Risk Update

Risk Reading — Clients Aren’t Property, Pandemic Ethics and Conflicts, Lawyers Technological Competence & Regulatory Sandboxes

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A few interesting odds and ends I’ve come across recently, spanning a few topics. Starting with: “Looking at Your Firm’s Balance Sheet: Law Firm Clients, and Lawyers, are Not Property” —

  • “It has been almost two years since the California Supreme Court issued its decision in Heller Ehrman v. Davis Wright (2018) 4 Cal.5th 467, holding that a dissolved law firm has no property interest in fees generated after dissolution for hourly matters that were in progress when the firm dissolved. And earlier this year, on February 13, 2020, the District of Columbia Court of Appeals essentially made the same finding in Diamond v. Hogan Lovells US LLP (D.C. 2020) 18-SP-218. These cases put to bed – once and for all – the idea that a law firm is entitled to future profits from the firm’s clients as an ongoing property right.”
  • “In a narrow sense, this means that a lawyer who leaves a dissolved law firm and takes clients to a new law firm does not have to give back profits earned on those matters at the new firm. But in a much broader sense, these courts reaffirmed something that should guide all lawyers and law firms managing partner or group departures: law firm clients are not property. This might sound obvious since clients have the right to choice of counsel and, in fact, this principle is part of what guided the court to reaffirm that law firms do not own clients.”
  • “As the court made clear in Heller, revenue from any client, who can leave the firm at any time, is an expectation interest, but not a property interest. So law firms don’t own clients, although the revenue stream from clients is an asset of the firm, at least until it isn’t.”
  • “On the other hand, law firms have the right to fair competition with departing lawyers for those clients, and should hold the lawyers to their fiduciary duties and their contractual obligations under the partnership agreement.”
  • “For lawyers, the fact that the law firm doesn’t own the clients and doesn’t own the practices doesn’t mean that you have carte blanche to do as you wish when you are departing. You still owe fiduciary duties to your firm and you may have contractual obligations to the firm. Ultimately, you have the right to compete for the clients, just like the firm does, after you give notice of your departure. But you shouldn’t rig the system and compete for clients before the firm knows you are leaving. Also, if you are retiring or selling your interest in your firm, if you have not properly planned for that event, the value of your interest in the firm may be much different than you think.”

A Taxonomy for Lawyer Technological Competence” —

  • “…in October 2019, the Federation of Law Societies of Canada amended its Model Code rule on competence to include explicit reference to technological competence. Several provincial and territorial law societies have incorporated this amendment into their respective codes, and more will hopefully soon follow suit.”
  • “The fact that there now exists a formal duty of technological competence raises the question of what, exactly, does this duty entail? What does this duty require from lawyers? In a strict sense, these questions will only be answered if and when Canadian law societies issue specific guidance or bring public disciplinary proceedings against lawyers for alleged breaches of the duty of technological competence.”
  • “In the meantime, I’ve been thinking about how we might frame our understanding of a lawyer’s duty of technological competence. This column offers an initial, 6-part (alliterative!) taxonomy for thinking about technologically competent lawyering.”
  • See the full article for more details

The Paradigm Shift of Regulatory Sandboxes” —

  • “Earlier this fall, the Law Society of British Columbia made headlines when it announced the creation of an “Innovation Sandbox” that would allow unauthorized providers of legal services to deliver those services in BC on a pilot-project basis while the regulator assesses their reliability and effectiveness.”
  • “The LSBC Sandbox is modelled on a similar project recently launched by the State Bar of Utah, which has already received several applications from innovative legal services providers seeking to close the access-to-justice gap in that state. California has been considering a similar initiative for several months now.”
  • “There are people (primarily lawyers) who think the law society has gone too far and is risking lawyers’ livelihoods by opening the market to non-lawyer providers. There are also people (primarily not lawyers) who think the law society has not gone far enough, that the Sandbox will suffer the same fate as authorized paralegal programs and will fail to really address the A2J crisis.”
  • “The Sandboxes take a different and, I think, better approach. Rather than lawyers generously permitting ‘non-lawyers’ to fill legal needs they’re not interested in serving, the Sandbox opens its doors and says, ‘Anyone who wants to provide legal services, come in and show us what you’ve got.’ They’re offering a new approach to regulating the delivery of legal services — a demand approach (what the market needs), rather than a supply approach (what lawyers are willing to do and allow).”
  • “So these Sandboxes might look, from outside the profession, like a very small step forward. But viewed from the inside, I think they’re something close to a paradigm shift, and their potential impact is significant. They represent the possibility of fundamental change for the better in the underlying premise of legal services regulation.”

