Risk Update

Law Firm Data Breach — Jones Day and Accellion in the Security Spotlight

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Hacker Claims to Have Stolen Files Belonging to Prominent Law Firm Jones Day”

  • “A hacker claims to have stolen files belonging to the global law firm Jones Day and posted many of them on the dark web. Jones Day has many prominent clients, including former President Donald Trump and major corporations.”
  • “Jones Day, in a statement, disputed that its network has been breached. The statement said that a file-sharing company that it has used was recently compromised and had information taken. Jones Day said it continues to investigate the breach and will continue to be in discussion with affected clients and appropriate authorities.”
  • “The posting by a person who self-identified as the hacker, which goes by the name Clop, includes a few individual documents that are easily reviewed by the public, including by The Wall Street Journal. One memo is to a judge and is marked ‘confidential mediation brief,’ another is a cover letter for enclosed ‘confidential documents.’ The Journal couldn’t immediately confirm their authenticity.”
  • “‘We have over 100 gigabytes of data,’ the hacker wrote in response to an email from the Journal.”
  • “Jones Day, in its statement, said it hasn’t been the subject of a ransomware attack. Rather, Jones Day said, it has been informed that a company the law firm used to transfer large files electronically, Accellion, ‘was recently compromised and information taken.’ Jones Day said that Accellion is used by many law firms, companies and organizations.”
  • “Law firms’ computer files often contain confidential information, including the size and nature of settlements, negotiations about pending deals, and legal strategy that would normally be shielded from the public by attorney-client privilege.”
  • “Law firms have long been considered an attractive target for hackers because firm files contain information on sensitive deals and legal matters that firms have a strong incentive to keep confidential. Information on yet-to-be-announced deals can also be used for insider trading. In 2016, federal investigators explored whether a hack of large law firms including Cravath, Swaine & Moore LLP had been used by insider traders.”

Jones Day 2nd Big Law Victim of Accellion Breach” —

  • “Two weeks after Goodwin Procter came forward with news that a vendor it used had been compromised, information surfaced that Jones Day was also affected.”
  • “After confirming earlier this month that Accellion was the vendor linked to Goodwin’s breach, Law.com reached out to all the law firm clients listed on Accellion’s website. None that responded said it has been affected.”
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Risk Update

Looking at Lateral Risk — Lateral/Merger Moves Creating Conflicts, Conflicts Causing Lateral Changes

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Lateral move creates disqualifying conflict. Decision issued September 8, 2020: “Goren v Barnett” —

  • “From 2010 to approximately 2013, the law firm of Amstein & Lehr LLP (Arnstein & Lehr) represented the Regional Center as securities counsel in various matters related to its EB-5 program administered by the United States Citizen and Immigration Services.”
    “In 2017, Amstein & Lehr merged with Saul Ewing LLP. Saul Ewing represents Lela Goren in this matter, both individually and derivatively on behalf of the Regional Center.”
  • “In support of their motion, the Defendants submit certain invoices (the Invoices) from Amstein & Lehr from 2011-2013 for work on matters that related to Ms. Goren’s allegations in this case… At least three Amstein & Lehr attorneys who worked on these matters for the Regional Center are now partners at Saul Ewing.”
  • “The Invoices submitted by the Defendants establish that the subject matter of Amstein & Lehr’s prior representation of the Regional Center in connection with the Operating Agreement and finder’s fee arrangements is substantially related to the issues in this case and that Ms. Goren’s interests are materially adverse to those of Gary Barnett and the Regional Center.”
  • “In addition, Saul Ewing’s representation of both Ms. Goren and the Regional Center presents a concurrent conflict of interest because it would require the firm to argue that the same transactions that it previously advised the Regional Center to undertake were part of the fraudulent scheme alleged by Ms. Goren.”
  • “Finally, the former Amstein & Lehr attorneys’ conflicts of interest are imputed to the entire firm of Saul Ewing under Rule 1.10 (a) of the Rules of Professional Responsibility, therefore no lawyer in the firm may undertake the representation.”

Paul Weiss Antitrust Leader Launches Own Firm” —

  • “Jonathan Kanter, the former co-chair of the antitrust group at Paul, Weiss, Rifkind, Wharton & Garrison, has left the firm to launch his own law practice in Washington, D.C.”
  • “A spokesperson for Paul Weiss said Kanter left the firm ‘due to a complicated legal conflict that would have required him to discontinue important and longstanding client representations and relationships.'”
  • “In recent years, he’s represented Altice USA, which took a part in the ultimately unsuccessful challenge to the blockbuster T-Mobile-Sprint merger, and also Monsanto, in its 2016 acquisition by Bayer. Kanter declined to comment on the record about his move on Monday.”
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Risk Update

(DQ Week) Disqualifications, Deflected (IP, “No Harm,” and Time-barred Scottish)

