Risk Update

Technology Risk News — Court Moves Proceedings to Zoom + More on Smart Device Security

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We’ve covered the security fallout and move away from Zoom by some corporations and law firms, so it caught my interest to see: “Northern District of Georgia Turns to Zoom as Proceedings Go Remote” —

  • “Long-established policies created by the Judicial Conference of the United States and adopted by the U.S. District Court for the Northern District of Georgia barred visual or audio recording devices and live broadcasts from the downtown Atlanta courthouse without a court order. Those have now been loosened due to the pandemic.”
  • “Federal judges in Atlanta, Rome, Gainesville and Newnan may now use Zoom and other technology to conduct public hearings in real time without bringing everyone into the courtroom.”
  • “Any recording—including audio, video, or still screen shots—of Zoom proceedings is prohibited, and anyone doing so is subject to sanctions, said Chief Judge Thomas Thrash. ‘There is to be only one record of a proceedings in federal court,’ he said. ‘If you start letting people record and re-transmit bits and pieces of court proceedings, that will be a disaster.'”
  • “The Northern District isn’t alone in adapting to the pandemic by turning to technology like Zoom. Last month, the Supreme Court of Georgia instituted oral arguments via Zoom. The Georgia Court of Appeals followed suit on Wednesday with Chief Judge Stephen Dillard presiding in the courtroom at the downtown Judicial Center while Judges Brian Rickman and Trent Brown and counsel joined in remotely.”
  • “Cohen also said that Zoom has a function that allows lawyers and their clients to conference privately during a Zoom session.”

Next, thanks to Simon Chester at Gowling WLG for sending in this excellent overview of likely prudent practices: “How To Make Your Amazon Echo and Google Home as Private as Possible” —

  • “With news that Amazon lets human employees listen to Alexa recordings, you might want to tighten up your smart assistant ship.”
  • “And Amazon had not been forthcoming about its Alexa auditors. Apple and Google, who make popular smart speakers as well, aren’t shouting it from the rooftops either, but both companies had mentioned previously that they use human reviewers as well.”
  • “When WIRED asked Amazon if there is an opt-out for sharing recordings to improve the Alexa service, Amazon declined to comment.”
  • “The easiest way to ensure that no one is listening through your smart assistant’s microphone is to mute the device.”

(Relating to these themes on a personal level, last week I discovered my child’s school-managed meeting room, class long since over, had been quietly recording hours of audio activity in the living room, uploading it to an inaccessible cloud repository. Thankfully, those were just between me and her. There might have been a book or two read. If you care to know, yes, I do voices. Embarrassing potentially, but not a breach of duty…)

Risk Update

Playbook Conflicts Allegations — Boy Scouts Abuse and Bankruptcy Proceedings

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Tensions rise over local councils’ role in Boy Scouts bankruptcy proceedings” —

  • “The role of local Boy Scout councils in the national organization’s Chapter 11 bankruptcy, and the sexual abuse crisis that propelled it, is a flashpoint in a slew of new lawsuits on behalf of men who say they were abused as scouts.”
  • “Under the Scouts’ proposed reorganization plan, local councils would be ‘Protected Parties’ not liable for sexual abuse claims filed against the organization. Victims’ attorneys are fighting against that division, noting that the vast majority of the Scouts’ assets lie outside the national organization’s holdings.”
  • “On Monday, the case hit another potential snag. In federal court in Delaware, Judge Laurie Silverstein held a hearing to review Century Indemnity Company’s objection to work being done on the case by Sidley Austin, a corporate law firm retained by Boy Scouts. The insurance company argued that it is a conflict of interest since it previously worked with Sidley Austin in a dispute over insurance payouts involving Boy Scout sexual abuse claims.”
  • “Sidley represented Century in a dispute with Lloyd’s of London over reinsurance Century purchased from Lloyd’s to help cover major claims events. Lloyd’s refused to reimburse Century for settlements in Boy Scout sexual abuse cases, leading to a lengthy legal dispute.”
  • “In recent years, the Boy Scouts have battled with insurance carriers who refused to pay out claims, saying the Scouts failed to take effective measures to prevent continued abuse. In 2018, Boy Scouts sued six of its carriers including Century. Experts include insurers’ refusal to pay out claims as one of the driving factors leading Boy Scouts to file for bankruptcy.”
  • “Though Sidley didn’t represent Century in the Scouts’ suit against them, Century’s attorneys have argued that Sidley understands the playbook from the Lloyd’s of London case, and will successfully help the Boy Scouts demand that Century cover large payouts to victims in the bankruptcy proceedings.”
Risk Update

Sample in a Jar — In Whiskey Conflict, Ethical Screen/Information Barrier Prevents Watering Down

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This title caught my eye, as we noted it last year, and I enjoy the subject matter — both questions of ethical walls and information barriers, and the particular subject of the suit. (Friends, all donations of the water of life presently welcome during these sheltering times, and will be put to good use powering the blog.)