New Ethics Opinion Addresses Lawyers’ Obligations When Required To Return To Court In-Person During A Pandemic” —

  • “Nine months ago the COVID-19 pandemic brought court operations in New York State to a near standstill. In the past few months, courts have slowly started to resume in-person appearances, but those plans were recently stalled owing to a spike in COVID-19 cases. Although the courts are understandably eager to resume in-person appearances, a lawyer may be hesitant to return in person owing to the associated health and safety risks.”
  • “A recent ethics opinion from the New York City Bar Association Committee on Professional Ethics (Opinion 2020-5) addresses a lawyer’s ethical obligations when required to return to court in person during a public health crisis. In short, the Opinion concludes that a lawyer’s health and safety concerns may create a conflict of interest which, if the conflict cannot be waived, may require the lawyer to withdraw. As detailed below, the Opinion provides a helpful roadmap for lawyers to analyze the conflict of interest rules as well as other ethical obligations when facing a directive to return to court in person.”
  • “The Opinion also provides some examples of situations where a lawyer’s health and safety concerns could compromise the lawyer’s professional judgment. For instance, a lawyer’s desire to request an adjournment or permission to appear remotely ‘could be in direct conflict’ with the client’s interests in having the lawyer appear in person.”
  • “Because the Opinion concludes that a lawyer’s health and safety concerns could create a conflict of interest, the Opinion next analyzes whether such a conflict is waivable… Whether a conflict based on a lawyer’s health and safety concerns is waivable turns on whether the lawyer reasonably believes that he or she will be able to continue to meet the “minimum standards of competence and diligence” contained in Rules 1.1 and 1.3. If so, the client can waive the conflict in writing after the lawyer explains the conflict to the client including the potential risks and the reasonably available alternatives.”
  • “The Opinion also concludes that if the conflict is not waivable, either because the client refuses to consent or because the conflict prohibits the lawyer from competently representing the client, then the lawyer would be obligated to withdraw under Rule 1.16(b)(1).”
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Risk Update

Disqualification News — Sue Your Client, Get DQ’d, But Misspeak and You Could Be Safe

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McGuireWoods DQ’d In Hartford’s Trade Secrets Case” —

  • “U.S. Southern District of Indiana Judge Sarah Evans Barker on Wednesday adopted a magistrate judge’s recommendation that McGuireWoods couldn’t represent former employees of Hartford Steam Boiler Inspection and Insurance Co., which is suing them for allegedly sharing trade secrets with their current employer.”
  • “‘The Magistrate Judge’s conclusion that McGuireWoods cannot litigate against its own client, which it plainly seeks to do, clearly aligns with the prohibitions set out in the rules of professional conduct,’ Judge Evans Barker said.”
    “McGuireWoods has, according to the order, been representing Hartford for over 10 years as outside counsel, advising on labor and employment issues. In June, the firm notified the company that it would be representing its direct adversaries: former Hartford employees Michael Campbell and Kiah Jacobs, and their new employer OneCIS Insurance Co.”
  • “McGuireWoods said it could do this because Hartford consented to allowing the firm to represent clients that may be competitors or adversarial in some way when both companies signed a waiver that said McGuireWoods could do so as long as the legal matter was not closely related to the work the firm does for the company.”
  • “However, Hartford argued in its motion to disqualify the firm that McGuireWoods was leaving out an important piece of this agreement. The retainer read: ‘McGuire Woods asks you to consent in advance to McGuireWoods accepting future matters for your adversaries where the matters are unrelated to the work we do for you and do not involve you as a party.'”
  • “And while McGuireWoods argued that Judge McVicker Lynch was wrong to determine that Hartford hadn’t consented to the firm representing adversaries, Judge Evans Barker called that reading of the contract ‘plainly wrong and legally untenable.'”
  • “The judge was also unmoved by McGuireWoods’ reliance on a case in which a judge cautioned that ‘a finding of conflict is not automatically grounds for dismissal.’ Judge Evans Barker pointed out that this case did not involve a firm that was representing a direct adversary to one of its current clients.”

