Thursday, March 30, 2017

REPORT: NY Risk Roundtable

We recently held a Risk Roundtable meeting in New York, graciously hosted by our colleagues at Cravath and co-sponsored by HBR Consulting. Pat Archbold, head of Intapp’s Risk Practice Group sent in highlights and thoughts:
  • Engaging and open discussion last week in New York. For conflicts management, there is a considerable level of interest among the firms in moving for a more centralized conflict clearance model. One firm that recently decided to centralize has hired a non-practicing lawyer to pilot this clearance approach with a small group of early lawyer adopters, with plans to expand service in 2018.
  • As part of that broader roll out, it will hire more lawyers on the conflicts review team. But by its calculations the financial benefits of centralization in terms of reduced risk and improved client vetting will more than pay for the investment.
  • Discussion turned to appropriate conflicts staffing levels (an area we’ll be revisiting at Inception in May). Generally, firms see non-practicing lawyers as best suited for analyst roles. One firm explained that they have different levels of staff aligned and mapped to specific scenarios. For example, one class of analyst conducts “first pass” review of patent matters, asbestos cases and restructuring matters, with the preliminary results then escalated and reviewed by non-practicing lawyer-analysts.
  • With firms looking at risk more broadly, including financial risk, one organization highlighted efforts to address time leakage. They explained that their firm has implemented a system where lawyers receive progressively increasing financial penalties for every week time entries are delayed, with monies gathered donated to charity. In addition to raising funds for good causes, the firm reported a materially positive impact to the bottom line.
  • There was a good discussion around the different types of third-party content that firms are incorporating in to their business intake process. In addition to corporate tree data, firms discussed how they are incorporating financial content to better assess financial risk in the onboarding process to help improve realization and reduce extended receivables.
  • One firm was kind enough to share some screen shots of how they are incorporating financial data in to their onboarding software and process.
  • There was also great discussion on improving client data captured before, during and after the on-boarding process to leverage that information for future business development efforts. One firm shared how they use Intapp Open to kick off a knowledge capture process after deal closing that then gets leveraged in pitch development by their business development team.
  • To capture this level of detail, firms discussed about how they assign associates, staff, or in one case professional support lawyers to capture this knowledge. Some firms assign an associate at matter opening, one firm is reviewing time entry data and looking for the associates that billed the most time to determine who would be best to able to articulate the specific details on an engagement. Overall I would say that there is more happening in this space among NYC firms than I have seen in the past.
  • One firm described how workflow managed by  Intapp Open, used for business intake, feeds a global experience management database used to prepare the firm for pitches. This is a natural alignment across intake and business development (which we’ve been investing in supporting with our experience management solution). All of that internal and external data on new matters has tremendous value for business development, pricing and targeting of future new business.


Wednesday, March 29, 2017

EVENT: Risk Roundtable in San Francisco

Our next Risk Roundtable event as co-sponsored by ILTA and will take place on Wednesday, April 5th at the San Francisco office of Morrison & Foerster.
  • Allison Martin Rhodes, Partner at Holland & Knight, will provide an overview of the common business intake practices firms at varying firm size bands are using to evaluate new clients and matters with procedures that fit the firm’s size, makeup and resources —  and the supporting internal firm process needed to streamline and enhance these approaches to benefit both firms and their clients.
  • Meg Block, Vice President of Risk Consulting at Intapp, will focus on the increasing ethical and business conflict principles that are driving firms to rethink their “conflicts clearing” process. 
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.

