Risk Update

Conflicts & DQ News — “Tit-for-Tat” Disqualification Battle, Casino Clashes

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Insurer Seeks Do-Over On Greenberg DQ Bid In Hartford Case” —

  • “An Indiana magistrate who let Greenberg Traurig stay in a trade secrets case for a Hartford insurance unit made “clear errors” when she decided the BigLaw firm never represented its current adversary, defendant OneCIS Insurance Co. said Thursday.”
  • “The filing is an outgrowth of tit-for-tat disqualifications bids in Hartford’s suit accusing two former employees and OneCIS — their current employer — of stealing trade secrets and customer information.”
  • “Earlier this month, U.S. District Judge Debra McVicker Lynch granted Hartford Steam Boiler Inspection and Insurance Co.’s bid to disqualify OneCIS’ counsel at McGuireWoods because the firm also has a long history representing Hartford on labor and employment issues, creating an unwaivable conflict in the current case.”
  • “In a separate order, Judge Lynch also denied OneCIS’ call for Greenberg’s removal, saying there was ‘no evidence’ the firm had ever represented OneCIS. She also said OneCIS had conceded the current case was unrelated ‘to any matter for which Greenberg Traurig has ever provided legal advice to any company related to OneCIS.'”
  • “In Thursday’s filing, OneCIS took sharp issue with both those assertions, saying it had “expressly” argued to the contrary in its motion and submitted declarations.”

Borgata, Ocean Casino’s Law Firms Start Battle Within The Battle” —

  • “The core of the lawsuit filed in August by Borgata in Nevada federal court against Atlantic City rival Ocean Resort Casino and two key casino executives is based on whether the executives violated employment contracts and improperly provided Ocean with proprietary trade secrets.”
  • “Last week, powerful Philadelphia-based law firm Blank Rome — which represents Ocean — augmented its claim that Jackson Lewis, Borgata’s counsel, be disqualified.”
  • “The charge is based on the fact that Jackson Lewis, itself a powerful law firm with hundreds of attorneys, has both Borgata and Blank Rome — its adversary in this case — as ongoing clients, so it thereby ‘violated the duty of loyalty’ to Blank Rome in participating in the lawsuit.”
  • “Borgata already had sought to oust Blank Rome from the case because of allegedly unethical conduct — as claimed by Jackson Lewis — in contacting a high-ranking Borgata employee in mid-September without Borgata’s permission.”
  • “‘The basis of Blank Rome’s Motion is very simple and straightforward: Jackson Lewis has moved to disqualify and seeks other sanctions against its client, Blank Rome, in its representation of another client, and is therefore taking a directly adverse position to its client,’ an attorney for Blank Rome stated in a 14-page filing early last week. ‘This is not, as Jackson Lewis would have this Court believe, a ‘no harm, no foul’ situation. To the contrary, Jackson Lewis committed a foul, and Blank Rome has been significantly harmed as a result.'”
  • “Attorneys for Jackson Lewis have told the court that its work for Blank Rome was minimal — just ‘a handful of visa applications, one or two a year.’ But the volume of work does not erase an obligation for Jackson Lewis to seek permission to serve as an adversary in another case, according to Blank Rome.”
Risk Update

Outside Counsel Guidelines — Latest Industry Insight, News and Discussion on OCGs

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Last week I heard talk of outside counsel guidelines in the wild in excess of 300 pages in length. (I guess this could have been timed as a Halloween update with that metric…)

On that theme, it’s always interesting to keep an eye on how law departments and those who advise and influence them think about key matters like OCG creation and management. Here are a few recent stories on that theme, starting with: “3 Can’t-Miss Best Practices for Outside Counsel Guidelines”  —

