Bressler Risk Blog

“Suit alleges BigLaw firm used LexisNexis product to inflate bills for flat-fee legal research” —

• “A corporate litigant disputing the legal bill charged by Squire Patton Boggs has filed a third-party complaint alleging that LexisNexis helped the law firm inflate its fees.”
• “The suit alleges that LexisNexis charged Squire Patton Boggs a flat rate, but the law firm billed more than $100,000 for what appeared to be separate searches with the help of a LexisNexis product. The product, called PowerInvoice, can be used to generate customized reports. The product was used ‘to construct sham bills,’ according to the suit, filed in Florida’s 15th Judicial Circuit.”
• “‘We believe LexisNexis aided and abetted Squire in a breach of fiduciary duty and a fraud against my client,’ said Michael Smith, a lawyer for the Armor Screen Corp., in an interview with Law.com. ‘We think the PowerInvoice product is a product created and designed in a way that enabled that kind of fraud.'”
• “A LexisNexis representative told Law.com that it does not comment on pending litigation. Squire Patton Boggs told Law.com in a statement that its billing for legal research complied with ABA rules.”

Law.com adds commentary from cost recovery consultant Rob Mattern:

• “Mattern said most of his law firm clients spell out their legal research billing terms in their engagement letters. The Squire letter, however, allowed the firm to change clients’ rates from the bulk agreement prices it received from its vendors.”
• “‘The only fair reading of it is they’re asserting that they are negotiating these arrangements to give the client a better rate,’ Smith said. ‘Instead what internal memoranda show is they used the PowerInvoice product and other aspects of the arrangement to generate documents that look like the actual bills charged from Lexis—the amount charged from Lexis to Squire—when there’s no relationship to the amount charged.'”

“Law Society Risk and Compliance Conference” —

AML:

• “Anti-money laundering (AML) compliance is a ‘messy and complicated area’, Amasis Saba, chair of the Law Society’s money laundering taskforce, told the conference. He added: ‘But nonetheless, the government has said it will not relax its efforts to identify and penalise those firms that are not on top of it.’”
• “Colette Best, the SRA’s director of AML, endorsed Saba’s comment about the area’s complexity. ‘The biggest challenge,’ she said, ‘is the pace of change. There were new regulations in 2017 and then again in 2019. And now a 212-page newly revised and updated guidance was published in January 2021. It’s difficult to keep up.’”
• “Saba turned his attention to what every firm must have in place: written risk assessments. ‘You must show what you, the firm, have actually done. It is not a generic, tick-box process. Consultants can be useful, but you need to own what you have done.’”
• “Risk assessments should be both firm-wide and related to specific matters, he continued. Everyone should be involved, including fee-earners and anyone else who has access to the files. ‘We should also all be asking ourselves whether there are factors that make any particular transaction more complex than usual or different. Does what the client tells you make sense? What precisely did the client do to earn all this money?”

Information Security & Cyber:

• “The Pentagon, with the resources to invest in state-of-the art cybersecurity, is not the only high-profile victim. US law firm Jones Day, which numbers former president Donald Trump among its clients, also had data compromised. ‘The vulnerability in this instance was that older systems were buried in modern updates,’ explained Wright, ‘which highlights the dangers of hanging on to legacy technology.’”
• “What can you do to minimise the risk to your firm? Fleming urged you to test your defence systems with ‘simulated attacks’ launched by yourself against yourself. ‘Fraudsters typically try to tempt you with offers that, upon reflection, are too good to be true. They also try to make you panic and act recklessly out of fear of being prosecuted or missing out on an opportunity. Teach colleagues to recognise such scams or simply to pick up the phone and check that the email they’ve just received is genuinely from an established client or somebody else they think they can trust.’”
• “Working from home has its own hazards. ‘Even automated vacuum cleaners can be hacked,’ said Wright, ‘as can smart fridges, lights and speakers. On top of this, of course, a colleague’s personal laptop probably won’t offer the same level of protection as the office’s system of firewalls and alerts. Best practice would be to get an expert to go to colleagues’ homes and verify the protective measures in place.’”