Tuesday, March 28, 2017

For the Record: Records Management System Swap Outs Continue (Latest Example)

Legal IT Insider Reports: "Nelson Mullins Riley & Scarborough, LLP Selects FileTrail for Its New Records Management Solution" --
  • "FileTrail, a leader in information records management software for the enterprise, announces Nelson Mullins Riley & Scarborough, LLP has signed a multiyear contract. A large-scale, South Carolina-based law firm, Nelson Mullins will deploy FileTrail to manage its physical records and its information governance policies, as well as retention and disposition workflows for both electronic and physical records."
  • "According to John Churchill, Nelson Mullins’ Records Department Manager: 'Our team did a lot of research to find a records management solution to replace LegalKey, which isn’t fully supported anymore. We needed to move to something that was more dynamic and specifically designed to meet the needs of a large law firm. FileTrail really fit the bill.'"
  • "With 17 offices and over 500 attorneys, Nelson Mullins explored several possible records management options to make sure that its next solution aligned with its software needs: 'After evaluating numerous solutions, we kept coming back to FileTrail. In addition to its focus on law firms, what really made it stand out from the competition was its integration with NetDocuments. While other records management solutions were only in the process of developing that functionality, FileTrail has a longtime relationship with NetDocuments. That integration was its biggest selling point. FileTrail’s interface is very similar to NetDocuments, which will make it easy to use right from the start,' said David Worth, CIO of Nelson Mullins."
  • "Nelson Mullins worked closely with FileTrail to make sure the features and functionality met the law firm’s specific needs. InOutsource, a trusted information governance consulting company, is handling the implementation of FileTrail."
  • “FileTrail is the best choice for law firms looking to move to a new platform. Our solution uses the latest technology, can integrate with leading document management systems in the legal space and has a variety of unmatched information governance features. Other records management systems depend on older technology that still requires desktop installation and has little depth in terms of integrating with information governance requirements. You need to look at FileTrail before you replace your current old system with another old system,” said Darrell Mervau, president of FileTrail.

Monday, March 27, 2017

More Detail on Conflicts-driven Departures

"Breakaway Lawyers From Kasowitz Firm Point to Conflicts Dispute" --
  • "A group of lawyers known for celebrity divorces surprised the legal industry last spring when they announced they would leave the New York law firm led by Marc E. Kasowitz, a longtime lawyer for President Trump, after two decades at the firm. Now, the lawyers say their departure resulted from an internal dispute over conflicts of interest."
  • "They point to a ruling this month that disqualified the firm, Kasowitz Benson Torres & Friedman, from representing an opponent of the Georgetown Company in a $35 million real estate dispute because the law firm already represented one of Georgetown’s principals, Joseph B. Rose, in a divorce case."
  • "Ms. Alter’s practice was one of the few such family practices at a large law firm, where conflicts can occur between the business dealings and the private lives of the wealthy. Typically, a memo is circulated among all the partners of a firm to ensure there are no conflicts in taking on a new case. But, according to the legal papers, that was not done in Mr. Rose’s case, even though he had been a client for some time."
  • "The position of the Kasowitz firm, according to legal documents, was that there was no conflict between representing Mr. Rose’s personal dealings and representing his adversary in the legal dispute over a fee for development rights for a property in Manhattan’s Chelsea neighborhood."
  • "In the ruling this month detailing the disqualification efforts on both sides, Justice O. Peter Sherwood of the New York State Supreme Court sided with Mr. Rose, noting that his Kasowitz lawyers had 'been privy to Rose’s personal and financial information, including information about Georgetown and the fees at issue in this litigation.'"

