Friday, September 29, 2017

VIDEO: Your Possible Future (or Present): "A Day in the Life of a Matter"

Wanted to end the week with something fun and inspiring. What could be better than movie time? (Grabs popcorn.) The next 20 minutes could change your life. (Well, professionally.)

Presenting: "A Day in the Life of a Matter" --


https://www.intapp.com/integrated-demo

Cue Move Preview Voice Over:
  • "In a world where clients are king – and critically concerned about success – law firms must adapt (or perish)... Rise Up Productions proudly presents a timeless story of a partner, a client and the lasting relationship they build. But before 'happily ever after,' business must be won, risk managed, compliance ensured, work performed, bills issued and clients delighted."
  • "You've never seen a performance like this. (At least, not where legal technology is concerned.) Watch how innovative software can and is working together seamlessly to create a better world – from business development to client (and business) success."
Well deserving multiple thumbs up, our enthusiastic (and often hilarious) cast of five delivers whatever the equivalent of Oscars are for this sort of thing-worthy performances.

You'll learn. You'll laugh. You'll be inspired.

You might even spot a few familiar faces. (Though your author opted to shun the spotlight and focus on playing the role of intransigent writer/director/producer. More Nolan than Tarantino. Of course, there are a few special effects, and a few Easter Eggs.)

Watch Now: "A Day in the Life of a Matter."

("No, I like it in here.")



EVENT: Law Firm GC Workshop



Washington DC, October 12-13: Law Firm General Counsel Workshop
[details]  --

The Center for the Study of the Legal Profession at the Georgetown University Law Center and the Lawyers for the Profession® Practice at Hinshaw & Culbertson LLP are holding their jointly sponsored 2017 Law Firm General Counsel Workshop on October 12 and 13, 2017 at the Georgetown University Law Center in Washington, D.C.

This two-day Law Firm General Counsel Workshop will provide new law firm General Counsel, Deputy General Counsel and others with new risk management responsibilities the skills they need to perform their jobs more effectively and to become trusted advisors and advocates within their firms. Participants will develop expertise in handling conflicts and business intake issues, internal investigations, risks created by rapidly changing technology, regulatory and compliance requirements, claims against the firm, and other ethical and risk management issues.

See the complete brochure for more detail on content and registration. This is a third-party event and a registration fee applies.

Thursday, September 28, 2017

IP Ethics & Conflicts: New Rules Create New Risks and Responsibilities




Longtime reader Brian Lynch, with IP experts Aurora North, writes in to note an excellent three part series from Michael E. McCabe, Jr: "Breadth Of PTO Ethics Opinion Could Alter How IP Firms Interact With Foreign Associates" --
  • "Thirty years ago, the PTO issued (in 1987 and 1988) ethics opinions regarding very discrete questions concerning two aspects of ethics issues that arise when a U.S. practitioner communicates and services their clients by working through foreign agents and 'client liaisons.'"
  • "In June 2017, the USPTO published the Mikhailova decision.  The public notice published as part of the USPTO Director’s Final Order in that matter provides a thorough discussion of how the OED/USPTO expect practitioners to operate when they are representing clients through “non-practitioner third parties.”  While this guidance may have been written specifically with the invention promotion entity in mind, the Mikhailova decision does not state that it is limited to that particular arrangement."
  • "According to Mikhailova, any legal services arrangement in which a USPTO practitioner interfaces with a “non-practitioner” third-party on behalf of a client must pass muster under a veritable maze of different Rules of Professional Conduct.   And yet the USPTO made a point to state that nothing in Mikhailova was meant to trump anything that was said in the 1987 or 1988 Notices."
  • "Is There a Business Conflict With the Foreign Associate? USPTO Practitioners have a significant financial interest in continuing to receive referrals from their foreign associates. Some foreign associates may refer many different clients or matters to a practitioner. And a number of foreign associate-U.S. law firm relationships have lasted for decades and have generated millions of dollars in revenue for the practitioner.  In addition, many foreign associates have an expectation that the U.S. counsel they choose to work with will refer IP work back to them when U.S. counsel has a client that wishes to obtain patent or trademark protection in the foreign associate’s country."
  • "This business arrangement raises a concern that a regulator at the USPTO would find that the personal interests of the practitioner in maintaining the foreign associate relationship create a conflict of interest... Given the potentially lucrative and longstanding relationships that some IP firms have with the foreign associates, it is reasonable to conclude, as the USPTO observed in the Mikhailova case, that a business conflict of interest exists between the client and the practitioner 'due to the practitioner’s personal financial interest in continuing to receive inventor referrals from the non-practitioner third party.'"
  • "This conflict can be waived, but only if the client gives “informed consent, confirmed in writing.”  In the case of the foreign associate, such informed consent may require disclosure of the length and duration of the relationship, the numbers of cases that the foreign associate has referred to the practitioner, and reasonable alternatives available to the client—such as having the services provided by a practitioner that does not have a business relationship with the foreign associate."
  • "Does The Foreign Associate Referral Client Conflict With A Current or Former Client? The USPTO expects practitioners to conduct adequate conflict checks to ensure that it is not representing another client seeking the same, or a substantially similar variant, to another client’s patent or application; the client is not 'directly adverse' to another firm client; or the matter is not 'substantially related' and adverse to a matter the U.S. practitioner worked on for a former client."
See also: Part 1 and Part 2.

