Thursday, August 27, 2015

Syrup, Sugar, Sanctions, "Strategic," and Such

Interesting news via the National Law Journal: "Sanctions Sought Against Ex-Squire Patton Boggs Lawyer in Sugar Case" --
  • "Two corn refining companies that booted Squire Patton Boggs from its high stakes lawsuit against the sugar industry are claiming one of the law firm’s former attorneys is still on the case—in violation of a judge’s disqualification order."
  • "In a sanctions motion filed on Aug. 20, the refiners allege that Daniel Callister, who allegedly resigned from Squire Patton Boggs after the disqualification order in February, continues to represent the sugar companies as a "strategic advisor.'"
  • "At the entreaty of Ingredion and Tate & Lyle, which had been clients of Patton Boggs prior to its merger last year with Squire Sanders, U.S. District Judge Consuelo Marshall on Feb. 13 ordered Squire Patton Boggs disqualified from the case. The judge concluded that the firm had a conflict of interest since it had continued to represent one of the corn refiners following its merger and had handled matters for the other that were related to the case."
  • "'In the context of a spontaneous discussion initiated by Briscoe about whether further settlement discussions should take place between the parties, Briscoe admitted that Callister was still advising the sugar plaintiffs in this case and that, further, Callister would participate and advise the sugar plaintiffs in potential settlement talks,' wrote Michael Proctor, name partner of Caldwell Leslie & Proctor, in the motion. 'Thus, Callister essentially left the disqualified Squire Patton Boggs to coordinate the litigation on behalf of the sugar plaintiffs.'"
    "...lead counsel for the sugar companies, called the sanctions motion 'an absolute waste of court time and lawyer time.'"

Wednesday, August 26, 2015

On Effective Law Firm Risk Management (Structures, Policies & Approaches)

Our (gracious and understanding) friends at Paragon noted that the intra-firm privilege article we highlighted a few days ago was actually published quite some time earlier. (Your human editor clicked the wrong newsletter link in his haste to bring you the latest and greatest.)

Now we bring you Paragon's latest latest article: "Reflections On a Few Common Elements of Effective Law Firm Risk Management," written by Gilda Russell, previously Holland & Knight LLP's longtime Ethics and Conflicts Counsel. The entire piece is indeed worth reviewing, here are some highlights:
  • "In terms of structure, many large firms delegate risk management responsibilities to a General Counsel’s Office, Legal Department, or some similar type of risk management “team” within the firm... Other large firms choose to follow a model where there are fewer specialized partners on the risk management team... Medium to smaller firms may follow similar models or divide risk management tasks among only a few individual partners, perhaps even a committee, and professional staff."
  • "Each of these approaches can lead to effective risk management, and there may be many reasons why a firm’s risk management program is successful.  This article does not attempt to designate the best approach or discuss all of the reasons for success.  Rather, the analysis below points out a few common elements of effective risk management and, where appropriate, notes how different approaches might fare with regard to these elements."
  • "While effective risk management may have many reasons for success, there are at least a few common elements to any approach that is taken:
    • Firms should make it very clear who the members of the risk management team are and what their respective responsibilities entail and should regularly circulate and update such information;
    • Firms should formally designate one or more members of the risk management team as in-house counsel and clearly indicate the team members acting under the authority of in-house counsel;
    • Risk management team members should communicate regularly among themselves as to matters they are handling;
    • Risk management team members should have a high degree of expertise in the specific subject areas of their responsibility; and
    • Risk management team members should operate in a way that engenders firm support through involving firm management, being available and responsive to firm lawyers, giving firm lawyers the opportunity to be heard and reheard on risk management decisions with which they disagree, assisting firm lawyers in communicating risk management decisions to their clients, and collaborating with other departments of the firm."

Tuesday, August 25, 2015

Wave Goodbye to Waivers (Says One GC)