Whiskey Glass Maker Can’t Ax Rival’s Law Firm” — 

  • “In a ruling penned for the panel, Court of Appeal Judge Julian Flaux found that a lower court judge didn’t err in refusing to grant the injunction sought by Glencairn IP Holdings Ltd., which would have blocked solicitors at Virtuoso Legal from continuing to act for rival manufacturer Product Specialties Inc.”
  • “‘In my judgment, the judge’s evaluation of the evidence is not open to criticism and he carried out the balancing exercise correctly,’ Judge Flaux said. ‘His conclusion that the balance of justice was against the grant of an injunction was unimpeachable.'”
  • “Glencairn, which owns a European trademark and a registered design for its distinctive glassware, unsuccessfully argued that the court should intervene since the solicitor for the opposing party had previously acted for another company that Glencairn sued for infringement — and thus had access to privileged, confidential information about a settlement reached in the earlier case.”
  • “Thursday’s judgment notes that Virtuoso’s principal, Elizabeth Ward, testified that the Product Specialities team didn’t have knowledge or access to the confidential information connected to the other matter and its settlement. The burden of proof to show that the law firm’s ‘information barrier’ failed was on Glencairn, which hadn’t made its case, Judge Flaux said.”
  • “Additionally, Judge Flaux said, if information is misused or openly disclosed or there is some threat that it will be, the sufficient remedy is to restrain the opponent and his legal advisers from misusing the information — not to block the law firm from acting.”
Risk Update

(Likely) Unwaivable Conflicts — Related Matters, Opposing Interests, Complex Facts

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Lawyer Likely Can’t Defend Clients on Related Criminal Charges” —

  • “A New York lawyer representing two clients in separate but related criminal matters faces a ‘likely unwaivable’ conflict of interest based on the facts presented, a recent state bar association opinion said.”
  • “A conflict of interest exists for a lawyer in this situation if it will involve the lawyer in representing opposing interests, or that there’s a ‘significant risk’ that the lawyer’s professional judgment will be adversely affected by the lawyer’s own interests, the April 22 opinion said.”
  • “The clients are in a relationship, and one is charged with a crime where the other was a victim, the opinion recounted. But the alleged victim was intoxicated when the event occurred, and was arrested for driving while intoxicated after the alleged perpetrator was arrested, it said. And each is a witness in the others case, with the alleged victim wishing to testify in favor of the perpetrator, it said.”
  • “The charges ‘arise out of the same common nucleus of circumstance,’ the bar opinion said. Although the clients are facing separate charges, it’s ‘impossible to divorce the allegations of one from the allegations of the other,’ it noted.”
  • “A conflict can be waived if the lawyer ‘reasonably believes that the lawyer will be able to provide competent and diligent representation to each affected client’ and if each client gives ‘informed consent confirmed in writing,’ the court explained. But the question of a waiver is a ‘very fact-intensive’ inquiry and ‘depends on a variety of factors of which we have limited knowledge here,’ it said.”
  • “The bar admitted it was “reluctant” to conclude that a conflict may never be waived on the facts as presented but that is was ‘very skeptical that informed consent is possible.'”

And on the topic of crime: “Is a client using your legal services to commit a crime? New ethics opinion outlines your duty to inquire” —

  • “Lawyers have ethical duties to inquire whether a client is seeking to use their services to commit fraud or other criminal activity. This duty to inquire extends beyond Model Rule 1.2(d), which prohibits a lawyer from advising or assisting a client with conduct the lawyer knows is criminal or fraudulent. The ABA’s Standing Committee on Professional Responsibility has issued Formal Opinion 491 to clarify this requirement in the wake of increased reporting of individuals using legal services for money laundering and terrorist financing.”
  • “The opinion states that ‘the legal professional has become increasingly alert to the risk that a client or prospective client might try to retain a lawyer for a transaction or other non-litigation matter that could be legitimate but which further inquiry would reveal to be criminal or fraudulent.'”
  • “If the client refuses to answer a lawyer’s questions or asks the lawyer not to evaluate whether a course of action or transaction is legal, the lawyer must still make an ‘appropriate inquiry.’ If the client will not provide the necessary information to the lawyer, the lawyer must withdraw or decline representation.”
Risk Update

