Bressler Risk Blog

“NRA Wants Dorsey & Whitney DQ’d From Ad Agency Suit” —

• “The NRA claimed in a motion Monday that a privilege log recently revealed that Dorsey & Whitney LLP worked briefly with Virginia lawyer Mark Dycio, who had advised the association on matters relevant to the case.”
• “‘The incurable conflicts arising from Dycio’s misconduct, which also taint Dorsey, could have been dealt with at the outset of this litigation,’ the motion said. ‘But they were not — because defendants concealed evidence of Dycio’s involvement from their initial disclosures and document productions.'”
• “Dycio began a relationship with both the NRA and NRA Executive Vice President Wayne LaPierre back in 2013, helping LaPierre with personal matters and the NRA with internal issues like executive pay and corporate governance, the motion says. The association claims that Dycio was privy to confidential communication and meetings about efforts the NRA was making to prepare itself for increased regulation in New York, which involved discussions about what information was sought from ad agency Ackerman McQueen.”
• “But when the NRA sued the ad agency in 2019, Dycio ‘switched sides’ and began representing Ackerman McQueen, the motion says. According to the NRA, Dycio and his firm Dycio & Biggs joined up with partners at Dorsey & Whitney to ‘craft tactical, misleading correspondence, and even affirmative litigation.'”
• “Although the NRA knew that Dycio was involved in preliminary stages of the litigation, the NRA claims that it did not know that he had been working directly with Dorsey & Whitney during that time.”
• “‘We don’t blame them for wanting to disqualify us,’ [Dorsey & Whitney partner Mike] Gruber said. ‘We wouldn’t want to try a lawsuit against us either. This is something that they’ve known about for three years, and it’s completely baseless.'”
• “The NRA filed multiple suits against the ad agency, claiming it refused to provide documents from New York Attorney General Letitia James’ investigation of the association’s status as a tax-exempt nonprofit and had attempted to seize control of the organization by getting LaPierre to resign under threats of a smear campaign.”

Bloomberg Law Columnist Vivia Chen asks: “Microsoft Sets Bar on Investigating Harassment. Who Will Follow?” —

• “You’d think that the brilliant brains running America’s shiniest institutions would get it right by now. They’re hardly virgins in the arena of sexual harassment, discrimination, bullying, and other unlawful conduct in the workplace.”
• “Just a few weeks ago, Microsoft did something simple and logical in laying out a road map on how to handle investigations into those thorny issues: It hired a firm (Arent Fox) that’s not its regular counsel to review its prior investigation into harassment allegations against Bill Gates, and benchmark its ‘current practices against ‘best practices’ adopted by other companies.'”
• “Independent review. Benchmarking. How radical. Microsoft might be leading the way, but are other institutions following this course?”
• “For instance, in the CNN imbroglio involving former anchor Chris Cuomo and its now ex-president Jeff Zucker, the network turned to longtime counsel Cravath Swaine & Moore to investigate the sexual harassment claims against Cuomo. And speaking of the Brothers Cuomo, the New York Assembly picked Davis Polk & Wardwell last spring to investigate charges of sexual harassment against then Gov. Andrew Cuomo, who had various personal ties to the firm.”
• “Though there’s no indication that either Cravath or Davis Polk failed to do their job fairly, questions inevitably arise whether there’s a conflict of interest. So why don’t companies and institutions pick a fresh firm?”
• “‘The optics are certainly better if a company hires a firm with which it has no prior professional relationship,’ says NYU law professor Stephen Gillers. Whether that practice will become the standard, though, is another matter: ‘I think the great majority of shareholders focus on the stock price and dividends,’ adds Gillers. ‘If the use of regular counsel is more likely to protect these, they’ll favor it. If the ensuing negative publicity risks harming profits and share price, they’ll press for an outside review.'”
• “But using a regular counsel for investigations should not be verboten, argues Bridgit Blinn-Spears, a partner at Nexsen Pruet in Raleigh, N.C. ‘The optics might be better if there’s no existing relationship but the disadvantage is that the firm won’t know the company as well,’ says Blinn-Spears. The key, she explains, is to have one set of regular counsel for investigations and another for litigation that might spring from the investigation. ‘The solution is to have a clean division.'”
• “Some institutions aren’t even debating this issue because they’re handling investigations internally—and they’re making a mess. That seems to be the situation with Tesla Inc., which got slapped with a $137 million verdict in October in a racial discrimination suit and is now facing a suit by the California Department of Fair Employment and Housing for discrimination and harassment against Black factory workers.”