“White & Case Fends Off Effort to Oust It From YPF Pollution Litigation” —

• “Law firm White & Case LLP will stay in charge of a $14 billion bankruptcy lawsuit against Argentina’s YPF SA, a judge said, rejecting complaints that a lawyer’s career move had undermined the state oil giant’s defense.”
• “The ruling said YPF failed to show why White & Case should be ousted as counsel to the bankruptcy trust that has sued YPF in the litigation, which seeks to hold the Argentine oil company responsible for the costs of cleaning up New Jersey’s contaminated Passaic River. Judge Christopher Sontchi of the U.S. Bankruptcy Court in Wilmington, Del., issued the ruling Tuesday.”
• “Judge Sontchi said White & Case had erected sufficient safeguards after hiring Jessica Lauria, a former top legal strategist to YPF, in October 2020. Ethical and law firm procedures will protect against disclosure of information that could be used against YPF, he found.”
• “The dispute took a detour in December when YPF moved to disqualify White & Case, saying its star hire, Ms. Lauria, knew too much about YPF’s legal strategy, which she helped design. With so much at stake, YPF needed to force White & Case out of the litigation to guarantee its corporate confidences would be protected, YPF company lawyer Victor Hou said during arguments last week.”
• “The company said she had met with top YPF leaders and was in possession of crucial confidential information that could be disclosed inadvertently. Her role was so important that the standard law firm screens used to avoid information leakage and conflicts wouldn’t be sufficient to guarantee its information wouldn’t get into the wrong hands, YPF argued.”
• “Judge Sontchi disagreed, and found White & Case had followed proper procedures. Ms. Lauria’s marriage to Thomas Lauria, the global head of White & Case’s restructuring practice, isn’t relevant to the disqualification motion, the judge said.”

Curious about the underlying matter, I found: “The New Jersey Chemical Spill That Could Pollute U.S.-Argentine Relations“.

“Judge rules Dr. Dre must find a new lawyer in Nicole Young divorce case” —

• “A judge has ruled that power divorce attorney Laura Wasser — and Dre’s lawyer Howard King — cannot represent him in his blockbuster split from estranged wife Nicole Young. Wasser is known as one of LA’s biggest divorce attorneys, repping clients including Kim Kardashian.”
• “But Young and her attorney argued in court papers that King had previously repped Dre and Young throughout their marriage. Wasser was ‘vicariously disqualified’ from repping the rap mogul because she was working with King.”
• “Dre and Nicole were married for 24 years. But they split on March 27, 2020, according to court papers. He is reportedly worth about $800 million.”

“DiFiore Didn’t Disclose Greenberg Traurig Connection During Arguments, Raising Questions” —

• “New York’s top judge did not disclose her connection to the law firm Greenberg Traurig as two attorneys from the firm appeared before the Court of Appeals for arguments earlier this year, transcripts of the virtual proceedings showed.”
• “At the time of the arguments in early January, Chief Judge Janet DiFiore was being represented by a separate attorney from Greenberg Traurig in two lawsuits over the court system’s decision to force out dozens of older judges.”
• “But DiFiore made no mention of that connection as judges heard arguments in four mortgage cases Jan. 5, according to the transcripts. A spokesman for the court system said a judge has no obligation to recuse from a unrelated case when a private law firm represents them in their ‘official capacity.'”
• “Gary Spencer, a spokesman for the Court of Appeals, declined to say if DiFiore disclosed her connection to Greenberg Traurig in any form. Instead, he issued a statement saying the court ‘does not address these matters through ‘disclosures.’'”
• “Judges on the Court of Appeals gathered for a virtual meeting Jan. 5 to hear arguments in four separate mortgage cases. Greenberg Traurig represented companies in two of those cases and argued before the state’s high court. Weeks later in February, the Court of Appeals court handed down a single opinion in response to all four mortgage cases. The majority opinion, which was written by the chief judge, sided with the companies represented by Greenberg Traurig. Both Greenberg Traurig cases were unanimous rulings.”
• “The chief judge should have divulged her connection to Greenberg Traurig through some channel, according to several experts on legal ethics. There’s some debate among experts over whether the chief judge had an ethical duty to disclose the information or if her providing the information would have simply been a best practice.”
• “Judges should avoid ‘the appearance of impropriety’ under the judicial conduct rules. But legal ethics experts advise it’s unclear specifically whether DiFiore had an obligation to recuse herself from the cases.”

