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."

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