Tuesday, April 28, 2015

Engagement Letters: Firsthand Industry Perspectives


We've had a very engaging week on engagement letters so far. It's a topic that's resonating with the community, so it's fitting to continue the discussion. The Willis industry risk report we noted previously also includes commentary on engagement letters from several industry experts:

Glenda West, Willis Head of UK PI Claims: "Partners should at the very least check the engagement letter on every matter. The task should not be delegated solely to an associate or a member of the risk team given its importance. When there is a professional indemnity claim, the first thing insurers will look at is the scope of the retainer – what the firm was instructed to do and sometimes more importantly what the firm was not instructed to do."

David Halliwell, Director of Knowledge, Risk and Legal Services at Pinsent Masons: "Client engagement risks are very high up the agenda for us, so a lot of our work involves making sure that client identification and conflict checks are always undertaken and that appropriate engagement terms are in place. If you get that right at the outset then you save yourself potential time, effort and trouble down the line, because you’ve absolutely clarified what you will be doing, what you won’t be doing, who you will be doing it for, when you need to get it done by, what you are going to get paid and how. This is so important that we recently centralised the responsibility for conducting money laundering checks to the risk team and removed it from the operational team."

Chris Perrin, Executive Partner & General Counsel at Clifford Chance: "A risk that has really risen up the agenda is the terms of engagement certain large buyers of legal services seek to impose on law firms. We are increasingly seeing provisions in these that are unacceptable to us, such as being responsible for third parties we instruct on behalf of the client or providing an indemnity in respect of any error (as opposed to being liable for the usual measure of damage). Here at Clifford Chance the rule is that these sorts of terms of engagement must be reviewed by me or my team so that we can get consistency in what the firm will sign up to."

(For those that may have missed it, the recorded demo of automating engagement letter management is online here.)

Monday, April 27, 2015

Improving Engagement Letter Management (Webinar Recording Online)



Yesterday, we highlighted the Willis risk management survey report, which noted: "...a clear lack of consistency in establishing clear terms of engagements and undertaking client due diligence when retaining clients." This jibes with other conventional wisdom – see for example past coverage, such as the colorful commentary on this exact topic from US General Counsel at Dentons and former GC at Jackson Kelly.

Now from Intapp comes a recorded engagement letter webinar highlighting how Intapp Open enhances this important piece of business acceptance. It runs about 10 minutes and includes a software demonstration showing automating engagement letter creation.

Intapp Open makes it easy to broaden the use of engagement letters by tightly integrating and automating drafting and tracking activity as part of new matter inception. This allows organizations to increase the overall use of engagement letters, to reduce risk and protect revenue, while increasing internal efficiency and lawyer satisfaction by reducing overhead associated with traditional business intake processes. It:
  • Automatically generates draft engagement letters for new matters, using data gathered during the normal intake process (or additional detail gathered through questions integrated into normal form/workflow activity)
  • Supports multiple templates, using the relevant option based on firm-defined business rules (e.g. matter type, geography, jurisdiction)
  • Integrates document assembly, leveraging a firm’s existing investment in HotDocs or ContractExpress; or allowing organizations to secure a document assembly tool licensed for engagement letters
  • Manages review and approval of draft letters as part of the overall new matter review and intake process
  • Attaches generated letters to intake requests, creating a clear record and audit trail
Click here to access the recording.