Sunday, March 26, 2017

Conflicts Check Called Cause of Considerable Consequence

"Whoops! Client Conflict Check Creates $4B Merger" --
  • "Did a Big Law partner’s conflict check accidentally tip off a buyer to a deal in the works and result in one of the biggest media mergers of 2016? That very well could be the case, according to a letter that Comcast general counsel Arthur Block wrote to the Securities and Exchange Commission."
  • "Comcast purchased Dreamworks Animation SKG in April 2016 for roughly $3.8 billion in total. But that deal might never have come to pass if Comcast’s outside counsel at Davis Polk & Wardwell hadn’t called to make a routine conflict-check and accidentally spilled the beans that an Asian investment firm was on the verge of buying Dreamworks, according to Block’s letter. Neither Block nor anyone at Davis Polk & Wardwell are accused of any wrongdoing."
  • "According to the letter, Comcast’s outside lawyer William Aaronson at Davis Polk, learned on April 10 that the head of M&A at his firm, George R. Bason, Jr., was angling to represent one of the financial firms advising Dreamworks on its potential sale to an Asian private equity firm. Knowing that his client, Comcast, posed a possible conflict in such a representation, the next day, Aronson called a Comcast executive Robert Eatroff, who handled global strategy, to get permission for the firm to advise on the matter."
  • "According to the SEC complaint, on April 13, Comcast CEO Brian Roberts contacted Dreamworks about a possible sale and by April 28, a deal had been approved by Dreamworks’ board: Comcast paid $41 per share, beating the Asian private equity firm’s offer to pay $35 per Dreamworks share."
The LA Times provides more detail on the mechanics and speed of the deal itself: "How thhe Comcast DreamWorks deal came together so fast."

Tuesday, March 21, 2017

Public Firm, Public Conflicts Allegation

Touching on a multiple issues and topics we've previously covered: "Slater and Gordon accuses class action firm of conflict" -- 

  • "The $100 million legal battle over the share-price collapse of listed law firm Slater and Gordon has taken a bitter twist over an allegation of a serious conflict of interest. Slater and Gordon faces a class action led by its No.1 rival, Maurice Blackburn, after the collapse of its share price last year."
  • "The spur for the conflict-of-interest allegation was a move by Maurice Blackburn to apply to the Federal Court for details on Slater and Gordon's insurance policies and documents relating to the debt-strapped law firm's rescue deal with its bankers."
  • "Its application came after Fairfax Media revealed a rescue package for the debt-strapped law firm will use a legal precedent to ring-fence the company's assets from secondary creditors including class action claimants."
  • "Fairfax Media also revealed Slater and Gordon is expected to reach an in-principle agreement with its bankers for a debt-for-equity swap by March 17. Lawyer for Slater and Gordon, Leon Zwier of Arnold Bloch Leibler, said he had concerns about Maurice Blackburn representing shareholders and that should also be discussed in the mediation talks.
  • "'It's a serious issue,' Mr Zwier told the court. 'It's like asking Channel Seven to play a role in the reconstruction in Channel Nine.'"

Monday, March 20, 2017

IP Conflicts: Always challenging for the intellectual

Following the news about Ropes & Gray, BNA conducted an interview with Greg Sueoka, former Fenwick & West managing partner: "Prominent IP Lawyer on 100 Lawyers and Staff Leaving Ropes & Gray" --
  • "One of the big stories last week was Ropes & Gray’s announcement that it would spin off its patent prosecution practice, resulting in 100 lawyers and staff departing the large Boston-based law firm to form a new entity."
  • "On Friday, Big Law Business caught up with Greg Sueoka, the former managing partner of Fenwick & West, who has maintained a patent prosecution practice of his own and now operates the boutique, Patent Law Works, which he formed after leaving Fenwick in 2010."
  • "Sueoka: I loved the people at Fenwick, but one reason I left was because of conflicts of interest. As a patent prosecutor, I’ll deal with a decent number of start ups. Maybe their initial spend might be in the tens of thousands of dollars. But litigators and corporate folks say, ‘We don’t want that conflict.’  Patent litigation is a huge law firm revenue ticket item. When it comes to a conflict between my little tens of thousands, which might grow to half a million or more later, I was getting conflicted out of a lot of work."
  • "Sueoka: If you bring in, say, ten startups a year, in two years, five of those companies will be gone because they’re startups. Four years later, you only have three clients left, but those three clients will be good companies, generating a lot of revenue for you.  But that still creates conflicts when you have large numbers of companies coming in. Technology moves in waves. Everybody is trying to do the same thing at the same time, whether it’s Snapchat and messaging, Facebook — they all kind of come together at the same time and you don’t know who’s going to be the next Facebook or LinkedIn versus who are going to be the losers. The amount of conflicts we’re going to have here is relatively easy to manage compared to me competing with 1,000 other lawyers to bring a client into a big firm."