Wednesday, September 27, 2017

Risk Updates (Controversy Edition #2): Side Switching, Side Sharing + Million Dollar Conflict?




"This Law Firm Is Both Representing Dakota Access Owner and Suing Its Security Firm" --
  • "Energy Transfer Partners, owner of the Dakota Access pipeline, has filed a federal lawsuit against Greenpeace and others for alleged racketeering in their anti-pipeline activism related to Standing Rock. The company’s legal support comes from the firm Kasowitz Benson Torres LLP, whose attorneys also represent President Donald Trump in the ongoing Russia-U.S. election investigation."
  • "However, federal court rules require that, in addition to the New York-based team at Kasowitz, Energy Transfer Partners must retain local legal counsel in North Dakota, where the lawsuit was filed. The bottom of the 187-page legal complaint filed on August 22 reveals that the corporation chose Vogel Law Firm, with offices in both Minnesota and North Dakota, for that job."
  • "However, by serving as a law firm for Energy Transfer Partners, Vogel may have a potential conflict of interest. That's because, at the same time, the firm is representing the North Dakota Private Investigation and Security Board in its ongoing lawsuit against TigerSwan. This private security firm worked on behalf of Dakota Access during the months-long protest movement at the Standing Rock Sioux Reservation in Cannon Ball, North Dakota."
  • "Rogneby, Stock, and Hagel did not respond to multiple requests for comment for this story, which inquired whether the firm ran a conflicts-of-interest check before taking on the racketeering case. These types of checks, according to the American Bar Association (ABA), should be a matter of routine for law firms to ensure the interests of one client do not compete and conflict with those of another."
"Loeb & Loeb Beats 'Classic Hot Potato' DQ Bid" --
  • "Loeb & Loeb LLP didn’t drop former client Howard Hughes Corp. like a “hot potato,” according to a ruling Thursday by a California federal judge who found the firm’s work for the property developer ended a year before Loeb took on another client that sued HHC. Loeb is representing Regal Cinemas Inc. in a breach of contract and intentional misrepresentation suit accusing HHC of a 'bait and switch' over two movie theater leases, court papers show."
  • "HHC pointed to two hours Loeb clocked for the property development company in June 2016 as evidence the matter in which Loeb was representing HHC wasn’t yet finished, but Judge England concluded the two hours — the only time between 2015 and present day that Loeb did anything for HHC — hardly amounted to current representation, according to the decision."
"Houston Law Firm Sued for $1M in Case Alleging Conflict of Interest" --
  • "A Houston marketing company sued Houston's Christian Smith & Jewell and former partner Stephen Cagle Jr., seeking more than $1 million in damages and alleging the defendants failed to notify it of a conflict of interest when representing it in a business dispute."
  • "Plaintiff Signet Interactive alleges the defendants should have acknowledged that it was a conflict to defend the company and also defend majority shareholder Christopher Mulgrew from allegations in an underlying suit filed by Joy Yoga. Signet Interactive alleged the defendants aided and assisted Mulgrew in using corporate money and assets to fund a settlement with Joy Yoga in that suit."
"TransUnion Can't DQ Side-Switching FCRA Atty, 7th Circ. Says" --
  • "A split Seventh Circuit ruled Tuesday that an Indiana lawyer who for years defended credit bureau TransUnion LLC against credit-reporting suits can now represent a consumer fighting the bureau, finding that there's no friction with a key Indiana rule of professional conduct."
  • "But Watkins' case immediately hit a snag because of who he hired to fight TransUnion: John Cento, who from 2003 to 2005 was a point person for TransUnion on the defense of FCRA cases, handling hundreds of them and gaining rare insight into the company's views on the merits and methods of such cases. TransUnion asked a judge for an order requiring Cento to show cause as to why he shouldn't be disqualified and pointed to two other cases in which judges had disqualified Cento. But the judge in Watkins' case refused, though he allowed TransUnion to immediately appeal that refusal to the Seventh Circuit."
  • "On Tuesday, the appeals court found that Cento could stay on the case. The two other courts that had disqualified Cento wrongly relied on an outdated common-law standard, Canons 4 and 9 of the ABA’s Model Code of Professional Responsibility, rather than Indiana Rules of Professional Conduct 1.9 and its attendant exegesis, the appeals court said. That commentary explaining the prohibition on representing the opposite side in a “substantially related” matter also shows that Cento is on the right side of the ethics rule, the Seventh Circuit said."
  • "'Cento’s prior representations of TransUnion and his present representation of Watkins both involve FCRA violations but do not turn on the same facts of one 'particular situation or transaction,'' the circuit said, referencing Rule 1.9's commentary section."

