Tuesday, May 27, 2014

2014 Law Firm Risk Survey

 
In April we kicked off the 2014 Law Firm Risk Survey program. Response has been tremendous -- over 120 firms have participated to date.

We're sending a second round of invitations for those who have yet to take part. (As a reminder an incentive, copies of the final published report are distributed to those firms who participate.)

Survey Overview
Once again, we're running four separate exercises, inviting risk and IT stakeholders at participating mid-sized and large firms in each of four geographies – US, UK, Canada and Australia.

The surveys explore several topics including risk priorities, risk policies and education, intake and conflicts management practices, lateral hiring and departures, confidentiality/information security management, and compliance tracking.

Please watch your inbox for an invite!

Monday, May 26, 2014

Risk News & Updates : Lawyer Insider Trading, Playbook Conflicts, and Information Governance



Various risk updates to share today. First, allegations of lawyer inside trading. In this case, the story involves someone directly in the matter. (As we've always noted, direct malfeasance is always a tough risk scenario to manage in any information security context.) This story involves an individual who was previously with a 300+ lawyer firm: "Mayor of Kentucky town settles civil charges of insider trading"--
  • "A lawyer previously employed at a corporate law firm who now serves as mayor of Fort Mitchell, Kentucky, has agreed to pay nearly $118,000 to resolve civil charges of insider trading by the U.S. Securities and Exchange Commission."
  • "In an order issued Tuesday, the SEC said Christopher Wiest in 2010 bought InfoLogix Inc stock based on inside information that the company was about to be bought by Stanley Black & Decker Inc. Wiest had worked on the deal while at a law firm retained by Stanley Black & Decker, the SEC said. He subsequently began buying stock in InfoLogix, a provider of mobility solutions for healthcare and commercial industries, the SEC said."
Regarding playbook conflicts, the prolific Bill Freivogel notes: "SalDan v. Super. Bus. Dev. Bank, 2014 ONSC 2979 (CanLII) (Ont. Super. Ct. May 15, 2014)" --
  • "Law Firm represented Defendant in Defendant’s creation. In this case Law Firm is asserting a construction lien for Plaintiff against Defendant. Defendant moved to disqualify Law Firm. In this opinion the court granted the motion. In a fact-intensive analysis the court found the earlier representation sufficiently related to the construction project. The court also noted playbook elements such as Law Firm’s knowledge of Defendant’s 'legal and business strategies and risk tolerances,' which would provide Plaintiff with 'a distinct advantage' in this case."
ILTA posted a recording of an interesting webinar featuring the risk consulting experts at InOutsource on the topic: "Measuring the Return on Investment of Strong Information Governance Processes." --
  • "In addition to providing access to information while reducing risk, improved information governance (IG) processes can be leveraged as a cost-saving measure -- resulting in significant savings for your firm. Join us as we demonstrate how we calculated the true costs of managing information and how we defined metrics to measure savings."

Thursday, May 22, 2014

Law Firm Information Security Summit


Set for June 11-12 in Lombard, IL, ILTA's annual law firm information security summit always provides food for thought and ample opportunities for peer networking and exchange. (Anyone who's been exposed to ILTA already knows the effort they put into their programs and standard of quality they hold themselves to.)

Learn more at their event web site. The keynote should be of special interest:

  • The Soft Underbelly of Corporate America? Law Firms and the Cybersecurity Threat MatrixEach day we hear about another data breach in the news. More personally identifiable information (PII) and account information is being siphoned out of respected companies.

    What about our intellectual property, our trade secrets and other business capital? Oftentimes, the easiest place to attack is when the data is outside the walls of the owner — in many cases at their law firm.

    During our keynote, we will walk through the cybersecurity threat matrix and its evolution, discuss how various state and federal laws drive forward controls that may or may not help protect our data, and the role of active defense and intelligence.

    Attendees will learn what programs and controls will position their firms for success in assurance reviews, certifications and competing for business.