“When employment causes a conflict of interest for expert testimony” —

• “James Finkel of Kroll considers the public sector and private sector considerations around conflicts of interest in expert testimony.”
• “It is explicitly prohibited under regulation (5 CFR § 2635.805 (a)) for federal employees to serve as an expert witness, other than on behalf of the US (with or without compensation), in any proceeding before a court or agency of the US in which the US is a party or has a direct and substantial interest unless the employee’s participation is authorised by the relevant federal agency.”
• “This rule importantly provides a means of review and consideration of the conflict-of-interest issues involved with the potential expert testimony and thus does not act as an absolute bar – in contrast to the blanket prohibition that the Fifth Circuit in the Hoover case disallowed.”
• “The US federal’s Ethics in Government Act also provides restrictions on former federal employees. This ethics rule thus squarely addresses what a conflict-of-interest process would otherwise entail – if there was substantial participation in the matter at issue while previously in government by the potential expert witness, and involving the party on whose behalf the expert would be testifying. Thus, it would seem the precision of this rule would allow it to stand, whereas a blanket prohibition on a former government employee from being an expert witness would presumably not be upheld. “
• “The New York Public Officer’s Law § 73(3)(a) provides that: ‘No statewide elected official, member of the legislature, legislative employee, full-time salaried state officer or employee shall receive, directly or indirectly, or enter into any agreement express or implied for, any compensation, in whatever form, for the appearance or rendition of services by himself or another against the interest of the state in relation to any case, proceeding, application or other matter before, or the transaction of business by himself or another with, the Court of Claims.'”
• “The Connecticut rule appears to provide a blanket ban on state employees acting as expert witnesses in state-related regulatory proceedings, also having no presence of a conflict-of-interest determination process, which may be the rule’s shortcoming under the federal legal precedents.”
• “The second rule above raises fascinating questions in the rare case where the state employee is affiliated with a firm that might have a testifying engagement for an ‘adverse’ party in a state regulatory proceeding. In such a case, the firm would be barred even if the state employee would not be involved in the matter in any way.”
• “Some states go beyond the state employee context, for example, prohibiting a treating health care provider from serving as an expert witness in matters involving one of their clients. It seems incongruous that the state should be displacing the professional conflict of interest determinations that such health care provider would otherwise make under his or her own ethical considerations and standards of conduct.”
• “For testifying experts in the private sector, conflicts of interest remain either individualised – where the expert is not employed by a larger firm (and it appears that even being an outside consultant to a larger firm would continue to allow the expert to be considered ‘independent’), or collective – where the expert is an employee of a larger company or enterprise and the firm’s own conflict issues come into play.”
• “One thing that remains clear is that in all cases (perhaps until artificial intelligence reaches new heights), a testifying expert must still be a ‘person’. Although not the only time explored, the Delaware Chancery Court considered whether a party to an action could designate a corporation to serve as an expert witness. The court answered in the negative on the ground that, under the rules of evidence, an expert witness must be a biological person – i.e., possess “a body and a brain” in re Dole Food Co, Inc. Stockholder Litigation, (2015).”
• “Whatever the employment status of the testifying expert may be, conflicts of interest relating to a particular litigation must always be considered. And in the case of the testifier being an employee of a larger firm, this can raise thornier issues in resolving certain eligibility requirements. For those acting as independent (non-employee) expert witnesses, and those employed at larger firms but nevertheless providing testimony in their independent capacity, it is imperative that conflicts of interest are cleared through a robust process.”
• “Such a process necessarily involves the consideration of ‘issue’ conflicts and ‘party’ conflicts. The former, in essence, is whether the testifier previously opined in a contradictory way to the testimony now being sought. The latter involves a clear understanding of who all the parties to the litigation are (sometimes scratching below the surface to determine corporate holdings or relationships), and in certain circumstances, consideration even of non-parties that may be directly affected by the outcome of the litigation.”
• “For large companies, such as consulting or accounting firms, to determine ‘direct’ party conflicts requires adequate recordkeeping of engagements, but the process also involves casting the net over broader ‘indirect’ conflict issues engendered by wide-ranging and significant business relationships (as well, at times, whether the firm can maintain its ‘independence’ when an employee is an expert testifier).”
• “In all cases, the conflict-of-interest resolution process ultimately rests with the expert witness himself or herself as a matter of professional responsibility, being both thorough with respect to issues and parties, but also making, as appropriate (and within the bounds of confidentiality), adequate disclosure. If an expert witness holds any doubt as to whether there may be even a highly remote or conceptual conflict, transparency about what the issues may be, whether in disclosure to counsel or stated in the expert report, is always the best course of action.”