Tuesday, September 26, 2017

Risk Updates (Controversy Edition): Confidential Disclosures + Protective Order + Drama = Risk




"Lawyers Sanctioned for Filing Confidential Information in Grubhub Suit" --
  • "A federal magistrate judge on Thursday sanctioned a law firm for publicly filing documents containing Grubhub Inc.’s confidential information in a lawsuit claiming the delivery service misclassified workers as contractors. 'I’m going to grant the motion for sanctions,' U.S. Magistrate Judge Jacqueline Corley of the Northern District of California said at a hearing. 'It was absolutely inexcusable to do that filing without redacting that information.'"
  • "Shannon Liss-Riordan—the attorney leading the case against Grubhub–apologized for the filing, which was made by a junior attorney at her firm named Thomas Fowler. But she downplayed the incident as a “technical error.' 'It is not a technical error,' Corley retorted. 'It is, in fact, an egregious error.'"
  • "Corley said she was issuing the sanctions to underscore that litigants must carefully protect confidential information. Disclosures like the one made by Liss-Riordan’s firm, the judge said, make it harder for plaintiffs generally to get access to sensitive business records in discovery."
  • "In a hearing earlier in the day at the same courthouse, U.S. District Judge Edward Chen of the Northern District of California found that Liss-Riordan had violated a court-issued protective order by using a list of California Uber drivers certified as class members to drum up potential business. She had emailed the roughly 240,000 drivers to inform them that if her arguments against arbitration failed at the Ninth Circuit, she could represent them in individual actions against Uber."
  • "A California federal judge ripped into all sides in a contentious hearing Thursday over Monsanto’s allegations that an opposing attorney improperly leaked confidential documents in a multidistrict litigation alleging its Roundup weedkiller causes cancer, at one point threatening to call security to remove a lawyer."
  • "U.S. District Judge Vince Chhabria said there was “plenty of blame to go around” for the dispute, which stems from a July meeting during which Monsanto said 86 disputed documents were irrelevant to the litigation and should remain under seal. Plaintiffs’ attorney R. Brent Wisner of Baum Hedlund Aristei Goldman PC waited 30 days for Monsanto to file a declaration defending its protective order. When it didn’t, he assumed the company had decided not to pursue its argument that the documents couldn’t be unsealed because the judge had threatened to sanction Monsanto if it continued to make frivolous filings."
  • “'Mr. Wisner, along with other members of the leadership group, decided to ignore that this was a live dispute,' the judge said. 'It seems obvious that these documents are relevant to the general causation phase of this litigation. It seems clear the position Monsanto was taking in the the meet and confer was unreasonable. ... The great irony here is had you teed this up before me in a joint discovery letter or a motion, I would have no doubt ruled in your favor and I would probably have had Monsanto pay the litigation costs.'”

