Wednesday, September 21, 2016

VIDEO INTERVIEW: Discussing Risk (Trends, Conflicts, OCGs & More)

VIDEO: "Law Firm Risk Discussion" -- At the recent ILTA conference, I had the pleasure of sitting down with Mike Guernon, director of new business and conflicts at Orrick, and seasoned Risk Roundtable veteran. This was part of the conference's "ILTACON TV" program.

(Alas, I don't they've quite closed the deal to secure Netflix streaming, so this is an internet-only affair... though, I did suggest jazzing up the introductory credits ala "Stranger Things" or "True Detective." Breaths will not be held on that front.)

In the video, we cover a variety of topics, including risk trends, conflicts management, risk staffing, outside counsel guidelines and more.

It's about a 20 minute episode. No commercial breaks. No snarky parenthetical comments, which are reserved for blog readers only. (We'll see if any networks decide to pick us up for season two... or series two, for our international readers. >smile<)

Tuesday, September 20, 2016

Information Security: Certification, the Cloud and Clients

Two interesting security updates to share. First, Philip N. Yannella, Partner and co-leader of Ballard Spahr’s privacy and security group, writes: "Law Firms Are Seeking Data Security Certification (Perspective)" --
  • "In the wake of a number of high-profile data breaches involving law firms — including the recent Panama Papers breach — many U.S. law firms are moving toward obtaining ISO data security certification."
  • "Law firms did not consider ISO certification necessary to the practice of law. But now, as hackers take aim at the legal profession, many law firms are obtaining ISO certification in order to reassure their clients that the firm’s data security practices are adequate. Some firms are using ISO certification for business development purposes — as a means of differentiating themselves from other law firms."
  • "Since that time, the cyber threat landscape for law firms has increased. In March 2016, The Wall Street Journal reported that the FBI was investigating a series of data breaches involving major U.S. law firms, including Weil Gotshal & Manges and Cravath Swain & Moore. Reports indicate that hackers were targeting sensitive client information concerning upcoming deals."
  • "The coup de grace occurred in April 2016, when the Panama law firm Mossack Fonseca was hacked in the infamous Panama Papers attack. It resulted in the public release of more than 11 million documents, detailing the formation of off-shore accounts and other questionable, if not illegal, financial activities of international politicians, business people, and celebrities to shield income from taxation."
  • "To improve their data security practices, and provide assurance to jittery clients, many Am Law 100 law firms are seeking ISO certification. A March 2015 ILTA survey found that 18 law firms had obtained ISO certification, and that another 30 were in the process of obtaining the certification. It is likely that these numbers have increased since then. Many law firms are using the ISO certification for marketing purposes, touting the firm’s commitment to ensuring the same level of data security as their clients."
  • "The trend toward ISO certification is not likely to abate as long as law firms continue to be targets of hackers. In the future, obtaining ISO certification may be like obtaining malpractice insurance for law firms — a cost of doing business."
Expert Discussion (video):
One area often catalyzing security discussions is the cloud — where some see risk, others see potential advantage (shifting the burden of security management to dedicated vendors). The cloud also raises questions of control and jurisdiction. Here is an interesting video discussion, delivered by Microsoft's own legal team, which explores: cloud security, privacy & control, compliance and transparency.

Monday, September 19, 2016

Conflicts News: Consistently Checked, Sides Switched

Randy Evans and Shari Klevens, Dentons US partners remind us: "Consistent Conflicts Checks Are Critical" --
  • "Most lawyers dread the process of checking, evaluating and resolving conflicts of interest. Perhaps it's because 'conflicts' issues seem to focus on why a lawyer must (or should) decline a new representation rather than how to get the business in the door. And yet unidentified or unresolved conflicts cost lawyers and their firms clients, money, and headaches."
  • "Given the demands of modern legal practice and competition for new business, it is far easier to immediately undertake a new representation when a potential client walks in the door without performing even a rudimentary conflicts check. But when it comes to conflicts, haste really does make waste."
  • "Developing a conflicts system is relatively painless, but implementing and complying with it 100 percent of the time is challenging. As luck would have it, the one representation that escapes the system could be the one that creates the most problems. Oftentimes, the reasons for pushing aside the conflicts process for that one representation (too important, too complicated, too rushed) are the same reasons the conflicts analysis was so imperative."
Next up: "Polsinelli Hires Trigger Attys' DQ In Texas Employment Suit" --
  • "A Texas federal judge blocked Polsinelli PC and Novak Druce Connolly Bove & Quigg LLC attorneys Thursday from representing two plaintiffs with a breach of contract and employment suit against Parker-Hannifin Corp., saying that lawyers switching sides have created a conflict of interest."
  • "In considering Parker’s request for the removal of opposing counsel, the judge disagreed with the company’s argument that there were substantial similarities between work Novak Druce had done for the plaintiffs in the sale of their company and transfer of assets to Parker and the intellectual property matters Novak had handled for Parker."
  • "But U.S. District Judge Gray Miller said there was a reasonable chance that information held by Novak Druce from prior patent work for Parker would be used to the company's disadvantage in the current case, which includes a claim carrying potential damages that would be pegged to the value of the patents."

