Risk Update

Conflicts News — Covid-19 Concerns & Derivative Dual Representative DQ Sought

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Prior Work Conflicts in the Age of COVID-19” —

  • “Special vigilance is warranted now, however, because the COVID-19 pandemic has created particular ways in which prior work conflicts are rearing their heads.”
  • “For example, there is now a great deal of scrutiny surrounding force majeure provisions in contracts. Where your firm is representing a client in a dispute surrounding the force majeure provision in a contract that your firm previously drafted or negotiated, a prior work conflict may exist.”
  • “This is particularly true where the client suggests that the firm may have made a mistake by not drafting the force majeure language more carefully. But even where the client has not made that suggestion, a conflict of interest might still exist depending upon the facts and circumstances.”
  • “In light of the risks associated with prior work conflicts, law firms should encourage their lawyers to consult with their General Counsel’s office or otherwise seek legal ethics and risk management advice in situations where a client asks the firm to handle a dispute involving a matter on which the firm previously worked.”

DQ Sought For Attys Repping Co. And Board In Derivative Suit” —

  • “Stephen Vance, who is not on the board of Broce Manufacturing Co., contended Tuesday that under Kansas state law, a company’s board of directors cannot retain the same counsel to represent both themselves and the company in a shareholder suit filed on behalf of the company.”
  • “Vance asserted that the firms hired to represent Broce and its board — Foulston Siefkin LLP and Lewis Brisbois Bisgaard & Smith LLP — face a further conflict of interest in that they facilitated Broce CEO Alan Vance’s final alleged self-dealing transaction of $5 million.”
  • “Under the Kansas Rules of Professional Conduct, the conflict of interest is even more blatant in cases in which the corporation plays an active part in the derivative litigation, as Broce does here, and where the claims against the individual directors are particularly grave, Stephen Vance argued.”
  • “Representatives for the parties did not immediately respond Wednesday to requests for comment.”
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Risk Update

On Governing Information — When Local Subpoenas Conflict with Global Data Privacy Laws

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Best Practices for Responding to Subpoenas That Conflict With Foreign Data Privacy Laws” —

  • “Companies who do business in the United States and have documents located abroad must understand the potential conflicts between the broad extraterritorial discovery authorized by U.S. courts, and the major restrictions on the transferring of personal data in many foreign countries.”
  • “Consider this scenario: A company receives a subpoena for documents from the U.S. government or a U.S.-based regulator, but is concerned because some of its documents are hosted on a server in a foreign country with restrictive personal data protections. How should attorneys advise this company to comply with the subpoena without violating foreign data privacy laws?”
  • “This article discusses various considerations on how to respond to such subpoenas, including: (1) negotiating with the party issuing the subpoena or document request to narrow the scope of the requests; (2) determining if the same information can be obtained through means that do not implicate foreign data privacy concerns; (3) consulting with local counsel in the country where the data is located to more fully understand the obligations; (4) seeking U.S. court intervention; and (5) taking all reasonable steps to limit and protect data productions.”
  • “U.S. courts typically rule in favor of the broad discovery sanctioned by the Federal Rules of Civil Procedure (FRCP), rather than the limitations on production set by foreign data privacy laws… Knowing that U.S. courts are likely to grant broad extraterritorial discovery, respondents should take certain steps throughout the process to minimize conflicts. Counsel should work with their clients to understand if the same data exists on U.S. servers or databases. Attorneys should come prepared to the initial negotiations with the requesting party with an understanding of where client documents are stored, and any potential conflicts with foreign data protections.”
  • “Attorneys should consider that U.S. courts may not recognize the foreign data privacy protections, and nevertheless compel the production of documents. Steps should be taken to limit and protect such data productions, including entering into a robust confidentiality and protective order.”
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Risk Update

ABA WEBINAR — Are Outside Counsel Guidelines a Threat to the Practice?