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



Portland, October 11-13: Law Firm General Counsel Summit [summary]  --
This summit is designed for the general counsel, ethics counsel, COO or managing partner of small to midsize law firms. Attorneys from Holland & Knight's Legal Profession Team, including Allison Martin Rhodes and Peter Jarvis, together with other industry experts, will lead interactive discussions to provide relevant and practical insights into the unique challenges of managing risk at firms employing up to 250 lawyers.

This two-day seminar is a rigorous and high-level program, in a roundtable format led by our faculty, to discuss the common issues facing leadership in small to mid-sized firms. Topics this year will include practical approaches to data security, succession planning, new business intake, advertising and social media, law firm liability insurance and two deep dive programs on conflicts of interest.

The 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.

This is a third-party event and a registration fee applies.

Monday, September 25, 2017

Lateral Drama



"Atty's Ex-Partner Wins Bid To Arbitrate Trade Secrets Fight" --
  • "A California federal judge Thursday sided with the attorney accused by his former partner of stealing trade secrets and client data to launch a competing law firm, sending the matter to arbitration rather than allowing the case to continue."
  • "U.S. District Court Judge Edward J. Davila agreed with William Paradice’s argument at an April hearing that plaintiff Zurvan Mahamedi had signed an agreement when they were partners at Mahamedi Paradice LLP that contained broad arbitration provisions that covered a wide range of potential disputes that might arise, including the trade secret claims alleged in the instant suit."
  • "But in a May 2016 lawsuit, Mahamedi and the firm accused Paradice of violating that agreement and transferring Mahamedi’s proprietary information, including billing data, legal research, contact information and strategy documents, in order to allegedly compete with Mahamedi and to attack his reputation. The complaint names Paradice as well as an information technology consultant who allegedly helped Paradice transfer the sensitive information."
"Charges Against BigLaw Atty Show Vetting Difficulties" --
  • "Alleged improper trading on client information got a former Foley & Lardner LLP partner fired last year, but the firm that hired him next didn't find out until he was charged — showing how hard it can be to unearth a lateral hire's problematic conduct."
  • "Without naming Little, Foley & Lardner said in a recent statement that it had done an internal investigation in June 2016 after learning of a partner's "trading activity" that resulted in the partner being shown the door and the firm alerting authorities. But when Bradley Arant hired Little in July 2016, chairman and managing partner Beau Grenier said the firm knew nothing of the alleged misconduct despite a thorough check."
  • "Florida bar spokeswoman Karen Kirksey confirmed on Monday that the bar has no open complaint file on Little. And he has no disciplinary record in the bar's public information system, which displays formal findings by the state's Supreme Court dating back 10 years. Did someone at Foley & Lardner have an obligation to report Little's conduct to the Florida bar? It depends on what they actually knew."
  • "While the bar rules don't speak specifically to trades on inside information about a colleague's clients, they prohibit disclosing client information to others and committing criminal or other conduct that smacks of dishonesty."
  • "Australia’s Henry Davis York and British firm Olswang both saw large groups of partners leave their ranks prior to unions with large firms. Norton Rose Fulbright and Henry Davis York announced in June their intention to join forces. Earlier this week, rival Australian firm Corrs Chambers Westgarth confirmed its hire of five Henry Davis York partners in Sydney, as legal publications Downs Under noted the possibility of more senior exits ahead of an expected combination later this year."
  • "'To give some context, a number of these departures took place well before merger discussions began and bear no relevance to the current firm,' CMS said. 'As to be expected with a combination of our size, there were a small number of partners that were not able to accept offers as a result of conflicts or other issues. Looking forward, the combined firm is in a strong position and we are continuing to make the most of the opportunities that the merger presents.'"
  • "The loss of lawyers prior to any Big Law nuptial has become fairly commonplace in a robust lateral market. Earlier this month, Bloomberg Big Law Business reported on a group of eight Liner lawyers leaving the Los Angeles-based firm ahead of its merger with DLA Piper to form Pasich, a firm comprised of [sic, tsk tsk] several Dickstein Shapiro alums."
  • "And in early June, just before Norton Rose Fulbright completed its agreement with Henry Davis York, the global legal giant watched a group of 15 lawyers leave Chadbourne & Parke for Covington & Burling in Dubai, Johannesburg and London."