    Together we will explore this topic — as you hear from someone who has worn the hats of law firm counsel, chief privacy officer, chief security officer and chief compliance officer — so we can operationalize against this threat.
Intapp's Kathryn Hume (of Risk Roundtable fame) will also be leading a panel worth watching, featuring Michael Aginsky (CTO of Gibbons P.C.) and Galina Datskovsky (noted information governance expert):
  • Don't Believe the Hype! What Data Leak Prevention Solutions Can and CAN'T DoCan you identify and restrict unwarranted attempts to copy or transmit sensitive information, deliberately or inadvertently (and generally by personnel who are authorized to access the sensitive information)? Take an in-depth look at best practices for implementing enterprise and point solutions for data leak prevention (DLP) as we cover the Web, email gateways, networks and mobile devices, and the mechanisms used to secure them. There's a lot of talk about what DLP solutions protect against...it's time the hype be laid to rest.

Wednesday, May 21, 2014

Risk Roundtable Reports (Boston, Dallas, Houston, Chicago and Toronto Events)


 
Throughout May, we’ve hosted a series of Risk Roundtables across the US and Canada featuring a wonderful collection of experts covering a wide gambit of risk management issues. The past two weeks featured events in Boston, Dallas, Houston, Chicago and Toronto. Many thanks to Mintz Levin, Norton Rose Fulbright, Winstead, DLA Piper and Davies Ward for hosting. The events featured presentations on three distinct subjects: the impact of technology on legal ethics, theoretical and practical considerations on corporate family conflicts and the impact of alternative business structures on business operations and management. Kathryn Hume, who manages and moderates the Risk Roundtable Program, sends this update:
  • Dan, I'm pleased to report back successful Risk Roundtables across North America. A special thanks to Fred Pretorius (Director of Information Services, Mintz Levin), Wendy Richerson (PMO Project Manager, Norton Rose Fulbright), Chris DiMasi (CTO, Winstead), Kent Fredrickson (Director, Enterprise Risk Management, DLA Piper) and Ivo Nikolov (Director of IT, Davies Ward) for hosting the groups of Risk and IT leaders at their respective firms.

    • Our Boston session featured a fascinating presentation by Andrew Perlman, Legal Ethics Professor at Suffolk University and Director of this institution’s Institute on Law Practice Technology and Innovation. Andrew unpacked the changes made to the comments of model rule 1.6 during the ABA 20/20 commission relating to what constitutes "reasonable efforts to prevent unauthorized access to or disclosure of" client information.
  • Stakeholders from Ropes & Gray and Edwards Wildman Palmer debated approaches to classifying client information during new business intake to assess data sensitivity and modify access controls as required.
  • We discussed client requirements for encryption, particularly in light of the recent allegations of spying on privileged information held by Mayer Brown.
  • Finally, we had a rich debate about how the vast risk exposure of electronic information has shifted a lawyer’s ethical duty to protect confidentiality from an active commitment to keep information secret to a more indirect effort to prevent others from gaining access.

    • Bill Freivogel, an independent consultant on legal ethics and professional responsibility, graciously joined us in Houston, Dallas and Chicago to lead three sessions on managing corporate family conflicts. Bill outlined recent case law regarding corporate family conflicts, describing two types of relationships between a corporate parent and subsidiary that were different for conflicts purposes to provide guidance on when affiliates should be consider one with corporate parents for conflicts purposes.
  • As experts and ABA opinion 95-390 provide no "bright line" test for making a determination, firms are encouraged to consider whether the parent and affiliate share legal departments, IT and operational infrastructure, and large proportions of revenue. Firms, of course, are advised clearly to articulate whom they believe to be representing in engagement letters and advanced waivers.
  • In Chicago, attendees compared techniques for using multiple data sources to figure out just who the affiliates of large corporate families were. The group brainstormed an idea to launch an open source platform to share individual efforts on resolving corporate affiliates across the legal conflicts and risk management community.

    • Finally, our Toronto gathering featured a presentation by Malcolm Mercer on developments afoot in the Upper Canada Law Society’s Alternative Business Structures Working Group. To promote access to justice across a vast consumer base, the group advocates for admission of non-law firm legal service providers as well as non equity partner investment in traditional law firms.
  • We analyzed the rhetorical difference between the practice of law as a profession and the provision of legal services as a business and attendees shared strategies under development at their law firms to modify business development and pricing to stay competitive against new players like Deloitte and Price Waterhouse Coopers.
  • Finally, the risk leaders discussed their efforts to collaborate with in-house counsel on Outside Counsel Guidelines, dismissing a unilateral acceptance of terms to work to understand why clients include specific requirements and how law firms might integrate them into existing processes to dampen their impact and cultivate awareness of the importance of guidelines with individual partners.
Kathryn's next Roundtables are set for Tampa and Orlando next week.