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With thanks to Anthony Davis at Clyde & Co for the gracious invitation, I’m looking forward to this ABA webinar on April 20th (at 2pm eastern): “Are Outside Counsel Guidelines a Threat to the Practice?” —

  • Have outside counsel guidelines gone a step too far? Are they being used to inappropriately restrict lawyers? Join our terrific ABA members and ethics lawyers Anthony Davis, Bruce Green, and Eric Hirschhorn as they grapple with the issues and discuss whether the ABA Model Rules of Professional Conduct should be amended to address these and similar concerns or whenever these should be left to bargaining between clients and their outside counsel.
  • The ABA Model Rules of Professional Conduct strike a balance between allowing clients and lawyers to contract with one another as they see fit and protecting essential elements of the practice of law (including access to legal services, the definition of what constitutes a conflict of interest, confidentiality of client information, loyalty to clients, and the independence of lawyers)
  • Some argue that this balance is being upset by a growing profusion of outside counsel guidelines (collectively, “OCGs”) that are generated by institutional clients.
  • What’s a lawyer to do when OCGs:
    • Expand the definition of “client” far beyond the organization that will actually receive legal services;
    • Restrict a lawyer from providing services to competitors of the client;
    • Require disclosure of confidential information relating to other clients;
    • Expand the definitions of positional conflicts so as to restrict law firms’ availability to serve other clients; and
    • Restrict the lawyer’s future use of expertise garnered during the course of representing a client?

The event is free for ABA members with a registration fee for non-members. But I’ll aim to take a few notes on anything interest I hear…

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Risk Update

ILTA WEBINAR — Information Governance Challenges for Today’s Teams & Collaboration

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ILTA’s upcoming IG webinar caught my eye as relevant on several fronts: “Teams and Other Collaboration Platforms With IG Considerations: An Open Mic Discussion” (if that link doesn’t work, see their general events page) —

  • Apr 15, 2020 from 3:00 PM to 4:00 PM (ET)
  • This virtual roundtable will be an open forum where members can learn and contribute to the topic of Microsoft Teams and other collaboration platforms with an IG (Information governance) structure. We will have several experts to help give some good suggestions for people to improve communications, and collaboration while proactively taking security into consideration. Other topics to be discussed:
    • Security of data while working remotely
    • Is now a good time to get your IG in order?
    • Time for spring cleaning?
    • Time to introduce and reinforce the culture and process changes needed to effectuate smart use of collaboration tools

Please join us to listen and share your thoughts and experiences in this topsy-turvy time.

Panel

  • Rachael Heade – Sr. Program Manager Information Management Policy and Compliance, Microsoft
  • Leigh Isaacs – Director, Information Governance & Records Management, Proskauer Rose LLP
  • Rick Krzyminski – Client Solutions Officer, Baker Donelson Bearman Caldwell & Berkowitz
  • Beau Mersereau – Chief Legal Technology Solutions Officer, Fish & Richardson PC
  • Darrell Mervau – President, FileTrail

 

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Risk Update

More Fresh Covid-related Risk Updates — Will Pandemic + Recession Impact Malpractice Claims?

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How COVID-19 and a Recession Could Impact Malpractice Claims” —

  • “During a recession, and for the three years following, there has historically been a huge spike in paid claims, which is a number that typically doesn’t return to a more normalized level until five years post-recession. In addition, and looking back at the events of 2008 specifically, legal malpractice insurers experienced a spike in paid claims above $10,000 that ranged from 35% to 41%. I share this in order to explain why recessions always capture the attention of the insurance industry because given how the markets look of late, another recession appears to be imminent thanks to the COVID-19 pandemic.”
  • “Now, based upon what has happened as a result of past recessions coupled with the realities of the response to COVID-19 from the individual level to that of governments, here’s what legal malpractice insurers are currently concerned about.”
  • “irst, claim frequency and/or claims severity will change for any number of reasons. We just can’t accurately predict how. At a minimum, clients will look to blame their lawyers when their business dealings go south as a result of the near-certain recession that’s coming. Lawyers and staff will make mistakes that would otherwise not have been made due to the rapid transition to working from home and/or being under excessive stress. And clients, who are also experiencing excessive stress, will question decisions they made in light of the advice their lawyer gave them if their legal matter doesn’t work out the way they expected it to. Regardless, there will be a new normal in terms of claims, at least for a few years.”
  • “Second, policy retention may be an issue; but again, we can’t accurately predict how this might evolve. Lawyers facing difficult financial times may choose to leave the practice of law entirely or may decide to allow their policy to lapse and simply go bare as a way to save some money. Of course, there’s the flip side, some who have previously been bare may decide now’s the time to purchase coverage because the value of their assets have dropped, and their level of risk has risen. Only time will tell.”
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Risk Update

Fresh Covid-related Risk Updates — Protecting Privilege Risk + Commentary from The Law Society

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Restatement to the Rescue: 20-Year-Old Treatise May Help Ease Work-at-Home Privilege Problems” —

