Wednesday, September 30, 2015

Information Security News – Law Firm Hacked, Data Ransomed

In August, LegaltechNews noted: "Heightened Risk of Cyberattacks Puts Pressure on Law Firms to Bolster Defenses" --
  • "On a scale of one to 10, the risks law firms are facing are an 11, according to Daniel Solove, professor at George Washington Law School and organizer of the Privacy + Security Forum. Underscoring this urgency is data from Mandiant, a division of FireEye, which finds that 80 of the 100 biggest law firms in the U.S. have been hacked since 2011."
  • "Law firms have become a bigger target for cybercrime... Those sentiments have been echoed by the New York State Department of Financial Services (NYFDS) and others, which view law firms as a secondary access point for criminal activity due to the volume and sensitivity of data they deal with..."
Now comes a startling story posted in the Legal IT Network LinkedIn Group by a consultant: "Security incident in a law firm" --
  • "A few days ago one of the largest Polish law firms experienced a serious IT security breach. They were blackmailed then by hackers demanding ransom in BTC to stop publishing data stolen from the law firm servers. The hackers published 500 MB of sensitive data and threatened to expose further 100 GB if their demand is not met."
  • "The attack went through servers of IT company that delivered its services to the law firm. Lawyers from some other big law firms commented that they were also attacked, however the hackers failed to steal data."
See the full post for extensive community from that community, including a pointer to a 2013 Canadian article: "Law firms targeted in top 10 worst cyber attacks"

Tuesday, September 29, 2015

Disqualification News: Lawyer Facing His Former Firm

The New York Law Journal notes: "Lawyer Disqualified From Suit Against His Former Firm" --
  • "A Long Island attorney cannot represent plaintiffs in a lawsuit against his former law firm because he was working there when the plaintiffs opted out of a class action settlement against the firm, Eastern District Judge Kiyo Matsumoto ruled." 
  • "In August 2014, eight months after his employment as managing attorney at the firm was terminated, Pashkin filed suit against Cohen & Slamowitz on behalf of two plaintiffs who rejected the class settlement and one who asserted a claim similar to those argued in the class action case."
  • "The firm moved to disqualify Pashkin in Liew v. Cohen & Slamowitz, 14-CV-4868, saying he had participated in critically important confidential discussions between the firm and its insurance counsel. Those discussions involved the firm's ability to pay a judgment in the class action, efforts to define the class as broadly as possible to forestall subsequent litigants with similar claims, and general strategy the firm employed in responding to such claims."
  • "But Matsumoto held Tuesday that "Mr. Pashkin's insistence that his tasks in the [class action] matter were rather circumscribed is misplaced, because the operative question is whether he likely had access to relevant confidential information... The judge said the undisputed facts were sufficient to grant the disqualification motion, because mere access to the confidential information was an adequate reason."
See: Liew v. Cohen & Slamowitz, 14-CV-4868.

Monday, September 28, 2015

Risk News: Playbook Conflicts (Hinted at), Unauthorized Practice Flagged

From the always vigilant Bill Freivogel comes a playbook reference: "Former Client (posted September 16, 2015) Sonos, Inc. v. D&M Holdings Inc., 2015 WL 5277194 (D. Del. Sept. 9, 2015)." --
  • "Patent infringement case involving wireless audio technology. Law Firm 1 filed this case and later withdrew. Plaintiff is now represented by Law Firm 2."
  • "Law Firm 1 formerly did work for the defendants in this case. Lawyers A, B, C, & D left Law Firm 1 to form Law Firm 2. Prior to leaving Law Firm 1 Lawyers A, B, & C had done patent work for the defendants. However, the defendants had not acquired the technology involved in this case until after Lawyers A, B, & C had left Law Firm 1."
  • "In denying a motion to disqualify Law Firm 2, the court found that the work A, B, & C had done for defendants was not substantially related to this case. The earlier work involved different technologies. In an oblique rejection of the playbook theory, the court said familiarity with the defendants' 'general strategy for handling patent litigation' was not enough to justify disqualification."
From Karen Rubin at Thomson Hine comes a reminder: "Unauthorized practice — a continuing risk for unregistered in-house lawyers" --
  • "We’ve written before to remind in-house lawyers that even if you don’t sign pleadings or appear in court on behalf of your corporate employer, you are still practicing law when you give advice and participate in business transactions on your employer’s behalf.  If you do so without being duly licensed, you are straying into unauthorized practice, in violation of ethics rules — and in many jurisdictions, in violation of statutory law.  Here are the two latest cautionary tales."
  • "The lawyer was general counsel of a company headquartered in Massachusetts.  When the company relocated its HQ to Philadelphia, the  GC moved there and continued to work, but failed to obtain the “Limited In-House Corporate Counsel License” required under Pennsylvania law. Here’s the kicker:  the GC only advised the company on issues under Massachusetts and federal law, and referred issues concerning Pennsylvania law to outside legal counsel."
  • "The second tale of disciplinary woe comes from North Dakota, where last month a lawyer was admonished for violating North Dakota’s version of Rule 5.5, based on merely having been “held out” in a press release as authorized to practice there when he was not."
  • "These rules are technical, and can appear to be designed to guard state borders in a way that can seem monopolistic; but you ignore them at the risk of inconvenience and embarrassment, at the very least."

