Risk Update

Law Firm Records Management & Insurance Risk — Firms Fight Over File Transfer IP, Insurer Argues Conflict Clears Cost

Polsinelli Fights Littler TRO Bid In Trade Secrets Case” —

  • “Polsinelli PC is fighting back against Littler Mendelson PC’s bid to bar Polsinelli from using 30,000 client files the firm obtained when it poached a Littler attorney last year, calling the request a thinly veiled anti-competitive ploy in the pair’s ongoing feud over home health care business.”
  • “In a 32-page brief filed Friday, Polsinelli said that not only are the overwhelming majority of the 30,000 files in question simply routine client files and not trade secrets, as Littler has asserted, but also that Littler knew about Polsinelli’s possession of the documents for more than a year before filing its temporary restraining order request roughly two weeks ago.”
  • “Polsinelli said Littler’s motion is clearly aimed at undercutting POSH, or the Polsinelli Online Solution for Homecare, an online document platform similar to a competing product offered by Littler, and which lies at the heart of the two firms’ dispute.”
  • “Littler’s recent TRO motion centers on 30,000 client documents that were transferred to Polsinelli after Spinola joined the firm. Polsinelli claims the overwhelming majority of those documents are simply routine client files, but Littler claims Spinola intentionally downloaded Toolkit templates and other sensitive documents and then improperly squirreled them away in his client files.”
  • “Polsinelli said it did identify a handful of documents, like a Toolkit subscriber database, that could be considered proprietary information. But Polsinelli said it promptly notified Littler of those documents and vowed not to read or use their contents.”
  • “Polsinelli said the fact that it’s been in communication with Littler about those files for more than a year puts the lie to Littler’s claims of impending harm.”

7th Circuit affirms insurance co. must pay USA Gymnastics ‘reasonable and necessary’ fees incurred from Nassar-related claims” —

  • “An insurance company that balked at representing USA Gymnastics against lawsuits stemming from Larry Nassar’s sexual abuse of hundreds of female athletes has failed in its challenge to an order that it pay significant fees to the Indianapolis-based athletic organization.”
  • “‘It is undisputed that USAG paid nearly 70 percent of the attorneys’ fees for which it now seeks reimbursement,’ Brennan continued. ‘That is compelling evidence of a market test. This element of the (Thomson Inc. v. Ins. Co. of N. Am., 11 N.E.3d 982 (Ind. Ct. App. 2014)) presumption supports, rather than contradicts, the bankruptcy and district courts’ conclusions that the fees USAG claimed are presumed to be reasonable and necessary.'”
  • “Discussing three special circumstances that Liberty argued rendered Thomson inapplicable, the 7th Circuit began with an alleged conflict of interest with USAG’s chief legal officer, C.J. Schneider, who was also an attorney with a law firm that served as outside counsel for USAG.”
  • “‘Despite Liberty’s contentions, the governing case law does not hold or suggest that the presumption is inapplicable when there is an apparent conflict of interest,’ it wrote. ‘To the contrary, an insurer’s objections to a policyholder’s selection of defense counsel lose force when the insurer disclaims its duty to defend and turns out to be wrong on the law.'”
  • “It also noted that the lower court was aware of Schneider’s dual role and concluded USAG’s practices were nevertheless sufficient to support the Thomson presumption’s application.”
  • “It further pointed to the bankruptcy court’s conclusion that the entire amount USAG claimed for Gibson Dunn & Crutcher LLP’s work was reasonable and necessary. That factual finding, the appellate court concluded, posed a ‘high hurdle’ for Liberty in seeking to overturn it.”