Thursday, September 21, 2017

Information Security: GDPR, ISO & Balancing Risk




"Information security & the risks for the legal sector" --
  • "Information security is a substantial risk for the legal sector. Law firms are an attractive target to cyber criminals due to the vast wealth of personal and private information in their possession. Cyber-attacks on UK law firms increased by a fifth between 2014 and 2016, with nearly three quarters of the country’s top 100 targeted in 2015, according to PwC’s 25th Annual Law Firms’ Survey."
  • "Despite the increasing threat, and the potential financial and reputational damage following a breach, a survey by online legal magazine, Legal Week, found that only 35% of law firms had a response plan in place for cyber-attacks. This is compared to 52% for non-legal professions."
  • "With the European Union’s General Data Protection Regulations (GDPR) due to come into force in May 2018, legal firms that fail to appropriately secure personal data will face severe fines in the event of a breach. The regulations could affect organisations throughout the world because they apply to any company that handles the personal data of Europeans. The GDPR defines a personal data breach as a breach of security leading to the destruction, loss, alteration, unauthorised disclosure of, or access to, personal data."
  • "Fines imposed following a breach could be as much as 4% of a firm’s annual global turnover, or €20 million, depending on which is greater. Furthermore, should a firm be fined under GDPR they are also likely to face personal litigation from the individuals whose data is lost. The total cost of a breach could therefore be far greater than the fine, and might see senior partners being taken to court and even imprisoned should the breach show negligence."
"Richard Elson, IS Director at law firm Trowers & Hamlins LLP, discusses the challenges of taking a security-first stance" --
  • "Speaking to Computing recently, Richard Elson, director of IS at the firm, explained how they balance the need for security with the oftentimes conflicting need for open communication."
  • "'We could probably spend millions and millions and millions on security," he said. 'It's obviously central to what we do; we've tried to take a security-first approach to all of our technology projects, but particularly our mobile technology. Taking a security-first stance can sometimes be a little unfashionable - and there can be trade-offs with ease-of-use, productivity, people wanting to use the latest apps. But we think we've got the right balance. We fairly recently standardised around a BYOD strategy, which is centrally-managed applications delivered to personal devices.'"
  • "When asked about the impact of the GDPR on the firm, Elson explained that although the regulation is a fairly onerous set of responsibilities, good data governance has accelerated their preparations. 'We did an awful lot of work around the ISO 27001 and we did a lot of work for the Cyber Essentials Plus [scheme] and got the accreditation for that last year; and also in preparation for looking at the cyber insurance, about two and a half years ago, we put together a systems map of our Personally Identifiable Information.' He explains, 'What we've tried to do is, for each system and for each set of Personally Identifiable Information, [identify] what the risk is, how we're treating it today and how the requirements of GDPR - particularly in respect of consent and control - what next steps we have to take for each set.' The firm's security-led stance means that from an IT perspective, they're well prepared for the GDPR."