Thursday, September 24, 2015

Managing Increasingly Stringent Client Terms of Business

At the recent ILTA conference, Intapp made several announcements, including introducing a fresh approach to managing terms of business:

With clients issuing increasingly stringent guidelines, it’s critically important that firms take their compliance responsibilities seriously. But keeping up with every rule and condition across multiple clients and matters can create significant overhead for lawyers and staff — which translates to real risk.

It’s not uncommon to hear stories of client requirements documentation ending up in a drawer — metaphorically or even literally… Or of instances where potentially alarm-raising client mandates, like indemnity clauses, go overlooked without proper review and consideration. No firm wants to live with the worry of missing a critical detail and facing a serious surprise when clients come knocking…

Clients Rule – So Deliver a Consistently Exceptional Experience
Ideally, everyone in the firm who interacts with clients — whether it’s lawyers, finance, risk or IT teams — should be aware of their specific rules of engagement and how they impact day-to-day service delivery. And everyone should also have a clear understanding of what success means to each client — top of mind and at their fingertips. Intapp Terms makes this possible (and practical).

Available as a stand alone product, or integrated with the full Intapp Open business acceptance suite, Intapp Terms enables firms to programmatically capture, index, report on and enforce client obligations throughout the matter lifecycle. These can include:
  • Formal outside counsel guidelines
  • Internal requirements and standards firms wish to institute
  • Overall client expectations and definitions of success
The Future of Client Success – Clear Rules, Full Service, Can't Lose
Intapp Terms of Business provides a structured approach for storing, indexing, analyzing and then enforcing client mandates and other firm requirements. A straightforward workflow, which can be integrated directly into the new business acceptance process, allows firms to transform paper or electronic policies and engagement conditions into structured rules, which can then be categorized, reported on and executed by matter teams.

All of this new control and capability is ingrained directly in business intake — which Intapp has modernized to deliver a more complete approach to business acceptance — so there’s no significant additional overhead.

With Intapp Terms of Business, firms gain more than the means to effectively comply with client rules — they gain a powerful competitive weapon. By highlighting their rigorous, programmatic internal compliance capabilities in business development contexts as a differentiator, law firms demonstrate a deep commitment to client success. And, in the process, can knock those lacking similar capabilities on their heels…

For more information, visit, and see this four minute overview video:

Wednesday, September 23, 2015

Conflicts Allegations Making News

  • "U.S. Securities and Exchange Commission Chair Mary Jo White is facing pressure to recuse herself from picking the next head of the regulator that polices accountants because of a potential conflict with her husband’s legal work."
  • "The Center for Effective Government, an advocacy group, said White should step aside because her husband, John White, sits on an official advisory group to the audit board. While the position is unpaid, it gives John White regular access to top PCAOB officials. His law firm, Cravath, Swaine & Moore, highlights the role in marketing materials."
  • "'The White family has to deal with this conflict,' said Jeff Hauser, who runs the Revolving Door Project at the Washington-based center that promotes government transparency and accountability. 'It makes Mary Jo White’s role choosing PCAOB officials problematic.'"
  • "The issue of potential conflicts between SEC Chair White and her husband’s law practice isn’t new. When Mary Jo White became head of the agency in 2013, John White stepped down as an equity partner at Cravath in an effort to minimize potential problems."
"Problems at United Airlines may stall GWB probe" --
  • "Turmoil at one of the largest airlines in the world, United Continental Holdings, could jam up a legislative investigation into the George Washington Bridge scandal and a $1.5 billion plan to add rail service between lower Manhattan and Newark Airport."
  • "The law firm hired by the Legislature to investigate the bridge scandal has warned that its work could come to a premature end because another client is facing scrutiny from U.S. Attorney Paul Fishman, according to a letter obtained by The Record on Thursday."
  • "Lawyers for Jenner & Block, the prominent firm retained last year by the Democratic-controlled Legislature, carried out a separate internal investigation for United. Their findings, which the airline did not disclose, led to the resignations of Chief Executive Jeff Smisek and two vice presidents this week."
  • "After being apprised by Jenner & Block of the potential for a conflict of interest stemming from the two matters, legislative leaders chose to keep the law firm on retainer earlier this year, according to the letter."
  • "The firm 'erected an ethical wall' to separate the two matters, and no attorneys involved in one case would participate in the other or share information, Schar said."

