Thursday, November 20, 2014

Risk News: Conflicts & Disqualification (Accusations & Attempts)

First, from Law360 (paywall/free trial): "Wiley Rein Fights Atty's DQ Bid In Continental Policy Suit" --
  •  "Wiley Rein LLP on Monday told a New York federal judge that the firm shouldn’t be disqualified from representing Continental Casualty Co. in a dispute with an attorney over a professional liability policy, saying that the attorney hadn’t shown that the firm would offer testimony prejudicial to him during trial."
  • "Darius Marzec of the Marzec Law Firm PC had sought last month to disqualify the entire firm from representing Continental under the New York Rules of Professional Conduct’s witness advocate rule, which precludes attorneys from acting as advocates if they are likely to be a witness in the trial. Marzec had argued that the rule was triggered because the firm had represented Continental when it denied his claim for coverage."
  • "But Wiley Rein argued that not only was Marzec’s argument premature because the rule is triggered only during a trial, he could only speculate as to the firm’s role in issuing Continental’s coverage correspondence."
  • "'Mr. Marzec cannot possibly have personal knowledge of how Continental conducted its coverage investigation or made its coverage decisions. Thus, there simply is no factual basis for concluding that any of Continental’s attorneys are likely to be witnesses at a trial in this matter,' the motion stated."
Next, via the Lawyer comes: "China oil giant CNOOC breaks ties with Baker & McKenzie after internal investigation finds conflict of interest" with additional detail from the Wall Street Journal --
  • "The Chinese energy company China National Offshore Oil Corp. said it sanctioned one of its top lawyers for conflicts of interest with Baker & McKenzie, a U.S. law firm that has often represented it and that in Beijing is led by the woman’s husband."
  • " Cnooc said it found that Karen Kang Xin violated unspecified national regulations and its corporate policies by accepting trips to Europe and Australia paid for by Baker, and that she subsequently helped the law firm win legal work. The note, which was reviewed by The Wall Street Journal, said Ms. Kang dated and then married Baker’s chief representative in Beijing, Stanley Jia Dianan, 'and did not withdraw from the conflict of interest after the marriage.'"
  • "By citing the U.S. law firm by name in its allegations, Cnooc’s letter adds an international dimension to corruption investigations in China’s oil industry that have rocked the sector for more than year."
  • "In response to questions Monday, Baker said in a written statement that it 'has strict rules and guidelines about professional conduct. Based on all of the information we have reviewed, we have not identified any breach of any professional rules or internal Baker & McKenzie rules by our attorneys or employees in this matter.'"

Wednesday, November 19, 2014

White Paper: Law Firm Information Security & Confidentiality - Managing the Delicate Balance

ILTA's recently published Fall White Paper features an article on the increasingly complex challenge of balancing compliance vs. convenience when it comes to law firm information security.
Co-authored by Rudy Moliere (Director of Records & Information at Morgan Lewis) and Mohit Thawani (Head of the Information Security Practice Group at Intapp), the article explores how firms can approach the trade offs between tightly controlling access to the sensitive internal information (which is increasingly distributed across offices, devices and even in third-party cloud services) and enabling lawyers and staff to be effective and avoid unnecessary barriers, overhead and inconvenience.
To understand the Benjamin Franklin featured in the clip art, read on in: "Information Security and the Spirit of Compromise" --
  • "A security program that includes more stringent controls will inevitably have some impact on lawyer and staff behavior, habits and productivity. Everyone must understand how an innocent mistake could have drastic consequences."
  • "They must also make informed decisions on how much risk the firm is willing to accept to maintain normal levels of productivity, and, conversely, how great a hit on efficiency the firm can accept to achieve a desired level of security."
  • "As security becomes a business issue, IT and security professionals must also adapt their approach, doing less watching around the perimeter and more negotiating with those inside it about the level of security required."
  • "There is no better way to do that than to align security with firm strategy, to remind leadership that today's clients expect strong controls and will readily take their work to another firm with a more confident security posture."