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Today we’re about disqualifications that didn’t (or haven’t yet) hit their marks. Several interesting ones to share. (And I’ll note that I am not left handed…)

First, an IP matter. (An area I’m finding myself spending a bit more time. For any curious about the latest operational and policy developments by the USPTO, I’ve done a bit of recent writing here, pardon the self promotion.) Regarding our DQ theme, we have: “Pierce Bainbridge Scolded But Dodges DQ In Patent Suit” —

  • “A New York federal judge has ruled that a Pierce Bainbridge attorney stepped over the line by recording a conversation with an employee for a Chinese company that is being sued for patent infringement by a company the firm represents, yet said the firm could still stay on as counsel in the suit.”
  • “‘[The attorney] went beyond general attendance or commercial transactions and asked specific, targeted questions related to the scope of Xiaomi’s business operations in New York,’ the judge said. ‘This line of questioning is reminiscent of that in a deposition.'”
  • “In a motion Dareltech filed immediately after Judge Hellerstein’s order, the company said the employee Hecht and an investigator spoke with in fact worked for Xiaomi Technology Inc., a separate company that was not added to the suit until January. Thus the employee was not a represented party, the motion said.”
  • “In a seeming effort to counter this, Hecht attended a promotional event in December with an investigator, the decision said. While there, Hecht questioned Xiaomi employees about the company’s New York presence, and were told that the company had a division based in Manhattan, but that it was ‘a secret operation,’ according to the decision.”

Next up: “Federal Judge Rejects Motion by DOJ to Disqualify Defense Attorneys in Illegal Drug and False Marketing Case” —

  • “A South Florida judge has rebuffed an attempt by the Department of Justice to prohibit two Miami attorneys from representing their clients in federal court.”
  • “U.S. Magistrate Judge William Matthewman denied a prosecution motion to disqualify the defense counsel for dietary supplement company Blackstone Labs and its CEO Phillip Braun on Monday. The department’s April 1 motion asked the court to bar attorneys Benedict Kuehne and Michael Davis from representing the defendants in the Southern District of Florida.”
  • “The agency’s motion contended the Kuehne Davis Law litigators ‘should not be allowed to handle the charged case because the firm also represented a number of company employees as fact witnesses during the grand jury investigation.'”
  • “However, Matthewman’s 17-page order rejected the DOJ’s motion and allowed Kuehne and Davis to appear as defense counsel. The judge asserted the three conflict-laden witnesses cited by the prosecution are no longer represented by Kuehne Davis Law.”
  • See the text of the order here.

Next, from Hinshaw: “No Harm, No Foul: Disqualification Not Warranted When City Attorney Obtained Privileged, But Irrelevant, Communications During Internal Affairs Investigation” —

  • City of San Diego v. The Superior Court of San Diego County, D073961 (Cal. Ct. App. 4th Dist. Modified Jan. 7, 2019)
  • “During an internal affairs investigation concerning the leak of a confidential police report, the Police Department of the City of San Diego (the “City”) questioned a police detective about communications she had with an attorney who was representing her in a harassment and retaliation lawsuit against the city.”
  • “Under the threat of discipline and termination, the detective invoked the attorney-client privilege. After the detective was informed the City Attorney had determined the privilege did not apply, the detective disclosed the privileged communications during a second interview with the Department and the City Attorney.”
  • “The appellate court found that the City Attorney violated the attorney-client privilege and the rule of professional conduct prohibiting an attorney from communicating with a represented party about a pending matter.”
  • “However, as disqualification is a drastic remedy meant to be prophylactic and not punitive, the appellate court reversed the trial court’s order disqualifying the City Attorney, determining that disqualification was not warranted because the transcript of the interview established there was no genuine likelihood that the City’s misconduct would provide it with an unfair advantage or in any other way affect the outcome of the proceedings before the court.”

And finally, from Scotland: “Client fails in appeal against decision to dismiss complaint against lawyer as ‘time-barred” —

  • “A disgruntled litigant whose complaints against a Scots lawyer and a law firm were rejected as time-barred has had an appeal against the decision dismissed.”
  • “A judge in the Inner House of the Court of Session held that the Scottish Legal Complaints Commission (SLCC), in exercise of its ‘gatekeeping or sifting function,’ was entitled to exercise to its discretion by reaching the conclusion which it did.”
  • “Lord Menzies heard that the applicant John Innes was seeking leave to appeal against the SLCC’s determination that the applicant’s complaints against a solicitor employed by Pinsent Masons were each time-barred in terms of rule 7 of the Rules of the Scottish Legal Complaints Commission.”
  • “‘The applicant did not identify any exceptional reasons why the complaint was not made sooner, either in his response to the commission or before this court, and the commission could find none. Similarly, the applicant provided no information about any exceptional circumstances relating to the nature of the complaint and the commission could find none.'”
  • Full text of the ruling here.
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