Tuesday, September 22, 2015

Chickens, Eggs, Laterals, Conflicts & Confidential Client Information

Excellent article by Don Foster, chair of Offit Kurman's business litigation practice group: "Limiting Disclosure of Client Information When Changing Firms" --
  • "When an attorney is contemplating moving from one law firm to another, both parties need to identify potential client conflicts, and will want to share baseline financial information about the other in order to assess the economic benefit behind the move, which invariably is the driving force behind the discussions in the first place. Both considerations are governed by the limitations contained within Rule of Professional Conduct 1.6. This article explores the tension between the desire to fully vet the economics of a potential lateral transfer and the need to protect client confidences."
  • Disclosing information about client relationships is no simple matter, and must be approached with care. Both the moving attorney and the receiving law firm are subject to ethical limitations on the form and content of the information exchanged."
  • "Before the moving attorney can consider sharing client-specific information—even the identity of the client (if not already publicly known)—the conversations must have progressed to the point where the two parties are ready to discuss specific deal terms."
  • "Unfortunately, many receiving firms do not want to wait until the point at which discussions get to such detail. Instead, they wish to analyze a prospective member's client list, and its revenue-generating potential, at the front end, under the guise of conducting a conflict check. As I mentioned above, the idea is presumably to find out whether it is financially worthwhile to go through potentially protracted discussions leading up to a lateral transfer."
  • "That said, such a request at the outset is improper under Rule 1.6(b)(7), and the moving attorney should resist agreeing to the request. Instead, the attorney should wait until 'substantive discussions' have taken place. That determination is somewhat subjective, but if the parties believe in good faith that they have met the first condition, the moving attorney may reveal the identity of his or her clients as well as such other information as is required by the receiving firm's normal conflict-checking procedures."
  • "Quantifying the potential economic benefit of a lateral transfer is obviously of critical importance to both the moving attorney and the receiving firm. One solution to overcoming the ethical proscription of Rule 1.6 could be to permit the moving attorney to aggregate his or her collections on an annual basis over the time period requested, without identifying which client paid how much."

Tuesday, September 15, 2015

Pro Bono Publico, Pro Conflicts?

Interesting coverage touching on several conflicts issues: "Big law already had a pro bono problem. Then the budget crisis happened." --
  • "A story from the last financial crisis illustrates the conflicts inherent in pro bono work at a big law firm—a nexus of pressures that continue today, when demand for volunteer services is more acute than ever."
  • "Mayer Brown, like most of the country's large firms, represents big banks, including JPMorgan Chase, Citigroup and Bank of America. So representing homeowners trying to halt foreclosures raised the possibility of a direct conflict of interest if the law firm also represented a bank that held the mortgage. It presented an indirect conflict, too: What if the lawyers won decisions that hurt the banks in future cases?"
  • "Such conflicts are bound to arise when attorneys at law firms that generate millions in annual revenue perform work pro bono publico—for the public good. There is no question that asking lawyers at big firms to volunteer their services to the disadvantaged brings real good. But at the same time, tensions exist in the volunteer model, and not just because law firms typically make money through hourly billings. Other factors that influence big firms' pro bono programs are time pressures, the types of cases lawyers choose to take and—as Mayer Brown experienced with foreclosure cases—client conflicts."
  • "Some lawyers say they simply feel freer to do pro bono work when accountable to no one but themselves. Steven Bashaw heads a real estate and foreclosure practice in Lisle, and he defends some foreclosure cases pro bono while training other lawyers to do the same work. His pro bono work was limited when he was a partner at McBride Baker & Coles, a Chicago firm that merged with Holland & Knight in 2002. Conflicts of interest prevented him from representing certain clients. So did the money-oriented culture of large law firms. Bashaw used to 'sneak around' to do his volunteering."

