lawyer firm Smith Debnam, based in Raleigh, North Carolina, has just announced the appointment of Jennifer Quillen as a full-time compliance officer. Quillen is a former FDIC bank examiner with 19 years of experience in risk management and internal controls. What’s impressive is that the firm has dedicated one full-time professional to the new role (i.e., not just slapping an additional title on a partner or associate with extra time on their hands), reporting directly to the managing partner, Jerry Myers... From the sound of it, this firm is serious about compliance. If Smith Debnam has the resolve and foresight to appoint an experienced, full-time CCO for its 22 lawyers, what excuse does Big Law have for its continued head-in-the-sand approach?"

Wednesday, August 7, 2013

Conflicts Allegations Making Mainstream News

(For those following or participating in the latest internet fads, with tongue in cheek, I note that this post will self destruct in 10 seconds...)

"Snapchat Founders Face New Twist In Legal Battle As Alleged Co-Founder Files To Disqualify Their Lawyers" --
  • "Reggie Brown claims to have co-founded Snapchat [a photo-sharing service provider, currently valued at $800 million by its investors, famous for automatically deleting images after a short viewing window], and in the latest twist to his suit against the company, he’s trying to disqualify its high-profile law firm. Brown filed motions in a Los Angeles court on Thursday to disqualify the law firm of Quinn Emanuel Urquhart & Sullivan LLP (“Quinn Emanuel”) from representing Evan Spiegel, Bobby Murphy, and Snapchat Inc."
  • "Brown alleges that he was advised by Anthony Alden, a Quinn Emanuel lawyer, on his case against Snapchat from November 2012 to January 2013. In April, Quinn Emanuel began defending Spiegel and Murphy after they replaced Cooley LLP for this case. Before Alden began representing Brown, Quinn Emanuel had Brown sign a waiver saying it did not represent him, but Brown says he and Alden did not limit their discussions, and he believed they were confidential communications between an attorney and client."
  • "'Mr. Brown signed a written contract saying Quinn Emanuel could represent the Snapchat defendants if we turned down his matter, provided the partner to whom he spoke was not involved in our representation of Snapchat,' Quinn Emanuel said in a company statement. “Mr. Alden has been ‘walled’ from the matter pursuant to that agreement.  It’s disappointing that Mr. Brown is refusing to honor his clear written promise to our firm.'"
UPDATE: Looks like the judge sided with Quinn: "The advantage [sic] waiver was satisfactory and effective under the circumstances... Furthermore, the court is satisfied that Alden has not had and will not have any improper communication with others at the firm concerning the litigation due to the timely and adequate ethical wall constructed by Quinn Emanuel."

"Steve Beshear's Son Representing Bluegrass Pipeline Company"
  • "Governor Steve Beshear's son is representing the company that has proposed building a natural gas liquids pipeline across Kentucky."
  • "Andrew Beshear is an attorney at law firm Stites & Harbison's Louisville office. As the State Journal in Frankfort reported earlier today, Boardwalk Pipeline Partners is a longtime client of the firm, and Andrew Beshear is working on the company's account."
  • "When asked about a possible conflict of interest, Kerri Richardson, communications director for the governor’s office, wrote in an email that the law firm Stites & Harbison, by which Andrew Beshear is employed, has represented the company for more than a decade."
  • "'We don’t see any issues with conflict of interest,' Richardson wrote. 'As a large legal firm, Stites & Harbison represents clients who sometimes have adverse interests to the Commonwealth.'"
  • Andrew Beshear said: "The Supreme Court of Kentucky has issued rules governing conflicts of interest for lawyers,” the governor’s son continued. “I am proud of how the lawyers in our firm carefully and vigilantly follow these rules. Neither I nor the firm have lobbied for this project. We were simply hired through a longtime client to provide legal services. Those services have been performed by more than a dozen lawyers."

