Wednesday, November 11, 2015

Risk Potpourri (Conflicts, Laterals, Screening & More)



Conflicts (in perspective):
An interesting and accessible summary from Mark Herrmann, Chief Compliance Officer at AON on law firm conflicts: "The Unspoken Differences Between Biglaw And Small" --
  • "Things don’t work quite that way at large firms. When Michael gets the call from his client who wants to be adverse to BigCo, Michael says, 'Thanks for calling me about this. I’d be delighted to represent you, but I can’t commit to handling the case until I check conflicts. Please don’t tell me anything more about the case. I’ll run a conflict check and get back to you as soon as possible.'"
  • "Michael then asks a conflict-checker to do the necessary search of the conflicts database. The computer searches for “BigCo” and “Big” and “Co”; and all corporate entities that have those words (or fragments) in their names; and parents, subsidiaries, and affiliates of all those corporate entities. Two hours later, Michael receives a 53-page spreadsheet with the names of all current clients, former clients, and potential future clients whose names the computer generated. The list is broken down not just by client name, but also by individual matter, and many matters were handled by different 'responsible partners' at various of the firm’s 30 offices around the globe."
  • "Michael dutifully sends out emails to the partners responsible for every matter that might create a conflict. A couple of those partners are in trial, and a few are on vacation, and one no longer works for the firm (but no one ever bothered to tell Michael). The guy in the Taipei office (who Michael has never met) naturally refuses to answer emails, despite many nudges."
  • "Three weeks later, Michael can at last return the call to his client, happily reporting that he can take the case. To which the client responds: 'Thanks very much. We got a TRO on the afternoon that I called you, and the preliminary injunction hearing is set for this coming Monday. As you might imagine, this implies that we retained other counsel. But we’ll be sure to think of you the next time something comes up.'"

Laterals (of the departing variety):
We previously noted Virginia’s rule about how departing lawyers and firms can and cannot communicate with clients during the metaphorical divorce process. One California firm takes issue with the possibility of such rules proliferating: "Are Recent Ethical Rules that Establish Attorney Notification Protocols For Departing Attorneys Really in the Best Interest of the Clients?"
  • "However, will this new Virginia rule, and similar notification rules that may be contemplated by other states, significantly change how law firm departures are handled? More importantly, will these rules promote a policy that is in the best interest of clients?"
  • "This well-intentioned attempt to force lawyers and law firms to cooperate surrounding an impending attorney departure seems to ignore the practical reality that most partnership or shareholder agreements, especially within larger firms, already have contractual provisions that govern what departing attorneys can or cannot do with respect to communicating with clients regarding their departure. These agreements, which many consider some form of adhesion contracts, are not subject to negotiation by the incoming partners or shareholders, and often become take-it-or-leave-it propositions."
  • "In California, as in most states, attorneys have fiduciary and ethical duties to keep their clients “reasonably informed about significant developments relating to the employment or representation.” (Cal. Rules of Professional Conduct, Rule 3-500.) This rule has been interpreted as imposing an obligation on the partner to inform clients (those firm clients with whom the attorney has significant contact) of his/her departure from a firm as soon as practical to allow clients to make a choice in counsel and provide for a smooth transition in order to avoid prejudice to clients."
  • "To codify the joint notice requirement, but to leave open the possibility that partnership or shareholder agreements can simply contract around it, renders it mostly meaningless. It increases the likelihood that law firms will seek to notify clients of a withdrawing partner’s departure first, not jointly. It also creates a heightened tension for departing attorneys who are trying to comply with applicable ethical guidelines during this process, but have various, and sometimes competing, provisions in their partnership agreements to balance."

Screening (shields up)

"D.C. Adopts Screening To Avoid Imputed Disqualification" --
  • "Major news from the Nation's Capital. The District of Columbia Court of Appeals has amended its Rules of Professional Conduct to permit screening to avoid imputed disqualification under Rule 1.10."

Security (another firm touting certification)

"Goodwin Procter Achieves Prestigious ISO 27001 Certification for Information Security Management System" --
  • "'At Goodwin, protecting the security and confidentiality of client and personal information is a top priority,' said David Fleming, the firm’s Chief Information Officer. 'We are pleased to be recognized among the small group of law firms that are certified against the stringent ISO 27001 standards.'"

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