Tuesday, November 18, 2014

Decisions of Note: Conflicts Allegations & Disqualifications

When it comes to expert Bill Freivogel, we're not exactly sure when he has time to do things other than legal research (though we know he does). Here are several recent decisions he's flagged:
  • "HLP Props., LLC v. Con. Ed. Co. of N.Y., Inc., 2014 U.S. Dist. LEXIS 147416 (S.D.N.Y. Oct. 16, 2014). Law Firm found itself representing Parent Co. on corporate matters and against Subsidiary Co. on a long-running environmental matter (this case). Sub Co. moved to disqualify Law Firm in this case. In this opinion the court denied the motion. First, the court found that Parent and Sub were one for conflicts purposes, noting, among other factors, that they shared a law department. In effect, the court applied a balancing/'no harm, no foul' test. First, the court noted how prejudiced Sub’s client would be if it lost Law Firm in this case. Second, the court noted that different offices and different lawyers were involved at Law Firm and that there was no sharing of Parent’s information. Though ruling for Law Firm, the court said that Law Firm’s failure to obtain waivers from Sub and Parent when it began representing Parent was 'troubling.'
  • "Anderson & Anderson LLP-Guangzhou v. N. Am. Foreign Trading Corp., 2014 N.Y. Misc. LEXIS 4611 (N.Y. Sup. Ct. Oct. 20, 2014). Client hired Lawyer to collect an arbitration award. Lawyer drafted the contingent fee agreement between Lawyer’s law firm 'Law Firm') and Client. Law Firm, representing itself, brought this action against Client to enforce the fee agreement. Client moved to disqualify Lawyer in this case. In this opinion the court disqualified Lawyer and Law Firm under Rule 1.9 (former client rule). The court also ruled that Lawyer, but not Law Firm, was disqualified under Rule 3.7 (lawyer as witness)."
  • "The Copper Cellar Corp. v. Ole Smokey Distillery, 2014 U.S. Dist. LEXIS 146054 (E.D. Tenn. Oct. 14, 2014). Trademark case. Lawyer for Defendant has in the past done trademark work for Plaintiff. Plaintiff moved to disqualify Lawyer in this case. In this opinion the magistrate judge denied the motion. In a fact-intensive analysis the court noted that Lawyer’s work for Plaintiff involved different trademarks and said that “[t]he Court is not prepared to find that all trademark matters are substantially related” within the context of Rule 1.9."

Monday, November 17, 2014

Macfarlanes Goes Live with New New Business Intake and Conflicts Management Software

Macfarlanes, a leading London law firm ranked amongst the top 20 most innovative law firms in Europe by the Financial Times, serving clients on a full range of corporate, commercial and dispute matters as well as on their private affairs, has implemented Intapp Open for new business intake and conflicts management.
Macfarlanes selected the Intapp Open platform after the product was launched in 2013.  Intapp Open was rolled out firm-wide this year, following a successful pilot. Client matter inception at Macfarlanes is centrally managed by a team of six individuals across the conflicts and client due diligence (‘CDD’) processes; the same team also manages the training and rollout process throughout the firm.


Said the Firm's Head of Risk, Jo Riddick:
  • "Quality of service is critical for Macfarlanes’ clients. Since going live with Intapp Open in May, we’ve been able to streamline our new business intake and conflicts management processes, capitalising on the synergies generated by the conflicts and CDD teams working from a common platform."
  • "Working with Intapp, we’ve configured Intapp Open to support our bespoke client matter inception processes. The new system has given desktop-based visibility to our internal stakeholders, who can now see where ‘their’ client/matter opening process has got to, at a glance, and we have a one-stop client/matter inception audit trail for compliance."

Said Intapp President,  Dan Tacone:
  • "We’re delighted that Macfarlanes has migrated to Intapp for new business intake and conflicts, joining the growing community around Intapp Open. By using technology to automate, search, share and analyse information where appropriate, Intapp Open is helping to transform new business acceptance at leading law firms worldwide."
Visit for more information on Intapp Open new business intake and conflicts management software, or to request a demonstration.