Sunday, March 19, 2017

When the story ends... (Ethics opinion on firm dissolutions)

"Dissolving Firms Must Still Put Clients First, DC Bar Says"
  • "Despite numerous requirements facing attorneys during a law firm’s dissolution, the principal obligation for lawyers and the firm during the process must be to focus on the present and future needs of their clients, a new ethics opinion released Friday by the D.C. Bar said."
  • "The D.C. Bar said attorneys must not only attempt to see current matters through to completion, if possible, but are required fulfill their ethical obligation to notify clients of the impending dissolution. The opinion said a significant amount of responsibility in terms of client notification and representation also falls on the firms themselves, as in most cases they are the signatories of engagement letters with clients, not their attorneys."
  • "The ethics opinion addressed the responsibility of client notification in the event of a law firm dissolution. While it is difficult to pin down an exact time after a dissolution decision to inform clients, the bar said law firms must do so in a “timely” manner to comply with the D.C. Bar rules of professional conduct."
  • "The bar went on to say that this notice should be given to allow a client enough time to plan its next move as to future representation, especially when a matter is pending. Additionally, the opinion stated that notification should be given to all clients that could be affected by the dissolution. The bar said this even includes clients with inactive matters and closed files, as long as the files have been closed for less than five years, or in the event that the property held contains some sort of intrinsic value like a will or stock certificates."
Full text of the opinion at the DC Bar web site.

Sunday, March 12, 2017

WEBINAR: Replacing Your Records Management System

Our expert risk consulting colleagues at InOutsource are co-hosting a webinar on replacing legacy records management systems.

We've covered some of the risks associated with legacy systems. For firms looking to plot a migration strategy, this session offers new insights and advice:

"Dare to Compare: Must-Have IT Requirements for RMS Replacement" --
  • Join Tim Clauss, Implementation Manager at InOutsource, and Jamie Richgels, VP of Engineering at FileTrail, as they review key considerations when evaluating a replacement Physical Records Management Solution.
  • This session will review total cost of ownership, project management, and implementation, as well as ongoing support considerations.
  • It will also include discussion of FileTrail as a modern replacement for legacy systems
  • They've noted: "FileTrail is a modern records platform that is easy to deploy with features to enable law firms to comply with their information governance policy. FileTrail’s retention review module stands alone in the marketplace. FileTrail is browser-based, offers both a hosted and on premise solution and integrates with a variety of systems used in law firms including iManage Work and NetDocuments."
To sign up, visit their registration page.