Sunday, September 18, 2016

EVENT: Law Firm General Counsel Summit (Portland, Oregon)

Portland, November 3 & 4: Law Firm General Counsel Summit [brochure] [registration] -- Hosted by Holland & Knight's Legal Profession Team, this summit is designed for the general counsel, ethics counsel or managing partner of small to midsize law firms.

Attorneys from Holland & Knight's Legal Profession Team, including Chris Cwalina, David Elkanich, Peter Jarvis, Allison Martin Rhodes, Calon Russell and Dayna Underhill, together with other industry practitioners, will lead interactive discussions to provide relevant and practical insights into the unique challenges of managing risk at firms employing between 30 and 250 lawyers.
  • Sessions on Day 1, November 3, will focus on substantive training and fundamentals of the position, recognizing that many lawyers who fulfill leadership and general counsel positions in small to midsize firms lack specific experience or training in the field. We call this "The Academy."
  • Sessions on Day 2, November 4, will be a roundtable format led by our faculty to discuss the broader common issues facing both the seasoned leaders and those new to the position. Our goal is to foster collaboration and the exchange of best practice strategies for the issues common to our attendees.
See the complete agenda for more detail on content.

Event sponsors: Holland & Knight, Intapp, Oswald Law, Paragon, Proquest.

This is a third-party event and a registration fee applies. CLE credit will be available (subject to the usual caveats across jurisdictions).

Thursday, September 15, 2016

Disqualification Discussions, Part Deux

  • "A California judge rejected Friday [Aug 19] a former SpaceX welder’s bid to disqualify Orrick Herrington & Sutcliffe LLP from defending the aerospace company in her sexual harassment suit, saying there’s no evidence the firm did anything wrong in contacting the plaintiff's expert about working in another case."
  • "Before Friday's hearing began, Los Angeles Superior Court Judge Michael P. Linfield issued a written tentative ruling indicating he would deny plaintiff Zhoei M. Teasley's motion to recuse Space Exploration Technologies Corp.'s lead trial counsel, Orrick partner Lynne Hermle, because the firm had contacted Teasley's expert, Michael Robbins, about potentially working on a case in the future. Judge Linfield wrote that no case law presented by either side stands for the proposition that “any communication” between a party's expert and their opponent, in itself, is enough to warrant recusal."
  • "Parks [opposing counsel] said that Robbins was in discussions with Orrick about consulting on upcoming matters, and that even if he hadn't been formally retained in those cases yet, it still created a problematic relationship — one that Orrick had refused to divulge the details of."
  • "Judge Linfield said the fact that Orrick might have reached out to the expert previously about the potential of hiring him in the future simply wasn't enough evidence to show there was a relationship between them. The judge said that if Robbins had told Parks that he'd spoken to Orrick about the instant suit, it would be 'a totally different situation,' but that there wasn't any evidence of that, 'and that lack of evidence is telling to the court.'"
  • "Live Face on Web LLC urged a Pennsylvania federal judge Thursday to sanction and disqualify Venable LLP from representing the digital marketing company it is suing over a video software licensing agreement, saying the firm previously promised not to represent any party in the case."
  • "LFOW told U.S. District Judge J. Curtis Joyner that Venable is representing The Control Group Media Co. Inc. only because it has firsthand knowledge of LFOW’s copyright litigation practices. LFOW said Venable acknowledged a conflict of interest in a related matter in 2014 and at that time promised not to provide counsel to either side."
  • "'Venable expressly concluded a conflict existed that barred the representation of any party in this case in 2014, but has now entered this case just in time to share LFOW’s settlement strategies and privileged information with defendants at mediation.'"
  • "In its motion, LFOW said a Venable partner responded to its original letter in 2014 informing Control Group of copyright infringement. However, at the same time, Venable represented LFOW in two similar cases. Venable decided to sever ties with LFOW, Control Group and Instant Checkmate, indicating it would not represent or give legal advice to either party, LFOW said."