Wednesday, September 20, 2017

Risk Updates: Waivers, Client Guidelines & More




"Conflict Waiver Fails After ‘Mission Creep’ in Lobbying Work" --
  • "Holland & Knight must stop representing a bank in a civil fraud case against a company the firm concurrently represented in other matters during the run-up to the suit, the U.S. District Court for the Southern District of New York held April 28 ( First NBC Bank v. Murex, LLC , 2017 BL 141143, S.D.N.Y., No. 16 Civ. 7703 (PAE), 4/28/17 )."
  • "The court concluded that a broad advance conflict waiver in the company’s engagement agreement didn’t cure the problem. H&K’s services expanded beyond the nonlegal services contemplated in the agreement, and the waiver provision didn’t mention the specific adverse matter, Judge Paul A. Engelmayer said."
  • "Advance conflict waivers have become a regular feature of engagement agreements for big law firms and their corporate clients. But as this case makes clear, a future conflict waiver isn’t a bulletproof shield, especially if the firm’s adverse role comes across as stabbing the client in the back."
  • "A nonlawyer senior policy analyst in H&K’s Washington office arranged the engagement, which called for “regulatory consulting services.” The engagement agreement stated that the conflicts of interest rules applicable to lawyers wouldn’t apply, and the agreement permitted H&K to represent clients adverse to Murex in unrelated matters."
  • "H&K argued that Murex was solely a lobbying client, but the court found that H&K formed an attorney-client relationship with the company. The firm’s representation of Murex broadened beyond lobbying work to include helping Murex defend itself against a threatened EPA enforcement action and briefly counseling Murex on a pending lawsuit in which Murex was represented by a different law firm, the court said."
  • "Those activities outside the scope of the engagement agreement clearly amounted to legal services, and it was reasonable for Murex to believe it had an attorney-client relationship with H&K, it found."
"Lawyers Should Negotiate Outside Counsel Guidelines" --
  • "The idea of lawyers negotiating the terms of a contract shouldn’t sound controversial, but when it comes to the terms of their own contracts, lawyers engage in behavior they would never recommend to a client. Other than big-ticket contracts, such as property leases and firm-wide outsourcing contracts, lawyers often agree to terms—such as those in agreements with e-discovery or contract attorney vendors—without any review whatsoever. The same has been true for OCGs, to which attorneys historically have paid little attention, partially, according to James R. Clark, general counsel and partner at Foley & Lardner LLP, 'in the interest of not disrupting client relations.'"
  • "Let’s look at three of the most problematic types of provisions found in OCGs, and ways to negotiate amendments to satisfy a firm’s business needs and risk management concerns."
  • "Expanded Duties of Loyalty. Every U.S. state has developed its own rules governing what constitutes a conflict of interest, most of which track closely the ABA Model Rules of Professional Conduct... Corporate clients have developed other ideas. Instead of relying on established rules and laws, corporate clients are defining conflicts for themselves and dictating the relationships law firms may have with other clients. A natural outcome of the basic conflict rules is that every matter a lawyer or law firm takes on necessarily restricts future business opportunities. Today’s corporate OCGs are, however, expanding the set of clients and matters foreclosed to law firms beyond the operation of the conflicts rules. And advance waivers are out of the question."
  • "Uninsured Liability. Beyond the acceptability of terms for conflicts/future business, another type of common OCG provision more directly targets the firm’s liability to the client. Corporations often include indemnification requirements of varying scope in their OCGs. I’m not aware of a claim against a firm involving the firm’s indemnification obligations. Yet, the consequences of certain types of indemnification provisions could prove disastrous."
  • "Promises of Data Security Not Enough. A notable development in OCGs is driven by concerns regarding the security of data. While clients in certain industries—finance, healthcare, and retail, for example—long have required assurances from their outside lawyers regarding adherence to principles of data security, clients no longer accept mere promises. In many OCGs, corporations are laying out specific measures and policies that they expect law firms to have in place or adopt in order to retain the client’s business. In addition, clients are following up on OCG terms with extensive written assessments and on-site, multi-office audits."
  • "At least as important as what the firm negotiates is who does the negotiation. Mr. Clark notes that one of the most effective ways to negotiate OCG terms—and avoid rocking the boat—is to entrust the task to firm personnel (in-house firm attorneys, if the firm has them, certain partners if it does not) other than client relationship partners. These individuals can ensure consistency in the application of the firm’s positions and, if necessary, play the bad cop role in the negotiation. OCGs are not non-negotiable. In fact, they represent an opportunity to open a discussion with the client and to build productive relationships."

Tuesday, September 19, 2017

Conflicts: Concerning Checking Standards and Skills



The Legal Intelligencer notes: "Carefully Evaluate Whether Issues Involving Your Case Are 'Substantially Related'" --
  • Comment 3 to Rule 1.9: "Matters are substantially related for the purpose of this rule if they involve the same transaction or legal dispute or if there otherwise is a substantial risk that confidential factual information, as would normally have been obtained in the prior representation, would materially advance a client's position in the subsequent matter. For example, a lawyer who has represented a business person and learned extensive financial information about that person may not then represent that person's spouse in seeking a divorce. Similarly, a lawyer who has previously represented a client in securing environmental permits to build a shopping center would be precluded from representing neighbors seeking to oppose the zoning of the property on the basis of environmental consideration."
  • "It does appear from the case law that confidential information is often a sticking point in deciding whether or not the matters are substantially related. A review of the case law seems to also suggest that the cases are decided on the specific facts of a particular case. But, there does not appear to be a bright line. A number of factors could be involved. The length of time between the current representation and the past representation is one. Also, confidential information or lack of it being obtained or whether the representation was directly adverse or not."
  • "Also, the business of representing a client or representing a competitor of a client can, at times, create potential issues of conflict or disqualification. In this modern world where new business is eagerly sought and a substantial fee can, at times, blind one to their ethical obligations, a lawyer must step back and think about the consequences. As difficult as it may be, clients are entitled to independent representation and also entitled to the fact that their prior lawyer will not be acting in an adverse manner against them in the future if there are similar or substantially related issues or issues of confidentiality. All lawyers should very carefully evaluate that."
And the folks at InOutsource have launched it's "Conflicts Essentials" training program --
  • "Researching and evaluating potential conflicts of interest serve as a fundamental component of law firms’ business operations. However, many law firms are challenged with incorporating rules from different jurisdictions into their internal processes for evaluating conflicts."
  • "InOutsource, an industry-leading global legal consulting firm celebrating its 15-year anniversary, has launched an innovative service to help law firms identify and address this challenge: Conflicts Essentials. Led by InOutsource experts with established experience with conflicts, the service includes an intensive series of programs for conflicts administrative professionals, review for nonlawyer professional staff and education and training for attorneys."
  • "InOutsource's new Conflicts Essentials program can be scaled and tailored to the needs and interests of each member of your team. Seminar offerings include: Intensive training series for conflicts administrative personnel; Basic review for non-lawyer professional staff; CLE-eligible* risk education for your firm's lawyers"
More information via their web site.