Thursday, March 9, 2017

Risk News: ABA + Insurance, Clients + Confidentiality

"ABA begins offering cyber liability insurance to lawyers, law firms of all sizes" --
  • "The American Bar Association has expanded its insurance offerings to include cyber insurance, adding a well-timed line of insurance to its coverage that already includes life, disability, dental, vision and travel insurance for law firms."
  • "The innovative insurance is underwritten by Chubb Limited and includes cyber coverage for a firm’s own expenses, such as network extortion, income loss and forensics, associated with a cyber-incident as well as for liability protection and defense costs. The coverage can be tailored to meet a law firm’s unique needs and also includes Chubb’s loss mitigation services both before an incident and following an incident."
  • "In recent years, the legal profession has become a popular target for hackers. Despite vigilance and increased awareness by law firms and individual lawyers, cyber-related risks have escalated based on the sensitivity and nefarious uses of that data. Last year, for example, the Manhattan U.S. attorney’s office unsealed indictments against three Chinese men who are accused of using stolen law firm employee credentials to access troves of internal emails at two law firms. The men, according to prosecutors, used details they obtained from partners’ emails about pending deals to make more than $4 million in illegal stock trades."
  • "'Cyber insurance coverage is a valuable and practical member benefit for lawyers offered through the ABA Insurance portfolio,' ABA President Linda A. Klein said. 'As the number of cyber breaches increases everywhere and throughout all industries, it is critical that lawyers and law firms that rely on vast amounts of electronic data are protected. As the legal profession evolves, the ABA remains at the forefront in providing attorneys the tools they need to thrive.'
  • "A whistle-blowing general counsel won an $8 million federal jury verdict earlier this month, in a case that might encourage other GC’s to call out corporate wrongdoing."
  • "After deliberating only three hours, the jury in Wadler v. Bio-Rad found that the GC had a reasonable basis for reporting his suspicions about the company’s Chinese sales operations to the organization’s audit team."
  • "But the jury found that the company had retaliated against the GC by firing him after the report, in violation of the Sarbanes-Oxley Act, and that absent the report, he would not have been terminated for legitimate reasons."
  • "The award to the GC included $5 million in punitive damages... the GC’s lawyer attributed the punitive damages to the company  CEO’s creation of a back-dated negative performance review; computer metadata proved that the review hadn’t been created until after the GC had been fired.Whether the Bio-Rad case will be upheld, and whether it is a trend or an outlier, remain to be seen.  But in the short run, it may encourage other GC’s to blow the whistle."
"Akin Gump, 2 Other Firms Face DQ Bid In Ameranth IP Row" --
  • "Akin Gump Strauss Hauer & Feld LLP, Alston & Bird LLP and Norton Rose Fulbright LLP should all be barred from serving as counsel in a consolidated suit over patents covering online-ordering technology, said Ameranth Inc. on Friday in California federal court, renewing disqualification bids put on hold by a three-year case stay."
  • "The Friday filings reiterate a 2013 disqualification bid centering around former Magistrate Judge Charles Everingham, who oversaw a separate Amaranth suit that targeted three of the four patents tackled by the consolidated litigation. Everingham later joined the private sector and became a partner at Akin Gump, where he worked with Stein before Stein left for Alston & Bird, according to the motion."
  • "In another Friday motion, Ameranth also asked to disqualify Jim Warriner and his current firm Norton Rose Fulbright LLP, saying Warriner previously clerked for Everingham during his tenure as a magistrate, thus connecting him to the previous patent litigation. Warriner represents hospitality defendants including Expedia, Hotwire and Fandango."
  • "According to the filings, Everingham presided over at least one precursory case, Ameranth v. Menusoft, from 2007 to 2011 and sat in on confidential settlement meetings with Ameranth’s principals before joining the law firm.'These facts call into question whether Akin Gump could have possibly adequately screened Mr. Everingham from the matters involving Ameranth,' the motion said."

Wednesday, March 8, 2017

Waivers standing there, frogs falling elsewhere (Disqualification News)

