Bressler Risk Blog

We noted new AML guidance last week. But this detail caught my eye in particular: “AI can form part of anti-money laundering armoury, law firms told” —

• “New technologies such as biometrics, machine learning and artificial intelligence can now form part of the anti-money laundering (AML) armoury, law firms have been told.”
• “The Legal Sector Affinity Group, made up of all the UK’s legal regulatory and representative bodies, has published a 212-page draft of its updated AML guidance, which is subject to approval by HM Treasury.”
• “The guidance also considers new technology. ‘The use of biometric indicators such as facial recognition software as part of an overall identity verification process is now widely used across various industries, and may be considered proven technology, helpful in meeting a practice’s AML obligations, especially in non-face to face situations, remote client take-on situations,’ it said.”
• “‘Where used, consideration must always be given to the use and storage of such data, where collected, stored and retained.'”

For those curious, my eye was caught due to that last bit — questions about information governance and security relating to personal biometric data. You see, just the other week an expert in the matter was sharing some shocking stories of law firms haphazardly storing passport and other PII data generally open in the DMS and sent around via email (where it can live forever).

The thing about biometric data is that it can be great for security, but carries its own risks. Hard enough to change your social security number if there’s a hack and leak — impossible to change your irises.

And there are plenty looking for this kind of data — though arguable not within the email systems of law firms, just yet. (For more general risk reading, see: “Intel agency warns of threats from China collecting sensitive US health data“.

And for more law firm AML perspective, see: “AML Risks – why did I agree to be the MLRO?!“ —

• “This is a question I ask myself many times each day since being appointed the MLRO for Weightmans in May 2020! As a compliance specialist advising law firms on all aspects of legal sector regulation, including AML, I was familiar with the obligations and responsibilities which come with being the MLRO so it made sense that I applied that knowledge internally at Weightmans when it became apparent that the role had become too onerous and time consuming for one person to be both MLRO and MLCO.”
• “Thankfully I inherited effective (touching wood as I speak!) and compliant policies and procedures but of course I am not resting on my laurels and there is always more work to be done to remain one step ahead of the crooks who seek to launder their ill-gotten gains through a law firm’s client account. My priorities currently are the updating of the firmwide risk assessment and PCPs to reflect the latest LSAG guidance and the SRA’s latest sectoral risk assessment dated 28 January 2021.”
• “One of the key areas of non-compliance with the ML Regs identified by the SRA is the requirement to independently audit the firm’s PCPs. The need for independence in auditing is an area that many firms seem to have neglected or misunderstood. Only the very smallest practices will not have to establish an independent audit function and yet, according to the SRA’s November 2020 report referred to above, more than 50% of the firms visited required follow up action on this issue.”
• “While ‘independent’ does not necessarily mean the audit has to be carried out by someone external to the firm, there needs to be someone suitable to carry out the audit within the firm who:
  • Is independent of the work areas being audited (so not the MLRO/MLCO/compliance team or the team who did the original work)
  • has the requisite skills and knowledge of audit and the requirements of the anti-money laundering regulations;
  • is a senior member of the firm with authority to access all relevant material and to make recommendations/report findings to senior management; and
  • has the necessary time and capacity to carry out the audit.”
• “Such a person is not always easy to find! Thankfully, Weightmans has an established internal, independent audit team, the head of which is responsible for auditing the AML PCPs, but many firms will not have this resource and, unless you can justify not having an independent audit (which will need to be carefully documented), this is where external expert support should be considered.”

The repeating nature of this one caught my eye. (It was just Groundhog Day after all.): “Two Troutman Pepper Partners Size Down for Boutiques Post-Merger” —

• “As large firms grow larger, some partners are opting for smaller shops. In the past couple weeks, two partners have left Troutman Pepper Hamilton Sanders for boutiques, on the heels of last July’s merger between Troutman Sanders and Pepper Hamilton that created a 1,200-lawyer firm.”
• “Mandel said client conflicts prompted his departure. He’d joined Troutman two years ago from Andrews Kurth after that firm merged with Hunton & Williams in April 2018 to form 1,000-lawyer Hunton Andrews Kurth, also because of client conflicts.”
• “‘It was almost deja vu,’ Mandel said. ‘Before I joined Troutman I was seriously considering going to a boutique firm because of conflict issues.'”
  “‘Troutman is a great place with great people,’ he added. ‘I made sure Lewis Baach isn’t planning any large-scale mergers in the near future.'”