Tuesday, May 20, 2014

New Ethics Opinion (Texas is Not to Be Messed With)

The Legal Ethics Forum flagged a recent ethics opinion (Opinion 642) from the Texas State Bar, which is sure to be of interest to our CIO, CTO, CRO and COO readers (in that great state at least) -- "Texas Ethics Opinion: Law Firms Can't Have Nonlawyer Chief Technology Officers" --
  • "According to the Committee, a law firm can't hire a nonlawyer to serve as Chief Technology Officer, Chief Operating Officer, or an "officer" or "principal" of any other kind.  The reason?  Apparently, even if these nonlawyers have no control over the delivery of legal services and do not share in the firm's legal fees, the job titles are so misleading that they are unethical.  Here's the Committee's logic:
    • "If the non-lawyer employees will not, in fact, control operations of the law firm nor own an interest in the firm, then designating these employees as "officers" or "principals" would be misleading and thus violate Rule 7.02(a), which states: 'A lawyer shall not make or sponsor a false or misleading communication about the qualifications or the services of any lawyer or firm.'"
    • "Identifying a person as an “officer” of or a “principal” in a law firm when the person does not, in fact, have a controlling or ownership interest in the firm would be a false or misleading communication about the firm." 
    • "Furthermore, using the title "officer" or "principal" for a non-lawyer employee who does not act as an "officer" or "principal" of the firm would violate Rule 8.04(a)(3), which prohibits a lawyer from engaging in “conduct involving dishonesty, fraud, deceit or misrepresentation[.]"
The expert minds and commenters at the Forum waste no time in attacking the opinion, led by law professor Andrew Perlman, who delivers a bit of a double-edged dismissal of the its merit:
  • "I am loathe to be too critical of state bar ethics opinions, but this one seems particularly troubling. In my view, this opinion is yet another unfortunate example of bar associations having a knee jerk negative reaction to the notion that nonlawyers have something important to contribute to the delivery of legal services. With opinions like this, it is no wonder that law firms are losing top nonlawyer talent to -- and having their lunches eaten by -- innovative legal service providers."

(Important Note: The opinion does not limit the scope of "officer" titles affected, so there's every reason to believe that Chief Financial Officers, Chief Knowledge Officers, Chief HR Officers, Chief Risk Officers, and Chief Marketing Officers at Texas firms, who haven't already, best be heading to law school... Or at least might want to consider updating their LinkedIn profiles... I'm partial to the title Khal/Khaleesi, or Admiral -- but, inspired by rules that are taking such interesting and creative turns, I bet our readers can do even better...)

Monday, May 19, 2014

Upcoming Webinar: Anomalies, Hacks and Lateral Moves: Monitor & Address Information Risks

 
Intapp and ILTA's LegalSEC Information Security program are pleased to present an upcoming webinar: Anomalies, Hacks and Lateral Moves: Monitor & Address Information Risks.

  • Date: Thursday, May 29th
  • Time: 9 am PST / 12 pm EST / 5 pm BST
  • Registration: Free and open to ILTA members. Register via this link. (if you are unsure if your firm is a member, check via this link)

  • This session features two law firm speakers and will present an overview of how Intapp information security software enables firms to control access to sensitive information and watch key information repositories (to notify management and IT teams of suspicious behavior, enabling intervention early enough to prevent unwanted outcomes).


    Session Details
    New technologies and regulations are forcing law firms to take a serious look at activity monitoring and data loss prevention software.

    Client guidelines and security audits mandate that firms have visibility into who does what with their data, new regulations like HIPAA require activity monitoring on personally identifiable information, lawyers increasingly use unsanctioned cloud tools without notifying IT and, with lateral movement on the rise, firm management needs a means to identify unauthorized activity to avert potential problems.