Thursday, November 13, 2014

Where Risk and Revenue Connect (Conflicts, Records & More)

Several interesting stories to share, continuing this week's informal theme of risk costs, rewards and investment priorities. First: "HP shareholder wants scrutiny of Wachtell role in controversial settlement" --
  • "If you are the most profitable corporate law firm in recorded history, with a habit of loudly defending the business judgment of corporate boards, you have to expect to take more than your share of shots. Wachtell Lipton Rosen & Katz is the Goldman Sachs of the law biz: When someone claims the firm has done something wrong, it’s news."
  • "...a brief filed this week by a plaintiffs’ lawyer whose client opposes Hewlett-Packard’s controversial settlement of shareholder derivative claims stemming from the company’s disastrous $11 billion acquisition in 2012 of the British software company Autonomy."
  • "Wachtell negotiated the settlement, which called for shareholders to release all claims against HP’s directors and officers but also for plaintiffs’ lawyers from Cotchett Pitre & McCarthy and Robbins Geller Rudman & Dowd to team up with HP in litigation against former Autonomy officers. (Plaintiffs’ lawyers were originally slated to be paid $18 million for their efforts.)."
  • "HP is Wachtell’s client. It does not represent HP’s directors, who have their own lawyers. But according to dissenting shareholder A.J. Copeland and his lead lawyer, Richard Greenfield of Greenfield & Goodman, Wachtell was actually acting in the interest of HP’s board members, not the company itself, when it made a deal to release shareholder claims against HP directors."
  • "This brief isn’t the first time in the HP case that Copeland and Greenfield have raised questions about Wachtell’s supposed conflict of interest. They advanced the same argument in a brief last month, asking for permission to intervene in the case."

"Mike Pero stops his law firm from acting against him" --
  • "Mike Pero has successfully stopped a major law firm acting in a court case brought against him by the mortgage business he set up more than 20 years ago."
  • "The allegations in the proceedings were kept under wraps last month by a High Court judge when Pero applied to stop law firm Buddle Findlay acting for the mortgage business in the case."
  • "Pero had enjoyed a relationship with Buddle Findlay for seven years, the court heard, and the firm was already acting for Pero on unrelated litigation in Christchurch when it was instructed by the mortgage business for the present disputes. Pero told the Herald this morning that Associate Judge Associate Judge Matthews yesterday restrained Buddle Findlay from acting for the mortgage business."
  • "'I thought from the beginning they could not possibly be serious. I spent weeks trying to persuade Buddle Findlay against what I considered to be unethical. I wasn't so much worried about my information being shared as the loyalty factor. I'm in business like thousands of others in New Zealand. I have respect for my customers and I would never consider trying to attack them while they are paying me for my professional services,' Pero said."

"Webinar: ILTA and ARMA Present: Information Governance: A Revenue Opportunity"
  • "Law firms are under increased financial pressure due to a highly competitive market and clients demanding fixed-fee contracts. Information governance (IG) offers firms the opportunity to not only create a new practice, but also tap into a new source of revenue by leveraging existing relationships and experience."
  • "Join us to learn about the impact of IG, opportunities for information governance at law firms and how law firms can help their clients with IG."

Wednesday, November 12, 2014

More (Potentially Quite Costly) Conflicts (Allegations)

"Squire may be forced off major case after conflict check error in Patton Boggs merger" --
  • "A multimillion dollar legal battle between the sugar and corn syrup industries is turning out to be anything but sweet for Squire Patton Boggs. This week, a California judge is slated to consider whether Squire, the law firm that has represented the sugar industry since it filed the lawsuit in 2011, should be thrown off the case because of two client conflicts stemming from Squire’s June acquisition of Patton Boggs — the Washington lobbying powerhouse that turned out to be representing the very companies Squire is suing in the case."
  • "For nearly two months, between June 1 and July 31, Squire was inadvertently representing both the plaintiffs and the defendants in the lawsuit. Squire’s attorneys say it was 'an innocent error in a conflict check.'"
  • "If the judge rules to disqualify Squire, the firm would be forced to give up a major chunk of business — a client that has paid the firm more than $12 million for this case alone — as a result of the Patton Boggs merger. Squire attorneys and paralegals have collectively spent more than 20,000 hours working on the case."
  • "In court papers, Squire conceded that the firm made mistakes in the conflict check process for the merger, during which they used computers to run checks on more than 15,000 clients to screen for conflicts."
"Ballard Spahr denies conflict of interest in Pat Turner's Westport case" --
  • "Law firm Ballard Spahr LLP has filed documents sharply disputing accusations made by developer Patrick Turner that the firm had a conflict of interest in representing Turner's opponent in his Westport Waterfront bankruptcy case."
  • "The documents, filed in U.S. Bankruptcy Court on Thursday, question the timing of the claim made by Turner and argue that Turner is engaging in a "desperate tactic" because he is unable to defend himself from losing the 42-acre property to foreclosure. Ballard Spahr attorney Timothy McCormack also appears to be building a case that Turner's attorneys filed the motion in bad faith, which Judge Robert A. Gordon said Friday would result in sanctions from the court."
  • "In an email noting Turner's attorneys' failure to respond to Ballard Spahr questions over the facts behind the case, McCormack warns Turner attorney Stuart Levine about the consequences for making court filings in bad faith."
  • "Gordon has scheduled a hearing on Turner's filings for November 21."