Hinshaw highlights: "Risk Management Issue: Can client A's waiver, given with informed consent, permitting lawyer to represent client A jointly with client B in the same matter be effective to permit lawyer's continued representation of client B in the future should lawyer no longer represent client A, where such continued representation will or may be adverse to now former client A?" --
  • "Because it was indisputable that the matters were "substantially related", the dispositive issue was whether Foltz had waived the apparent conflict of interest arising from Tom Cummings' current representation of Ryan. The engagement agreement's waiver provision stated that both Foltz and Ryan "hereby waive any actual or potential conflict of interest which currently exists or may arise out of Tom Cummings' representation of both of them." Foltz contended this provision was inapplicable to the instant case, however, because it only provided consent for Tom Cummings to represent him and Ryan at the same time, not for Tom Cummings to represent Ryan in the future should he no longer represent Foltz."
  • "The Court disagreed. Relying upon Oklahoma's statutory rules of contract construction, the Court did not construe the retention agreement and its waiver provision as narrowly as Foltz suggested. Foltz conceded that at the time Plaintiffs decided to hire Tom Cummings, both men "had competing interests for the same funds" at issue. With this recognition in mind, both plaintiffs agreed to waive any actual or future conflict of interest stemming from Tom Cummings' dual representation. The Court was satisfied that, with respect to Tom Cummings' current representation of Ryan, Foltz has given a knowing waiver, i.e., an 'informed consent' to such representation under Rules 1.7 and 1.9."
And, disqualification news: "Cooley DQ'd In Leapfrog’s Trademark Suit" --
  • "A California federal magistrate judge has granted Leapfrog Enterprises Inc.’s request to disqualify Cooley LLC from representing competing educational game company Epik Learning LLC in a trademark infringement suit."
  • "Magistrate Judge Elizabeth D. Laporte on Thursday decided that Cooley may not continue representing Epik in the case because the firm previously had a long-standing relationship with Leapfrog and had advised it in similar matters, but she refused to sanction the firm for not withdrawing sooner, saying the issue was not 'clear cut.'"
  • "In the opinion, the judge said it was a 'close call' but that the balance tipped in favor of Leapfrog because Cooley had acquired a substantial knowledge base of how the company operates over the years. Leapfrog said it considered Cooley its 'go-to firm' for two decades and that it has paid Cooley about $10 million in fees for various matters, but Epik contended that Leapfrog was late in speaking up about the potential conflict."

Tuesday, March 7, 2017

News juxtaposed, Information disclosed – whether or not they chose (and Texas)

"Metadata Fair Game in Texas?" --
  • "In a recent opinion, the Texas bar panel adopted the minority view on metadata, which states that there is not an obligation to inform opposing counsel that he has sent a document containing metadata. Moreover, Texas rules do not prohibit searching for and  in extracting metadata from documents. Of the nineteen jurisdictions that have issued opinions with specific requirements regarding attorneys’ obligation when transmitting or receiving documents containing metadata, Texas is the third state to opine that its rules do not require notification to the sender of the document."
  • "Additionally, the Texas opinion indicates that the ethics rules “do not prohibit a lawyer from searching for, extracting, or using metadata” embedded in documents sent from opposing counsel. Currently, ten other state’s opinions forbid searching for or extracting metadata from the documents."
  • "The Texas opinion acknowledge other state opinions and notes that . lawyers may be subject to metadata restrictions if they are subject to the rules of other jurisdictions."
"Putting Papers on File-Sharing Site Waived Privilege" --
  • "Putting sensitive materials on an unprotected file-sharing site waived a plaintiff’s attorney-client privilege and work product protection for those materials, a federal magistrate judge in Virginia held Feb. 9 ( Harleysville Ins. Co. v. Holding Funeral Home, Inc. , 2017 BL 39590, W.D. Va., No. 1:15cv00057, 2/9/17 )."
  • "However, the magistrate judge also ruled that defense counsel acted improperly by accessing the materials and using them without notifying the plaintiff’s counsel and asking for a court ruling. Disqualification isn’t warranted, but defense counsel must pay the parties’ costs in connection with the disqualification motion as a sanction, Magistrate Judge Pamela Meade Sargent decided."
  • "The court’s waiver ruling should make lawyers think twice before putting confidential documents in a file-sharing site without password protection. The case is also a reminder that lawyers generally aren’t free to secretly exploit inadvertently disclosed materials even if they believe the disclosure waived any privilege claim."
  • "The magistrate judge said the insurance company inadvertently disclosed the confidential material when an employee intentionally uploaded the case file to the Box site. The disclosure waived the attorney-client privilege under the multifactor waiver test set out in Virginia case law, the magistrate found. The employee should have known that the information uploaded to the site wasn’t protected in any way and that anyone who clicked on the hyperlink could access the case file, the magistrate said."