That had me thinking about pre-lateral terms with financial contingencies in the case of future conflicts. Maybe those already exist? Maybe they will? And then I spotted not quite this point but the related: “Law Firm Penalties On Departing Partners Just Got Riskier” —

• “The D.C. Court of Appeals, on Feb. 4, issued an important decision that sharply limits the ability of law firms to penalize departing partners who leave for other law firms and take clients with them. Even before COVID-19, large law firms were experiencing significant volatility with partners changing firms. COVID-19 has escalated these lateral moves and the resulting economic hit that law firms will suffer.”
• “Fortunately for departing partners, any substantial financial penalty that the law firms may impose will violate Rule 5.6(a) of state bar ethics rules and the American Bar Association’s Model Rules of Professional Conduct, which many states follow as guidance. The D.C. Court of Appeals, in Jacobson Holman PLLC v. Gentner, has now provided a clear road map for the numerous law firms in Washington, D.C., and their equity partners, and confirms that the law is continuing in the direction of prohibiting financial penalties on departing partners.”
• “Historically, law firms had a range of so-called golden handcuffs that they could use to prevent their rainmaking partners from leaving, or to impose financial penalties on them if they did leave. The Model Rules of Professional Conduct and bar ethics opinions have had to respond to new strategies by law firms that violate the rules by interfering with the attorney-client relationship.”
• “The most recent decision, from the D.C. Court of Appeals, involved an intellectual property litigation boutique, in which the two name partners informed the other partners in 2013 that they were going to dissolve the firm and do business under a new entity. Marsha Gentner and several other attorneys instead decided to leave the firm, and they demanded their accrued capital be returned to them.”
• “Gentner had an accrued capital balance of $141,569, but the firm tried to offset that with (1) pending member bonuses and allowances; and (2) writeoff of accounts receivable unlikely to be paid, resulting in Gentner now owing $21,762 to the firm. Further, the firm asserted that if a court were to find a positive balance, it should be cut by 50% because clients followed Gentner to her new law firm, Dykema Gossett PLLC.”
• “Judge Catharine Easterly, joined by Judges Roy McLeese and Eric Washington, held that although the firm’s partnership agreement allowed for adjustments to the year-end accrued capital balance, those adjustments could only be based on costs or events arising after the year-end financial statement. Here, the firm knew all along that it had to budget for bonuses and that it had numerous uncollectible accounts unlikely ever to be paid. The court held that allowing these adjustments would ‘simply invite the remaining equity members to make unpredictable, self-interested, post hoc changes to the firm’s financial statements.'”
• “Thus, the law firm could not enforce the financial penalty provision of its partnership agreement against Gentner and other departing partners.”

“Solicitors urged to review AML policies as new guidance launches” —

• “It is finally here! You have all waited so patiently, but I am delighted to confirm that the Legal Sector Affinity Group’s (LSAG) revised and much updated anti-money laundering (AML) guidance has, after much anticipation, finally landed. The good news is the Law Society can help making getting through it all easier, but more on that at the end.”
• “The review of the guidance was triggered by the European Union’s fifth money laundering directive, which came into force in January last year and brought in a raft of new requirements including changes to client due diligence and enhanced due diligence as well as a duty to collect proof of registration for companies and trusts.”
• “Where possible the MLTF has sought to ensure regulatory expectations and burdens were tempered by practical reality. Balancing the many demands that practitioners are under while recognising the importance of our role in the fight against financial crime and the need for a minority to up their game.”
• “The guidance is an effective and critical tool in supporting the profession. It is designed to help the legal profession navigate complex AML risks and challenges. It will guide you through what is a ‘must’, a ‘should’ and a ‘may’ to help ensure practices are able to understand and address AML risk to meet regulatory requirements, SRA expectations and identify good practice.”
• “There is also additional advice on understanding and evidencing source of funds and wealth, a new technology section, which examines considerations to apply when using or exploring AML-related technology to effectively mitigate risk and revised, updated and expanded AML governance and internal controls sections.”