Wednesday, September 14, 2016

Disqualification Discussions

Via the New York Law Journal: "Big Firm/Small Firm—Size Matters for Attorney Disqualification" --
  • "When it comes to imputing conflicts of interest, size really does matter. This much is clear from two recent decisions of the U.S. District Court for the Southern District of New York. At one end of the spectrum, Judge Naomi Reice Buchwald disqualified a small firm, notwithstanding the firm's immediate creation of a substantial ethical wall when a lawyer with a conflict joined the firm. At the other extreme, Judge Jed S. Rakoff denied a motion to disqualify where a large firm concurrently represented both sides of a litigation, notwithstanding his finding that the firm had violated ethical rules and had been grossly negligent in failing to conduct an adequate conflict check."
  • "In contrast to Judge Buchwald's treatment of the small firm in Energy Intelligence Group, Judge Rakoff denied a motion to disqualify a large national firm in Victorinox v. The B & F System,4 where attorneys within the firm had represented opposing parties, albeit in different matters, without a formal screen."
  • "In November 2015, the defendant's Locke Lord lawyer in Texas received an internal email related to the New York litigation and recognized the conflict. He consulted with the firm's ethics partner, and sent a letter nearly a month later to the defendant terminating the representation, ostensibly for economic reasons, without mentioning the conflict of interest. The firm did not set up an ethical wall, and the Texas lawyer testified before Judge Rakoff that he set up his "own wall" separating himself from the New York lawyers in Locke Lord representing plaintiffs."
  • "Citing Hempstead Video, Judge Rakoff began his analysis with the observation that "[c]oncurrent representation of parties on opposing sides of a litigation is a prima facie conflict of interest." He found that Locke Lord's representation was a violation of the New York Rules of Professional Conduct, specifically Rule 1.7, and the court's Local Rule 1.5(b)(5). He went on to hold that these violations resulted from gross negligence because, when merging with the firm that originally represented plaintiffs, Locke Lord had limited its conflict check to matters on which that firm had billed $100,000 or more in one or both of the previous two years. Judge Rakoff remarked that the firm never completed a full conflict check "because the firm decided it was just not worth it to comply with its ethical obligations.""
  • "Finally, Judge Rakoff held that the letter from the Texas lawyer terminating the representation of the defendant was "misleading on its face," inasmuch as it cited economic reasons for ending the relationship when the conflict was the precipitating factor."
  • "Notwithstanding his obvious displeasure with Locke Lord's conduct on multiple scores, Judge Rakoff concluded that the Texas lawyer's conflicts should not be imputed to the New York team representing the plaintiffs and denied the disqualification motion. He found no evidence that there had been any exchange of pertinent information between the Texas lawyer and the New York lawyers representing plaintiffs, despite the presumption that the conflict should be imputed to the firm as a whole. Judge Rakoff also found, without elaboration, that the matters on which Locke Lord represented the defendant in Texas were "very substantially different" from the matter on which it represented the plaintiffs in New York. Finally, he was swayed by the fact that no present conflict existed because the concurrent representation ended in December 2015."

Tuesday, September 13, 2016

EVENT: Risk Roundtable (New York, OCG Focus)

We're pleased to announce the first of several upcoming Risk Roundtables focusing on outside counsel guideline / terms of business management. The event is taking place on Wednesday, September 21st in New York, and features:

  • Anthony Davis, Partner at Hinshaw & Culbertson LLP, who will provide an overview of how outside counsel guidelines present ethical dilemmas, as well as other risks, to law firms. He will also dive into the countless options firms have to combat these risks.
  • Eric Nerland, Risk Practice Leader for Professional Services at Intapp, who will focus on the increasing compliance pressures being imposed by clients and how a firm can deliver on key client commitments. He will also share a short update on Intapp Open terms of business management system, a solution that helps firms finally manage, centralize, classify and report on client terms, RFPs and communications in a structured fashion.
And, as always, we’ll have plenty of time for open discussion, peer exchange and networking.
Attendance is by invitation only and is limited to qualified law firms and personnel. Please contact for more details.