    In this session, we will explore how firms can leverage technology to monitor and address information risks. Hear from panelists who will present diverse perspectives, ranging from cyber insurance and regulatory trends to process and technical best practices.

    Speakers

    Brian Dusek is a partner at McCullough, Campbell and Lane LLP, where he concentrates his practice on the representation of domestic and international insurers in complex insurance coverage claims, particularly those relating to professional liability. He is a frequent speaker on professional liability, technology, and cyber liability issues.


    Kathryn Hume is a member of Intapp's Risk Practice Group and focuses on law firm information security, data governance, HIPAA compliance and risk management. She manages and moderates the Law Firm Risk Roundtable program and writes articles analyzing how emerging technologies are influencing and being affected by evolving standards for professional responsibility.

    Craig Lucca, CISSP, CISA, CEH, oversees information security and is responsible for the identification, design and implementation of -- and compliance with -- information security programs for a New York based law firm. In addition, he acts in an advisory capacity to the firm's lines of business regarding information security best practices and the interpretation of security requirements of new and ongoing development efforts
     

    Sunday, May 18, 2014

    A Jury Rules on a Conflicts Allegation...

    "$40.5 million verdict fades quickly, to the relief of Baker Botts law firm" --
    • "A chill swept through lawyers with Baker Botts on Thursday when a Dallas jury ruled that the firm acted negligently more than a decade ago when it represented two competing technology companies vying for similar patent protections but didn't disclose the potential conflict to its client."
    • "The jury set damages against Baker Botts at $40.5 million, which is about 8 percent of the Houston-based firm's reported revenue in 2013. But 30 seconds later, dismay turned to relief when the five-woman, one-man panel also found that Addison-based Axcess International waited at least one year too long to file its lawsuit against Baker Botts. And, as a result, the 700-lawyer firm likely will not have to pay a dime."
    • "Lawyers on both sides plan to appeal the mixed verdict."
    • "'We continue to believe that we lived up to the highest ethical standard and that the claims against us were unjust,' Baker Botts general counsel George Lamb said. 'The jury has entered a mixed verdict, but we are very pleased the verdict will result in a judgment in favor of Baker Botts.'"
    • "Axcess will appeal the jury's decision that the company failed to file its suit within Texas' statute of limitations for such claims, while Baker Botts will appeal the ruling it was negligent, lawyers said."
    For more detail and history of the case, see the complete story in the Houston Chronicle, and additional coverage via Law.com.

    Wednesday, May 14, 2014

    Law Firms + SOX : New (And Surprising) Information Risks


    Lawyers from Littler, the largest global employment and labor law practice, highlight important risks associated with the 2002 Sarbanes-Oxley Act (SOX): "Warning to Rainmakers in Private Law Firms and Accounting Firms: SOX Now Says, ‘Don't Shoot the Messenger'" --
    • "Yes, we understand how you may become upset if a colleague of yours, such as a servicing partner or junior associate, openly criticizes one of your publicly traded client's financial reporting or accounting practices--even if this occurs only within the walls of your firm... However, when your client is a publicly traded company governed under the 2002 Sarbanes-Oxley Act (SOX), be very careful how you and your firm respond to the criticizing colleague."
    • "Under the U.S. Supreme Court's game-changing decision in Lawson v. FMR LLC [Decided March 2, 2014], the Court held that SOX provides broad whistleblower protection to employees of contractors and subcontractors to publicly held companies."
    • "As such, your firm's employees now have SOX whistleblower protection from your firm. This means that your employees are protected legally when they complain to you internally, or complain externally to the SEC or another federal regulatory agency, about your client's allegedly fraudulent public reporting or accounting conduct."
    • "Lawson's broadening of SOX's whistleblower protection to employees of “contractors and subcontractors” of publicly traded companies presents an obvious and suddenly looming problem for private law firms and accounting firms."
    • "Sometimes, these more seasoned 'supervisors' may strongly disagree with their colleagues' criticisms or assessments of the clients' conduct. Given the traditional culture of many law firms and accounting firms, the rainmaker or client relationship “supervisor” may on occasion even lash out at their colleagues..."
    • "A successful claimant can obtain at least two remedies that can also be very problematic to your firm: (1) reinstatement with payment of lost back pay and employee benefits and (2) your firm's payment of the claimant's attorneys' fees, litigation costs and expert witness fees. The claimant also may assert that you should be held liable individually."
    The article provides several suggested guidelines, including: "unless the individual's view is dead wrong, avoid communicating anything, orally or in writing, that suggests that adopting the individual's view could jeopardize your firm's relationship with the client."