Tuesday, August 6, 2013

Conflicts & Disqualifications Avoided

Law Firm May Stay in Case Despite Hiring Expert Who Had Talked With Opposing Party
  • "A law firm that hired an expert who previously spoke to the opponent about the same case won't be disqualified where the firm overcame the presumption that the expert shared the other side's confidences with the firm, the Nebraska Supreme Court ruled July 19 (Mid America Agri Prods./Horizon, LLC v. Rowlands, Neb., No. S-12-473, 7/19/13)."
  • "In an opinion by Justice John F. Wright, the court decided that a firm is not invariably disqualified when it hires an expert who has acquired confidences from a client's opponent. The firm is presumed to have learned the opponent's information, but this presumption is rebuttable, the court held."
  • "The trial court barred O'Neil from testifying as an expert for Lansing, but it declined to disqualify Lansing's counsel due to a dearth of evidence that O'Neil had communicated confidential information about Horizon to Lansing's counsel."
  • "Before addressing the presumption issue, the court had to decide whether experts are “support persons” under Nebraska's unique rule on former-client conflicts... The rule defines “support person” to mean any nonlawyer associated with a firm, including law clerks, paralegals, legal assistants, secretaries, messengers, “and other support personnel employed by the law firm.” Experts aren't mentioned. The court decided that experts such as O'Neil are not support persons under the rule."
Judge Refuses to Disqualify EDD Vendor for Playing Both Sides
  • "On Friday, Kaleida, the largest non-profit health care provider in Western New York, filed papers with the U.S. District Court in Buffalo reaffirming its stance that Foschio erred and D4 should have been disqualified. Kaleida had originally hired D4 in 2010 after Kaleida was sued by a group of employees in a wage-and-hour class action alleging that they were owed regular and overtime wages."  
  • "According to Foschio's opinion, Kaleida did not retain D4 for its e-discovery consulting services. Instead, Kaleida's attorneys at Nixon Peabody had decided to use predictive coding to go through its gigantic cache of 300,000 to 400,000 emails, and had hired D4 to provide scanning and coding services. In 2011, D4 entered into a contract to provide e-discovery consulting services to the plaintiffs. Despite D4's representation that its consultants had not been involved in the project for Nixon Peabody, Kaleida and Nixon Peabody objected."
  • "According to Foschio, there was no conflict of interest because D4's involvement with Kaleida was limited to scanning and coding documents and that Kaleida failed to show that D4 had access to any confidential information. Foschio drew a distinction between D4's duties to Kaleida, which he called "a routine clerical function" and similar to photocopying documents, and the consulting services D4 provided to the plaintiffs, which Foschio described as "requiring expert knowledge or skills." Foschio held that D4 had not provided expert services to Kaleida, merely routine clerical work. As such, Foschio ruled that there was no conflict of interest when its consultants signed up to provide expert services to the plaintiffs."

Monday, August 5, 2013

Cautionary Conflicts Workaround

An interesting story about  a creative (but not unprecedented) step taken to work around firm conflicts. In this case, lawyers left to set up their own firm. But that move brought new risks: "Boutique Firm Sues T-Mobile for Post-Merger Termination" --
  • "...former Paul Hastings lawyers resigned in 2011 to create Telecommunications Law Professionals, or TLP, a Washington-based firm that began specifically to support MetroPCS. After T-Mobile bought MetroPCS earlier this year, T-Mobile told TLP in May that it was ending the contract."
  • "According to the complaint, MetroPCS hired Paul Hastings's telecommunications group and partner Carl Northrop beginning in 2004 to handle a variety of legal matters. Over the next seven years, according to the complaint, Paul Hastings was increasingly conflicted out of work with MetroPCS because Verizon Wireless and AT&T Mobility were also clients."
  • "In 2011, Northrop and two other Paul Hastings attorneys that had worked with MetroPCS reached an agreement with the company to spin off and create their own shop. Under the terms of the retainer agreement, according to the complaint, MetroPCS would pay a fixed monthly fee that would cover the new firm's expenses for at least two years."
  • "The firm is arguing T-Mobile breached the contract signed between the firm and MetroPCS, which T-Mobile didn't object to as they were finalizing the merger. Although TLP has other clients, the firm claimed that because MetroPCS was its biggest client by design, it wouldn't be able to operate in its current form if T-Mobile severed ties."