Monday, September 18, 2017

Risk, Money and Market Pressure (Litigation Financing, Billing Busted, and New Legal Practitioners: The Big Four)




Let's talk about money a bit. Well, financing and other forces on the legal market. First: "Attys Can Ethically Sell Future Fees To Nonlawyers, Prof Says" --
  • "Allowing attorneys to sell their unmatured fees to nonlawyers would permit law firms and legal practitioners to more widely use a capital source that still complies with current ethical restrictions on nonlawyer investment in the industry, according to a law professor."
  • "Professor Anthony J. Sebok of Yeshiva University’s Benjamin N. Cardozo School of Law contended that there has been little consideration by state bar ethics committees as to whether the purchase of expected attorneys’ fees by nonlawyer entities is permitted under American Bar Association ethics rules."
  • "In his April 21 paper, Sebok surmised that this method of capital creates a passive investment that does not necessarily involve the sale of a property interest in an attorney’s practice and should be allowed under current ethical rules restricting lawyer fee arrangements with nonattorneys."
  • "Sebok drew parallels to the practice of “standard” factoring, in which a lawyer or legal entity sells accounts receivables that have been billed to a client but are not yet paid. He said the vast majority of ethics bodies in the U.S. recognize the standard form of factoring as an acceptable practice under the so-called direct relation test, which measures the significance of a financial arrangement between a nonlawyer and a lawyer."
"Elephants in the Room Part I: The Big Four’s Expansion in the Legal Services Market" --
  • "The Big Four’s recent expansion into the legal market is not the accounting industry’s first foray into providing legal services. Throughout the 1990s, the big accounting firms expanded aggressively from their traditional audit business. After a decade of investment and expansion, the Big Five, as they were then known, built legal arms which rivalled the scale of the biggest law firms. Despite their early success, their ambitions in the legal industry were thwarted by a series of scandals and ensuing regulation, which exposed the potential conflicts of interest stemming from mixing audit with legal advisory services."
  • "The first section of this paper examines the prior expansion of accounting firm into the legal market – a period from which accounting and law firms can learn valuable lessons. The second section looks at the current state of the Big Four in today’s global legal market. Accounting firms have learned valuable lessons from their prior misadventures in the legal industry. They are approaching expansion more cautiously and are using more sophisticated business models that combine traditional aspects of legal services delivery with newer methods. This strategy, combined the Big Four’s relationships with large clients, have allowed the Big Four to penetrate many areas of the legal industry and, once again, rival the largest law firms in the world."
"After Wedding, An Associate's Overbilling Leads to a Suspension" --
  • "Mary Jaclyn Cook spent nearly two weeks last December in Hawaii, getting married and honeymooning in the Pacific paradise. All the while, she knew she was short on hours... A November meeting with her boss had failed to quell Cook’s fear that she would be fired if she missed the target. On Jan. 3, 2017, when time logs were due, Cook wrote 60 entries totaling 135.7 hours. Thanks to the help of a December in which she billed more than 12 hours every day, despite her travel, Cook managed to end the year about an eight-hour workday over her firm’s expected hours for associates. If only it were true."
  • "This month, Cook and the Colorado Attorney Regulation Counsel agreed to a nine-month suspension from the practice of law for the now former Faegre Baker Daniels associate. In a stipulation with the disciplinary board, Cook admitted to inflating and fabricating time entries totaling nearly 140 hours, worth nearly $40,000. The firm never collected the money, having noticed Cook’s unusually high hourly totals in December before most of its bills went out to clients. She resigned from the firm in January."
  • "Cook 'was caught off-guard, and she panicked. She claimed the hours were legitimate,' according to the stipulation. Stark countered by saying that a document management system her log claimed she used on certain days showed she never logged in those days. After the meeting ended, Cook confessed on the same day to Stark about the overbilling, stating she was afraid she would lose her job if she missed the firm’s hours requirement. Faegre Baker Daniels gave her the change to resign, which she accepted."
  • "Michael Frisch, an ethics expert and professor at the Georgetown University Law Center, said that while there is no excuse for overbilling, Cook’s tale is symptomatic of the billable hour pressures that associates face and the inherent conflict they create within firms, their lawyers and clients. 'The whole idea of targeting billable hours, saying an attorney must work ‘X’ number of hours to stay employed, doesn’t encourage efficiency and it doesn’t encourage the most cost-conscious use of attorneys’ services for clients,” said Frisch, who spent 17 years as a grievance prosecutor for the District of Columbia’s Court of Appeals. “And that’s been widely recognized in the profession.'"