    (This development also poses interesting questions and additional risks beyond the scope of the matter team, considering the access unrelated law firm personnel may have to public company data within the firm.)

    Tuesday, May 13, 2014

    Client Care, Conflicts and Compliance

    Hat tip to Bill Freivogel for pointing out an excellent article in the latest ABA/BNA Lawyers' Manual on Professional Conduct (Multiple Representation - 30 Law. Man. Prof. Conduct 303) [subscription required].

    He notes: "This excellent article discusses various aspects of lawyers representing entities and constituents of entities in the same matters. It contains cites to various ABA ethics opinions, Restatement sections (including relevant comments), and court cases. Among aspects discussed are discipline, malpractice exposure, fee forfeitures, consents (including who may consent for an entity), and representation agreements." --
    • "Rules of professional conduct governing representation of corporations and other entity clients recognize that it is not inherently unethical for an attorney or law firm to represent the organization and one or more of its constituents in the same matter."
    • "At the same time, ethics standards make clear that, before heading into this situation, the lawyer must carefully assess conflicts of interest that exist or could arise among the multiple clients, and deal with them appropriately. This includes obtaining informed consent from all affected clients—if the perceived conflicts are not unwaivable."
    • "In this Special Report, legal editor Joan Rogers explains the general rule allowing joint representation, the risks posed by representation of multiple clients in the corporate context and what steps the attorney should undertake to obtain the clients' effective and fully informed consent."
    BNA's newsletter also reports on a recent California ethics opinion (No. 2014-190) : "All Lawyers in Dissolving Firm Must Take ‘Reasonable Steps’ to Guard Clients’ Interests" --
    • "When a law firm breaks up every lawyer in it must take “reasonable steps” to safeguard the interests of the firm's clients from foreseeable harm, according to a recent opinion from the California bar's ethics committee."
    • "'The opinion applies Rule 3-700(A)(2) of the California Rules of Professional Conduct which, similar to ABA Model Rule 1.16(d), prohibits bar members from withdrawing from a representation until they have taken “reasonable steps to avoid reasonably foreseeable prejudice to the rights of the client.'"
    • "The committee said that whether or not a dissolution committee or similar mechanism is in place, the actions required of each attorney depend on the totality of the circumstances. One salient factor, it said, is the lawyer's prior relationship with a client... Another factor is the particular lawyer's ability to act for the firm, the committee said... A third factor the opinion identifies is the lawyer's competence to perform services for the client..."

    Monday, May 12, 2014

    June New York Risk Roundtable: Featuring Intapp and CNA



    Risk Roundtable (Tuesday, June 24, 10:30am - 2pm). Sponsored by CNA and Intapp.
    We are excited to partner with CNA, a leading professional liability insurer, on an upcoming New York Risk Roundtable. The event will feature multiple panels exploring emerging risk trends from various perspectives: priorities and practices of peer General Counsels, trends in claims against law firms and strategies for claim avoidance, common intake and conflicts management challenges and a demonstration of new technology for managing intake and conflicts successfully.

    Target Audience:
    Managing Partners, General Counsels, Risk Managers, Ethics/Risk Management Partners
     
    Speakers: 
    • Andrew Allison, Esq., General Counsel & Chief Compliance Officer, Post & Schell, PC
    • David Piedra, Esq., General Counsel, Morrison Cohen, LLP
    • Jeffrey Reilly, Esq., General Counsel, Miles & Stockbridge, PC
    • Shauna Reeder, Esq., AVP, Lawyers Professional Liability Claims, CNA
    • Dr. Kathryn Hume, Risk Practice Group, Intapp
    • Lisa Jaffee, Esq., Risk Control Consulting Director, Lawyers Professional Liability, CNA
    • Sean Ginty, Esq., Risk Control Consulting Director, Lawyers Professional Liability, CNA
    CLE Credit:
    Application for New York, New Jersey and Pennsylvania CLE credit is currently pending
     
    Registration: Attendance is by invitation only and is limited to qualified law firms and personnel. Space is limited. Please contact info@riskroundtable.com for more details.