Sunday, April 26, 2015

Risk Management Survey Report: Priorities, Attitudes & Approaches


Global insurance broker Willis has published: “Risk Barometer: A Study on how Attitudes And Approaches to Risk Management differ between U.K. Law Firms.” While the report focuses on the UK, the topics covered and findings are sure to be of interest regardless of your geography.
  • “This report aims to identify which risks concern U.K. law firms most and what strategies are being adopted to mitigate them. The report includes the following:
    • What keeps risk managers awake at night?
    • What are law firms doing to mitigate risk?
    • The role of insurance in risk management
    • How much resource should be allocated to risk management?”
On Risk Investment Levels
  • "Our survey data reveals that, on average, law firms with over 100 Partners dedicate 1.2% of total revenues to risk management."
  • "Three quarters of surveyed firms with more than 100 Partners plan to increase investment in risk management during the next 12 months." 
On Client Risk, Engagement and Terms of Business
  • "31% of surveyed law firms with over 100 Partners identified claims risk as their number one risk, more than the proportion citing any other area of risk. This is likely a direct result of the surge in claims against law firms in 2014. High Court data reveals 418 professional negligence claims were issued against UK solicitors in 2014, almost three times the number in 2013."
  • "Despite the importance of claims risk to UK law firms, our survey data reveals a clear lack of consistency in establishing clear terms of engagement and undertaking client due diligence when retaining clients."
  • "For example, only 76% of surveyed law firms with more than 100 Partners always ensure their work does not stray beyond the scope of their PII cover. Even less (62%) always ensure lawyers are adequately supervised and only 48% always define the scope of the retainer."
  • "Our survey data reveals that a large number of law firms are not undertaking relatively simple risk management measures as a matter of routine whenever clients are retained. This is surprising given claims risk was frequently identified as the top risk facing U.K. law firms."
  • "While nearly every surveyed law firm checks for conflicts of interest as part of CDD, a smaller proportion undertake other vital CDD checks or relatively simple client engagement procedures. For example, only 76% of law firms with over 100 Partners always ensure work does not stray beyond the scope of PII cover, only 62% always ensure lawyers are adequately supervised and only 48% always define the scope of the retainer."
On Information Security and Confidentiality Management
  • "Some 19% of surveyed law firms with more than 100 Partners identified cyber attack as their greatest risk, making it the joint-second most frequently cited risk behind claims risk... Encouragingly, 87% of surveyed firms with more than 100 Partners are currently strengthening internal data protection and client confidentially systems related to human processes."
  • "Almost 90% of surveyed law firms with over 100 Partners are strengthening internal data protection and client confidentiality systems related to human processes. This is the most common risk management initiative currently being undertaken by U.K. law firms with more than 100 Partners."
  • "The growing cyber threat has also forced a number of law firms interviewed for this report to seek ISO 27001 accreditation. This enables them to demonstrate to their clients that they are adopting best practice cyber security procedures."
On Anti-Money Laundering Compliance
  • "It comes as no surprise that over 90% of surveyed law firms of all sizes review the systems and controls in place to avoid the misuse of client assets and improper use of clients’ money at least once a year. However, our survey data reveals a wide discrepancy in the regularity of anti-money laundering training provided to fee earners – 52% of surveyed law firms with over 100 Partners provide anti money laundering training to fee earners less frequently than annually."
The full report, freely available from Willis, runs 48 pages and provides a wealth of additional detail, including data covering smaller firms and information on insurance trends.

Wednesday, April 22, 2015

Breaking Risk News: The "Appearances and Matters" Edition

 

Several updates on the theme appearance. First: "'Appearance of impropriety' is now dead in Kentucky" --
  • "In any event, the former Model Code included Canon 9, which stated 'A Lawyer Should Avoid Even the Appearance of Impropriety.' While not actually a Disciplinary Rule, the 'appearance of impropriety' was 'a favorite of some courts, which quoted it with great frequency over the years,' as Ronald Rotunda and John Dzienkowski note in their useful treatise, Legal Ethics — The Lawyer’s Deskbook on Professional Responsibility.  It was especially used as a basis for disqualifying lawyers for a broad range of conduct, ranging from conflicts to other kinds of misconduct."
  • "Earlier this month, in Marcum v. Scorsone, the Kentucky Supreme Court overturned 18 years of precedent, holding that 'disqualification based on an appearance of impropriety is inappropriate under the existing Rules of Professional Conduct,' and that if that were the standard, 'all the former client has to do is claim discomfort with the subsequent representation to create the appearance that something untoward is going on …'  Moreover, the court said, the standard 'creates the impression that courts are ruling based on appearances rather than facts.'"
  • "So the appearance of impropriety is dead — at least in Kentucky.  If faced with a disqualification motion — or if making one — you should research carefully to see how courts in your jurisdiction treat the old standard.  It will make a difference in how easy or hard it might be to prevail, whichever side of the motion you are on."
Next, from the fictional side, we were admittedly a little late to the Breaking Bad universe, but are tickled at the various coverage of "The Ethics of Saul Goodman," as flagged and further linked in the Legal Ethics blog. Turns out, one can find detailed discussions on this topic (with the enthusiasm only rapid hybrid TV-legal scholar fans can muster), addressing questions like "Did Kim Violate Conflict of Interest Rules?" and "Digging Through the Dumpster." For those so inclined, enjoy. (I am the one who blogs.)