  • “Since so many lawyers and clients are now communicating with each other from their homes, the COVID-19 pandemic presents such a time with respect to the protection of attorney-client privilege.”
  • “For lawyers who have long since set themselves up to operate on a “virtual” basis and for clients who have developed sophisticated systems for assuring confidentiality, there may be no change. But what about the rest of us who now find ourselves or our clients communicating while regularly surrounded not only by household pets but also by children, relatives, and spouses or partners – with little or no guarantee of “private” space or time? This is where the 20-year-old §71 of the Restatement of the Law (Third), The Law Governing Lawyers (2000) can provide some helpful advice.”
  • “It is known that a reasonable expectation of confidentiality at the time of a communication between attorney and client must exist before a communication can be potentially considered for privilege protection.”
  • “Translated to the age of COVID-19, this can fairly be taken to mean that neither lawyers nor their clients can immediately be expected to go as far in protecting the confidentiality of their client communications from home as they used to do from the office.”
  • “Nonetheless, two limitations must be noted. One is that steps that can reasonably be taken now… The other is that the duties that lawyers have to protect communications on their end and to advise clients about risks to confidentiality on the client end may well grow if and when it appears that lawyers and clients will remain working from home for a prolonged period of time.”

The Law Society: “Coronavirus (COVID-19) advice and updates” —

  • “In response to questions from our members, our latest advice for firms is below.This information will be updated regularly to reflect the most recent guidance.”
  • “Are solicitors key workers? Only legal practitioners who work on the types of matters, cases and hearings listed above can be classified as key workers:
    • advocates (including solicitor advocates) required to appear before a court or tribunal (remotely or in person), including prosecutors
      other legal practitioners required to support the administration of justice including duty solicitors (police station and court) and barristers,
    • solicitors, legal executives, paralegals and others who work on imminent or ongoing court or tribunal hearings
    • solicitors acting in connection with the execution of wills
    • solicitors and barristers advising people living in institutions or deprived of their liberty”
  • “What are a solicitor’s professional obligations if they are unable to provide the services required, due to coronavirus? You should notify the client as soon as practical that due to coronavirus issues the service cannot be provided, and suggest that they try another solicitor (perhaps giving a list of three alternatives or a link to the Law Society’s Find a Solicitor service).”
  • “What should I do if I have court deadlines coming up? A new Practice Direction under the Civil Procedure Rules seeks to address the issue of extensions of time. Practice Direction 51ZA, effective from 2 April 2020, makes provision for parties to agree extensions of time to comply with procedural time limits in the Civil Procedure Rules, Practice Directions and court orders. Parties can agree an extension up to 56 days without formally notifying the court (rather than the previous 28 days) so long as that does not put a hearing date at risk. Any extension of more than 56 days needs to be agreed by the court. It provides guidance to the court when considering applications for extensions of time and adjournments. This Practice Direction ceases to have effect on 30 October 2020.”
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Risk Update

Zoom Zoom — Conferencing, Collaboration & Confidentiality Concerns

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A few weeks ago, Zoom seemed to be poised to achieve “Ketchup/Kleenex/Xerox”-like brand status as a verb, offering convenient collaboration in a way that appealed to the remote working world. Now several shoes are dropping as security concerns are driving serious repercussions. While not our standard conflicts fare, this all seemed worth a consolidated review.

Today’s latest: “Elon Musk’s SpaceX bans Zoom over privacy concerns – memo” —

  • “Elon Musk’s rocket company SpaceX has banned its employees from using video conferencing app Zoom, citing “significant privacy and security concerns,” according to a memo seen by Reuters, days after U.S. law enforcement warned users about the security of the popular app.”
  • “SpaceX’s ban on Zoom Video Communications Inc illustrates the mounting challenges facing aerospace manufacturers as they develop technology deemed vital to national security while also trying to keep employees safe from the fast-spreading respiratory illness.”
    “NASA, one of SpaceX’s biggest customers, also prohibits its employees from using Zoom, said Stephanie Schierholz, a spokeswoman for the U.S. space agency.”
    “Investigative news site The Intercept on Tuesday reported that Zoom video is not end-to-end encrypted between meeting participants, and that the company could view sessions.”

(Having performed a cursory search to identify firms who have recently represented SpaceX, I note several familiar names. Curious if SpaceX or others are extending guidelines to address conference tools.)

In related Zoom news, see:

(Of course, some of us are curious when client and firm attention will be turned to Microsoft Windows Telemetry and data gathering on that front… But that’s a post and discussion for another day…)

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