Thursday, October 29, 2015

On Sometimes Onerous Client Terms and Very Real Law Firm Concerns



Fascinating summary and analysis from Richard Moorhead, Director of the Centre for Ethics and Law and Professor of Law and Professional Ethics at the Faculty of Laws, University College London, on the SRA's recent publication: Independence, Representation and Risk: An Empirical Exploration of the Management of Client Relationships by Large Law Firms: "Out of the Shadows: Are Institutional Clients Influencing Lawyers to the Detriment of Others?"--
  • "The study concentrated on ‘high impact’ [i.e. high risk in SRA terms] commercial firms working.  The essential concern addressed by the research was whether institutional clients were exercising too much influence over the firms they instructed, to the detriment of the public interest and/or the interests of other clients."
  • "The central finding was that all respondents, 'discussed a shift in the balance of power from law firms to clients… [with] major corporates and financial institutions seek[ing] to impose their own terms of engagement on law firms.'  Most interviewees it seemed felt forced to accept terms of engagement dictated inflexibly by the client although some reported routinely and successfully pushing back on unacceptable terms."
  • "Whilst generally the resurgent client is seen as a positive, this report suggests some negatives.  Similarly, one might be tempted, unwisely if taken too far, to discount general grumbles that client procurement practices discourage lawyers from viewing themselves as professionals.  Allied with the concern that lawyers are increasingly thinking of themselves as mere ‘service providers’, the report raises more specific concerns which it seems to me do require careful thought and a considered response."
  • "The first of these is the familiar concern that institutional clients deliberately seek to conflict certain large firms out of litigating against them, whether that conflicting out is merited or not.  Partly this seems to be institutional clients, not entirely unreasonably, taking a broader view of conflicts of interest than law firms would like to take.  There may also be a degree of seeking to transport tougher US rules to UK firms."
  • "A more worrying problem is that (some) clients appear to be seeking terms which (some) firms accept that may affect duties it owes to other or future clients."
  • "The report considers a second set of potential problems including the attempts of clients and firms to ‘add value’ to their mutual relationships through secondments and the like.  As the report puts it there are: '...potential for breaches of confidentiality to arise from client terms –  via inbound secondments, IT and data protection audits, most favoured nation clauses etc – struck us as being high, but our interviewees seemed confident that this risk was being managed appropriately.'"

Wednesday, October 21, 2015

EVENTS: Risk Roundtable sessions set for Sydney and Melbourne


We're pleased to announce our upcoming Risk Roundtables set for Sydney and Melbourne.
 
Our previous events in Australia have been a great way for risk professionals to get a finger on the pulse of what is going on in the risk space both in Australia and other parts of the world. These also provide a good opportunity to understand the latest thinking and solutions available.
 
These upcoming sessions will provide a forum for risk and IT professionals to connect in a collaborative environment. The theme for the event is: "How Much Risk Management is Enough and How Do You Staff the Team?"
 
Presentations will explore trends we are seeing globally in staffing, and how firms are managing client terms and best practices being adopted with Intapp solutions by firms around the world.
 
The Sydney event is set for Tuesday, November 10th at office of K&L Gates LLP. Dion Cusack, Corporate Services Manager at K&L Gates, and Nell McKay, Quality & Risk Manager at K&L Gates, will discuss how their firm is implementing a new Risk and Quality Champion program to improve their risk assessment processes.
 
The Melbourne session follows on Thursday, November 12th at the office of Norton Rose Fulbright LLP. Allison Chong, General Counsel Senior Associate at Norton Rose Fulbright will present.
 
These sessions will also include a short demonstration of an Australian specific version of Intapp Open tuned to the particular drivers and needs of this geography.
 
Attendance is by invitation only and is limited to qualified law firms and personnel. Please contact info@riskroundtable.com for more details.

Tuesday, October 13, 2015

Legal Professional Regulatory Landscape: Change & Innovation (in the US and Canada)



Via the Legal Ethics Forum:"ABA Commission on the Future of Legal Services Proposes Model Regulatory Objectives" --
  • "The ABA Commission on the Future of Legal Services has released this draft resolution and report, which proposes the creation of ABA Model Regulatory Objectives.  The Commission’s cover memo offers the following explanation:
    • As one part of its work, the Commission is seeking comments on a draft resolution and report, which recommends that each state’s highest court, and those of each territory and tribe, use clearly identified regulatory objectives to help (1) assess the court’s existing regulatory framework and (2) identify and implement regulatory innovations related to legal services beyond the traditional regulation of the legal profession. The ABA Model Regulatory Objectives are intended to advance these important goals.
    • The Commission’s final resolution and report will be submitted for consideration by the House of Delegates at the 2016 Midyear Meeting. The comment deadline is October 30.
  • The Commission is also studying other regulatory issues and may propose additional resolutions in 2016.
  • The Commission was established in 2014 by then-ABA President William Hubbard.  Its mandate is to examine how legal services are delivered today and recommend new approaches that “improve the delivery of, and the public’s access to, those services.”  (Disclosure: I am the Commission’s vice chair.)
And from Malcom Mercer comes: "Innovate or be innovated" --
  • "When the Chief Justice of Canada highlights global liberalization of legal services regulation, recognizes that our old monopolies are fading, says that the legal profession must embrace new ways of doing business and that the question is not whether our rules should be liberalized but how, even those most resistant to change must take heed."
  • "On August 14, 2015, Chief Justice McLachlin addressed the Canadian Bar Association annual plenary in Calgary . In her remarks entitled The Legal Profession in the 21st Century, the Chief Justice suggested that the legal profession must ask itself three questions:"
    • First, where does the profession stand as it enters the second quarter of the 21st century?
    • Second, what are the forces that have led to the challenges the profession is facing?
    • Third, against this background, how can the profession move towards the newer world it seeks?