And finally, bridging from fiction back to reality (or hypothetical reality), from the New York Legal Ethics Reporter comes a lengthy analysis: "'Illegal' Conduct Under Rule 1.2: When Does Advice to a Client Violate an Attorney's Ethical Obligations?" --
  • "Many attorneys have experienced situations in which a client has sought advice about proposed actions which 'push the legal limit' or are even clearly illegal. How far—if at all—may attorneys go in assisting a client to engage in questionable activity?"
  • "At first glance, the New York Rules of Professional Conduct (NYRPC) appear to provide some clear guidance. Rule 1.2(d) prohibits an attorney from counseling a client to engage in conduct that the attorney knows is 'illegal.' [NYRPC Rule 1.2(d).] In practice, however, application of Rule 1.2(d) is not always straightforward... A close look at the application of Rule 1.2(d) demonstrates the difficulty of defining 'illegal' conduct under the Rule and why some guidance would be beneficial."
  • "An important source for interpreting the meaning of NYRPC 1.2(d) is the history of the Rule, which would also involve an examination of the ABA Model Rule. The ABA Model Rule 1.2(d) is nearly identical to New York’s Rule 1.2(d) with a very important distinction: the ABA uses 'criminal' in place of 'illegal.'"
  • "Some types of civil “wrongs” would certainly appear to fall outside of the rubric of “illegal” conduct under the Rule. A good example is breach of contract."
  • "Ultimately, the authors do not take a position on how extensive Rule 1.2(d)’s prohibition should be. But if the Rule is going to continue to use the term 'illegal' instead of 'criminal,' instruction on the meaning of 'illegal' would be beneficial."

Tuesday, April 21, 2015

Take the Disqualification, Leave the Cannoli


North Carolina Lawyers Weekly (subscription required) reports: "Blurred lines between corporate client and its CEO gets law firm disqualified" --
  • "In The Godfather, Michael Corleone assures his brother that 'It’s not personal, Sonny. It’s strictly business.' Law firms should take similar care to draw bright lines between work done for a business client and work done for the company’s officers in their personal capacities. A Greensboro law firm appears to have done a bit of both, and as a result was recently disqualified by the North Carolina Business Court from representing a longtime corporate client that’s currently suing its former CEO."
  • "Since 1987, Tuggle Duggins has served as corporate counsel for Kingsdown Incorporated, a mattress manufacturer based in Mebane that is suing its former CEO, Eric Hinshaw… In the decades that Hinshaw was CEO, Tuggle Duggins also advised him on several personal matters, including some now at issue in Kingsdown’s lawsuit. When Kingsdown brought its suit, Hinshaw moved to disqualify Tuggle Duggins as its counsel, arguing that he had a prior attorney-client relationship with the firm."
  • "But I must say no to you [ed: please give the NCLW headline writer a raise]… Bledsoe found this evidence lacking, however, since the firm conceded that Tuggle provided advice to Hinshaw but the firm never asked him for payment. 'Given the Firm’s provision of legal services to both Kingsdown and the Hinshaws without maintaining separate records to distinguish between the two, it comes as no particular surprise that the Firm's billing records do not reflect the Firm’s representation of the Hinshaws in connection with the transactions in dispute,' Bledsoe."
Complete decision here, for those with additional questions, just this once. (Such is the life we have chosen…)

Monday, April 20, 2015

Business Conflicts: One More Thing... Are You Feeling Lucky?