Law Firm Can’t Be Disqualified Based on Its Misstatement of Conflicting Representation” —

  • “An attorney’s flub in saying that his law firm represented five employees of a company that was the firm’s client—where those employees, whom it didn’t represent, had interests that were potentially adverse to the client—was not a sufficient basis for disqualifying the firm from representing the company in a Private Attorneys General Act action against it, the Court of Appeal for this district has held.”
  • “Acting Presiding Justice John L. Segal of Div. Seven wrote the opinion, filed Thursday. The opinion, which was not certified for publication, reverses an order by Los Angeles Superior Court Judge Gregory Keosian.”
  • “The order stemmed from a response by a named partner of the firm, Ryan Saba, to Jamie Stein of the Simi Valley firm of Green Law, counsel for Cortez. Stein queried as to contact information for five specific employees, and Saba advised that his firm represented them and that he would make them available for depositions.”
  • “‘I was mistaken when I stated ‘our firm represents these individuals.’ What I meant to say, is that our firm will coordinate with these individuals and any other LandCare employee so that the individuals will appear for a deposition, upon your request.'”
  • “Keosian subsequently issued his disqualification order. Segal wrote:
    • ‘Rosen Saba’s statements that it represented the potentially aggrieved employees were unilateral statements showing, at most, that Rosen Saba believed, at least for a short period of time, it represented the employees. The statements were not substantial evidence of an attorney-client relationship….Rosen Saba’s statements did not show the aggrieved employees intended to retain Rosen Saba as their attorneys, that Rosen Saba obtained confidential information from the employees, or that Rosen Saba provided legal advice to the employees… That is not to say an attorney’s conduct is never evidence of an attorney-client relationship….Rosen Saba, however, did not make a court appearance or file anything on behalf of the aggrieved employees. Rosen Saba opposed Cortez’s request for a temporary restraining order on behalf of LandCare, not the employees. And, at the time LandCare filed the opposition, none of the aggrieved employees was a party to the action or subject to a subpoena or a notice to appear for deposition. Because Rosen Saba was not appearing on behalf of the employees, its statement that it represented the employees did not raise a presumption the employees knew of or had authorized Rosen Saba to make the statement. The trial court erred in ruling that the statements showed Rosen Saba represented the potentially aggrieved employees and that such representation required disqualification.'”
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Risk Update

DQ Denied — Not All Lawyer Contact Creates Conflict

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Karen Rubin writes: “No DQ for contacting represented party on a different subject, district court says” —

  • “The scope of the ‘no-contact rule’ — barring a lawyer from communicating with represented persons — is spotlighted in a disqualification ruling that a Florida district court handed down earlier this month. The opinion is a reminder that the prohibition against contact (without permission of the person’s counsel) extends only to ‘the subject of the representation.”
  • “The plaintiff sued the defendant collection agency in the Middle District of Florida for allegedly violating the federal Fair Debt Collection Practices Act; she was represented by the Agruss Law Firm. In early November, according to the collection agency, Agruss employees contacted it twice, even though the firm knew that the collection agency was represented by counsel in the plaintiff’s case.”
  • “The law firm explained in its brief in opposition to disqualification that it frequently represents plaintiffs in FDCPA actions. It acknowledged that on one of the dates in question a paralegal of the firm had phoned the collection agency — but it submitted unrebutted affidavit evidence that the call did not relate to the plaintiff’s case in the Florida action. Rather, said the law firm, its paralegal had called the collection agency in order to investigate a potential FDCPA claim against the collection agency by a completely different person. The law firm later filed a separate complaint in the Northern District of Texas against the collection agency on that person’s behalf.”
  • “A second call to the collection agency was made a few days later by a principal of the Agruss firm, who simply listened to the agency’s outgoing voicemail message, and who never spoke to anyone at the agency, according to a second affidavit.”
  • “Although the evidence showed that the Agruss firm had contacted the defendant collection agency directly, the court said, it was about a completely different case. Therefore, the contact was not ‘about the subject of the representation,’ as would be necessary in order to demonstrate a violation of the rule, according to the court.”

For more on the “no contact” rule, see the complete post.

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Risk Update

Information Security & Compliance — ACC Sets New Industry Standard, Law Firms On Board

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ACC Launches Data Steward Program”