From Clyde & Co: “Webinar: Lateral Hires – Issues to Consider” (Monday, March 21, 3PM ET) —

• “In this webinar we will consider some key issues around the hiring and integration of new partners, including disclosure of confidential business and client information, data protection, restrictive covenants and on-boarding considerations.”
• “Lateral hires are a key part of business growth for law firms, and yet there is a natural conflict to overcome between the information required for a partner’s move to a new firm, elements which will help a move be successful, and a partner’s obligations – both to their current firm and regulatory obligations.”
• “There is also a natural conflict between a partner’s desire to be a success in their new firm, and their obligations to their current firm to act in its best interests (and to abide by restrictive covenants).”
• “In this session we will consider some key issues around the hiring and integration of new partners, including disclosure of confidential business and client information, data protection, restrictive covenants and on-boarding.”
• “Agenda:
  • The basic obligations of partners
  • Regulatory obligations relevant to lateral hires
  • What a recruitment process may look like
  • What a lateral hire move may look like and the issues involved
  • Issues seen in lateral hires based on our experience
  • Key rules of the road
  • Who may be impacted by regulatory issues”

From Intapp: “An Expert Panel Discussion on Risk Assessment, AML, and CDD” (Thursday, March 3 at 9AM ET) —

• “One of the many ever-increasing challenges firms currently face is ensuring proper due diligence while managing their risk assessment processes. Firms are constantly seeking out new ways to address this issue and implement best practices for conducting necessary checks throughout the client and matter opening processes.”
• “We will speak with two leading subject matter experts on risk-related issues such as Solicitors Regulation Authority (SRA) expectations and expanding risk awareness.”
• Panelists:
  • Emma Oettinger, Head of Financial Crime and Risk, Ashurst
  • Amasis Saba, Head of Business Acceptance for U.K., CE, and MENA, Freshfields Bruckhaus Deringer
  • Daragh McLaughlin, Practice Group Leader, Risk and Compliance, Intapp

“Wendy Williams hires ex-husband Kevin Hunter’s lawyer after Wells Fargo freezes account” —

• “Wendy Williams is using her ex-husband Kevin Hunter’s legal team to fight Wells Fargo over her frozen bank account amid ongoing health issues. ‘The Wendy Williams’ star will be represented by Florida attorney LaShawn Thomas of Miami Entertainment Law Group. The same legal firm that handles all of Kevin Hunter’s businesses, including Hunter Publishing and Head Hunter Productions.”
• “Attorney LaShawn in an interview with Page Six on Tuesday, February 15, insisted that Williams doesn’t see the law firm’s involvement in Kevin Hunter’s business as a conflict of interest. The attorney explained, ‘Kevin did not request that I represent Wendy…I actually began representing Wendy approximately two years prior to their divorce. I represented neither party during their divorce proceedings… I am representing Wendy because no one should be barred from accessing their own money.'”
• “LaShawn also told The Sun that ‘whatever is going on with Wendy, I don’t disclose to him [Kevin Hunter]… I believe in protecting the attorney-client privilege…I’m not representing Wendy and Kevin in an adversarial proceeding, and Kevin is not that kind of guy.”
• “LaShawn went on to claim that the relationship between Wendy and her ex-husband is now good. ‘People think that they don’t get along with each other, which is not true,’ she said.”