Following last week's discussion of advanced waivers comes discussion of the impact of business conflicts, the other side of the coin, in our backyard here in Silicon Valley: "In Google-Apple Rivalry, a Conflict Not Easily Waived" --
  • "Client conflicts can scuttle a lateral move, as any recruiter can tell you. But some conflicts run so deep, and are spread so wide, they split the entire Silicon Valley legal marketplace in two."
  • "For law firms, that reality requires calculations about the value of the business in hand versus other business that might be precluded. And for would-be laterals who do work for either company, it means recognizing that it may be hard, if not impossible, to move to a firm in the other camp."
  • "Only a few firms have done work for both companies since 2009: Morgan, Lewis & Bockius; Greenberg Traurig; O'Melveny & Myers; and Kasowitz, Benson, Torres & Friedman have handled intellectual property matters for each. Fish & Richardson has handled multiple litigation matters for Google, and has also done patent prosecution for Apple."
  • "The line between "Apple firms" and "Google firms" can put roadblocks in the way of partner movement, and narrow the field of options for would-be laterals. Recruiters tell stories of partners whose adversity to a big player boxed them out of just about every firm they were inclined to approach. In such cases, lawyers have little choice but to wait out the matter."
  • "Hiring a particular law firm can be tactical for large clients. By spreading work among elite law firms—and turning down conflict waivers—they limit the universe of firms their opponents can hire. Apple and Google have spread work to some 70 law firms since 2009, so lawyers need to step carefully."

Sunday, April 19, 2015

Events: Risk Roundtables (New York, Boston, Philadelphia & Dublin)


We're pleased to announce our upcoming Risk Roundtables set for New York, Boston, Philadelphia and Dublin.
 
Measure Twice, Cut Once: Improving the ROI in your COI (conflicts of interest) / business acceptance process
 
Evaluating new business becomes more and more challenging as firms grow. Client demands are changing and regulatory pressures continue to increase. Effective acceptance processes that deliver quick results and improve management visibility and control is critical to firm operations (and financial performance).
 
This session will discuss how firms are impacted by and responding to these new changes – and how they’re leveraging people, process and technology to deliver new value to their lawyers and clients. 
 
Industry expert, Meg Block, with Intapp, will provide an overview of trends and considerations facing firms looking to modernize their own practices, and share examples of different approaches organizations can take to execute these projects.
 
As always, we’ll have plenty of time for open discussion, peer exchange and networking.
 
Dates & Locations:
 
  • Friday, May 15th at the Boston office of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.
  • Thursday, May 14th at the New York City office of Cravath, Swaine & Moore LLP.
  • Wednesday, May 13th at the Philadelphia office of Post & Schell, P.C.
  • Thursday May 21st at the Dublin office of A&L Goodbody
Attendance is by invitation only and is limited to qualified law firms and personnel. Please contact info@riskroundtable.com for more details.