Sunday, September 17, 2017

Client Information Risk Management (Ethics, Border Searches, Marketing & More)



Several interesting stories and updates to share concerning managing sensitive client information. First up: "Dissemination of Confidential Client Information Discouraged in Formal Ethics Opinion 130" --
  • "The Colorado Bar Association Ethics Committee recently issued Formal Opinion 130, dated April 3, 2017. Formal Opinion 130 addresses the disclosure of confidential client information, including information that is publicly available, such as when the information has been on the news. The opinion concludes that dissemination of such information is prohibited by the Rules of Professional Conduct, and specifically states that there is no exception for information contained in the public record."
  • "Formal Opinion 130 also addresses the use of information about former clients, concluding that such use may be allowed under the Rules when such information is “generally known.” The opinion advises attorneys to exercise caution when using information about former clients."
Hinshaw's latest newsletter also notes: "Duty of Confidentiality – Marketing – Revealing the Identity of Current and Former Clients. Wisconsin Formal Ethics Opinion EF-17-02" --
  • "The opinion concludes that disclosure of a client’s identity, without informed consent, is prohibited unless the disclosure falls under limited exceptions... This extremely broad definition leads to confusion as to the scope of the rule. The duty to protect information thus defined is often misunderstood because lawyers confuse the duty of confidentiality with attorney-client privilege."
  • "The duty of confidentiality extends automatically even if the client does not request the information be kept confidential or if the client does not consider it confidential. In order to disclose information relating to the representation of a client, it is the lawyer’s obligation to obtain informed consent, or determine if there is an exception that allows disclosure of the information. Even if the lawyer thinks that disclosure of the information is harmless, it does not mean that the disclosure is permitted, absent client consent. The Opinion recognizes that attorneys also have duties with respect to prospective clients, and that the duty of confidentiality continues beyond the death of a client. See Wisconsin Ethics Op. E-89-11."
  • "The ethical duty of confidentiality is extremely broad, applying to any information related to the representation of a client no matter the source. This information is protected regardless of privilege, status as public record, or where disclosure would be harmless. The duty extends to former clients and prospective clients. The disclosure of a client’s identity is prohibited unless the client gives informed consent, unless it is necessary to carry out the representation, or is within a specific exception to the rule. Attorneys should be mindful of this duty in all circumstances, and should consult their state version of Rule 1.6."
  • "The ACLU and the Electronic Frontier Foundation have sued the Department of Homeland Security to block U.S. Customs and Border Protection personnel from searching travelers’ electronic devices without warrants.  This has implications for lawyers who cross in and out of the U.S. with phones and laptops  containing confidential client information.  The CBP’s policy, which the ABA also has questioned, currently authorizes such searches even without a suspicion of wrongdoing."
  • "We first wrote about the issue last month, when the New York City Bar Association published an ethics opinion raising the client confidentiality issues and advising that in some circumstances lawyers should consider using “burner” phones, and avoid taking client confidential information across borders."