  • “The Association of Corporate Counsel (ACC) announced the formal launch of its new Data Steward Program (DSP) – the legal industry’s first and most comprehensive data security evaluation and accreditation program specifically designed for law firms and their corporate law department clients.”
  • “‘ACC heard from our members that there was no standard approach to assess and compare law firms’ data security standards,’ said Veta T. Richardson, ACC president and CEO. ‘In the 2020 ACC CLO Survey, CLOs ranked data privacy and security among the top three most important issues facing their overall business. These are also key concerns of the law firms they work with, who handle and store significant amounts of sensitive client information. The ACC Data Steward Program enables quick assessments and comparisons of law firms’ data security protocols as our members and others vet which law firms will earn their business.'”
  • “The program creates a standardized framework for assessing, scoring, benchmarking, validating, and accrediting a law firm’s posture toward client data security. The DSP also enables secure and easy sharing of this profile with the firm’s current or potential clients. The program, designed by working groups of law firm and in-house counsel, leverages controls from existing data security frameworks (e.g. NIST), but it customizes the control selection, available responses, arrangement, and compliance metrics to meet the specific needs of law firms, delivering both questions – and reports – in an easy, online platform. A set of charter law firms – ranging from AmLaw 50 to small boutique firms – are already signed up and completing their first Data Steward assessment, some working in partnership with key clients to do so.”
  • “‘The ACC Data Steward Program is a clear win-win for law firms and their clients,’ said Jim Merklinger, president of the ACC Credentialing Institute, who was responsible for development of the accreditation.
    ‘Currently, law firms must spend considerable time and money completing individual data security evaluations for their clients. The ACC Data Steward Program provides both standardized, easily comparable evaluation, and, if desired, accreditation of law firms’ security practices – all at a fraction of the time and cost. While the DSP is thorough – assessing one hundred and sixty controls – early users have indicated that a well-prepared law firm can complete the entire process in a few hours. Review by in-house counsel is equally straightforward. ACC is confident that this new program will prove to be a valuable tool for our members and law firms alike.'”
  • “‘Our firm, like many others, welcomes ACC’s Data Steward Program,’ said John Kuttler, CIO at Finnegan, Henderson, Farabow, Garrett & Dunner, LLP. ‘Now we can do a detailed assessment once, and potentially leverage that assessment many times over with multiple clients. We particularly like that the program focuses specifically on the security and governance of client legal information. This guides us in ensuring that we are maintaining the appropriate level of security.'”
  • “‘Mac Murray & Shuster was the first law firm to participate in the ACC’s Data Steward Program,’ said Michele Shuster, Managing Partner, Mac Murray & Shuster. ‘The streamlined SaaS interface and industry-standard NIST security controls allow our firm to demonstrate, to current and future clients, the measures we take to protect their confidential data. M&S recognizes the competitive advantage this will give our firm: it will level the playing field so our clients will not have to worry about our firm’s technology expertise, but can focus instead on the caliber of our attorneys.'”

For more detail, see the Data Steward Program website: https://www.accdatasteward.com/

 

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Risk Update

Disqualification News — Under-researched Oil DQ Bid, Class Action & Divorce Matters

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Shell Unit’s Failed Atty DQ Bid Faulted For Lack Of Research” —

  • “U.S. District Judge Nancy F. Atlas declined to sanction oil field technology company Enventure Global Technology Inc., a Royal Dutch Shell PLC subsidiary, for its bid to disqualify the attorneys for oil field equipment provider Weatherford International Ltd., but she did note that the sanctions bid was ‘not unfounded.'”
  • “‘It appears that plaintiff’s unsuccessful attempt to disqualify opposing counsel was the result of a lack of sufficient factual and legal research and analysis, apparently due in part to the difficulty of obtaining complete records about an alleged attorney-client relationship many years ago,’ Judge Atlas said.”
  • “In October, Enventure filed a bid, under seal, to disqualify Weatherford’s current in-house counsel, William Imwalle, claiming he previously served as counsel for Enventure. By extension, it argued that Weatherford’s other in-house counsel, Brian Welborn, and outside counsel Heim Payne & Chorush LLP should be disqualified as well.”
  • “Enventure was created out of a joint venture between Shell Technology Venture Inc. and Halliburton Energy Services in July 1998. Imwalle served as legal counsel to Halliburton from July 1994 to January 2014 and, while there, occasionally interacted with Enventure in connection with various intellectual property matters.”
  • “‘Enventure had its own in-house attorneys during this time, and Mr. Imwalle never signed an engagement letter or other representation agreement with Enventure,’ Judge Atlas said Friday. ‘Mr. Imwalle was not involved in the prosecution of any of the patents that Enventure asserts against Weatherford in this case.'”
  • “Imwalle says his interaction with Enventure was “infrequent and limited,” which Judge Atlas said was backed up by exhibits submitted by Enventure itself, which show that he interacted with the company once every few years.”
  • “Enventure’s claims that Imwalle “directed” the company in its patent prosecution is ‘directly contradicted by the record evidence,’ Judge Atlas found, noting that disqualification of Imwalle is ‘in no way warranted.'”