Ethical Screens, Conflicts & Vigilance — One Firm Disqualified, One Firm Still Fighting

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Cozen O’Connor Disqualified Over Delaware Case Conflicts” —

  • “Law firm Cozen O’Connor has multiple conflicts in a Delaware life insurance trust case and can’t continue to represent its client due to a risk that its lawyers will need to testify, the Delaware Superior Court ruled.”
  • “Even though Cozen screened off the attorneys from one another and ‘demonstrated the vigilance appropriate to the profession,’ it can’t continue to represent Sun Life Assurance Co. of Canada, Judge Paul R. Wallace said.”
  • “Cozen represented Sun Life in the suit, but it had a longstanding outside counsel relationship with WSFS, according to the court. And it previously represented a company called Ocean Gate Life Settlement Program LP, which purchased the life insurance policy from the original insured and beneficiary, the court said.”
  • “But Sun Life conceded Ocean Gate was a prior Cozen client, he said. The two are materially adverse…”

Williams & Connolly Fights DQ Bid In $150M LabMD Suit” —

  • “Williams & Connolly LLP told a Virginia federal court that it shouldn’t be disqualified from representing Reed Smith LLP in a $150 million malicious prosecution lawsuit brought by LabMD Inc., saying the defunct cancer-screening company, which has pursued a number of similar suits, doesn’t have the evidence to back up its motion.”
  • “Williams & Connolly wrote in its response Monday to a motion to disqualify from LabMD that the medical testing company had waited eight months after learning the firm represented Reed Smith before objecting and that it had not provided anything to back up its claim that LabMD had been a client of Williams & Connolly.”
  • “In March, the company said that a Williams & Connolly attorney consulted with LabMD before the lawsuit was filed and was provided with confidential information. In its response Monday, Reed Smith said that the attorney in question, Rob Cary, met Daugherty at an event in 2017, where they both talked about litigating against the government. Cary was screened from the case after the firm checked for potential conflicts, according to the response.”
  • “The firm also argued that LabMD was never a client of Cary or Williams & Connolly and that the company had waited too long to object to the representation. With a July 10 deadline for completing discovery looming, the firm said, it would be highly unfair to expect Reed Smith to find and familiarize new counsel in the case.”


Risk Update

Conflicts Fight Conceded — Context Covid-19

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“‘Life Is Too Short’ So Atty Cedes Clients In Chiquita DQ Fight” —

  • “The lead attorney representing families of banana farmers accusing Chiquita Brands International Inc. of funding terrorist groups in South America voluntarily stepped away from clients he shared with a lawyer calling for his disqualification, telling a Florida federal court Thursday that the COVID-19 pandemic ‘has sharply emphasized that life is too short.'”
  • “Terrence Collingsworth of International Rights Advocates was accused of failing to establish an attorney-client relationship with more than 140 plaintiffs, bribing witnesses and later posting confidential material in response to the disqualification bid brought by his co-counsel Paul Wolf.”
  • “A hearing on Wolf’s motion to disqualify Collingsworth was set for Monday, but the attorney said Thursday that it wouldn’t be necessary as he was willing to voluntarily relinquish his lead counsel status and step away from the 144 clients he shared with Wolf.”
  • “The multidistrict litigation involves families of banana farmers allegedly murdered by a right-wing paramilitary group known as the Autodefensas Unidas de Colombia, or AUC. The families contend that Chiquita entered into agreement with the AUC in 1995 to pacify the banana plantations amid increasing activity by left-wing guerrilla groups.”
Risk Update

Mega Mergers, Mega Firms — Mega Risk? Mega Conflicts? Mega Opportunity?