Tuesday, November 11, 2014

Now Available: 2014 Law Firm Risk Survey Reports (US, UK, Canada & Australia)

We're pleased to announce the publication of the 2014 Law Firm Risk Survey. Four reports are now available, each presenting results from a specific geography, including the United States, United Kingdom, Canada and Australia. Over 2,300 professionals from leading law firms were invited to participate.

Produced by the Law Firm Risk Roundtable program and sponsored by Intapp, the Law Firm Risk Survey provides statistical information and commentary about the top priorities and concerns for law firm risk, IT and management stakeholders. The reports are designed to provide insight into how firms in each country are addressing key issues such as regulatory compliance, information security and confidentiality requirements, outside counsel guidelines, and new business acceptance.
Some of the trends identified in the 2014 Law Firm Risk Survey include:
  • Law firms have been making significant investments in risk management. The trend is particularly striking in the UK, where 83% of firms responded that they had a dedicated risk management budget, up from only 45% in the 2012 survey. In Canada, 42% of firms reported having a dedicated risk management budget. Those firms that lack a dedicated risk budget typically draw resources from other departments, such as IT and finance.
  • Information security and conflicts are ranked as the top risk management priorities for firms worldwide. Information security was the most frequently mentioned priority by a large margin in the UK, where 50% of respondents cited it as their top concern. In the US, 37% identified information security as their No. 1 priority, followed by conflicts management, which was the top concern for 22% of respondents. Meanwhile, in Canada, nearly 60% of respondents identified conflicts as their top risk management priority.
  • Client-driven audits are becoming increasingly common, indicating a steady trend since 2012. Approximately 50% of respondents in the US and Australia indicated that their firm’s risk and security practices have been subject to an external audit, either by a client or regulatory body. Most client audits are performed by financial services entities in these countries.
Said Pat Archbold, head of Intapp's Risk Practice Group:
  • "The 2014 Law Firm Risk Survey results offer a multifaceted view of the current risk management landscape. From information security and conflicts to outside counsel guidelines, today’s risk and compliance teams are under significant pressure to manage a wide range of client-driven requirements. This underscores the importance of a more holistic approach to new business acceptance – selecting clients and evaluating new matters with a 360° view of the firm’s business, and closely managing all the requirements attached to individual matters throughout their lifecycle."

Survey Distribution:
  • If you (or someone from your firm) participated in the survey, you should receive a copy of the final report shortly, via postal mail.
  • If you did not participate in the 2014 exercise, we hope you'll make a New Year's resolution in 2015 to do so! (We all benefit from broad participation. Let's not let the tragedy of the commons take hold... Everyone do their part!)
  • If you're not sure, but receive our mailers, watch your mailbox for a more detailed report summary and instructions on how to request the full report.
  • Or you can write in to: to be connected with details.