“Latham & Watkins Prior Work for Perkins Coie Could Pose Conflict in Ex-Partner’s Trial, Government Says” —

• “Special counsel John Durham is asking a judge to examine potential conflicts of interest in Latham & Watkins’s defense of former Perkins Coie partner Michael Sussmann.”
• “The issue stems from Latham’s prior representation of Perkins Coie and another of its former partners, Marc Elias, on issues also related to Durham’s probe that may be relevant in Sussmann’s upcoming trial, according to a motion filed by Durham’s prosecutors.”
• “Sussmann, a former cybersecurity partner at Perkins Coie, was indicted in September as part of the Durham investigation for allegedly lying to the then-general counsel of the FBI during a 2016 meeting about purported ties between then-Republican presidential nominee Donald Trump and Russia. Sussmann allegedly told the FBI that he was not meeting with the bureau on behalf of a client, when he was actually working with both Hillary Clinton’s 2016 campaign and a technology executive that was conducting opposition research on Trump.”
• “Sussmann’s defense team, led by Latham partners Sean Berkowitz and Michael Bosworth, has denied the allegations and called the prosecution politically motivated. His lawyers told the government that Sussmann intends to waive any possible conflicts, according to Durham’s filing.”
• “‘Moreover, it is possible that the defendant, having recently resigned from his partnership at [Perkins Coie], is currently or will become in an adversarial posture with his former employer. Latham–through its prior representation of [Perkins Coie]—likely possesses confidential knowledge about [Perkins Coie]’s role in, and views concerning, the defendant’s past activities,’ the motion states. ‘Accordingly, the government believes that potential conflicts of interest may exist or arise from Latham’s prior representations of [Elias] and [Perkins Coie] in this investigation.'”

“Texas Lawyer Can Migrate Conflicts from Public Work at Old Firm” —

• “A Texas lawyer who works for public entities at a private firm will create conflicts of interest for other attorneys if he moves to another firm that is routinely in opposition to those public entities, the State Bar of Texas said.”
• “The bar’s Professional Ethics Committee was asked if a lawyer who regularly represents municipalities can join an adverse firm without creating a conflict for other attorneys at the new firm. Secondarily, the committee was presented a question about whether the public entities’ open meetings and records could help avoid conflicts.”
• “The committee said in a February opinion that, under Rule 1.09 of the Texas Disciplinary Rules of Professional Conduct, a migrating lawyer is prohibited from representing any client if the matter is adverse to a client the lawyer personally represented before in related matters. If the migrating lawyer is personally conflicted under Rule 1.09, the committee said, ‘all lawyers in the hiring law firm will share the same conflict while the migrating lawyer remains in the firm.'”
• “The committee also rejected the notion that the ‘generally known’ exception to a lawyer’s confidentiality obligations under Rule 1.05 would allow the hiring firm to avoid the migrating lawyer’s conflicts because of the public entities’ generally open meetings and records.”
• The opinion: Texas Bar Ethics Advisory Comm., Op. No. 693, 02/22

“Ethics Forum: Questions and Answers on Professional Responsibility” —

• “I have been contacted by my state representative to represent him in a challenge to his election opponent once the circulation period is finished. The challenge will not be brought by him, but brought by a registered voter in his district. Who do I represent?”
• “Although the state representative had asked you to bring the challenge and perhaps is paying for it, the person represented is the voter whose name is going to appear on the petition to challenge the nominating petition of the opponent of the state rep.”
• “At times, there can be differences or conflicts between the person bringing the challenge and the person paying the fee.”
• “Despite the fact that the petitioner has a very limited role other than being the registered voter that is needed to bring these challenges, this person is still the client. It is probably a good idea to have a fee letter under Rule 1.5(b). The letter would indicate who is paying, but also note that the lawyer represents them, not the political people who asked them to do this challenge. Also, the election might reflect that there is a waiver of any attorney-client privilege so, at least, the matters can be discussed with the person paying.”
• “There still can be potential conflicts in this situation. One potential conflict could be if the state rep wants the matter to be withdrawn, but the person bringing the challenge wants it to continue. There could also be a conflict if there is a difference of opinion as to whether an appeal should be taken if the challenge is initially denied.”
• “A real conflict could arise if there are sanctions. In the Election Code under 25 P.S. 2937, costs and sanctions can be imposed, though it is rarely done. The person who would be sanctioned would not be that state rep who had the initial idea for the challenge, but it would be the individual voter who had agreed to do so. That could create a problem if the state rep wants the matter pursued even though it was lost below, but the voter may not want to, or may have some concern about sanctions going against them. This would create a real conflict.”
• “Therefore, there could be a real conflict in these situations if one is not careful. Every lawyer should be aware of the potential conflict and who they represent in these election cases.”