“UNETHICAL MISTAKE: Big Firm Sanctioned as Partner Violated Ethics Rule When Calling TCPA Plaintiff in an Effort to Disprove Ownership of Phone” —

• “A big firm partner just got his law firm sanctioned by calling a TCPA Plaintiff in a putative class action in the hopes of proving someone else actually owned and used the phone line. Talk about a bad day at the office.”
• “Setting the stage here—TCPA plaintiffs often sue callers for purported wrong number calls when they (the Plaintiff) actually set up the lawsuit by allowing someone else to use the phone, enter the number, or otherwise have a relationship with a third party that the caller was trying to reach. Its dirty unethical stuff, and it happens all the time.”
• “Defense counsel constantly look for tactics to try to detect and reveal this unsavory behavior to the court. But the one thing most defense lawyers know not to do is to call the Plaintiff’s phone number in an effort to somehow prove that someone else actually uses the phone.”
• “There is a very clear ethical rule that forbids lawyers from talking to represented opposing parties about the substance of the case. This is a big clear bright line that any lawyer that passed their ethics exam has seared into their memory.”
• “And while dialing a number in the first instance might not—in and of itself—violate the rule, having a discussion (even a brief one) with a represented party is a huge no no.”
• “Plaintiff asked to have the attorney’s law firm disqualified from representing the Defendant but the Court felt that was too harsh a penalty. Instead the firm was ordered to pay the cost of Plaintiff’s motion work to address the ethical violation.”
• ore details and decision: In Moore v. Club Exploria, LLC

For those looking to dig into security, see: “Security Assessments and Pen Tests for Law Firms” —

• “The new norm has created an operating environment that hackers once could only dream of. What has been proven over the past year is that cybercrime rises during times of crisis and law firms are still slow to respond. Ransomware is the number one cybersecurity threat that we now face. The perfect storm has been created and is heading towards your firm if it hasn’t arrived already.”
• “What exactly do we mean? Users are now accessing confidential client files from their kitchen or home office through personal computers, tablets, and outdated Wi-Fi that has not had the configuration updated since the Internet Service Provider installed it. Employer-provided systems are not universal, even among the largest of firms. Users are now responsible for keeping their software and operating system patched with critical updates.”
• “Law firms recognize that there are security problems within their networks. Many just don’t know where to start to identify and fix them. Others accept the risks of taking no action. All is not lost. There are steps that law firms can take now to get control of the situation, to identify where the problems exist and remediate them. The first step is realizing that something needs to be done. The next step is finding where the problems exist, and that is accomplished through a security assessment.”

Hat tip to a loyal reader who sent word yesterday of: “Goodwin Points to 3rd-Party Vendor as Root of Data Breach” —

• “Goodwin Procter found itself the victim of a cyberattack, the firm acknowledged Tuesday, after a vendor to the firm that handles large file transfers was hacked, allowing the intruders to access data the third party had handled for the law firm.”
• “Bettencourt stated in the memo that the firm believes Goodwin was not the only client of the vendor that was affected by the breach.”
• “The memo stated that after being notified of the breach, Goodwin disconnected the vendor from its network and ‘halted use of service for any transfers,’ hired an independent forensic security expert and opened its own investigation into the matter.”

“Goodwin Procter Hit With Data Breach Via Vendor Hack” —

• “The investigation also revealed that a few Goodwin workers were impacted by the breach, the memo said. It did not appear that the firm’s human resources system or any firm resources, other than the file transfer service, were impacted, according to the memo. The firm believes that the vendor’s security issue impacted several of the vendor’s customers, not just Goodwin, the memo said.”
• “‘Please know that we were running the most current version of the service and following all directions to ensure the proper maintenance of the system,’ the memo said. ‘This included deploying security patches as soon as [they] were made available to us.'”

Thinking of that eventual report brings to mind recent news about security forensics privilege matters.

Paul Hodkinson, Editor-In-Chief of Law.com International and Legal Week opines: “In a Market Gone Mad, High-End Private Equity Hires Have Gotten Out of Hand“–

• “The demand for private equity partner hires has never been greater. It makes perfect sense, in a way. With more than $1.5 trillion available to spend, the private equity industry has become the most powerful driver of global mergers and acquisitions and economies ravaged by the coronavirus look ripe for a surge of investment. High-level hires are deemed an essential way for law firms to get in on the action because buyout firms rarely operate formal legal rosters, meaning it is crucial to have partners who hold those relationships.”
• “Such a fluid market does not offer any benefit to clients, who no doubt feel frustrated by so many changes. And—I say this as gently as possible—it also has to be asked whether all this hiring is really worth it for law firms.”
• “The chances of consistently winning all the work from any one client are slim—regardless of how close a partner’s relationship is—as there are often so many bidders in auction processes that conflicts are rife.”
• “Individual lawyers face conflict challenges, too. Some of the market’s most prolific private equity lawyers privately admit they sometimes get asked by clients what the other side might be thinking because they’re so familiar. Don’t be surprised if a court claim features such discussions one day.”