Monday, March 6, 2017

INCEPTION: Insights Inspire Inspection and Attention

 A brief note to remind readers that the early bird registration deadline for Inception 2017 (May 15-18) expires this Friday. With great turnout (and great feedback) from risk-focused attendees last year, it was inevitable that we’d increase our risk investment in 2017.

Indeed, we’re planning informative, instructive and inspiring sessions. These include a special Risk Roundtable track. (And a GC breakfast event, which I heard loudly and clearly that many non-partner, risk professionals wanted in on last year. Message received, see below.)

Some key sessions, panels and topics which should incite interest:
  • Panel summary and discussion of key takeaways from the morning GC breakfast
  • Risk staffing approaches for conflicts management
  • Enhancing the business impact of risk management
  • Making the case for investing in risk
  • Expanding client evaluation (beyond conflicts, how to address client health, strategic alignment and other factors)
  • Enhancing intake through better client requirements and terms of business management
  • Integrating third party data into business acceptance
  • Case studies about migrating from legacy conflicts applications
  • Advanced topics and scenarios in new business intake
  • Advanced topics in conflicts management and compliance (AML, KYC, etc)
  • Addressing business intake/conflicts management as part of general Practice Management System (PMS) migrations and upgrades
  • Information security trends and drivers
  • Why Walls, information barriers and screens now matter more than ever
While (full disclosure) some of these sessions have an Intapp focus (it’s the “in” thing these days, after all), many are broadly focused on approach and strategy, applicable to any risk professional.)

The latest agenda, event overview and a new “Dear Manager” letter template (for those who might need some assistance making the case for investment to their supervisors) are all online at:

Dan... Discounts?
I previously offered qualified and enterprising blog readers a path to an additional discount. And in the spirit of inclusion (today is a big post for “in” words), I’m extending the same offer this week, with a limited supply on hand.

If you’re interested... email: Tammy (and tell her that I sent you). (And watch for future updates on Inception 2017.)

And, for a bit more flavor on the event, see this 90 second recap video highlighting the 2016 experience:

Sunday, March 5, 2017

Conflicts Corrected, Conflicts Protested, Conflicts Clearance is Requested

Here's an update to a long running story we and others have had an eye on for several years: "Covington Pays to End 3M Conflicts Row. The deal puts an end to an unusually high-profile clash between a Fortune 100 client and its onetime law firm." --
  • "Ending a long-running conflict of interest dispute, Covington & Burling has agreed to settle claims that it betrayed its obligations to onetime client 3M Co...The unusual clash between a Fortune 100 company and its well-known former law firm had drawn attention from specialty law publications and legal ethics blogs, as well as more mainstream outlets such as the Minnesota Star Tribune and The Washington Post."
  • "Lead 3M lawyer William Brewer III of Brewer, Attorneys & Counselors said in a statement that Covington or the firm's insurer would provide some sort of payment to 3M as part of the settlement. Further details were not publicly available."
  • "The dispute began taking shape in 2010, when Covington, representing Minnesota on a contingency basis, sued 3M for allegedly polluting state waterways by its handling of fluorochemicals once used in such products as 3M's Scotchgard stain repellant."
  • "More than a year later, 3M's lawyers sought to have Covington disqualified from the case. The company maintained that in the years before the 2010 water pollution suit, Covington had advised 3M on regulatory issues related to fluorochemicals. Lawyers for 3M later filed a separate lawsuit, accusing Covington of 'side-switching' and breaching the firm's contractual and fiduciary duties to the company."
  • "Following multiple rulings and appeals, a Minnesota state judge determined in February 2016 that Covington could continue representing the state in the environmental suit. But the judge also found that Covington had violated its ethical duty to 3M."
Next an update to an item we noted last month: "Holland & Knight Protests DQ Bid To Judge’s ‘Dismay’" --
  • "A New York federal judge scolded Holland & Knight LLP for a letter it submitted in a case pitting First NBC Bank against ethanol distributor Murex LLC, saying the unsolicited filing contesting a bid to disqualify the firm did not reflect well on it and that its attorneys had 'abused the court's courtesy.'"
  • " Given that the current case is one of first impression, the letter goes on to say, 'there is ample risk that Murex's motion [to disqualify Holland & Knight] and the circumstances giving rise to it are tactically motivated.' Murex contends that Holland & Knight used confidential information obtained from consulting work performed by one of the firm's senior policy advisors to achieve an unfair advantage in a suit brought by FNBC."
  • "The judge told the firm at a Feb. 13 hearing that he found it likely that Holland & Knight had represented both sides. However, he said he would give the firm and its client some time to decide their next move. He was "not inviting substantive briefing" on the matter, but asked them to inform him of their "bottom-line determination.""
  • "On Tuesday, Judge Engelmayer said the firm abused the courtesy he had extended, and that he was "constrained to express dismay" at the tactic. 'While the court appreciates the strength of counsel’s views on the pending disqualification motion, HK’s resort to such a fait accompli, in support of its own self-interest, does not reflect well on the firm,' Judge Engelmayer said."