    Thursday, May 8, 2014

    On Defining Clients and the Duty of Loyalty

    Two interesting articles to share. First, from the University of Calgary comes an excellent and detailed write up from law professor Alice Woolley, providing the facts, analysis and opinion tied to a recent Canadian decision: "Defining the 'Client' (or not) in Former Client Conflicts"--
    • "…knowing whether a client is a former or a current client, whether the matters are the same, related or unrelated, and whether the clients are represented by the same lawyer or lawyers at the same firm, will direct them to the norms and [conflicts] rules that appropriately govern the situation."
    • "A recent decision by a Master Schulz of the Alberta Court of Queen’s Bench in the case of Orr v. Alook, 2014 ABQB 141, illustrates how this sort of challenge can arise when applying the law of conflicts of interest, and also how to address it satisfactorily.  Her decision demonstrates that it is crucial to get those relationships right, but that the point is to look at them in substance, not formally or technically – to determine what, in actuality, are the relevant relationships."
    • "In addition, it shows that the factual categorization cannot be separated from the legal analysis (even if it necessarily precedes it).  Assessing the various relationships depends on understanding the legal principles governing conflicts of interest well enough to know what you ought to be looking for."
    • "First, the judgment illustrates the point that the law on conflicts of interest protects information that is confidential and not merely information that is privileged."
    • "Second, Master Schulz seems to suggest that once Ms. Kennedy was found to have relevant confidential information that was at risk of disclosure, one ought nonetheless to consider factors that “militate against disqualification” (para 33).  Those factors include protecting a client’s choice of counsel and addressing delay in bringing forward an application."
    • "Finally, Master Schulz suggests that Davis LLP may continue to act if it demonstrates that "'Chinese Walls' have been in existence around these files from the date Ms. Kennedy joined the firm until the present date" (para 42).  She notes affidavit evidence suggesting that Ms. Kennedy’s "aboriginal files were separated behind a 'Chinese Wall'" after Ms. Kennedy joined the Davis firm."
    And another hat tip to the Legal Ethics Form for pointing out the provocative: "The Duty of Lawyers to Serve Their Clients’ Interests -- An Economic and Psychological Account"-
    • "In many Codes of Conduct for lawyers around the globe, the duty of the lawyer to serve the interests of his client, and not his own interest, is incorporated."
    • "This paper analyzes this duty from various perspectives. Theoretical Law and Economics literature views the client-lawyer relationship as a principal-agent relationship and predicts that the lawyer may (try to) further his own interests, even at the expense of those of the client... Empirical research subsequently corroborates this view, so that one may conclude that lawyers are also influenced by their self-interest, which is contrary to the norm that they should always act in the best interest of their client."
    • "Psychological and behavioral economics literature in addition casts doubt on whether lawyers are able to act in their client’s best interest, even if they would want to do so. Research concerning personality characteristics of lawyers vis-à-vis clients as well as literature discussing various biases and heuristics plaguing lawyers is discussed."
    • "The paper concludes, on the basis of Law and Economics, empirical, behavioral economic and psychological literature, that there are various reasons to believe that the principle that lawyers should only serve the interest of their client and not their own interests is naive."