Monday, September 12, 2016

On Conflicts: The "It’s Just Business" Update

It's time for business. The ABA/BNA Lawyers’ Manual on Professional Conduct reports: "Market Rivalry Isn't ‘Materially Adverse' Conflict"
  • "Lawyers aren't precluded from accepting a litigation matter just because the new client and a former client have generally competing economic interests, the New York state bar's ethics committee advised July 15 (New York State Bar Ass'n Comm. on Prof'l Ethics, Op. 1103, 7/15/16)."
  • "An attorney who previously represented a corporation can handle a new client's suit against another company, even though the former client and the new client are marketplace rivals and it would be in the former client's interest for the new client to lose the suit, the committee advised."
  • "The opinion addresses a conflicts question on which there's scant authority—that is, whether it's 'materially adverse' under the rule on former-client conflicts to handle litigation against a third party when the outcome would economically help a former client's competitor. The committee said no. General economic adversity poses neither a current-client conflict nor a former-client conflict, it advised."
  • "Because a lawyer may simultaneously represent current clients who are economic competitors, it follows even more so that a lawyer may subsequently represent a client whose economic interests are contrary those of a former client, the committee said."
  • "The committee said that Rule 1.9(a) would prohibit the attorney from defending current client B in the lawsuit brought by former client A if the current representation is substantially related to the former representation of A. This is because the “materially adverse” prong of Rule 1.9 is always met when a former client is on the opposite side of a lawsuit involving a substantially related matter, it said."

Thursday, September 8, 2016

Conflict Best Practices: Centralization Rules

We've seen a general trend of firms moving to centralize conflicts teams and overall management. Here's the latest on this: "3 Ways Law Firms Can Avoid Conflicts Of Interest" --
  • "Law360 spoke with experts who shared advice on how to avoid such dilemmas. High-performing firms generally centralize the management of client intake and conflicts, according to Kent Zimmermann, a leading adviser on strategic growth planning at Zeughauser Group LLC. Although some firms pride themselves on being entrepreneurial and allowing partners to make the call on which clients to take or not, higher-performing firms realize that there are benefits to control, he said."
  • "'While many partners thinking about their individual interests are happy to bring in a client that benefits their own practice, it's in the firm's best interest before agreeing to work with a client that there's a view of the pluses and minuses of taking that client for the firm over time,' Zimmermann said."
  • "Firms often have a committee that oversees intake, and it's often to firms' benefit to keep those committees really small, Zimmermann said, since intake can be time-sensitive. He noted that firms should not only look at whether there's a present conflict with a potential client but also whether there could be future conflicts that could cause firms to lose money by having to pass up compelling relationships or other matters later on."
  • "Since certain companies, especially in the high-tech industry, don't want law firms to work for their competitors, according to Michael Rynowecer, president of BTI Consulting Group Inc., the most important thing a law firm can do to avoid a conflict of interest is to make sure they're in dialogue with their client so that there's no surprises on either side."
See the complete article for details on the other two recommendations: Be in Dialogue With Your Clients Think Institutionally.

Wednesday, September 7, 2016

Musical Conflicts: Tik Tok / Hear Me Roar

A few conflicts allegations making noise in the media. (Given the pop culture nature of the players involved, we now find ourselves linking, quite certainly for the first time, to reporting from “Teen Vogue.”)

Judge Who Tossed Out Kesha’s Dr. Luke Case May Have Had Conflict of Interest --
  • "Kesha has been going through a lengthy legal battle with Dr. Luke, in which she accused him of sexual assault. Earlier this month, it was reported that she dropped all charges against him and is choosing to focus on her music. Kesha explained to fans how she isn't going to let anything get in the way of her dreams and is happy with her decision to tour with her new band Kesha and the Creepies."
  • "However, reports are coming to light that the judge who dismissed her case in April may have had a conflict of interest. According to the New York Post, it appears New York Supreme Court Justice Shirley Werner Kornreich is married to Ed Kornreich, a partner at the Proskauer Rose law firm, whose clients include Sony/RCA Records — which own Dr. Luke's Kemosabe record label."
  • "'Judges are required under the New York state canon of judicial ethics to avoid even the appearance of impropriety,' legal expert Troy Slaten told E! News. 'This means judges are not supposed to preside over cases where they have an actual or potential financial interest in the outcome. The rules go so far as to say that even somebody in the judge's family should not have a financial interest in the outcome of litigation.' He went on to say, 'Kesha's lawyers could now be in a position to seek that every ruling of this judge be redone by a new neutral and impartial judge who does not suffer from potential or actual bias. Basically, Kesha can probably get a do-over if she wants.'"
Note: They Daily Mail observes: “Ed Kornreich does not do any sort of entertainment law and is instead head of  the Health Care Department at Proskauer Rose... What's more, it was also lawyers from Proskauer Rose who represented Kesha herself back in 2011 when she and Dr. Luke were being sued for breach of contract by her former managers.”