“Opioid Judge Withdraws After AbbVie Elevates His Atty Sister” —

• “Despite drugmaker warnings of “harmful and unwarranted” disruption, an Illinois magistrate judge withdrew Thursday from Chicago’s bellwether case against drugmakers in multidistrict opioid litigation after the city flagged his sister’s new role overseeing thousands of opioid cases for AbbVie Inc.”
• “U.S. Magistrate Judge Young B. Kim, who started managing discovery and other issues in the case more than six years ago, recused himself in response to the city’s concerns about his sister — longtime AbbVie in-house counsel Nancy Kim — recently being designated to manage the company’s vast docket of opioid-crisis lawsuits.”
• “According to the entry, Chicago and the public might question ‘the newly arisen conflict of interest’ involving his sister, and drug companies could perceive ‘that the court will overcompensate to appear to be unbiased’ against the city.”
• “Illinois-based AbbVie’s involvement in the case stems from its acquisition of Allergan PLC, which is facing more than 3,000 lawsuits alleging unlawful marketing and sales of prescription narcotics. Shortly after the acquisition last year, Judge Kim notified the city and the drugmakers that he now had a family connection to the case, but the parties said they had “no issues or objections,” according to a June docket entry.”
• “More recently, however, Nancy Kim was tapped to replace a departing AbbVie lawyer in charge of the company’s opioid cases. In an email last month, Kirkland & Ellis LLP partner Donna Welch, counsel for Allergan, informed the city that Nancy Kim ‘will work closely’ with Kirkland and other firms ‘to develop and oversee the litigation and settlement strategy regarding opioid litigation at a national level.'”
• “According to Welch’s email, Allergan was willing to erect ‘an ethical wall’ between Nancy Kim and Chicago’s case, ensuring that she would have no role ‘other than being informed of key developments.’ Last Friday, Chicago filed a “notice of these new facts for consideration of recusal,” averring that Nancy Kim’s managerial role means that she would be ‘acting as a lawyer’ in the city’s case.”
• “Despite the proposal for an ethical wall, ‘Allergan’s national litigation strategy, settlement positions and defenses will necessarily carry over to the Chicago litigation,’ the city wrote, adding that it filed the notice ‘respectfully and reluctantly.'”

“Gibson Dunn disqualification over privileged email could be headache for Calif. lawyers” —

• “On Tuesday, a divided California state appeals court refused to reverse a trial court decision to disqualify Gibson Dunn & Crutcher from defending McDermott Will & Emery in a malpractice suit brought by the patriarch of a family investment business. Gibson Dunn’s fatal mistake, according to the Fourth Appellate District of the California Court of Appeal, was relying on an email distributed by the patriarch, which Gibson Dunn found in McDermott’s own files and produced to the other side.”
• “If that strikes you as a strange rationale for disqualification, you are not alone. In a strongly worded dissent from the majority opinion by Judge Richard Aronson, Judge David Thompson said the majority had twisted California’s rules for handling disputed discovery material beyond recognition and reason.”
• “The majority opinion ‘upsets the delicate balance,’ Judge Thompson wrote. ‘It imposes on Gibson Dunn an obligation to respect their opponent’s interests which is greater than and in direct conflict with their primary obligation to zealously represent their own client’s interests.'”
• “But among the new wrinkles in the Gibson Dunn case, as you will see, are that the disputed email ended up in McDermott’s files before McDermott was in litigation with its former client. Gibson Dunn didn’t trick anyone to get hold of the email to gain a litigation advantage. Nor did McDermott’s former client mistakenly produce the email in discovery in the malpractice case. The email was already sitting in the files of Gibson Dunn’s client when the malpractice case began.”
• “The backstory on the disputed email is so uniquely convoluted that I doubt any other lawyers will find themselves in precisely the same circumstances as Gibson Dunn in the McDermott case. But as Judge Thompson warned in his dissent, the ruling puts all California lawyers on notice that their own clients’ records may contain privilege pitfalls.”
• “When Dick’s lawyers realized McDermott had the email, they asked Gibson Dunn to return all copies. Gibson partner James Fogelman refused, asserting that the document was not privileged because Dick had disclosed it to non-lawyers.”
• “Dick eventually settled his dispute with Rick without any resolution on whether the email was privileged. But the issue came back when he sued McDermott for malpractice, claiming the firm was conflicted in representing various members of the Hausman family. Dick first moved for a ruling that the email was privileged. After the trial judge overseeing Dick’s malpractice actions, Orange County Superior Court Judge Sheila Fell, agreed that it was, Dick asked her to disqualify Gibson Dunn for using the document. The judge did so in a minute order.”
• “More broadly, the opinion said lawyers don’t have discretion to consider whether the facts strip privilege from presumptively privileged documents. Once the protocol for presumptively privileged material is triggered, the majority said, lawyers don’t have discretion.”