Thursday, April 16, 2015

The Cost of Risk – Malpractice Claims, Disqualifications & Sanctions



Two stories highlighting the costs. First, from The Recorder: "Legal Malpractice Claims Are Costing Firms Big Bucks" --
  • "Recent headlines from around the country reveal multimillion-dollar legal malpractice payouts, with firms facing big exposures arising out of predictable and avoidable problems. In difficult economic times, clients and former clients often look to attorneys—perceived as having deep pockets—to compensate them for failed businesses, lost homes or risky investments. This year, the number of large verdicts against attorneys confirms the risks of failing to follow effective risk management procedures for avoiding legal malpractice claims."
  • "Big firms face big risks. Unfortunately, neither the size of the firm nor the reputation of the attorney provides much insulation from legal malpractice exposure. Some of the bigger verdicts this year were against attorneys with excellent reputations who were part of well-regarded law firms."
  • "Oddly, it is often the most experienced attorneys with the best reputations that skirt firm protocols and ignore risk management procedures. Yet, according to the data, the attorneys who need to strictly adhere to risk management practices and procedures are experienced attorneys with significant clients and exposures. Big reputations backed by big firms do little to persuade a jury to find in an attorney's favor when the rules have not been followed or a mistake has been made."
  • "Conflicts of interest continue to drive up exposures. Juries do not like conflicts of interest, regardless of how they happen. In fact, even the appearance of a conflict of interest can, and often does, result in some of the largest legal malpractice verdicts."
  • "As these cases make clear, actions alleging a breach of the duty of loyalty result in stiff penalties for attorneys and law firms. There is no good substitute for clear conflict of interest identification procedures and effective protocols for documenting the resolution of identified conflicts."
  • "But not all the news is bad. Increasingly, legal malpractice data confirm that effective risk management procedures can substantially reduce these risks. These steps begin with effective client intake procedures and include conflict identification and resolution procedures."
Next, from DQED "Disqualification Retaliation: Sanctions for Seeking or Defending Disqualification" --
  • "The issue of disqualification can irritate many lawyers and judges.  For example, some fear that disqualification motions are invariably 'tactical' or 'strategic' moves that should be viewed with 'skepticism' and 'extreme caution.'  Others, however, tend to view the lawyers or firms at issue as ignoring their ethical responsibilities and rationalizing away clear conflicts of interest or other misconduct."
  • "Two very recent examples illustrate the infliction of sanctions. First, the Eastern District of Louisiana just concluded that a plaintiff had brought suit solely as a tactic to have his wife’s lawyers disqualified in a separate divorce proceeding and awarded attorneys’ fees as a consequence."
  • "Second, in an unpublished decision last week, the Second Circuit upheld a high-dollar attorneys’ fees award against Boies, Schiller & Flexner (BSF) for failing to withdraw (and instead making the opposing side file a motion to disqualify): ‘Host moved for sanctions on the grounds that BSF’s representation of Madison 92nd Street Associates, LLC (“Madison”) presented a clear conflict of interest in light of BSF’s earlier, substantially related representation of Host, and that BSF unreasonably refused to withdraw from its representation of Host until faced with a motion to disqualify. The district court agreed, concluding that '[a] clearer conflict of interest cannot be imagined” and that Host was entitled to fees and costs incurred in preparing the motion to disqualify BSF.’"
  • "As an interesting aside, although the district judge in her above ruling was clearly no friend to the large firm of BSF, she happened to be notably nice to another large law firm (namely, Sidley Austin, LLP) last week.  In short, the judge held that because Sidley screened a partner who had represented the other side in the same dispute, Sidley was not disqualified."

Wednesday, April 15, 2015

Advanced Waivers – On the Offensive



University of California, Hastings College of the Law professor Richard Zitrin takes to the pages of The Recorder to take great offense: "Viewpoint: Law Firms Put Themselves Before Clients With Advance Waivers" --
  • "Despite the [California] rules, which clearly prohibit almost all such waivers, clients—particularly big, institutional clients—are routinely being asked by law firms, principally larger firms, to agree to broad, open-ended advance waivers."
  • "By the new millennium, large law firms were pushing for a liberalization of the advance waiver concept. They reasoned that given the wide-ranging list of clients and possible future clients in their books of business, it was more than reasonable to ask their clients to consent to an open advance waiver, even though neither the firm's future client, nor the future case, would be discernible to the current client."
  • "In 2002, the American Bar Association modified its own conflicts rule, Model Rule 1.7, to require 'informed consent, confirmed in writing.' But it also gave substantial recognition to the concept of a broad advance waiver by adding Comment 22, which, edited, says in part: 'If the consent is general and open-ended, [and] if the client is an experienced user of the legal services involved and is reasonably informed regarding the risk that a conflict may arise, such consent is more likely to be effective.' The ABA followed this broad comment with Formal Opinion 05-436, which liberalized prospective waivers substantially, particularly where the client is a "sophisticated" user of legal services."
  • "Yet, over the past five to seven years, I have seen what seems like innumerable advance waivers presented routinely to so-called 'sophisticated' clients by California law firms. These waivers take the 'substantial relationship test,' long used to determine whether a firm could be adverse to a former client, whether the former representation is "substantially related" to the new representation, and use it to define law firm adversity against a current client."
  • "These law firms have conflated a never-accepted proposal for a comment to a rule—not even in the rule itself—into a broad conflicts waiver they see as an enforceable document. But the problem of informed consent does not go away merely by signing a consent that does not inform. The waivers I have seen generally ask clients to consent to the firm representing any new client in any matter against the current client, so long as the representations are not substantially related."
  • "At this point, matters have not gone nearly that far. And, at least from a de jure perspective, advance waivers have still not been widely approved, with only a few jurisdictions formally accepting a broad formulation. But it is clear that in day-to-day practice, many law firms with "sophisticated clients" have jumped the gun on the rules. That may mean the best interests of clients, big and small, sophisticated or not, are taking a back seat to the best interests of law firms."