And here’s the latest from the eagle-eyed Bill Freivogel:

  • Cortez v. LandCare USA, LLC, No B298044 (Cal. App. 2d Dist. Unpub. Dec. 10, 2020). This is a class action against LandCare by employees for under-compensation. The case contains two separate conflict issues unrelated to class nature of case.
    • In the first, a lawyer from Law Firm 1 representing the LandCare claimed Law Firm 1 represented five other employees. She later corrected that, saying only that she would arrange to produce them for depositions. The trial court disqualified the Law Firm 1. In this unpublished opinion the appellate court reversed holding that the Law Firm 1 had, in fact, not represented the five employees, notwithstanding the partner’s earlier misstatement that it had.
    • The second issue relates to Law Firm 2, which showed up representing two of the aforementioned five employees. Defendant LandCare is paying Law Firm 2’s fees. Law Firm 2 had earlier represented LandCare on other matters. Law Firm 2 obtained the two client’s written consent to this arrangement. Nevertheless, the trial court disqualified Law Firm 2. In this opinion, the appellate court reversed. The court said the compensation arrangement and the earlier representation of LandCare were not enough to constitute a disqualifying conflict. The court was particularly moved by the potential harm to the two employees if Law Firm 2 were disqualified.”
  • “Van Ryn v. Goland, No. 530037 (N.Y. App. Div. 3d Dep’t Dec. 3, 2020). In this divorce-related case H and W are contesting how H’s pension should be divided.
    • W’s lawyer had drafted an earlier settlement agreement on that point. It now appears that the agreement was somewhat ambiguous, resulting in this disagreement. H moved to disqualify W’s lawyer because the lawyer may be liable to W for malpractice, depending upon how the court finally rules on division of the pension.
    • The trial court denied the motion to disqualify. In this opinion the appellate court affirmed, finding that the possibility of the lawyer’s liability to W is, at this point, ‘entirely conjectural.'”
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Risk Update

Conflicts Allegations — Catholic Church, Juul/Altria

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Ex-Client Sues Am Law 200 Firm Over Its Catholic Church Representation, Alleging Conflict” —

  • “A New Mexico woman is suing her former lawyers at Phoenix-based law firm Lewis Roca Rothgerber Christie for malpractice related to its representation of her in bringing allegations that she was sexually abused by a Catholic school teacher.”
  • “Attorneys for the former client, referred to as “Jane Doe” in the suit to protect her identity, said Lewis Roca attorneys steered her away from filing a civil lawsuit against Rhode Island Catholic institution Portsmouth Abbey School for failing to protect her from a predatory teacher when she was a student from 2012 to 2014. It wasn’t until the middle of 2020 when “Doe” learned that she could have brought a civil case against the school had she done so before turning 21, according to the suit.”
  • “The complaint also argues that Lewis Roca failed to disclose to “Doe” potential conflicts of interest in representing her due to the school’s payment of her case’s lawyer’s fees and the firm’s history of defending the Catholic Church against claims brought by survivors of clerical abuse.”
  • “‘If you have such a clear conflict where you routinely represent the church in cases brought by victims of sexual abuse, you have an obligation to tell that to a prospective or new client who has a potential case against the church, because there’s an obvious conflict there,’ Neil Gehlawat, an attorney with Los Angeles firm Taylor & Ring who is representing the unnamed plaintiff, said in an interview.””The firm also failed to inform Doe that they routinely defended the Catholic Church in claims brought by abuse survivors, and had a potential conflict of interest when Portsmouth Abbey paid for plaintiff’s lawyers’ fees, the complaint alleged.”
  • “Reached for comment Wednesday, a spokesperson for Lewis Roca said in an emailed statement that the claims in Doe’s suit are without merit. ‘The firm intends to respond to the complaint by showing that the written scope of the firm’s engagement was narrow and did not include the subjects alleged in the complaint, and that the firm did not have a conflict of interest. We know the true facts will come out, and the firm looks forward to its day in court,’ the firm statement said.”