Monday, October 12, 2015

Risk News & Commentary: Lateral Movement & Conflicts



Several interesting updates to share. First: "Negotiating for legal employment with the 'other side' raises ethics issues." Which explores issues tied to lateral movement, rooted in a "ripped from the headlines" incident. (We noted similar themes a few months ago in: "Business Moves, Business Conflicts.")
  • "When you start planning to leave your firm for greener pastures, lots of ethics issues can crop up (bad pun). One of the most acute issues is if you get an offer to join a firm that is on the opposite side of a matter you are already handling. That was the situation in a recent bankruptcy case, In re US Bentonite, Inc., and it led the court to order the firm representing a Chapter 11 debtor-in-possession to disgorge several months’ worth of fees. The firm avoided disqualification, however, in part because the lawyer’s new firm had screened him."
  • "The scenario that the court dealt with in In re US Bentonite, Inc. — negotiating for a job with counsel representing the opposing party — is not unique to the bankruptcy context... In 1996, the ABA ethics committee considered it in Formal Op. 96-400, concluding that 'a lawyer’s pursuit of employment with a firm or party that [the lawyer] is opposing in a matter may materially limit [the lawyer’s]is representation of [the] client, in violation of Model Rule 1.7(b). Therefore, the lawyer must consult with [the] client and obtain the client’s consent before that point in the discussions when such discussions are reasonably likely to materially interfere with the lawyer’s professional judgment.' The more involved the lawyer is in the client’s matter, the more likely it is that a material-limitation conflict will arise."
  • "Comment [10] to Rule 1.7 echoes the committee’s advice: 'When a lawyer has discussions concerning possible employment with an opponent of the lawyer’s client, or with a law firm representing the opponent, such discussions could materially limit the lawyer’s representation of the client.”  See also ABA Formal Op. 09-455 (Oct. 8, 2009), “Disclosure of Conflicts Information When Lawyers Move Between Law Firms.'"
  • "In Bentonite, the debtor’s firm avoided disqualification based at least partly on the fact that the migrating associate’s new firm apparently screened him when he arrived. (The court’s order says that the new firm 'shall continue to screen' the lawyer from the case.)"
Next, a few conflicts updates to share. "Where There's A Will, There's A Conflict" --
  • “The Nebraska Supreme Court has publicly reprimanded an attorney for a conflict of interest in representing both a testator and a potential beneficiary… The attorney admitted the misconduct.”
And from Bill Freivogel:
  • N.C. State Bar v. Merrell, 2015 WL 5795667 (N.C. App. Oct. 6, 2015). The state disciplinary agency ordered Lawyer suspended, in significant part because he represented both lenders and borrower in a real estate development deal. In this opinion the appellate court affirmed. The facts are complex. The court found “guidance” in a North Carolina ethics opinion, N.C. Op. 2013-14 (Jan. 2015) (“2015 FEO 14”). Opinion 14 found Baldasarre v. Butler, 625 A.2d 458 (N.J. 1993), instructive, and concluded that a lawyer may almost never represent multiple parties in a commercial real estate closing.

Wednesday, October 7, 2015

In Conversation: Fresh Approaches to Intake and Conflicts


In the latest edition of In Conversation, Pat Archbold, head of Intapp's risk practice group moderates a panel discussion with several industry experts, exploring current trends in new business intake and conflicts management.

Participants:
  • Curtis Russell, Aurora North Software
  • Terry Coan, HBR Consulting
  • Eric Mosca, InOutsource
  • Meg Block, Intapp

Sample:
  • Pat: We've got a great panel today. I've got the easiest job — I just have smart people say smart things and guide the dialogue. The panel is going to talk about some of the drivers, the trends, things they're seeing to give you a sense of a broad spectrum of what's happening in this space. For one, things are getting riskier out there. We're going to talk about some of the risks and how people are responding.
  • We are seeing an increase in malpractice suits, conflicts of interest malpractice suits.
    Out of Am Law 200, in 2007, 92 cents out of every dollar was collected. By 2014, it went down about 8.5%. That's pretty significant. I don't want my income going down 9% over that time frame. You're seeing expenses rise, realization going down. On the demand side, things are relatively flat. And over the past four years pre-negotiated discounts and AFAs continue to climb significantly. The price pressure in most markets is very real.
  • What we're really going to try to talk about today is not just the risk management issues, but the financial issues. How do we start to help the firm really improve financial performance as they look at the matter intake process in general?
  • What do we do about that?
Click to read the full article and discussion.