The title in this one says it all: "Gilead Sciences’ GC Is Sick of Conflict Waivers" --
  • "For Brett Pletcher, Executive Vice President and General Counsel of biotechnology giant Gilead Sciences, advance conflict waivers are a big pet peeve. 'I’ve always pushed back on these with the firms, saying, ‘Look, how can you ask me to waive something? I don’t even know what the conflict is.'”
  • "He estimated that 95 percent of law firms require conflict waivers, and his negotiations with firms usually occur 'around the edges... Firms are trying to preserve a level of optionality to either represent me or represent somebody else, or represent both at the same time,” he said. 'I have a big problem with that.'"
  • "'My biggest pet peeve right now — which pretty much every law firm I’ve worked with does — is pre-waiver of conflicts. Firms want me to sign a contract with them that says they reserve the right to take on matters adverse to Gilead, and I waive my objection to those adverse matters now, without knowing what that matter might be.'"
  • "'I’ve always pushed back on these with the firms, saying, 'Look, how can you ask me to waive something? I don’t even know what the conflict is.' I’ve been very reasonable about waiving conflicts when I know what they are, and believe that these really aren’t conflicts.'"
  • "'It drives a bit of a wedge with me, because it makes me think, “Okay, what work am I going to send to this firm? Because I’m not sure exactly what could come up adverse to me within that firm that could be a problem... All these firms that have gotten big enough that they’re fearful that if they represent me, it’s going to cut out a lot of other work for people that might want to be adverse to me, and so they ask for these waivers up front.'"

Sunday, August 23, 2015

ILTA Conference: Sessions of Note (Part 2)

Another group of ILTA sessions worth a look:

Successfully Selling an Information Governance Program
September 1 (11am – 12:30 pm. Roman Ballroom I. #ILTACON #056)
  • What is the secret to selling the idea of implementing an information governance program at your organization? A panel of experts will discuss the business drivers relevant to getting people on board, including key indicators of success.
  • Featuring:
    • Beth Chiaiese, CRM - Foley & Lardner LLP
    • Rudy Moliere - Morgan, Lewis & Bockius, L.L.P.
    • Sharon Keck - Polsinelli PC

The Client’s Perspective on Maintaining Data Security Aug 31 (1pm – 2pm. Milano Ballroom III. #ILTACON #016)
  • Confidential information faces greater security threats than ever before, and the dangers to lawyers and their firms are significant. Sophisticated attacks can come from many sources, including hackers, cybercriminals, economic spies or trusted insiders who are dishonest, bored or simply fooled by a clever malware program. What do your clients think about the way you protect their data? This program will include the voice of the client to help law firms and law departments understand and address client concerns about data security and confidentiality.

Handling Lateral Lawyers and Matter Transfers in a World of Mergers and Movement
September 3 (11:00am – 12:00 pm. Milano Ballroom III. #ILTACON #143)
  • Lawyers are moving from firm to firm to capitalize on legal practice innovations, regional relationships and professional advancement. Here we'll present a fresh view on some of the latest issues facing law firms when lawyers cut ties, including who "owns" non-traditional content (such as Web posts or calendar items), whether the firm should consider retaining copies of any materials, how to handle a departure that is less than amicable, what technologies can make the division of content more precise and timely, and more!
  • Featuring:
    • Rudy Moliere - Morgan, Lewis & Bockius, L.L.P.
    • Charlene Wacenske - Morrison & Foerster LLP
    • Julie J. Colgan - Nuix
    • Al Pica - Ropes & Gray
    • Leigh Isaacs - White & Case LLP

Thursday, August 20, 2015

Risk News: Threats & Waivers Edition

A few interesting updates to share. First, from Hinshaw: "Future Conflict Waiver Allows Firm to Representation Adverse to Former Client" [GEM Holdco, LLC v. Changing World Technologies, L.P., 46 Misc. 3d 1207(A), 7 N.Y.S.3d 242 (Sup. Ct. New York County Jan. 9, 2015), aff'd, 2015 WL 4112529 (1st Dep't 2015)] --
  • "A law firm represented two sets of codefendants who later became adversaries; the firm then continued to represent one of the sets of defendants against the former clients. The New York Supreme Court, Appellate Division, First Department, held that because the defendants had specifically waived any conflicts that might arise from the joint defense arrangement, the firm would not be disqualified from its representation of the defendants."
  • "Accordingly, Danzik signed a "retainer letter" with Schalm Stone. The letter expressly contemplated future conflicts between the CWT Defendants and the Ridgeline Defendants."
  • "New York courts have recognized that where a valid waiver exists, the traditional concerns about confidential information are inapposite. The Ridgeline Defendants argued that the confidential information shared with an attorney in a joint representation inherently gives rise to the unfair advantages that Rule 1.9 seeks to prohibit, and warranted disqualification. But the court concluded that if the transmission of confidential information vitiated the validity of a conflict waiver notwithstanding the retainer letter's disclaimers to the contrary, virtually all conflict waivers would be ineffectual."
  • "The court upheld the waiver of future conflicts of interest, and allowed the continued representation of one client against the former client, even if information obtained during the joint representation from the former client could result in an advantage for the continuing client."
And then from Karen Rubin at Thomson Hine's blog comes an update (it might be a shame not to read, if some sort of accident should happen, that is...): "Threat to file disciplinary complaint can backfire" --
  • "We’ve all been there. Opposing counsel has acted like a jerk throughout your case.  But now, counsel has crossed the line with conduct that you think is not merely uncooperative or dilatory, but also unethical."
  • "Thinking of telling your opponent that you’re going to file a complaint with disciplinary authorities about that unethical conduct?  You should probably take some deep breaths and think again about that threat.  As a recent ethics opinion from the Association of the Bar of the City of New York (ABCNY) points out, making that threat may be unethical conduct on your part, if:
    • 'you are ethically required to actually report another lawyer’s misconduct, and you instead, threaten a disciplinary complaint to gain some advantage or concession from the lawyer; or'
    • 'you lack a good faith belief that the other lawyer is engaged in conduct that has violated or will violate an ethical rule; or'
    • 'your threat of disciplinary charges has no substantial purpose other than to embarrass or harm; or'
    • 'your threat of disciplinary charges violates other substantive laws, such as criminal statutes that prohibit extortion.'