AG did not fully disclose campaign contributions from firm tapped to lead fight against JUUL” —

  • “When Minnesota Attorney General Keith Ellison decided to sue a giant e-cigarette manufacturer last year, he called it his duty to take on the legal fight. On Thursday, he expanded the lawsuit against JUUL Labs, Inc. by adding tobacco company Altria to the list of defendants in the case. Altria bought a 35% stake in JUUL in 2018.”
  • “Except, Ellison and his staff are not actually leading the court battle against those companies which are accused of deceptively advertising addictive products to youth. Instead, the attorney general picked two Minneapolis-based law firms to handle a case that could potentially lead to millions of dollars in legal fees if the state wins or settles out of court.”
  • “Yet, when Ellison asked lawmakers to review the contract last year, he did not disclose that one of the firms, Robins Kaplan, had been a longtime supporter of his career in public office. The firm’s political action committee donated to his run for attorney general as well as his previous congressional campaigns, according to state and federal campaign finance records reviewed by 5 INVESTIGATES. Ellison also did not tell lawmakers that a partner at the firm, Richard Allyn, led Ellison’s transition team after he won the election in November 2018.”
  • “But Richard Painter, an expert in legal ethics at the University of Minnesota, says Ellison’s failure to report even the appearance of a conflict raises serious ethical concerns. ‘The decision-makers shouldn’t have to prowl around on the internet looking for campaign contributions,” Painter said. “It should all be right there in the paperwork for the contract.'”
  • “While both firms acknowledged having partners that supported Ellison’s campaign for attorney general, they claimed that support did not present ‘any factual or potential conflicts of interest,’ according to a memo provided to the Legislative Advisory Committee, which reviewed the contract.”
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Risk Update

Conflicts Analysis 101 (and 201) — Training Materials & Scenario Walkthroughs

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Scouring the internet for risk nuggets on a Sunday morning — hey, everyone needs a hobby — I came across an interesting resource. Linked below is workshop developed and presented by counsel for the University System of New Hampshire. Across a dozen pages, it provides a really excellent overview of several conflicts and professional responsibility issues, along with the step-by-step analysis and resolution of several hypotheticals and strands.

This all reminded me of a recent risk round table event I sat in on where the topic of staff training and development was in focus. I suspect we’ll see more interest in this arena as organizations navigate those challenges in 2021 and beyond.

For now, see:  “Ethics: Managing Conflicts of Interest, Attorney Client Privilege, and Other Thorny Issues when Serving as Foundation Legal Counsel or Working with Your Campus Foundation” —

  • “Assume for purposes of this part of the outline that you serve as counsel to a university. Do you also, by virtue of your status as corporate counsel, serve as counsel to all the university’s subsidiaries and affiliates—including a separately incorporated supporting foundation?”
  • “Obviously, if the university’s lawyer is not the foundation’s lawyer, then there’s no conflict possibility to analyze. But if corporate or ethical or other precepts assign to that lawyer the responsibility for corporate subsidiaries and affiliates, there might be if the corporation and its affiliate are adverse to one another. So the follow-up question is whether, if the university’s lawyer does function as counsel to the
    foundation, there is a potential conflict. Under what circumstances? How can a putative conflict be managed or mitigated?”
  • “We come, then, to the second strand of our analysis. Assume that one lawyer represents both university and foundation. Under what circumstances does that “concurrent representation,” to use the nomenclature in Rule 1.7, give rise to potential conflicts of interest? And how can conflicts be mitigated? Let’s examine the text of Rule 1.7, with some annotations:”

For more, see the complete workshop.

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Risk Update

Law Firm GDPR Compliance — Information Governance in Depth

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David Zetoony, Co-Chair of Greenberg Traurig’s U.S. Data, Privacy and Cybersecurity Practice presents an excellent, in-depth analysis: “GDPR: Law Firm Information Collection; Processors or Controllers?” —