“Bank Experience is Conflicting Juniors Out as Litigation Firms Struggle to Hire” —

• “Quinn Emanuel and several U.K. litigation specialists say lawyers are being conflicted from joining because of time spent advising banks early on in their career.”
• “According to Richard East, the founder and senior partner of Quinn’s London office, the firm is struggling to find good lawyers to recruit who are not already conflicted from litigating against major banks.
• “Most litigation lawyers spend at least some time advising banks early on in their career, according to East, meaning they are inadvertently conflicted from ever acting against those same banks in the future.”
• “‘Many financial institutions, including the banks and private equity houses, have for some years now, been restricting the law firms they engage and preventing them from taking adverse positions in disputes” according to Natasha Harrison, formerly of Boies Schiller Flexner and now founder and managing partner of Pallas Partners. “As a consequence, much of the City, including the major U.S. and U.K. firms, have been conflicted out of being adverse to banks.'”
• “It’s a situation CYK [litigation boutique, Cooke, Young and Keidan] has first hand experience of. Around 2016, the firm employed an ex-Clifford Chance lawyer who’d done work for Royal Bank of Scotland. CYK was involved in litigation against RBS and it was claimed the lawyer in question would have had access to confidential RBS documents while at Clifford Chance. The claim was enough to make the client jump to a different adviser for the case.”
• “Quinn Emanuel’s East believes such moves are unfair, saying: ‘The idea we would hire an associate who’s got a few hours’ worth of basic knowledge and information and then use it and breach our professional obligations is ridiculous.'”
• “One litigation firm partner said: ‘Being placed on a [bank] investigation as a junior lawyer is a death to your career.'”
• “One solution some firms have used to get around the issue is to seek waivers from the clients in order to be able to hire with the promise that individual lawyer will not litigate against them, but this is also proving difficult as banks simply don’t want to aid the development of firms that will potentially litigate against them.”
• “‘More often than not banks won’t give you a written waiver.’ commented East, ‘It doesn’t matter whether the lawyer’s worked on something for 10 or 100 hours, they don’t even look into it, they simply say no. On a number of occasions that has prevented moves.'”
• “Meanwhile one London partner has gone as far as threatening to sue, saying to the bank: ‘You either sign the waiver or I’ll go to court and seek a declaration myself that this person doesn’t have any conflicting interests.’ That’s worked on a couple of occasions.'”
• “Banks can also use appointments to their sizeable panels as a weapon, according to some. CYK’s O’Callaghan said: ‘We were acting against one particular retail bank in hard fought and aggressive litigation and I remember hearing through the grapevine that the bank had said that it would look to put us on its panel going forward as a means of removing us as opposition on future cases. Needless to say that we had no intention of ever agreeing to the appointment.’ She continued: ‘You often hear stories of large firms that are put on panels and are given hardly any work.'”
• “This ultimately has an impact for clients too, who may find they cannot work with their usual trusted advisors if a conflict dispute is a risk. ‘Clients are understandably not keen on the prospect of a tactical challenge which can end up being an expensive sideshow to the main litigation.’ commented one London partner.”

For those not off this President’s Day, or other otherwise interested in law firm anti-money laundering, here are two events and an article of interest:

SRA Webinar: “AML officers: what they need to know” (February 23) —

• “Everyone in a law firm has a responsibility to keep the proceeds of crime out of circulation. Some, however, have a greater responsibility than others. This free webinar will look at what it means to be a Money Laundering Compliance or Reporting Officer – key roles in the fight against financial crime.”
• “Join us to learn more about:
  • what our thematic review and visits to firms found
  • the practical aspects of both roles
  • what guidance is available for both new and experienced AML officers.
• You can send us questions when you book your place, or you can ask them during the webinar.
• Speakers: Ross Gillson, AML Regulatory Manager, SRA, Susannah Eaton, AML Investigation Officer, SRA
• Registration Link

“Legal Eye webinar: AML update 2022” (March 10) —

• “The first Legal Eye webinar of 2022 will talk all things Anti-Money Laundering (AML), from independent audits to the challenging roles of MLCO and MLRO.”
• “AML processes within the legal sector are under more scrutiny from regulators than ever before. It is imperative that law firms understand the role that they play; from the latest requirement for independent audits under Reg 21 to the key roles of a firms’ MLCO and MLRO and the challenges of these roles.”
• “In this AML update, Legal Eye will discuss:
  • Commentary from the recent SRA Thematic Report on the roles of the MLCO and MLRO
  • What they are finding in their Independent AML Audits of Firms
  • Client & Matter Risk Assessment
  • Regulatory compliance around Data Protection and a mention on S43 Orders”
• “Join in to gain some valuable insight on some of the current topics in the industry and enjoy some practical working examples.”
• Registration Link