“Crowell Denies ‘Blatant’ Ethics Breach as Walgreens Broadens Lawsuit” —

• “Lawyers for Walgreens on Tuesday filed an amended complaint that asked a District of Columbia Superior Court judge to disqualify Crowell from an arbitration proceeding in which the firm is representing the insurance carrier Humana Inc. against Walgreens. The attorneys also urged the judge, Hiram Puig-Lugo, to strip legal fees ‘that Crowell has received or in the future will receive in connection with actions in which it is acting adversely to Walgreens.'”
• “The company’s original lawsuit, first published by The National Law Journal, was docketed in March and sought documents related to work the law firm did years ago for Walgreens on a prescription drug benefit program. In 2008, Crowell provided legal services as part of a Walgreens initiative called the ‘prescription savings club,’ or PSC. Crowell, representing major U.S. insurance carriers, last year sued Walgreens in Illinois federal district court in a case that confronts the prescription savings club and accuses Walgreens of fraud.”
• “‘Law firms cannot advise a client on a legal issue, then turn around and sue that client over the same issue. This represents a clear conflict of interest and a breach of Crowell & Moring’s ethical and fiduciary obligations,’ a spokesperson for Walgreens said in a statement. ‘Walgreens has given Crowell & Moring every opportunity to do the right thing. They refused, leaving Walgreens no alternative but to seek relief in court.'”
• “Just weeks ago, lawyers at Crowell had resisted disclosing internal law firm documents to Walgreens’ attorneys at Reed Smith, according to court filings. Crowell had maintained the firm had not been counsel to Walgreens at the time legal services were provided on the prescription savings club. Crowell argued it had represented a Walgreens subsidiary that was later sold to a third party.”
• “That company, however, consented to the disclosure of the Walgreens files, the lawsuit said, and Walgreens recently obtained requested documents from Crowell. Lawyers for Walgreens contend, however, that Crowell still is holding onto relevant documents related to the work the firm did on the prescription savings club.”
• “Rebecca Carr, a spokesperson for Crowell, said in a statement: ‘Crowell denies the assertions in Walgreens’ amended complaint and looks forward to achieving vindication in court.'”

For those of you who are ILTA members, you may be interested in two recent relevant webinar recordings from events held late last year:

“General Firm Risks: A General Counsel’s Perspective” —

• “If you are interested in learning ways to strengthen your relationships with your general counsel, or are a GC yourself, this roundtable will provide insights into multiple areas and questions to ask, no matter the side of the table you are on. This roundtable will cover topics such as: Meeting/Messaging Services, Cyber Insurance, Cloud: Legal Considerations while Using and eDiscovery/eBilling.”
• Moderators & Participants:
  • Matthew Roskoski – Deputy General Counsel at Latham & Watkins LLP
  • Martin Kaminsky – Chief Legal Officer and General Counsel at Greenberg Traurig LLP
  • Corey Reitz – E-Discovery Project Lead at Sandia National Laboratories
  • Michele Gossmeyer – Global Director, Information Governance, Risk and Compliance at Dentons