“Insurer Seeks To Dodge Mass. Firm’s Overbilling Probe Fees” —

• “An insurance company on Thursday asked a Massachusetts federal court to declare that it is not responsible for paying attorney fees incurred by Thornton Law Firm LLP when the firm faced an investigation over alleged overbilling in a $300 million State Street Corp. settlement.”
• “Continental Casualty Co. should not be obligated to pay Thornton Law the unspecified amount of fees the firm paid to its legal counsel for representation throughout the investigation, along with the unspecified amount the court ordered to be deducted from the firm’s fee award to help cover the investigation’s costs, according to Thursday’s complaint in the District of Massachusetts.”
• “Continental argues that Thornton Law did not take out insurance that would require the insurer to defend or indemnify the firm in the investigation. The company noted that the investigation was not a claim triggered by an ‘act or omission in the performance of legal services’ by Thornton Law, nor does it leave open the possibility of covered damages, according to the complaint.”
• “The investigation’s findings — that Thornton Law and Labaton Sucharow LLP repeatedly violated the rules of professional conduct in part by overbilling — meant that the insurance policy’s ‘intentional acts exclusion’ is also triggered, according to the complaint.”

“Court Rejects Carrington Coleman’s Legal-Mal Appeal in Case Hinged on Anti-SLAPP Law” —

• “Signaling support for a ruling that said a Big Law firm can’t use the Texas anti-SLAPP law to dismiss a legal-malpractice lawsuit, the Texas Supreme Court on Friday rejected review on an appeal by Carrington, Coleman, Sloman & Blumenthal.”
• “Randy Ackerman, managing partner at Ackerman Law Firm in Houston who represented White Nile, said that hypothetically if the Supreme Court had taken the case and reversed the ruling, it would have ended all legal-malpractice cases in Texas. ‘If they are saying that the anti-SLAPP had stood, then this would have gone out the door, and this is a pure malpractice case: an attorney representing an entity, and then changing sides,” Ackerman said. ‘This was as pure a malpractice case as there ever was to be.'”
• “In 2018, White Nile filed a lawsuit against Carrington Coleman for professional negligence, breach of fiduciary duty, aiding and abetting breach of fiduciary duty and conspiracy.”
• “The basic allegation was that Carrington Coleman had a conflict of interest in representing both White Nile and its directors. White Nile claimed the firm didn’t fully investigate the company’s rights and failed to plead claims or defenses for the company. Among other things, Carrington Coleman failed to tell an independent governance board about conduct by the company directors that Carrington Coleman also represented.”
• “On appeal, White Nile argued that the anti-SLAPP law wasn’t meant to dismiss legal-malpractice lawsuits that claim a lawyer had a conflict of interest between its clients. The law firm countered that the litigation centers around its statement or document in a judicial proceeding, and the Texas Citizens Participation Act should protect it.”

“Holland & Knight Accused Of Conflict In Med Billing Fraud Suit” —

• “Holland & Knight LLP is ‘playing both sides’ in a $17 million personal injury protection fraud suit in Florida federal court, a defendant argued Monday, saying the firm is conflicted and must be disqualified.”
• “Chintan Desai, a physician being sued along with several others by State Farm Automobile Insurance Co. and State Farm Fire and Casualty Co., said Holland & Knight, the plaintiffs’ counsel, is representing him in a separate but similar lawsuit and therefore should be disqualified.”
• “Desai is named as a medical director at Path Medical. In his filing Monday, he said he retained the firm in November 2019 in a case involving his Florida company Radiology Imaging Specialists. The representation included the sharing of confidential client information, according to Desai.”
• “‘The scope of this ongoing representation involves complaints and issues related to the practices and procedures employed in connection with my radiological interpretations of pathology demonstrated by patients receiving PIP benefits,’ the affidavit said. ‘I employ these same practices and procedures in connection with my role as a medical director for a Path Medical radiology clinic.'”
• “‘Dr. Desai has not provided informed consent or otherwise waived his confidences, which Holland & Knight is obligated to protect,’ the motion said.”