Wednesday, March 1, 2017

IP Fights & Flights: Client IP, Firm IP (Concerning Clouds & Client Files)

A few interesting stories about information governance. First, from Karen Rubin at Thomson Hine: "Digital dilemma: Who owns litigation database when partners leave a firm?" --
  • "A high-profile duel over rights to legal databases is playing out in state court in Boston.  The warring parties are six former partners and the asbestos defense firm they left, allegedly taking with them high-value file-management and other databases.  The firm’s suit, filed in November, raises the question:  When partners leave, does a database that includes client information belong to the clients they take with them?  Or to the old firm, which says it has invested heavily in developing the proprietary database?"
  • "According to the complaint, before abruptly ending the sale discussions and leaving, one of the former partners had copies of the databases downloaded to her own computer.  The six partners allegedly took more than half of Governo’s business with them; the complaint asserts claims for misappropriation of trade secrets, interference with contractual relationships and civil conspiracy."
  • "The former partners opened their new firm on December 1, and are asserting that the database information belongs to the clients who came with them, and who were billed for the work connected to the databases."
  • "On January 11, the Suffolk County Superior Court in Boston denied the Governo firm’s motion for preliminary injunction, ruling that the record was too undeveloped to determine whether the databases belong to the Governo firm, or to the clients who moved their business to the new firm.  A scheduling conference is set for Feb. 14."
  • "The Boston Globe reported that the case is being carefully watched, for its potential to make law on 'leaving a law firm in the digital age.'"
  • "In denying injunctive relief, the judge reportedly assessed evidence from both sides on the ownership of the database material, but found it insufficient to decide.  That would appear to be a sound call, since determinations in this area can be very fact-specific.  Key factors might be whether the firm used its own funds to develop the data base, or if those development costs were passed on to clients.  In the latter case, an argument could be made that the clients charged for  creation of the database should have a continuing right to have the lawyers use it at their new firm. Whether you are a firm manager or a lawyer thinking about leaving your firm for greener pastures, this is an area where it pays to check your jurisdiction’s rules and ethics opinions before acting."
Next, Matthew Hector at Woerthwein & Miller offers commentary on: "ISBA ethics opinion OKs storing client info in the cloud" --
  • "Lawyers can store client information on cloud-based servers, an ISBA ethics opinion says, but only if they take the proper precautionary steps."
  • "ISBA Professional Conduct Advisory Opinion No. 16-06, issued in October, says yes, as long as lawyers take specific steps to ensure the security of the data stored there. See"
  • "The cloud isn't going away. Much like email (and likely the fax machine), it will eventually become a standard and accepted method of storing and sharing data. Moving to cloud-based storage makes sense for many attorneys, particularly those who often practice in the field as opposed to at the office. Until the cloud is as normal as email, however, attorneys should take extra care when choosing and working with a cloud-services provider."