Wednesday, August 19, 2015

Risk Experts Share Expert Risk Advice

BNA published a wonderful summary of the recent Association of Professional Responsibility Lawyers (APRL) meeting: "Ethics Counsels Divulge Risk Management Tips." It's worth reading in its entirety, but here are some highlights --
On Conflicts:
  • "Many issues stem from risks and conflicts that come into the firm from potential clients, from lateral hires and from lawyers moving to another state while staying with the firm, they explained."
  • "As for exercising care in choosing whom to represent, panelist Eliza M. Rodrigues said in her firm the client intake process includes not only a report prepared by a conflicts analyst but also an analysis of the risks presented by the client. Rodrigues is associate general counsel and ethics counsel at Sedgwick LLP in San Francisco."
  • "Rodrigues said her firm's risk management committee, which she chairs, seeks out as much information as possible about potential clients, including credit checks and Internet searches. Because the committee includes partners from a number of different practice areas, she said, 'there's always someone with the right expertise.'"
On Engagement Letters:
  • "Mokriski [professional responsibility counsel at Proskauer Rose LLP] asked Rodrigues 'who is more difficult' in getting an engagement letter prepared and signed in a new representation—the clients or the firm lawyers?"
  • "Rodrigues said Sedgwick requires an engagement letter as part of its new business intake procedure unless an exemption is issued. Some partners, she said, have demurred on the ground that clients either do not want to sign an engagement letter or object to signing a new one for each new matter. 'There's pushback, because lawyers want to start doing work and billing,' she said."
  • "To address those issues, Rodrigues said she finds herself increasingly negotiating engagement terms directly with a member of the client's office of general counsel and has found it “very helpful” for her firm lawyers to tell clients that someone from the firm's general counsel office will be contacting them. 'We can talk at the same level' and work out whether terms such as an indemnification clause are needed in the engagement agreement, Rodrigues said."
  • She said firm lawyers are more 'difficult' with respect to engagement letters than firm clients, who she's found 'are willing to communicate and negotiate with you.'"
On Risk Roles:
  • "The panelists agreed that lawyers serving as their firms' ethics counsel should have the title to buttress their authority “and also so people will know who to go to,” Rodrigues added."
  • "Mokriski said a year into his duties he suggested to his firm's management that he should be given the title “Professional Responsibility Counsel.” Proskauer not only agreed but “apparently got some credit from our insurance carrier for it,” he said."
  • "Serving as firm ethics counsel, Mokriski said, requires the lawyer to know the rules, the underlying jurisprudence and case law developments, and also have “an eye for the unintuitive. Some rules seem a little strange.”"

Tuesday, August 18, 2015

ILTA Conference: Sessions of Note (Part 1)

The annual ILTA conference is nigh. (Alas, it's in the city of Las Vegas, which some, your editor included, would rather leave than arrive at. Still, it's by far one of the best educational events offered to the legal industry, across a broad range of topics.) Here are several sessions of note for risk readers attending. Mark your calendars.