  • “Are law firms considered ‘processors’ or ‘controllers’ of the personal data that they receive from clients as part of a representation? It depends.”
  • “Many lawyers (and clients) incorrectly assume that attorneys must be processors because they are service providers of their clients. In some situations, a service provider has a role in determining the purposes and means of processing; when that occurs the service provider is, like its client, considered a ‘controller’ or a ‘joint controller.'”
  • “The Article 29 Working Party took the position that if a service provider has a ‘traditional role and professional expertise’ that required it to determine the purpose and means of processing, that independent expertise could convert the service provider into a controller. They specifically noted that in situations in which a ‘barrister represents his/her client in court, and in relation to this mission, processes personal data related to the client’s case’ the barrister is a controller.[2] Their logic appears to be that the instruction that a client provides to their attorney is not necessarily to process data, but, rather, to represent the client’s interest before a court. Because the processing of data is an ancillary function that is wholly (or partially) determined by the attorney independent from the client, the attorneys’ processing should be conceptualized as that of a controller.”
  • “The UK ICO – the supervisory authority for the United Kingdom – reached a similar conclusion in the context of discussing whether a solicitor would be a processor or a controller… The view of the ICO was echoed by The Bar Council of England and Wales, which stated in a memorandum that ‘[f]or the avoidance of doubt, self-employed barristers are data controllers of their client’s data. They are not data processors.'”
  • “The guidance of the Article 29 Working Party, the UK ICO, the UK Bar Council, and the German Council of Data Protection Commissioners leaves open the possibility that in some situations an attorney could, however, act as a processor and not a controller. For example, if a client retained a law firm for the express purpose of processing data (e.g., conducting document review or hosting a document room), and provided specific direction and control regarding how the data was to be processed (e.g., the client selected or approved the type of software that would be used during a document review and how the documents would be stored and processed) an argument could be made that the attorney is, in fact, functioning as a processor and not as a controller.”
  • “Even in situations in which it appears that a client has provided specific directions and retains a large degree of control, a law firm may still find itself acting as a controller with regard to data if it is required to process data outside of those client instructions in order to comply with regulatory or professional obligations.[7] For example, an argument could be made that a law firm acts as a controller of data if it is required to (i) carry out internal conflicts and other regulatory checks on new client matters or to undertake appropriate client due diligence in accordance with anti-money laundering laws; (ii) subject to duties of confidentiality and privilege, cooperate with regulators and other public authorities (including by responding to regulatory requests for information; undertaking internal investigations and complying with reporting and other professional obligations), or (iii) disclose personal data over a client’s objection to a court during the course of litigation.”

 

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Risk Update

Risk News — DQ Undone, Law Firm Confidentiality & Security, Lawyer Governance & Compliance

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Big Lots’ Ohio Attys Wrongfully DQ’d From Calif. Wage Fight” —

  • “A California appellate court has vacated the disqualification of several Ohio attorneys representing Big Lots in an overtime pay dispute, determining that a state court jumped the gun by revoking their temporary admission to work on the putative class action after they solicited current and former employees.”
  • “Rather than disqualify the Vorys Sater Seymour & Pease LLP attorneys, the San Diego County Superior Court could have temporarily barred them from continuing to solicit the discount retailer’s current and former employees in the case while it sorted out the dispute, the Fourth Appellate District held Friday.”
  • “The lower court could have determined whether by contacting store and district managers who could prospectively be deposed in the case, Vorys lawyers Michael J. Ball, Jocelyn M. Hoffman and Daniel J. Clark were engaging in ethical misconduct that called for a corrective action, the three-judge panel determined.”
  • “‘But in advance of such a hearing and appropriately supported findings, the circumstances did not justify barring all further participation by Big Lots’ counsel of choice based on conduct that occurred before the issue was ever presented to the trial court,’ the opinion said.”
  • “‘The evidence adduced so far merely shows that Vorys and Big Lots innocently misinterpreted two pro forma orders granting routine pro hac vice applications,’ the opinion said. ‘Without more, that is an insufficient basis to effectively disqualify Big Lots’ counsel of choice.'”
  • “A California federal court also weighed in on the dispute involving the Vorys attorneys in a related case. It determined in May that the lawyers did not exceed the scope of the authority the federal court granted them when they asked the workers if they wished for the firm to represent them as they participated in depositions as nonparty witnesses.”

Alleged Pillow Talk Via Email” —

  • “An attorney who allegedly provided his spouse with unfettered access to his law firm email account has been charged with violations of the duty of confidentiality by Ohio Disciplinary Counsel.”
  • “The spouse is not an attorney and was not employed by the law firm. She is a ‘content metadata specialist for a large corporation.'”
  • “The conduct was discovered by the firm shortly after the attorney moved to another firm when one of the attorney’s former clients sought the case file. An associate with access to his computer files found “derogatory” comments about firm employees.”
  • “He allegedly gave his user name, password and firm domain information to his spouse one week after starting there. He was at the firm for nearly four years. The remarkable allegations are that he shared client confidential financial information with his spouse, that she had regular access to “client names, case types and descriptions of their legal issues,” and that she reviewed and sometimes edited his work emails.”