Thursday, April 9, 2015

Risk News: Law Firm Insider Trading, Disqualification Discussions



Several interesting updates to share. First, an interesting question and paper flagged by the always excellent Legal Ethics Forum: "When Should eDiscovery Vendors Be Disqualified?" --
  • "As a general proposition, courts have inherent authority to disqualify parties and their representatives and consultants from participating in litigation. Attorneys, expert witnesses, and litigation consultants may face disqualification motions in the event of a conflict of interest. With the rapid expansion of the eDiscovery industry, however, a new question has arisen: If an eDiscovery vendor has a potential conflict of interest, when should it be disqualified? What standard should apply?"
  • "To put the problem in perspective, imagine that you manage discovery at a law firm representing the defendant in a contentious wage and hour dispute, and you recently hired an eDiscovery vendor to assist you in scanning and coding your client’s documents, at a cost of $50,000. Two months later, you receive notice from your vendor that the plaintiff’s counsel has requested its services in connection with the same case. How would you react? Would you expect a court to disqualify the vendor if it accepted the engagement? This scenario occurred in Gordon v. Kaleida Health, resulting in the first judicial order squarely addressing vendor disqualification. The Kaleida Health court ultimately denied the defendant’s motion to disqualify, allowing the vendor to continue participating in the case."

Next, two partners at McKenna Long raise several interesting issues in an article well worth the read : "Who Should Represent a Law Firm Against a Motion To Disqualify?" --
  • "When disqualification motions do come, attorneys should be prepared, hopefully having foreseen the issues.  But  “going it alone,” and not seeking the representation or advice of independent counsel, is the one most common mistake that increases the chance of turning a potential conflict of interest into a lost representation, a bar complaint and/or an action for legal malpractice.  Below are a few reasons why this approach is not the most effective."
  • "A Fool for a Client: Some may say that a law firm defending itself against a motion to disqualify has a fool for a client.  Here is what happens. When a motion to disqualify is filed, the targeted law firm ends up with two clients in the litigation.  The law firm continues to represent its original client.  In addition, however, the law firm now represents its own interests in attempting to continue the representation of the client."
  • "The law firm is not listed on the pleadings as a party, but it nonetheless has an interest in the outcome.  At that moment, the law firm has two clients whose interests may not completely align."
  • "In some situations, the law firm’s client might be better served financially or otherwise by other counsel.  On the other hand, in most situations, the law firm’s best interests are likely best served by the continuation of the representation.  The stage is set for, at the very least, a perceived potential conflict."
  • "The safer course is for the law firm to advise the client of any potential differing interests, including the advantages and disadvantages of hiring a new firm to contest the motion to disqualify.  Because the law firm has a financial (and potentially other) interest in the outcome, the law firm should avoid giving any advice in connection with the client’s decision on how to proceed."
  • "These risks could include members of the law firm being called as witnesses, unexpected fees and costs, or unknown restrictions imposed as a condition of the law firm’s continued participation.  The firm should not put itself in the position of  advising both itself and its client on these issues absent the full disclosure and consent required for multiple representation."