“Client Audits” —

• “Client audits (like them or not) happen, and you have to be prepared for them. As we become ever more reliant on technology, the complexity of our systems increases; clients know this and want to be ensured that the data they provide us is well-protected. Most of us are regularly subjected to client audits, which can range from being as simple as a couple of security-related questions to the equivalent of a TSA pat-down. Similarly, outside counsel guidelines and representation agreements are becoming more and more complex, covering a wide range of insurance, governance and security requirements.”
• “So how can we best prepare for and respond to client audits? Bring your friends (and your questions and experiences) and join us in an open mic discussion as we try to chart a better course through the chaos of client audits.”
• Participants:
  • Matt McKinley – Chief Information Officer, Holland & Knight LLP
  • Jon Washburn – Chief Information Security Officer, Stoel Rives LLP

“Treasure Trove On Thumb Drives: Remand Ordered In Dispute Over Conduct Of Departing Attorneys” —

• “The Massachusetts Supreme Judicial Court has remanded in a suit brought concerning the conduct of departing law firm attorneys.”
• “Over the course of more than two decades representing clients in asbestos litigation, the plaintiff Governo Law Firm LLC (GLF) systematically created the contents of a research library, a treasure trove of materials amassed from GLF’s own matters as well as other sources, that gave it a competitive edge in attracting and providing legal services to clients in this specialized field.GLF also built electronic databases to render the library readily searchable, facilitating retrieval of the information.”
• “In the fall of 2016, these proprietary materials were taken by a group of nonequity employees at GLF (attorney defendants) as they prepared to start a new law firm, the defendant CMBG3 Law LLC (CMBG3), in case their planned purchase of GLF proved unfruitful.”
• “The attorney defendants took turns secretly downloading the library and databases, as well as GLF’s employee handbook, other administrative materials, and client lists, onto high-capacity ‘thumb drives’; the attorneys then surreptitiously removed these materials from GLF’s offices.”
• “They subsequently made an offer to GLF’s sole owner, David Governo, to buy GLF, stating that they would resign if the offer were not accepted that day. Governo rejected the offer that same day and locked the attorney defendants out of GLF’s computer systems. The next day, the attorney defendants opened for business under the previously incorporated CMBG3, where they used the stolen materials and derived profits therefrom.”
• “The materials copied included three different types of information: a research library, databases, and administrative files. The research library contained over 100,000 documents relevant to asbestos litigation, including witness interviews, expert reports, and investigative reports… The library was developed by GLF over a period of twenty years, at a cost of more than $100,000. According to testimony by GLF’s expert, these materials were ‘extremely valuable’ and provided a competitive advantage to GLF over other law firms within the field of asbestos litigation.”

My friends and colleagues at InOutsource are hosting their latest virtual risk round table webinar. I’ve enjoyed these past sessions and will be in the audience again at: “VIRTUAL ROUND TABLE: Successful New Business Intake” —

• DATE: April 22^nd at 1 pm Eastern.
• “As partnerships, law firms are complicated organizations. The greatest challenges of the partnership model often are associated with getting the partners to do things associated with running the business of the firm. Lawyers like to practice law, not handle business administration.”
• “One of the key pieces of the business of a law firm is new business intake. Get it right and important downstream processes like timekeeping, billing, collections, and profit analysis will go smoothly. Get it wrong and not only will it jam up those gears but it also could expose the firm to ethical, financial, and reputational risks.””
• “So, if new business intake is so important, why do so many law firms struggle to get it right? What does successful new business intake look like? We have some ideas but we also want you to share yours!”

• Conversation topic starters will include:
  • What works really well? What really doesn’t work?
  • Is this just a hoop to jump through or is there meaningful consideration of new work?
  • Are there creative workflow strategies you’ve employed to get better information from submitters, get better involvement from reviewers (answering the “should we” question), and speed things up?
  • What are the “new” things your firm has asked to know about new matters? (Marijuana businesses, Pricing, LPM, OCGs, etc.”
• Registration link