  • “Since that time, CLDs and law firms alike have grown exponentially, creating an opportunity for in-house counsel to manage OCGs in a way that can generate a level of compliance and savings that is anything but boring. In addition to saving millions, OCGs are a way to improve both law firm billing practices and the underlying behavior they represent.”
  • Ensure the guidelines are received and understood by the right person at the law firm. It may seem obvious to say billing guidelines must actually be read in order to be followed, but the reality is they often go unread. To remedy this problem, organizations must first figure out who at the law firm is in the best position to receive, understand, and implement the guidelines in question.”
  • “In addition to sending the guidelines to the right person, you should document that they were received and agreed to, ideally using e-signature. But even then, you’re not done because e-signature does nothing to guarantee actual comprehension occurred.”
  • Make the guidelines simple and unambiguous. Stylistic questions aside, organizations still have to decide what requirements belong in the guidelines vs. what ones are not practical to comply with or unlikely to be enforced.”
  • Enforce the guidelines. If you don’t take your guidelines seriously, nobody else will, either. With this document, you are drawing a line in the sand, but that doesn’t mean law firms won’t cross it. No matter how clear your guidelines are, law firms will violate them—sometimes knowingly, but usually by accident because the task gets deemphasized in favor of other priorities. Without monitoring and enforcement, there is no motivation to read these hideously boring guidelines and put in the effort to comply.”
    “Enforcing guidelines is easier with advances in technology like AI-assisted invoice review, which increases the ROI of the bill review process. Additionally, legal spend and matter management platforms can help with everything from smarter staffing to streamlined communications.”

Legal Department Challenge: E-Billing Can’t Fully Automate Guideline Compliance” —

  • “Using e-billing tools to help manage expenses and track outside counsel’s adherence to guidelines is now pretty much par for the course inside corporate legal departments. But technology alone may not be enough catch errors in law firm billing, a reality that may lead more departments to supplement e-billing solutions with a review by an alternative legal service provider.”
  • “From a technology perspective, some of those challenges often have their root in the set of uniform activity codes that law firms enter for different services, such as e-discovery, for instance, and an e-billing system that flags for potential violations of a company’s billing guidelines. Those codes are developed by the Legal Electronic Data Exchange Standard, and are updated to reflect tasks centered around emerging practice areas such as privacy.”
  • “‘Some GCs may be more welcoming of ‘Our law firms are our partners and yes, we’re absolutely going to pay for first-year associates because we want them to develop.’ Other people may say ‘I’m not paying for training and development,’’ Clem said.”
  • “Clem also doesn’t think there’s much of a chance that a more universal and uniform set of billing guidelines would emerge, especially as businesses adapt to the individual hardships caused by the COVD-19 pandemic. Still, not all billing policy violations are strictly accidents.”
Risk Update

Conflicts Updates — Side Switching Allegation, Canadian Conflict Considered

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Snell & Willner Won’t Be DQ’d From EB-5 Project Fight

  • “A Colorado federal judge has declined to disqualify Snell & Wilmer LLP from a suit in which Chinese investors seek to recoup the millions they sunk into a condo project under the EB-5 visa program, finding that the firm adequately handled potential conflict of interest issues.”
  • “Investors effectively created the conflict for the firm after they amended their complaint against Colorado Regional Center Project Solaris LLLP, its former general partner Colorado Regional Center I LLC and other defendants, changing their claims from being direct to being derivative, according to Tuesday’s order by U.S. District Judge Raymond P. Moore.”
  • “The change led Snell & Wilmer’s two clients — Project Solaris and Colorado Regional Center I — to have competing interests, as the investors, led by Jun Li, went from directly suing the defendants to suing various defendants on behalf of Project Solaris, according to Tuesday’s order.”
  • “To avoid a conflict in response to the legal maneuverings, Snell & Wilmer stopped representing Project Solaris, which is now representing itself. That the firm continued to represent Colorado Regional Center I does not warrant a disqualification, the judge held.”
  • “‘The court finds Snell & Wilmer did not ‘switch sides’ or drop [Project Solaris] in favor of pursuing the interest of another client, CRC 1,’ the order reads. ‘Instead, when Li plaintiffs’ actions created the conflict, Snell & Wilmer recognized the conflict and withdrew from representing [Project Solaris.] They were required to do no more.'”
  • “‘Li plaintiffs fail to identify any information Snell & Wilmer would have obtained that would be confidential to [Project Solaris] in light of the relationship between [Project Solaris] and CRC I or how any such unidentified information could be used to the detriment of [Project Solaris,]’ the order reads.”