Fiually, another story of loose lips: "Insider Trading Case Involves Legal Secretary" --

  • "...a law firm administrative assistant had to work long hours and her boyfriend asked her why. She said her boss, a law firm partner, needed help with the merger of two insurance companies (Harleysville Group and Nationwide)... The boyfriend told his father. According to the SEC the father, Joel J. Epstein, then illegally traded on that information in advance of the deal going public."
  • "Epstein settled the civil action, according to the SEC. He will pay a total of $495,627, which is how much he and the four other tippees gained from the trading, a civil penalty plus prejudgment interest."
The Legal Intelligencer added:
  • "No charges have been filed against the son or the law firm administrative assistant and no allegations were made that the law firm did anything wrong."
  • "The girlfriend allegedly told her boyfriend about the deal and how it was causing her extra work and stress. She expected him to keep it confidential given their past history and practice of sharing confidences, according to the complaint."
  • "And, as in Epstein's case, the cases don't always involve firm employees misappropriating information. In a 2011 case, the SEC charged the father of a law firm attorney after the father, unbeknownst to the daughter, misappropriated information on a deal from documents the daughter brought home to work on over the holidays."
  • "Attorneys familiar with the work of the unit said these types of cases put professional service firms on notice that the SEC is paying attention to the misappropriation of insider information."

Wednesday, April 8, 2015

Disqualification News – Tainted, In-house Edition



Fascinating story about in-house counsel disqualification: "Acacia Feels Fallout From Schlumberger Ruling" --
  • "Patent licensing juggernaut Acacia Research Group [current market cap: $540m] suffered a blow last week when its lawyers—including its entire in-house legal department—were kicked off an infringement suit against oil field services company Schlumberger Ltd."
  • "Schlumberger’s lawyers at Latham & Watkins convinced U.S. District Judge Lee Yeakel in Austin to disqualify Acacia’s counsel in a case accusing Schlumberger of violating a patent related to three-dimensional geologic mapping. The judge also dismissed the suit, filed by Acacia subsidiary Dynamic 3D Geosolutions LLC, without prejudice."
  • "Schlumberger’s disqualification bid centered on the role that Acacia lawyer and executive Charlotte Rutherford played in Acacia’s decision to acquire the 3D-mapping patent in late 2013 and to sue Schlumberger in February 2014. Rutherford served as Schlumberger’s deputy general counsel for intellectual property for four years, until she joined Acacia and took the lead of its newly formed Texas energy practice in 2013. Schlumberger claimed Rutherford worked on matters related to Acacia’s infringement claims before making the move, and then counseled her new company about the litigation."
  • "Yeakel disqualified not only Rutherford, but also the rest of Acacia’s in-house legal team and its outside lawyers at Collins, Edmonds, Pogorzelski, Schiather & Tower. He then dismissed the case, ruling that 'although a harsh result,' Rutherford’s involvement had tainted the litigation."
  • "'This has been, to my knowledge, only the third case that’s been published where a disqualification has led to a dismissal,' said Latham’s Maximilian Grant, who argued the disqualification motion for Schlumberger at a November hearing."

Monday, April 6, 2015

Looking at Lateral Trends from Multiple Angles

An interesting slice of stories on laterals to share today, from several perspectives. First comes the client voice: "Newegg CLO: Lawyers Matter, Law Firms Don’t" --
  • "As it becomes more common for lawyers to hop between firms, corporate counsel are increasingly making decisions about whether to continue working with a firm or an individual lawyer. For Lee Cheng, chief legal officer at online retailer Newegg, Inc., the choice is simple: The lawyer, not the law firm is important."
  • "My philosophy and the philosophy of a growing number of in-house counsel, is that we hire lawyers, not law firms. As long as they demonstrate the same level of care, we are platform agnostic. The most important criteria is: Will they be able to continue to do the work that we hire them to do?"
Next, firm management, in the form of a video:

Paul Hastings Chairman Seth Zachary: "Zachary discusses his firm's approach to hiring laterals. He breaks down the code words of lateral hiring and explains why he'll walk away from a $20 million lawyer."