Next on the playlist: "Hard Candy Wants Jones Day Out Of Katy Perry Makeup Suit" --
  • "Cosmetics maker Hard Candy urged a Florida federal court Thursday to disqualify Jones Day as opposing counsel in a trademark suit over the design of Procter & Gamble's Katy Perry CoverGirl products, citing the firm's hiring of an attorney who previously handled its trademarks."
  • "In a motion to disqualify, Hard Candy LLC pointed to Jones Day's July 25 hiring of Erika Handelson two weeks after she resigned from law firm Coffey Burlington PL, which is representing the cosmetics company in the current matter. Having worked at her previous firm for five years, Handelson served as a 'key associate' for Hard Candy's trademark matters, including being listed as attorney of record with the U.S. Patent and Trademark Office for the trademarks at issue in this case, according to the motion."
  • "Handelson, who resigned from Coffey Burlington prior to the July 18 filing of the case, has not made an appearance for either side, but Hard Candy says she was involved in multiple discussions with Groisman regarding the suit, including legal theories underlying its trademark infringement claims and a review and analysis of both the allegedly infringing products and Hard Candy's products. She also had been responsible for day-to-day monitoring of Hard Candy's trademark holdings and took part in related litigation and strategic discussions on the strength of its trademarks."
  • "The lawsuit claims that beginning in spring 2016 The Procter & Gamble Co. infringed a number of Hard Candy’s design trademarks for lipstick and eyeliner products with a line of 'Katy Perry CoverGirl' products that use similar visual cues on the lipstick tubes."

Tuesday, September 6, 2016

Have Risk (Trends Report) Will Travel

A reader sent word noting the publication of the 2016: “Legal Innovation and Risk Management Report” published by Traveler’s and The Lawyer.
  • "It’s worth reflecting on why innovation is important. The first driver is external. Clients are increasingly demanding more competitive fees, greater choice when it comes to fee arrangements and of course a great service. Innovating, whether that be investing in technology, offering alternative fee arrangements or flexible working, can help address these client demands."
  • "The third driver is regulatory. Increased awareness of certain risks, including cyber-attacks, may result in increased attention by regulators. A certain amount of innovation, for example regarding management structures and internal controls, is then required to ensure compliance."
  • "Indeed 37% of surveyed UK law firms pinpointed ‘use of technology’ as their most innovative initiative in the last three years, more than double the number that stated any other area of innovation."
  • "Why are firms investing in new technology? Survey participants mentioned a huge number of reasons from improving conflicts and client management to marketing and business development."
  • "We also asked firms what the most innovative technology they have adopted is in the last three years and what benefits this has had. Some notable trends emerged. A large number of firms mentioned they had adopted technology or software to improve the efficiency and accuracy of case management, document management, billings management, conflicts management and risk management:
    • "Intapp Open. This product has transformed the way we take on new clients to create a more streamlined and effective system that is more compliant and has helped bring the firm up-to-date with technology.”
    • "Use of technology to manage file opening and deal with risk management of a matter from the outset. The benefit is seen in the reduced level of notifications."
    • "A new client inception programme (still being implemented). Benefit is a single end-to-end client take-on process which encompasses client due diligence, credit checking, billing regime, terms of business through to a letter of engagement."
    • "Conflicts Management (Intapp) - modernised and centralised conflict clearance."
    • "Use of cloud to enable remote working and collaborative work."
    • "AI for legal process management. Uniform and efficient integration of knowledge into legal delivery processes, delivering fixed fee work with greater certainty across practice streams."
The full report covers related areas including managing a remote workforce, outsourcing, innovating in management structures, and evolving business models. It also explores client attitudes and drivers  shaping firm innovation and risk management:
  • "Clients are focussing far more on efficiency and innovation in their firms, independent of whether this drives costs down for them. They want to know their strategic partners are innovative and efficient and to learn from them to improve the position of the in-house team and organisation as a whole. This is perhaps unsurprising given the expanded, strategic role of the GC in clients."