    Wednesday, May 7, 2014

    Two Conflicts Updates: Paralegal Screening + Conflicts Waivers in the News

    Via the SCOG Blog: "Supreme Court of Georgia on Paralegal Conflicts" --
    • S13G1626. HODGE, ADMRX., et al. v. URFA-SEXTON, LP et al. This case considers the question of whether a paralegal who has knowledge of a case can disqualify an entire law firm from representing a party…
    • "Kristi Bussey was a paralegal at Hanks Brookes and participated in the investigation into potential claims, as well as assisting Hodge in being appointed the administrator of the estate. URFA-Sexton retained Insley & Race LLC in March 2010 to represent it in connection with the potential case threatened by Hodge. A year later (but before the suit was filed), Bussey interviewed for a paralegal position at Insley & Race and was hired. Bussey said she did not become aware of the potential conflict until just before Hodge filed this case in November 2011."
    • "After informing her superiors, Insley & Race implemented screening measures and Bussey provided affidavits that she never disclosed or discussed any confidential information regarding the Williams case with anyone at Insley & Race."
    • "On May 5, 2014, the Supreme Court unanimously vacated and remanded (Nahmias, concurring specially). Writing for the Court, Justice Hunstein explained that the Supreme Court adopted the majority rule in interpreting the Rules of Professional Conduct: a nonlawyer’s conflict of interest does not automatically disqualify an entire law firm, so long as proper screening measures are implemented."
    • The Court also set forth specific guidance for dealing with a nonlawyer’s conflict of interest, including providing prompt notice to opposing counsel of the conflict along with an explanation of the screening measures utilized. The receiving party may then move to disqualify the firm with the potential conflict. If the party receiving notice can show the nonlawyer worked on the same (or a substantially related) matter, then a rebuttable presumption arises that confidential information was shared with their new firm."
    • "That firm can rebut the presumption and avoid disqualification by showing effective screening measures.In this case, the screening measures were effective and appropriate, but there remains an issue of whether the new law firm promptly disclosed the conflict, requiring an additional hearing."
    Via the Legal Ethical Forum: "A conflict and a waiver claim in the Dewey Four case" --
    • "The WSJ Law Blog reports that a witness against some or all of the Dewey Four will be former Dewey partner, now at DLA, John Altorelli. However,  the  firm that represents him also represents Zachary Warren, whose indictment  has observers puzzled.  Writes the WSJ Blog:
    • "On Monday Peirce Moser, a prosecutor in Manhattan District Attorney Cyrus Vance Jr.’s office, told the judge overseeing the criminal case that Mr. Altorelli was a witness for the prosecution. The issue came up because Mr. Altorelli is represented by the same law firm, Zuckerman Spaeder LLP, that is defending a fourth person in the criminal case—a young lawyer named Zachary Warren who was previously a client manager at Dewey & LeBoeuf. Mr. Warren has pleaded not guilty."
    • "Paul Shechtman, a lawyer for Mr. Warren, said both his client and Mr. Altorelli had signed conflict waivers with the firm."
    Legal Ethics Blog author and NYU professor of Law Stephen Gillers commented:"In federal court there would now be a Cuccio hearing and I assume there'll be the equivalent in state court. A conflict waiver may work. Or not. We don't know on what Zuckerman represents Altorelli. Nor do we know if his testimony will target Warren or only the other Dewey defendants.The risk to the trial, of course, is that despite a waiver a defendant can claim ineffective assistance because of the conflict.
    Worth watching. Not all conflicts can be waived."