Thursday, November 6, 2014

Am Law Survey -- Information Security a Top Concern

The American Lawyer has just published its annual technology survey: "Survey: Data Security Is Tech Chiefs' Top Worry" --
  • "Worries about data security have reached new heights, our annual technology survey shows, with potential threats coming from outside the firm, and within."
  • "Yet one topic dominates the discussion. In response to our question asking technology directors about their biggest challenges, 55 percent cited security, by far the most frequent answer. And overall, 74 percent of the chiefs say they are more concerned about security now than they were two years ago. Their clients are concerned too. While security was a leading topic on last year’s survey [“A Secure Location,” November 2013], the focus has only become more intense—and more time- and budget-consuming."
  • "'Five years ago, we didn’t have client security audits,' says Gary Becker, the chief information officer at Reed Smith. 'We’ve had over 15 of them this year.'"
  • "For law firm CIOs, the result is often a to-do list of remedial measures—new security hardware and software that must be deployed to satisfy the client, whose hypervigilance, several chiefs said in follow-up interviews, stems from multiple sources, including headlines hammering companies that suffered data breaches and beefed-up regulations, particularly in the finance and health care sectors."
  • "But it is also time- and resource-consuming. Reed Smith now has three full-time staffers 'dedicated to meeting the security requirements of clients,' says Becker. 'That’s three people I didn’t have five years ago.'"
  • Other firms have similarly bulked up on security experts. Vinson & Elkins, for instance, now has a full-time security director it didn’t have a few years ago. 'There are a lot of steps we need to do now to meet client expectations on security,' says the firm’s CIO, Dennis Van Metre. It’s not just a matter of installing the systems the client asks for, he says, but also 'asking the questions our clients will ask us' whenever a new tool, service or product is evaluated, from cloud computing to tablets to online deal rooms.

Wednesday, November 5, 2014

Risk News & Updates

A grab bag of stories to share today. First, from Hinshaw comes: "No Duty to Defend Based on Insured's Material Misstatement at Time of Renewal" --
  • The U.S. District Court for the Central District of California ruled that an insurer's duty to defend against a malpractice claim was not triggered by the insured's material misstatement about the nonexistence of a potential claim when the insured entered into a tolling agreement that gave notice that there were allegations which could lead to a malpractice claim."
Next, two updates from the Shining Star, via Professor Alberto Bernabe:
And while we (and others) had some fun at the expense of the Lone Star State, it appears that "Texas Will Revisit Ethics Opinion on Nonlawyer Law Firm Officers." But, until it changes its mind, we'll still advocate for clever workarounds. (Any takers for "Chief Information Burseg"?)

And finally, with the midterm elections concluded, and states continuing to make policy in this arena, the North Dakota State Bar Association has noted : "ND State Bar opinion finds use of medicinal marijuana is a violation of the rules of conduct even if the use is legal according to state law."

Monday, November 3, 2014

Case Study: Improving Law Firm New Business Intake & Conflicts Management

Last week we highlighted international law firm Eversheds' successful implementation of Intapp Open for new business acceptance. Now, hot off the presses, comes a case study providing more detail from their Head of Operations, Kerry Kendall: "Eversheds Speeds New Business Acceptance with Intapp Open" --
  • "Acutely aware of inefficiencies in the firm’s existing internal process for evaluating and clearing conflicts, the Conflicts and Compliance team at Eversheds was ready for a change. According to Kerry Kendal, Head of Operations, the previous conflicts software tool they were using was 'no longer fit for purpose, and generated a lot of data.' With the old system, the Conflicts team was unable to rank data by relevance or eliminate irrelevant search results. As a result, lawyers received lengthy conflict reports that were difficult and time consuming to read. Sifting through them could take hours of valuable time. Kendal adds, "You could develop a false sense of security, if the most important result had been pushed down to #174.'"
  • "Partners evaluating new matters found themselves forced to manually look up client information and financial data – a tedious process that added hours to the conflicts evaluation process. 'With our previous system, we didn’t have access to past search records – so there was no record of our institutional knowledge across the firm,' says Kendal."
  • "The net result was that the Conflicts team found themselves functioning mainly as conflicts administrators who ran searches for the legal teams, and had to undertake extensive quality checks to work around the limitations of the old system – to reduce the firm’s exposure to risk. 'We wanted to move toward a more efficient model where conflicts experts were doing more of the conflicts analysis – not the legal teams,' says Kendal. A more efficient process would save both the lawyers and the Conflicts team time and resources, reduce risk for the firm, and ultimately deliver a better service to clients."
To learn how Eversheds has transformed new business acceptance at the firm, see the complete case study.