“ABA Formal Opinion OKs Lawyers Who Sit in One Jurisdiction But Are Licensed in Another” —

• “The American Bar Association’s (ABA) Formal Ethics Opinion 495 confirms what many have said is the law under ABA Model Rule 5.5 for a while now: Lawyers can sit in a jurisdiction in which they are not licensed so long as they are licensed in a U.S. jurisdiction and are ‘invisible’ as a lawyer where they sit. Still, this confirmation will come as welcome news to many who have either been forced or chosen to relocate outside of their licensed jurisdiction due to the COVID-19 pandemic.”
• “The Formal Opinion does caveat that it does not apply to those jurisdictions that have already affirmatively barred such “invisible lawyering,” though it does not identify any such jurisdiction.”
• “The ABA’s conclusions are consistent with a recent advisory opinion issued by The Florida Bar’s Standing Committee on the Unauthorized Practice of Law, which concluded that a lawyer licensed in New Jersey could live and practice law in Florida without violating RPC 4-5.5 because his presence for purposes of practicing law was in New Jersey and would in no way involve Florida clients, cases, parties, courts, etc. FAO #2019-4, Out-Of-State Attorney Working Remotely from Florida Home (Aug. 17, 2020).”
• “Lawyers who suddenly found themselves working from a new jurisdiction in 2020 can generally cross ‘take the ____ bar’ off their list for 2021 thanks to ABA Formal Opinion 495.”

“Davis Wright Tremaine Will Require All Employees To Get a COVID-19 Vaccine Before Returning to the Office” —

• “Davis Wright Tremaine will require its attorneys and staff to be vaccinated if they are to return to the firm’s office, according to firm guidelines announced on Thursday. It is the first Am Law 200 firm to publicly announce such a requirement.”
• “The new policy requires that firm employees provide proof of vaccination ‘in the coming months’ to be allowed to return to the office or attend firm-sponsored events. Those who cannot get vaccinated due to disability, advice of a medical provider or religious beliefs will be asked to contact the firm’s Human Resources department to work out ‘reasonable accommodations.'”
• “If possible, the firm said it will set up a vaccination clinic onsite, as it does with annual flu shots, and will cover the cost of vaccination if an employee’s insurance, or the United States government, does not.”
• “But if law firms won’t mandate their attorneys be vaccinated, courts may. Texas state court officials, for example, have made it clear that judges, attorneys and court staff will have to be vaccinated for in-person jury trials to resume. Even then, people who will be required to come to court, such as jurors, will need to be vaccinated as well.”

“Biden brother’s law firm touts his connection to the president, creating an early headache for administration” —

• “The Florida law firm that employs President Biden’s brother Frank ran a newspaper ad on Inauguration Day touting the brothers’ relationship and shared values, a move that is causing an ethics headache for the administration less than two weeks after Biden took office.”
• “Press secretary Jen Psaki, speaking from the White House podium Friday, addressed the subject broadly, without mentioning the ad in particular. ‘It is the White House’s policy that the president’s name should not be used in connection with any commercial activities’ that would suggest or imply ‘his endorsement or support,’ she said. The ad featuring Frank Biden arguably runs afoul of that edict.”
• “The two-page “advertorial” ran on Jan. 20 in the South Florida-based Daily Business Review to promote the work of the Berman Law Group, which employs Frank Biden as a ‘non-attorney senior adviser.'”
• “President Biden has issued a wide-ranging executive order imposing ethical restrictions on his administration’s appointees, but that policy does not speak to his family members. Shortly before the inauguration, a Biden official told The Post that the White House would adopt procedures to ensure that activities by family members would not create a conflict of interest, or even the appearance of one.”

A few updates from the always reading, always watching Bill Freivogel:

• Former Client; Consent; Allen v. The Hanover Ins. Group, No. 2:19-cv-12024 (E.D. Mich. Jan. 14, 2021).
  • In an auto accident, Allen was a passenger, and Watts was the driver. In this case, Allen, represented by Keel, sued Watts for injuries.
  • Initially, Keel had represented Watts in two matters arising out of the accident. One was defending Watts in a drunk driving charge. The other was a dispute with Watts’ under-insured motorist carrier. Those got resolved quickly, with little activity, and Keel’s representation of Watts ceased.
  • Keel then filed this case against Watts. Watts moved to disqualify Keel.
  • In this opinion the court denied the motion. First, Watts, after seeking the advice of another lawyer, signed a waiver of Keel’s conflict, enabling Keel to sue Watts. The court noted that although Watts was not a lawyer, the situation was not “complex,” and Watts had been advised about the waiver by another lawyer. As to Rule 1.9(c), Keel had used Watts’ drunk driving guilty plea in a summary judgment motion in this case, but that was “public record” or generally known.
• Corporation; Passage of Time as Waiver; Hanson v. CBS Constr. Servs., Inc., No. A20-0157 (Minn. App. Jan. 11, 2021).
  • Hanson and Bestul joined in the formation of an investment business LLC. Bestul brought in his lawyer (“Lawyer”) to give advice and handle the documentation.
  • In the early days of this representation Lawyer had several contacts with Hanson at which times Lawyer may have given advice to Hanson and received Hanson’s confidences. After several of these contacts, Lawyer told Hanson that Lawyer was not representing her.
  • Hanson brought this case against Bestul and another company for “discrimination and self-dealing.” Lawyer appeared for Bestul. Hanson moved to disqualify Lawyer. The trial court granted the motion.
  • In this opinion the appellate court affirmed, saying, among other things, that Lawyer had been Hanson’s lawyer until he said he was not.
  • The court also said the trial court was reasonable in finding that Lawyer’s work for Hanson was substantially related to this case. Bestul claimed that Hanson waived the conflict by waiting “more than 600 days” to file the motion to disqualify. The court held that by objecting several times to Lawyer’s involvement during the 600 days, that was evidence that Hanson did not intend to waive the conflict.

“Goldberg Segalla Seeks To Duck DQ In Elevator IP Row” —

• “Goldberg Segalla LLP has pushed back against a bid by the U.S. arm of a German elevator company to toss the firm from a patent infringement case in Texas, arguing that its defense of the New Jersey-based subsidiary’s subcontractor in a separate personal injury case is insufficient reason for disqualification.”
• “The Western District of Texas should allow Murolet IP LLC to keep Goldberg Segalla as its counsel in the litigation against Schindler Holding Ltd. even as the firm is representing a subcontractor that Schindler Elevator Corp. agreed to indemnify after a worker was injured, according to Tuesday’s opposition brief.”
• “‘In a calculated tactical move aimed at depriving Murolet of its chosen counsel, SEC appears in this action, but only as a non-party,’ according to the response to the disqualification bid. ‘SEC’s gamesmanship cannot deprive Murolet of its chosen counsel.'”
• “Schindler Elevator sought in December to disqualify Goldberg Segalla, arguing that the firm should not be allowed to represent the subsidiary in one court while concurrently counseling a client that is suing the parent company in another court, according to its motion for disqualification.”
• “‘That position is legally and ethically indefensible,’ Schindler Elevator told the court. ‘The conflict here is clear, and the court should disqualify Goldberg Segalla from continuing to represent Murolet in this case.'”

“Lawyers must use caution when responding to negative online reviews, new ethics opinion says” —

• “Lawyers are frequent targets of criticism and sometimes that criticism takes place in the form of negative reviews online. As such, lawyers must be careful not to violate the duty of confidentiality when responding to negative online reviews. The ABA’s Standing Committee on Ethics and Professional Responsibility advises that the best response is often no response at all.”
• “Formal Opinion 496, released Wednesday, identifies ‘the main ethical concern’ of any response a lawyer makes to a negative online review as ensuring the “confidentiality of client information.'”
• “The opinion notes that an online review is not a “proceeding,” and responding online is not necessary to establish a defense to a criminal or civil charge. Thus, the only part of the rule that even possibly would allow disclosure is establishing a claim or defense for the lawyer in a controversy between the lawyer and the client.”
• “The opinion also identifies what it calls “best practices” for lawyers when confronted with negative online reviews. A lawyer can ask the website host or search engine to remove the post. The lawyer cannot relay confidential client information but can tell the website host that the post is not accurate.”
• “The opinion cautions: ‘Even a general disclaimer that the events are not accurately portrayed may reveal that the lawyer was involved in the events mentioned, which could disclose confidential client information.'”
• More detail via ABA press release.