Monday, September 14, 2015

Risk News, Risk Thoughts, Risk Honors

Several updates to share coming out of the recent International Legal Technology Association conference (ILTACON), starting with a personal one:

Acknowledging the conflicts-like irony of taking a moment to self-report, I’m pleased to note that I was honored as the recipient of ILTA’s 2015 Distinguished Peer Award in the category of Vendor Thought Leader of the Year.

Said ILTA Executive Director Randi Mayes:
  • "I’m delighted to congratulate Dan Bressler of Intapp for being honored with the ILTA Distinguished Peer Award for Vendor Thought Leader of the Year."
  • "This award recognizes an exceptional individual who maximizes the value of technology in support of the legal profession, provides quality educational opportunities for ILTA members and ongoing learning to help organizations navigate a complex and changing environment."
  • "Dan has made an outstanding contribution to the community, and I applaud his hard work, dedication and vision."
Having been nominated by a kind soul, I was fortunate to have several members of the legal community from ranks including lawyers, IT leaders, risk leaders and insurance providers put in good words on my behalf as part of the application process.

While it is always exciting to be acknowledged publicly, those individual comments of support were the most gratifying part of the process for me. And those supporters have my sincere thanks. (As do all the participants in the Risk Roundtable, Risk Blog and other programs we produce and support.)

For more information, see the formal announcement.

And now, back to work.

– Dan

Friday, September 11, 2015

"Devilishly Difficult" and "a Lot of Work" – IP Conflicts Contentions

Coming off a short break to attend the excellent ILTA conference (risk news on that shortly), we resume the investigation of all intriguing things risk. Today is another IP day. First off: "Finnegan Takes Swipes in High-Stakes Malpractice Fight" --
  • "The Massachusetts Supreme Judicial Court didn't sound eager Tuesday to rewrite the conflict-of-interest laws for patent prosecution. While that may be good news to the many law firms that joined amicus curiae briefs in Maling v. Finnegan Henderson, it might not be enough to get Finnegan Henderson Farabow Garrett & Dunner off the hook for malpractice in a case where it helped two competitors obtain patents on similar inventions."
  • "Several justices suggested that Finnegan may have breached the standard of care—at least as pleaded in former client Christopher Maling's complaint—by failing to turn up Masunaga Optical Manufacturing Co.'s patent application in a search for prior art. Finnegan says the application was confidential when it did its initial prior art search for Maling, but a couple of justices pointed out it became public a few months later."
  • "Maling's case has caught the legal industry's attention because it presents an early test of state ethics rules after the U.S. Supreme Court divested federal courts of jurisdiction over patent malpractice cases in 2013."
  • "From the court's perspective, reframing the dispute as one of competent prior art searches might have appeal, said intellectual property ethics expert John Steele. That's because drawing up new conflicts rules for prosecuting 'similar' patents would be 'devilishly difficult,' he said. But searching for prior art is no small undertaking, and there's no clear-cut duty to perform searches on an ongoing basis. Some law firms might do it for big institutional clients, in part to win new business, he said. But for one-off inventors on a limited budget, repeated searches are typically 'outside the scope of the assignment.'"
Next comes: "Quinn Emanuel DQ'd From Urban Compass IP Theft Suit" --
  • "Quinn Emanuel Urquhart & Sullivan LLP was disqualified Thursday from representing an ex-business partner of Urban Compass founder Robert Reffkin, who allegedly stole proprietary information, after a former lawyer on the Kirkland & Ellis LLP team representing Reffkin and the rental search business jumped to Quinn."
  • "At a hearing Thursday on the defense's motion, New York Supreme Court Justice Jeffrey K. Oing said Quinn’s offer to provide the court with monthly affidavits attesting that client confidences were being maintained would be 'a lot of work.'"
  • "'A client has an absolute right to have a lawyer of their choosing ... but the facts of this case compel me to go the other way' and grant the disqualification motion, the judge said. 'I can’t sit here and learn what he learned in terms of confidential information.'"
  • "In their bid to disqualify Quinn, the defendants said Myre worked directly on two Urban Compass matters, including the Dorfman suit, and interviewed Urban Compass executives to develop defense strategies. Myre left Kirkland & Ellis in January for Quinn, after preparing Urban Compass’ motion to dismiss an amended complaint, according to the defense. By April, Quinn Emanuel had been retained to work with other plaintiffs counsel on the case."
For additional background on this case, see an earlier story laying out the facts and history.