Same counsel can’t work for insurer on both priority dispute and AB claim: Court” —

  • “An Ontario auto insurer involved in a priority dispute with another insurer should have used a different counsel in that dispute than the one used for the main accident benefits claim with the insureds, the Ontario Superior Court has ruled.”
  • “The issue came up in the case of The Personal Insurance Company v. Jia, in which the same counsel represented the insurer in both the priority dispute and in the accident benefits dispute.””The accident benefits claimants raised the issue of a conflict before the Ontario Licensing Appeal Tribunal (LAT). They argued that the insurance company’s counsel, in support of the insurer’s denial of their claim, had misused information that had been compelled from them in an examination under oath during the insurer’s priority dispute with another insurer.”
  • “‘[SLASTO] found that there is a conflict in counsel for the insurer acting in both the priority dispute and the benefits dispute,’ the Ontario Superior Court of Justice found. ‘[SLASTO] found that breach of the statutory scheme was improper and prejudicial to the respondents, defeating the carefully balanced process prescribed by law.'”
  • “Even if theoretically there may not have been any inherent conflict of interest in the same lawyer representing The Personal in both the priority dispute and the accident benefits actions, how the information was used made a difference in this case, the Ontario Superior Court ruled.”
Risk Update

Risk Webinar — Virtual Risk Round Table (Focus on OCGs: Policy, Process, Technology & More)

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My friends at InOutsource are hosting the fourth webinar in their virtual risk round table series. These have sparked good interest and discussion from the community, and I’ll be a fly on the wall again at: “VIRTUAL ROUND TABLE: Navigating Today’s Pressing Risk Challenges” —

  • DATE: November 19th at 1 pm Eastern.
  • “Because we didn’t leave enough time to discuss them and our survey said you wanted more, we’re going to devote the entire hour of our next roundtable to…Outside Counsel Guidelines!”
  • “Fortunately for your family, we’re scheduling this one for the Thursday before Thanksgiving, thereby providing you with lots of OCG conversation starters to drop during your virtual Thanksgiving dinners. Talking points like:
    • Hot take from Max Welsh: OCGs aren’t worth your time! Just stick them in a drawer!
    • What are your operating procedures for reviewing and negotiating terms?
    • How have you leveraged technology to make tracking and complying with OCGs more efficient?

Registration link.

Risk Update

Political Conflicts — Election Looms, Law Firm Conflict/PR Risk Mitigation in the News

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Doug Emhoff paused his career for his wife Kamala Harris’s aspirations” —

  • “If his wife [Kamela Harris] and her running mate, Joe Biden, are elected, Harris would accumulate several firsts: first female vice president, first Black veep, first No. 2 born to Indian American and Jamaican American parents.”
  • “He’s the high-powered professional who has sidelined his career to support his wife’s sky-high aspirations — even as his work life is creating a prickly conundrum over possible conflicts of interest if Harris takes office.”
  • “In August, Emhoff announced a leave of absence from his law practice. He had continued working as an attorney while Harris was California’s attorney general, and during her campaigns for U.S. senator and the Democratic presidential nomination. This time it was different.”
  • “Emhoff presents a more complex set of questions. Over the years, alongside the boilerplate corporate and real estate work, he has sometimes represented heavily regulated companies or firms that might be frowned upon on the left.”
  • “He represented Merck in cases involving allegations that the drug Fosamax caused bone disease, an entanglement that could cause appearance problems given Democrats’ criticism of the drug industry. Even more touchy, his clients have included Abbott Laboratories in an OxyContin fraud case, and the arms dealer Dolarian Capital in a dispute related to a contract to transfer weapons from Romania to the Afghan military.”
  • “The problem for Emhoff is that his current firm, DLA Piper, has a Washington lobbying presence. Even if he could figure out a way to build a firewall between his legal work and the firm’s lobbying and government work, it’s likely that real or perceived conflicts of interest would be alleged by his wife’s political opponents.”
  • “DLA Piper may be uncomfortable with Emhoff returning to the firm, according to two people familiar with its culture who spoke on the condition of anonymity to discuss private conversations. DLA Piper declined to answer questions about Emhoff’s future.”
  • “There isn’t a clear-cut conflict-of-interest rule governing vice-presidential spouses, said Larry Noble, a government ethics expert who served as general counsel for the Federal Election Commission in Republican and Democratic administrations. But that won’t be Emhoff’s biggest problem, he said. ‘The problem with appearances of conflicts of interest is that they undermine the public’s confidence in their government,’ he said.”