Now usually I’m the one making snarky comments, but ethics lawyer Brian Faughnan gets top marks here for invoking SNL’s Stephan on this matter:

• “This opinion has everything. Sound rule interpretation. Meaty footnotes chock-full of research material for disciplinary cases and state ethics opinions. Acknowledgement of the important role that Barbara Streisand plays on this topic. Good practical guidance for what a lawyer might do. Seriously, go read it.”
• “The only quibble I have with it is its initial conclusion that online criticism alone from a client does not qualify as a ‘controversy’ under Model Rule 1.6(b)(5). I think that is wrong, but the opinion goes on to even make my quibble pointless because they acknowledge that even if they are wrong about that, the lawyer wouldn’t need to respond online in kind to ‘establish a claim or defense on behalf of the lawyer’ with respect to the controversy. I’d prefer that the opinion just rely upon that point rather than arguing that an online dust-up could not constitute a controversy.”
• (I debated using the clip art on his post, but figured everyone would think I was making it up…)

Rule changes in Canada caught my eye as I wondered when we’d see the first examples of inbox overload risk: “Tips to Prepare for the New Rule Changes” —

• “On January 1, 2021, significant changes to the Rules of Civil Procedure come into force. While you should review the amendments carefully, this article include some key practical tips and an overview of the major changes.”
• “You can now serve documents by email. Confirm that your email address is up to date with the LSO as the courts and parties will look it up on the LSO members database. Rule 4.12(1)(b) allows the Court to send documents to the e-mail address for lawyers as published on the LSO’s website when there is no other e-mail address in the Court file.”
• “Remember to add your email address to the backsheet of and update your Court forms. Familiarize yourself with the new document naming protocols for electronic filing and CaseLines.”
• “The amended Rules allow for the service of documents (other than originating processes) by email. Relatedly, references to the service of documents by fax have been removed from Rules 16, 37, and 38. So lawyers – check your e-mail regularly!”
• “E-mail service will not require the consent of the other parties or a court order (see amended Rule 16.01(4)(b)(iv) and Rule 16.05(1)(f)). There is also no longer a need for a certificate of service (former Rule 16.09(6) is revoked). Court staff will also be permitted to communicate and send certified court documents (4.03 (2)) to parties by email (4.12).”

“Beware: The Report Expressly Prepared for Trial Counsel May Not Be Privileged After All” —

• “Here’s a common scenario: You discover a potential compliance issue and worry about being sued. You hire outside counsel to help prepare for litigation. Trial counsel in turn hires a consulting firm for the express purpose of helping in its litigation efforts by preparing a report addressing how the breach happened, its effects, and how to prevent another breach. Nothing too unusual, right?”
• “Here’s the catch: if ‘the Report, or a substantially similar document, would have been created in the ordinary course of business irrespective of litigation’ it may not be privileged after all.”
• “Applying this rule, a federal court in Washington, D.C. just held that a Report prepared for trial counsel as well as the Report’s associated materials are not privileged and must be produced to plaintiffs. See Wengui v. Clark Hill, 2021 U.S. Dist. LEXIS 5395 (D.D.C. Jan. 12, 20201). While Wengui involves a cyber breach, its reasoning applies to any compliance-related investigation.”
• “During discovery, Clark Hill produced the documents related to its cybersecurity vendor’s work, but claimed the Report prepared for counsel was classic attorney work-product. Clark Hill also argued the Report was subject to the attorney-client privilege.”
• “The district disagreed. Carefully examining the record, and after conducting an in camera review of the Report, the court determined the Report was in fact an “ordinary course” incident report and ordered its production to plaintiffs. As the court explained, for many entities, ‘discovering how [a cyber] breach occurred [is] a necessary business function regardless of litigation or regulatory inquiries.'”
• “It did not help Clark Hill’s argument that the Report was not just shared with outside and in-house counsel, but also with Clark Hill’s leadership and IT teams, as well as the FBI. As the court observed, “[t]he Report was probably shared this widely… because it ‘was the once place where [Clark Hill] recorded the facts’ of what had transpired.'”
• “All compliance officers and outside counsel should heed this observation from the court: ‘Although Clark Hill papered the arrangement using its attorneys, that approach ‘appears to [have been] designed to help shield material from disclosure’ and is not sufficient in itself to provide work-product protection.'”
• “The court also rejected Clark Hill’s assertion that the attorney-client privilege shielded the Report regarding the data breach from disclosure. The court explained that attorney-client privilege must be ‘applied narrowly,’ to prevent its scope from encompassing “all manner of services” that should not be excluded from litigation.”