Better Business Results Through Better Business Intake
Thursday September 3 (2:30 - 4:30pm. Milano Ballroom VII & VIII. ILTA Event Code: #169 )
  • Streamlining client intake and improving general business process efficiency is critical to the practice of law. Today firms face new pressures to transform how they operate. This session will discuss the role technology can play in enabling quicker, more adaptable business acceptance and workflow execution.
  • The two-part session will feature two panels, moderated by Intapp Risk Practice Group head Pat Archbold, and featuring participation by risk consulting expert Meg Block, Chad Ergun at Gibson Dunn, Paul Davis at Baker Donelson, and several others. The first will explore industry business, risk and financial drivers, along with technology considerations. The second will feature law firms discussing their specific experiences with intake and conflicts software.
Building Information Governance Like “Ocean's Eleven”
Aug 31 (1pm – 2pm. Milano Ballroom V. #ILTACON #020)
  • In the 2001 movie “Ocean’s Eleven,” George Clooney assembles the perfect team to pull off a spectacular Vegas robbery. In managing IT governance, risk and compliance (GRC), your firm also needs to assemble the perfect team.
  • How do you find and manage the key players in GRC, and how do you properly divide the varied responsibilities that must be shouldered? Together we can figure out how to build a team that prepares us for the heist (GRC program) of a lifetime.
  • Featuring:
    • Nancy Beauchemin - InOutsource
    • Beth A. H. Faircloth - Seyfarth Shaw LLP
    • Tim Schank - Vedder Price P.C.
    • Stuart Senator - Munger, Tolles & Olson LLP

Wednesday, August 12, 2015

On the Advantages of Centralizing Conflicts Management

Eric Mosca at InOutsource has published an excellent article in the latest ILTA Peer to Peer Magazine: "Centralize Your Conflicts of Interest" --
  • "Your firm’s attorneys are often kept from starting work with a new client because of dozens of pages of potential conflicts. Many law firms send that huge report to the requesting attorney and hope for the best, but there is a better way."
  • "Using internal administrative resources to support the conflicts clearance process ensures that due diligence is performed while also returning billable hours to attorneys who would otherwise lose them tracking down responses."
  • "Transitioning from a decentralized, requesting-attorney-led model of conflicts clearance can be daunting, but busy lawyers faced with ballooning conflicts reports and fewer available hours often welcome assistance even if the firm’s risk management personnel are wary."
  • "If you (or your firm’s partnership) are looking for cost justification for these additional resources, consider this: avoiding even a single conflict of interest claim, disqualification or disgorgement of fees can be a huge cost savings. Speeding the time frame needed to open new matters and ensuring that conflicts due diligence is complete before substantive work begins can also be a major benefit. Consider surveying your firm’s lawyers to quantify the non-billable hours spent on conflicts of interest analysis and review to gauge the amount of potentially billable hours that could be handed back to lawyers. Multiply this by billable rate, and the number looks very attractive."