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The Rise of the Mega Firm: Legal Departments Face Difficult Questions Amid Law Firm Mergers” —

  • “Cameron Findlay, general counsel of global food processing and commodities trading company Archer Daniels Midland Co., says it seems like a near-weekly occurrence that one of his outside law firms calls to announce a forthcoming merger with another firm or to say that they’re considering a merger.”
  • “Law firm mergers have double-edged consequences for legal departments. Mega firms have deeper benches and a broader geographic reach. But consolidation can breed conflict, lead to billing rate hikes and shrink the pool of firms for legal departments to choose from when considering outside counsel.”
  • “‘In terms of the benefits to in-house counsel, for a big multinational company like ADM, I have to admit that it’s nice to know that our principal firms can handle a broader array of matters in a broad array of geographies,’ Findlay says. ‘It is kind of nice to call up if you have an investigation that crosses national boundaries, and say, ‘Can you handle it without hiring other firms in other countries?’'”
  • “But, he adds, ‘I’ve had at least a couple questions that have arisen … because law firms have merged with firms with which we’ve had disputes in the past. And so we’ve had to work through those sorts of things.'”
  • “Another more common type of conflict arises when firms that represent competitors merge, notes Jason Winmill, managing partner at Boston-based legal department consulting firm Argopoint.”
  • “‘It’s not just that they were mean to us or nasty to us in another matter,’ Winmill says. ‘Law firms often work on one side of the street or the other. In-house counsel are looking for the merged firm to demonstrate that the side of the street they want to be on in the future is their side of the street.’
  • “…Faegre Drinker co-chair, Andrew Kassner, notes that the two firms and their clients were ‘incredibly compatible,’ which resulted in “few real conflicts.’ He adds that the clients were ‘impressed with the overwhelming business case’ for the merger.”
  • “For legal departments that are unhappy with a firm in the wake of a merger, the choice of staying or leaving can be difficult. Especially if the legal department and firm are in the middle of litigation or a project. In that common scenario, companies grapple with the tough decision of remaining in an unsatisfactory relationship or dealing with a service disruption.”
Risk Update

(The) Facebook Comes at King (& Spalding) — Conflicts Allegations, Privacy, Hacking, Human Rights & FBI Eyes

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Facebook claims NSO Group’s lawyers have conflict of interest in WhatsApp case” —

  • “In a court filing made public this week, Facebook asked a federal judge to disqualify law firm King & Spalding from representing NSO Group because the firm previously represented Facebook-owned WhatsApp in a different, sealed case that is ‘substantially related’ to the NSO Group one. King & Spalding, an Atlanta-based firm with a range of big corporate clients, has denied there is a conflict of interest, according to the filing.”
  • “It is the latest twist in a legal tussle that began in October, when Facebook sued NSO Group, alleging that the Israeli company violated a federal anti-hacking law when its malware was used to infect some 1,400 mobile devices, including those of human rights advocates. NSO Group denies the charges.”
  • “Facebook alleged that King & Spalding’s past work gave NSO Group’s legal defense an unfair advantage. ‘Any attorney defending this suit would love to have insight into how WhatsApp’s platform and systems work,’ the court filing states. ‘And King & Spalding has that insight—because it was once WhatsApp’s counsel.'”
  • “The lawsuit— seen as a key front in rights’ groups efforts to rein in the operations of spyware firms — has gotten increasingly contentious in recent weeks, with Facebook and NSO Group trading barbs in legal filings.”

For more interesting, related details see also: “FBI Head Helped Facebook Defend Encryption He’s Now Fighting” —

  • “Christopher Wray, prior to becoming FBI director, argued on behalf of Facebook Inc in defense of encrypted communications as the company was being pressured by the U.S. Justice Department over the issue, according to a court filing and a person familiar with the case.”
  • “Only last month, Wray told a cybersecurity conference that internet companies were ‘increasingly shielding indispensable information about those threats from any form of lawful access -through warrant-proof encryption.'”
  • “Wray’s work for Facebook, which occurred when he was employed as a lawyer for law firm King & Spalding, has not been previously reported.”
  • “The FBI said Wray could not comment on the case. ‘When he was an attorney in private practice, however, the Director represented his clients’ interests and advocated on their behalf,’ the agency said in a statement.”
  • “Alan Rozenshtein, a former U.S. Department of Justice lawyer who now teaches at the University of Minnesota, agreed with that assessment. ‘I don’t think it’s anything untoward,” he said in a telephone interview. “There are plenty of attorneys who go from industry to government and argue against the very industry they were representing.'”
  • “In a statement, WhatsApp did not comment specifically on Wray’s past position on encryption but said that King & Spalding’s past work for WhatsApp poses ‘serious ethical concerns for their representation of NSO today.'”