“Pot Attys Org. Enters ABA Debate On Money Laundering Rules” —

• “The proposed changes would broadly extend lawyers’ due diligence obligations to be more proactive in verifying the legality of clients’ activities and could require them to withdraw representation if they become aware of unlawful money laundering.”
• “‘We fear that the unintended consequences of the proposed comments will force states that have implemented adult-use and medical cannabis regulatory regimes to decline to adopt this guidance, as it discourages or denies legal services to those in the state-legal adult and medical cannabis industry,’ INCBA’s [International Cannabis Bar Association] comment said.”
• “According to INCBA’s comment, the ABA’s language does not take into account emergent industries that exist in a legal gray area — such as cryptocurrencies and nonfungible tokens, or NFTs — and does not acknowledge the conflict between federal and state cannabis laws.”
• “‘The proposed language prohibits lawyers from representing cannabis-industry market participants — and could even create barriers for attorneys who represent state and local governments that license operators, or that accept fees or tax payments from those operators,’ the INCBA comment said.”
• “The association warned that adoption of the proposed language would force state bars to either reject it or accept it in whole or with caveats. Any outcome would make it difficult for attorneys to take on cannabis clients and would further exacerbate differences between states’ ethical standards with respect to cannabis law, the INCBA comment said.”

Bill Freivogel notes recent decisions:

 L.D. v. Seymour, No. 8:20-CV-1203 (N.D.N.Y. Jan. 3, 2022).

• “Plaintiff appears to be suing several local government entities arising out of an alleged sexual assault by an individual defendant (‘Seymour’). Law Firm represents one of the entities (‘County Services’), which evidently was Seymour’s employer. Plaintiff moved to disqualify Law Firm in this case because some twenty-five years earlier Law Firm had represented Plaintiff in ‘a matrimonial action.'”
• “In this opinion the magistrate judge denied the motion. Lawyers who represented Plaintiff in the matrimonial action (‘Team One’) are still with Law Firm, but they are not the lawyers (‘Team Two’) working on this case.”
• “On balance, the magistrate judge seemed to feel that the information, if any, that might flow from Team One to Team Two, would not prejudice Plaintiff in this case. The court alludes to the New York Rules of Professional Conduct, screening, the substantial relationship test, notions of confidentiality, etc. It cites a potpourri of New York federal court cases, many of questionable relevance here, and most of which predate New York’s adoption of the Rules.”

Diagnostic Affiliates of N.E. Hou, LLC v. United Health Grp., Inc., No. 2:21-CV-00131 (S.D. Tex. Jan. 18, 2022).

• “Plaintiff seeks to recover ‘payments for COVID-19 testing and related services’ from three groups of defendants, totaling dozens of entities. Law Firm seeks to represent all the defendants. Plaintiff moved to disqualify Law Firm because of conflicts among the defendants. Standing is an issue.”
• “In this opinion the court followed those authorities that recognized the right, in some instances, of parties to raise conflicts of law firms that never represented the moving parties. However, the court found that, on balance, the possible conflicts here were not substantial enough, or real enough, (our characterizations) to interfere with the defendants’ right, as a matter of strategy, to continue with one law firm.”
• “[Our note: The relationships among the defendants are not clear to us from the opinion, so we are unable to articulate why the conflicts are not substantial enough, or real enough to justify disqualification.]”

“Bid To DQ BB&K Is ’11th Hour Litigation Tactic,’ City Says” —

• “A California city that sits on an island off the coast of Los Angeles fought efforts to disqualify its counsel from litigation over contamination on school property, urging the court to reject the ‘eleventh-hour litigation tactic’ because it was no secret that Best Best & Krieger LLP advised the local school district years ago.”
• “The city of Avalon and its attorneys from BB&K told the court Monday that the Long Beach Unified School District’s motion to disqualify is out of turn and uncalled-for. The city told the court that the school district has always been aware that BB&K attorneys — one of whom left the firm well over a decade ago — represented the district in an ‘exceedingly limited scope’ regarding contamination at the Avalon School.”
• “The district’s claims that it only recently became aware of the apparent conflict are not true, the city argued, saying ‘the district has known every fact it now alleges in support of its motion since 2012.'”
• “The city argued the district cannot now use information it has been sitting on to seek disqualification, saying the prior representation does not pose a conflict of interest, but even if it did, precedent dictates that litigants can’t hold off on seeking disqualification until it is convenient for them. The city called the district’s disqualification bid ‘a litigation tactic aimed at depriving the city of its chosen attorneys who have been successful in this litigation,’ which should be denied.”
• “In its disqualification motion, the school district further argued that the timeliness issues central to the court’s ruling in August were directly related to the law firm’s past work advising the school district. The district argued the law firm ‘injuriously affected its former client’ since it successfully argued many of the district’s claims were time-barred.”