    Tuesday, May 6, 2014

    Risk Roundtable Roundup Report



    In April, we kicked off our spring Risk Roundtable series with events in Philadelphia and Sydney. Many thanks to Blank Rome LLP and K&L Gates for hosting. The events featured presentations on the impact of globalization on law firm risk management from two diverse perspectives, with the Philadelphia seminar focusing on ambiguous guidelines for choice of law in an international setting and the Sydney seminar focusing on global conflicts clearance and firmwide compliance with client outside counsel guidelines. Kathryn Hume, who manages and moderates the Risk Roundtable Program, sends this update:
    • Dan, I'm pleased to report back successful Risk Roundtables in Philadelphia and Sydney. Blank Rome and K&L Gates generously agreed to host our group of risk managers and technology leaders. A special thanks to Larry Liss (CIO, Blank Rome), Rob Weaver (IT Security Manager, Blank Rome), and Dion Cusack (Corporate Services Manager, K&L Gates, Australia) for bringing together two strong groups of Risk and IT leaders.
    • Our Philadelphia session featured an extremely informative presentation by Laurel Terry, Legal Ethics Professor at Penn State Dickinson School of Law. Laurel described her efforts during the ABA 20/20 commission to modify the guidelines in Model Rule 8.5 regarding international choice of law so as to resolve ambiguities in international settings.
    • Her presentation launched a debate regarding whether it would be in the best interest of law firms, particularly those pursuing a Swiss Verein global business model, to actually support unified ethical rules across jurisdictions or whether it remains favorable to retain local differences. 
    • Our Sydney session featured a presentation by Murray Landis, partner in the Corporate/M&A practice and a risk management leader of K&L Gates, on the challenges firms face to comply with client outside counsel guidelines.
    • The group discussed fee and billing arrangements, business conflicts beyond legal conflicts requirements and information security guidelines. Of core interest for the group was the challenge of balancing knowledge management and information security, especially as firms move away from an open-by-default security model. Australian firms also described the challenges of resolving global conflicts requirements inherited from jurisdictions with stronger standards, in particular after mergers with US- or UK-based law firms. 
    • We ended both presentations with a demonstration of sample matter opening workflow using Intapp Open, our business process and conflicts management platform. Attendees were interested to learn more about the platform’s features for providing analytics into conflicts trends and resolutions; providing flexibility to quickly modify workflow forms and questions to satisfy emerging regulatory needs; and providing lawyers and staff simple and intuitive mobile device interfaces to improve performance in fast-paced, global marketplace.
    Kathryn continues her world risk tour over the next three weeks, with events in Boston, Houston, Dallas, Chicago, Toronto, Tampa and Orlando. For more information, please see event descriptions and contact: info@riskroundtable.com

    Thursday, May 1, 2014

    More Conflicts in the News


    We've been tracking the 3M case for some time now (see previous stories for background). Alas, the saga continues: "Minnesota Supreme Court delays action on 3M suit" --
    • "The Minnesota Supreme Court has delayed action involving the state’s lawsuit accusing 3Mof damaging the environment.The court, asked to decide whether the state’s legal firm should be disqualified, kicked that decision back down to a lower court for more fact-finding."
    • "The attorney general is suing 3M for allegedly damaging the environment with perfluorochemicals, or PFCs. But 3M has argued that the attorney general’s law firm, Covington & Burling LLC, should be disqualified because Covington previously worked with 3M."
    • "A Hennepin County District Court ruled in 3M’s favor in 2012, against Covington and the attorney general. On appeal, the Supreme Court issued its ruling Wednesday that one issue needed more study — whether 3M knew that its former law firm had switched sides."

    • "Report finds U.S. appeals judges have decided cases where they have a financial interest through stock ownership or ties to a law firm. At least 26 federal appeals judges have decided cases where they had a conflict of interest since 2010, the Center for Public Integrity says."
    • "The center, a non-profit investigative journalism group, reported Monday that it compared financial disclosure forms filed by 255 of the 258 judges in the appellate courts. It found 24 judges who decided cases involving companies they owned stock in, and two judges who had financial ties to a law firm involved in litigation."
    • "Judges are required to report conflicts of interest, and the federal courts installed software after a Washington Post story in 2006 to make finding them easy. But there are no penalties for judges who do sit in cases where there are conflicts."
    • [For more detail, see this additional media coverage.]

    And hat tip to the Legal Ethics Forum for noting: "A conflict and a waiver claim in the Dewey Four case" --
    • "The WSJ Law Blog reports that a witness against some or all of the Dewey Four will be former Dewey partner, now at DLA, John Altorelli. However,  the  firm that represents him also represents Zachary Warren, whose indictment  has observers puzzled.  Writes the WSJ Blog: 'On Monday Peirce Moser, a prosecutor in Manhattan District Attorney Cyrus Vance Jr.’s office, told the judge overseeing the criminal case that Mr. Altorelli was a witness for the prosecution. The issue came up because Mr. Altorelli is represented by the same law firm, Zuckerman Spaeder LLP, that is defending a fourth person in the criminal case—a young lawyer named Zachary Warren who was previously a client manager at Dewey & LeBoeuf. Mr. Warren has pleaded not guilty."
    • "Paul Shechtman, a lawyer for Mr. Warren, said both his client and Mr. Altorelli had signed conflict waivers with the firm."
    • [More detail at the WSJ.]