Tuesday, August 11, 2015

Business Moves, Business Conflicts

A few interesting updates to note. First, via The Recorder devotes ink to risk management associated with lateral movement: "Four Steps to Take When Changing Firms" --
  • "Most law firms and search firms use a formal lateral questionnaire, although not all do. (Every law firm that uses a lateral questionnaire should use it every time–without exception! Inevitably, the lateral hire who did not complete the questionnaire ends up with an impermissible conflict, putting both the law firm and the attorney in a very difficult situation.)"
  • "The bottom line is that potential and actual conflicts should be addressed before the negotiation progress. This means truthfully and completely sharing the necessary information for a complete conflicts analysis."
  • "Notably, the new law firm has more flexibility than the attorney in exchanging information necessary for the conflicts analysis. The most important information for the new firm to disclose to the attorney changing law firms is the identity (for whatever reason) of clients against whom the new firm cannot (or refuses to be) adverse."
  • "Contrary to what most law firms believe, an impermissible conflict can be created prior to the moment an attorney actually joins a law firm. Commonly, it arises from the inadvertent disclosure of confidential information during an interview process."
Next, earlier this year we noted a decision concerning economic (not necessarily ethical) adversity as a potential a class of conflict. Now Celgard, LLC v. LG Chem, Ltd., Case Nos. 14-1675, -1733, -1806 (Fed. Cir., Dec. 10, 2014) (Dyk, J.) is getting a fresh round of review and analysis from Professor Ronald D. Rotunda worth revisiting, see: "The Celgard Decision and Lawyer Disqualification" --
  • "In Celgard, the Federal Circuit disqualified the international law firm of Jones Day because it was representing Celgard in a patent dispute while it continued to represent Apple (another Jones Day client) in other matters. However, Apple was not a party to the Celgard patent case. Jones Day represented Celgard seeking a preliminary injunction against LG Chem, maker of lithium batteries, for alleged patent infringement. It turns out that Apple uses LG Chem’s batteries in its products."
  • "The court said, 'Because Jones Day’s representation here is ‘directly adverse’ to the interests and legal obligations of Apple, and is not merely adverse in an ‘economic sense,’ the duty of loyalty protects Apple from further representation of Celgard.' The court concluded that Apple was 'directly adverse' to Celgard in licensing negotiations related to that patent dispute and thus Rule 1.7(a) required disqualification."
  • "What does it mean to be 'directly' adverse and 'not merely adverse in an ‘economic sense''? Apple bought a product (lithium batteries) from LG Chem, but that alone should not create a conflict. As one comment noted, 'Jones Day argued that it would not be possible for a law firm to anticipate the economic consequences to a non-party client who happened to be in an opponent’s supply chain.' It added, 'the implications can be disturbing if read even a bit broadly,' because '[m]any litigations can have economic consequences for a non-party client, even foreseeable ones and here Apple was a client on unrelated matters. The case holds that as a client even on unrelated matters Apple had a right not to see Jones Day appear for another client in a matter in which Apple was not a party because of foreseeable economic harm to Apple.'"
  • "The Celgard precedent does not demand nor should it invite such a broad holding. Apple was concerned not merely that it could not buy batteries from LG Chem if Celgard was successful in this lawsuit. After all, Apple could presumably switch to Celgard as a supplier. However, the court noted that Apple faced 'additional targeting by Celgard in an attempt to use the injunction issue as leverage in negotiating a business relationship' (emphasis added)."
  • "The Celgard court made clear that there is no conflict for a law firm simply because another client of the law firm is part of the supply chain. 'Jones Day’s representation here is ‘directly adverse’ to the interests and legal obligations of Apple, and is not merely adverse in an ‘economic sense,’ the duty of loyalty protects Apple from further representation of Celgard.' (Emphasis added). The Federal Circuit specifically said that there is no conflict “merely because the client is up or down the supply chain . . . .'

Monday, August 10, 2015

Business and Boards Bring Conflicts (or at Least Concerns)

Interesting story via The Legal Intelligencer: "Law Firms Have Reined in Partner Board Memberships" --
  • "Board memberships have often been touted as great ways for attorneys to give back to the community and generate business contacts, but a recent situation involving Bill Cosby's defense counsel doubling as the chairman of Temple University's board highlighted why some firms have put tighter scrutiny on board affiliations."
  • "Law firm leaders have said their firms have exercised more control over the past several years to which boards partners are joining and whether anything involving existing board memberships could prove embarrassing enough to the firm that the partner should step down from the board."
  • Anthony E. Davis, a partner at Hinshaw & Culbertson in New York, advises attorneys and law firms on legal professional and ethics issues. He said there is no 'one-size-fits-all' approach to attorney participation on boards of directors."
    • 'There are certainly some firms out there that take what we might call an entrepreneurial approach and think it's great for lawyers to be on boards," Davis said. But "many firms are shying away from it now because of the very serious conflict of interest and other risks.'"
      "There could be several reasons behind such a hesitation, he said. Lawyers may find that their different duties as a director and as an attorney create complicated situations, or they may encounter a conflict if an attorney's firm wants to do legal work for the entity he or she is serving."
  • "Eckert Seamans Cherin & Mellott CEO Tim Ryan said his firm has had a board-membership policy in place for about a decade.'Part of that is to ensure that we can track what boards our lawyers are part of for conflict purposes, but also to make sure, in appropriate cases, the lawyers are provided with insurance for their board participation,' Ryan said. The firm has to notify its insurance carrier of board participation that is not covered by the external organization's insurer. In that case, Eckert Seamans' insurer will offer coverage, Ryan said."
  • "Dechert has a policy requiring a committee's approval of any request for a partner to serve on a for-profit corporation's board. There is a similar requirement at Saul Ewing where executive committee permission is required for for-profit board service."
  • "'There are ethical considerations, potential conflicts of interest, and D&O liability coverage issues that all must be considered and discussed prior to accepting such a position,' a Saul Ewing spokeswoman said. 'We have partners who serve on for-profit boards, but we want to ensure they consider all of the potential ramifications before making that commitment.'"