In this Law Gazette feature, “Joanna Goodman looks at the everyday perils that give compliance officers sleepless nights.” — “The watchful hours” —

• “Law firms need to manage risk and compliance effectively to meet their legal, financial and professional obligations, to keep their – and their clients’ – money and data secure and protected from fraud. Achieving that will safeguard their reputation and professional status.”
• “As legal processes and resources have moved online, not least with the introduction of government portals, the compliance burden has grown more complex…The key message from the SRA conference, and from compliance officers across the sector, is that compliance is a shared responsibility across the firm and all its stakeholders. Good policies, systems and processes, which are the domain of compliance officers, need to be supported by awareness and action across the legal services supply chain.”
• “Cybercrime is the top threat keeping compliance officers, partners and managers awake at night, attendees at the SRA conference heard. Law firms are targeted by cybercriminals because they manage the financial element of transactions and hold valuable corporate and financial data.”
• “COLPs are worried about loss of data through hacking, phishing and ransomware, and even the biggest firms are not immune. DLA Piper’s high-profile ransomware attack in 2017 was down to third-party vulnerability, underlining the significance of managing supplier risk.”
• “While the SRA does not take enforcement action against firms which report incidents, it emphasises the need for firms to assess and manage transactional risks and avoid breaches that are distressing to victims and damage the reputation of firms and their clients.”
• “Chun Wong, partner and COLP at consumer litigation firm Hodge Jones & Allen, deems cybersecurity even more important in today’s hybrid world, as lawyers and clients working from home may be more exposed to risk. As cybercriminals are becoming increasingly sophisticated, it is impossible to eliminate risk entirely. ‘When you get so many emails every day, you need external help: investment in IT and third parties supports seamless hybrid working, systems security and compliance.'”
• “To some extent, anxiety around risk and compliance is holding back digital transformation. While some regulations have been relaxed temporarily to allow for online identity checking and electronic witnessing and signature, firms are evaluating how much to digitise from a risk management perspective. ‘We accept electronic signatures for some legal documents, such as client care letters, but we decided the risk was too high to witness wills over Zoom, because we are not prepared to take the risk when large estates are involved,’ explains Wong.”
• “For larger firms, risk and compliance can be integrated into core policies, processes and systems. Weightmans, which handles both volume and bespoke work, has incorporated compliance and risk into the firm’s governance model.”
• “Partner and business services and innovation director Stuart Whittle heads the risk and compliance team. He explains that over the past two years, the audit risk committee chaired by one of the firm’s executive directors has developed a risk register to evaluate the severity and potential impact of different risks. Whittle’s team then decides on a course of action: to accept the risk, to insure against it, or to take mitigating action. The biggest consequence of risk is professional indemnity insurance, where premiums have increased significantly over the past year. ‘In a hardening insurance market, insurers want to understand your policies and processes for managing risks,’ he adds.”
• “Additionally, Weightmans’ quality standards team remotely audits a selection of files across all teams against criteria including statutory and regulatory requirements, AML, KYC and so on, and reports back to each team manager with recommendations for corrective action if this is needed. Whittle’s IT and innovation teams follow a detailed procurement process, which includes a data protection impact assessment (DPIA).”
• “Reputation risk is becoming a higher priority. ‘Solicitors trade on their professional reputation for honesty, integrity and client confidentiality, and compliance measures that protect client data and funds are critical to that,’ observes Whittle.”
• “The fallout of investigations into the Pandora Papers highlighted the need for firms to balance protecting the right of individuals and organisations to legal representation against their own risk of being associated with certain people and industries.”
• “Law firm risk management is starting to reflect the flipside of ethical consumerism, in that a firm might have to decide whether to represent particular clients on the grounds of its own reputational consequences, in terms of its ability to attract clients and talent.”