And, finally, another example of a lateral move making news: "Dechert Paris partner Mayer quits firm citing conflicts" -- 
  • "Dechert arbitration partner Pierre Mayer is quitting the firm’s Paris office to set up his own practice, citing his reasons for leaving as increasing conflicts of interest and a wish to focus on working as an arbitrator."
  • "He said that increasing numbers of conflicts of interest was one of the reasons for leaving Dechert. 'It's three times out of four that I have to refuse cases because there’s a conflict of interest,' Mayer said, adding that these conflicts were both actual and potential, commercial conflicts."
  • "He said that the problem had increased as Dechert had become more global and because the firm had toughened up its stance on commercial conflicts, notably in the energy sector where it was looking to protect existing and future clients."


Thursday, April 2, 2015

Risk News: Conflicts & Confidentiality



Firm Is Ousted as Counsel Against Nonclient Whose Secrets It Learned Via Related Case
  • "A law firm may not represent an expert suing a company for consulting fees where the firm learned significant amounts of sensitive information about the company when it represented a law firm against the company in a fee dispute arising out of the same underlying litigation, the California Court of Appeal, Fourth District, decided Feb. 27."
  • "While the firm never represented the company and did not acquire its secrets by wrongful means, the firm's 'wide-ranging access to privileged information in the first representation and the substantial relationship between the two matters' require its disqualification, Justice Raymond J. Ikola said in his opinion for the court."
  • "In ordering disqualification, the court pointed out that AlvaradoSmith had received substantial amounts of confidential and privileged information from Shared Memory Graphics when it represented the company's prior counsel, Floyd & Buss, in a fee arbitration proceeding arising from that same patent litigation."
  • "The trial court pointed out that the circumstances did not involve improper acquisition of confidences and that AlvaradoSmith was not accused of violating protective orders requiring the return of all confidential information at the end of the fee arbitration proceeding."

  • In the mass tort litigation context, where one plaintiff typically brings similar claims against numerous defendants within a particular industry, the coordination of defense efforts among codefendants can be a very prudent course of action."
  • "Additionally, in the absence of establishing preemptive safeguards prior to formulating a joint defense — namely a carefully tailored joint defense agreement — attorneys may run into a host of conflict of interest and waiver issues, unwittingly create an attorney-client relationship with other codefendants, and ultimately expose themselves to malpractice liability."
  • "Participation in a joint defense amplifies the risk that attorneys will encounter a conflict of interest. By way of example, if an attorney shares privileged communications with the joint defense group and is later determined to have a conflict of interest, that could result in potentially disastrous results for the entire group, up to and including disqualification of all attorneys involved in the joint defense agreement."

Wednesday, April 1, 2015

Citibank Report Criticizes Law Firms on Information Security


  • "The unwillingness of most big United States law firms to discuss or even acknowledge breaches has frustrated law enforcement and corporate clients for several years. That frustration bubbled over in a recent internal report from Citigroup’s cyberintelligence center that warned bank employees of the threat of attacks on the networks and websites of big law firms."
  • "The report said bank employees should be mindful that digital security at many law firms, despite improvements, generally remains below the standards for other industries."
  • "The Citigroup team issued the report as other Wall Street banks are putting pressure on the legal profession to do more to prevent the theft of confidential client information."
  • "John P. Carlin, assistant attorney general for national security, spoke this month at an American Bar Association conference in New Orleans, impressing on the lawyers the need to promptly inform clients and law enforcement authorities of attacks that could compromise confidential information."

In an interesting twist, Citigroup added some additional commentary after a few law firms mentioned in the report offered exculpatory detail (such as one firm noting that a hack on their corporate web site, hosted by a third party, did not result in any confidential information being disclosed):
  • "Citigroup issued a statement on Thursday distancing itself from the report. A person briefed on the matter but not authorized to speak publicly said the bank had stopped distributing it: 'The analysis relied on and cited previously published reports. We have apologized to several of the parties mentioned for not giving them an opportunity to respond prior to its publication in light of the sensitive nature of the events described,' said Danielle Romero-Apsilos, a Citigroup spokeswoman."