And Noel Semple is Assistant Professor at the University of Windsor Faculty of Law writes on SLAW: “If You See Something, Say Nothing: Why Lawyers Don’t Report to the Law Society” —

  • “In identifying professional misconduct, legal regulators are heavily reliant on client complaints and receive relatively little help from practitioners. For example, 71% of complaints to the Law Society of Ontario in 2019 were brought forward by members of the public (typically clients) while only 12% came from legal professionals. The problem is that there are many forms of professional misconduct that only professionals, and not clients, can readily identify. Misconduct therefore goes undetected, leaving clients and others to be victimized by bad lawyers who should have been caught after previous offences.”
  • “Lawyers have a duty to report certain types of misconduct, which listed in Rule 7.1-3. This includes any ‘conduct that raises a substantial question as to another licensee’s honesty, trustworthiness, or competency as a licensee’ and ‘any situation in which a lawyer’s clients are likely to be materially prejudiced.’ It is not clear that this rule is sufficiently understood and appreciated by practicing lawyers. I have personally heard lawyers describe professional misconduct which they would undoubtedly characterize as passing these thresholds, without any sense that reporting it might be an ethical obligation.”
  • “Why don’t legal professionals complain more often about the bad eggs? I have asked lawyers this question. Some do not think the Law Society will do anything even if they do complain. Others are reluctant to play the role of ‘snitch’ or ‘tattle-tale.’ They perceive that their professional relationships will suffer if they complain about a fellow lawyer, even if the complaint is amply warranted. A complaint might create a grudge which would make it difficult to work with the individual in the future.”
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Risk Update

Conflicts News — Judicial Edition (Screening & More)

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NY Ethics Opinion on Judicial Screening: Ethics Opinions 1209” —

  • “A former appellate judge, who was on a panel which issued a dispositive order about the scope of an easement, is personally disqualified from representing the owner of the servient estate of the same easement with respect to legal questions involving obstructions to the easement, equitable relief, adverse possession, and “overburdening” of the easement. However, the firm to which the former appellate judge is counsel may, pursuant to Rule 1.12(d), undertake the representation upon appropriate screening and notification.”
  • “The inquirer is a New York lawyer who formerly served as a New York State appellate judge. Ten years ago, inquiring counsel was on a panel which issued a dispositive order confirming the validity and scope of an easement. Inquiring counsel, having retired from the bench, is now “of counsel” to a firm. That firm has been approached by the owner of the servient estate of the same easement with respect to questions involving the potential legal effect of obstructions to the easement, the possible availability of equitable relief to the owner of the dominant estate, the applicability of adverse possession, and whether subdivision of the dominant estate would result in an “overburdening” of the easement.”
  • “Rule 1.12(a) of the New York Rules of Professional Conduct (“Rules”) provides: ‘A lawyer shall not accept private employment in a matter upon the merits of which the lawyer has acted in a judicial capacity.'”
  • “‘A conflict under Rule 1.12(a) is a non-waivable conflict’ (N.Y. State 1064, ¶ 4 (2015)), and should be read in conjunction with both the New York Code of Judicial Conduct (22 NYCRR Part 100) and Judiciary Law § 17”
  • “If the inquirer’s law firm complies with Rule 1.12(d) by promptly and properly screening off the inquirer and by providing the specified notifications, and if no other circumstances in the particular representation create an appearance of impropriety, then Rule 1.12 will not prohibit the firm from accepting the representation despite the inquirer’s personal disqualification.”

Calif. Judge DQ’d From Atty Fees Fight In Water Plan Dispute” —

  • “A California appeals court Tuesday ruled that a lower court judge should be disqualified from hearing a dispute over attorney fees after the Imperial Irrigation District fended off a challenge to its water distribution plan, ruling the district had the right to request a new judge after its initial loss in the case was overturned on appeal.”
  • “After Abatti won an initial judgment overturning the plan in superior court, the judge awarded him costs and attorney fees. That order was then reversed and the case remanded by California’s Court of Appeal, Fourth Appellate District, Division One for a new decision on fees and costs.”
  • “The district subsequently filed a motion to disqualify the superior court judge overseeing the remanded case, as it was his judgment that awarded the fees to the opposing party. But that judge denied the disqualification bid on the basis that a second peremptory challenge cannot be made before a ‘final judgment’ is declared.”
  • “Justices Judith McConnell, Patricia D. Benke and Patricia Guerrero for the Fourth Appellate District, Division One granted a post-appeal motion in favor of the district, writing in an unpublished opinion Tuesday that because its reversal on appeal resolved a monetary dispute, the remanded order constitutes a ‘final judgment’ as well as a ‘new trial’ and therefore allows for new peremptory challenges.”
  • “In its petition to the appellate court, the district said Abatti was initially awarded over $300,000 in attorney fees and over $25,000 in costs. It further alleged that the judge overseeing the decision, the Honorable L. Brooks Anderholt, had ‘deep connections’ and a ‘proclivity toward’ Abatti.”
  • “While not addressing those accusations specifically, the panel asserted the district’s right to disqualify the judge.”

 

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