Bressler Risk Blog

With my living room transformed into the Bressler Academy for Precocious and Mischievous Young Ladies (who have been known to suggest clip art while watching over my shoulder during evening risk blogging sessions), I note, more seriously, that today many of you are working remote, managing personal and professional challenges, and waiting to see what the days ahead bring.

On a professional front, I’ve noted an expected and increasing crop of general stories of how organizations are adapting to this new landscape, and advice about the same ranging from the generic to the incredibly astute. Here are some specifically focused on law firm risk:

“Client Service Continuity Strategies for Law Firms Responding to Coronavirus Pandemic” —

• “During this period of uncertainty, the health and welfare of your lawyers, staff, and clients is a top priority. However, attorneys must also be prepared to continue to provide legal services to clients regardless of measures taken by any government or oversight organization. In addition, the need to potentially self-quarantine has to be taken seriously. The best and only time to prepare for an interruption in practice—whether self-imposed or by a third party—is before it happens.”
• “One of the primary risks for law firms in a quarantine situation are missed deadlines… Immediately review upcoming deadlines for the next 60 days and consider how you will meet those deadlines should you be quarantined.”
• “Consider arrangements to have mail delivered to your home or scanned and sent to you if you are out of the office. Again, do not rely strictly on your legal assistant in the event he or she is unavailable for any reason. Identify a backup for that task.”
• “Review and consider the privacy and security of any client records and documents, as well as your ability to meet the requirements of outside counsel guidelines when working remotely. This typically means client information should not be placed or stored on home computers, personal storage devices, or in the cloud, which violate most—if not the majority of—standard outside client guidelines.”

“COVID-19: How to Maintain Regulatory Obligations While Working Remotely” —

• “Remote working increases the risk of data breaches and loss of confidential information through hard copy documents being transported and kept at home, rather than in offices with the necessary systems and controls in place. Colleagues should work digitally wherever possible and be advised against working from hard copy documents and minimising the need to make handwritten notes of calls or virtual meetings they attend – typed notes should be encouraged.”
• “Colleagues should be reminded to work in private environments where conversations of a confidential nature cannot easily be overheard and computer screens cannot be easily seen by third parties. The importance of locking computer screens when unattended (even within one’s home) should be reinforced.”
• “Being away from the office should not lead to a relaxed attitude to the importance of one’s regulatory obligations. Individuals should be aware that they are responsible for the professional judgement they exercise when working at home and that the various discussions and decisions taken on a particular case, for example around disclosure or potential conflict points, should be carefully recorded. This should include reasoning for why they have chosen to act in a certain way, so that they can justify their decisions, should they need to, in the future. The SRA’s Enforcement Strategy recognises, however, that mistakes do happen; clear record keeping will help the SRA decipher between honest mistakes and those that are less excusable.”

“3 Big Pitfalls To Avoid Regarding The California Consumer Privacy Act Compliance” —

• “The reach of the CCPA cannot be underestimated — businesses outside of California are not necessarily outside the scope of the CCPA.”
• “More specifically, the CCPA gives California residents the right to (i) know what personal information is being collected, used, shared, or sold about them, (ii) know whether and to whom their personal information is sold or otherwise disclosed, (iii) access and review their personal information, (iv) opt-out of the sale of their personal information, and (v) non-discrimination in the level of service and pricing despite exercising any of their privacy rights.”
• “Such responsibilities under the CCPA, however, only apply to those businesses that meet one or more of the following criteria: (a) gross annual revenues in excess of $25 million; (b) buy, receive, or sell the personal information of 50,000 or more consumers, households, or devices; and/or (c) derive 50 percent or more of annual revenues from selling consumers’ personal information.”
• “The reach of the CCPA cannot be underestimated — businesses outside of California are not necessarily outside the scope of the CCPA… Given the scope and reach of the CCPA, it comes as no surprise that most companies in the United States that do business with California residents and meet any of the qualification criteria are scrambling to comply.”
• “Being GDPR Compliant Does NOT Mean Your Company Is CCPA Compliant. It may come as a surprise to some, but GDPR compliance does not guarantee CCPA compliance. In fact, your company (or client) may have additional obligations under the CCPA.”
• “Once the policies implemented by your company (or client) have been updated to address CCPA requirements, those policies must not be set in stone. The CCPA may give the consumer the right to delete personal information held by businesses (or their service providers), but this “right to be forgotten” does not extend to the privacy policies of your company (or client). Revisit these policies on a regular basis to update them based upon guidance from enforcement actions, newly promulgated regulations or potential modifications to the statute.”

A law firm focused exploration of response strategies: “4 Ways Firms Can Keep Compliant With the CCPA” —

• “A law firm’s website should describe California residents’ rights including their right to authorize personal data deletion, or allow disclosure of information and notice of collection. What’s more, a firm must also provide opt-outs for the selling of consumer information.”
• “Law firms leveraging outside vendors, such as e-discovery providers, to store or process data that includes Californians’ personal information should update their vendor contracts to ensure that such information is not used for anything outside of specified services, said Jackson Lewis principal Joseph Lazzarotti.”
• “Law firms need to prepare for data requests, which includes having a system to process such requests and protocols to find data and verify a requester’s identify. Law firms may face more difficulties in this regard compared to other businesses because of the data large sets corporate clients send them.”
• “Implement ‘Reasonable Security Procedures.’ Lazzarotti noted the CCPA provides statutory damages for anyone whose ”nonencrypted or nonredacted public information” was breached because a company lacked “reasonable security procedures and practices.” Plaintiffs could be awarded $100 to $750 per consumer per incident or actual damages, whichever is greater, and injunctive or declaratory relief.”

For those wondering, here’s: “A Comparison of GDPR and CCPA.”

And, worth noting: “States Are Proposing Their Own CCPA-Like Privacy Laws” —

• “The Washington Privacy Act (Senate Bill 6281), which failed to pass last year, was reintroduced in the state senate for the 2020 legislative session.”
• “A bill that is strikingly similar to the CCPA has been introduced in Nebraska.”
• “House Bill No. 473 (Virginia bill) would amend Virginia law to add the Virginia Privacy Act. The bill applies to any company doing business in Virginia or that produces products or services “intentionally targeted to residents” of Virginia…”
• “Companion bills have been introduced in the Florida Senate (Senate Bill 1670) and the Florida House of Representatives (House Bill 963)…”
• “New York has recently seen its own share of privacy laws and regulations proposed. Most notably, the New York Privacy Act (NYPA), which some refer to as “groundbreaking,” was reintroduced in the state senate at the beginning of the year…”

“As Clients Demand More Than Ever, How Can Lawyers and Firms Respond?” —

• “As the legal industry continues to disaggregate and is increasingly flooded with technology, clients and in-house counsel report that they want a more personalized legal relationship. As hyperpersonalization permeates the legal industry, clients will continue to push for more tailored service.”
• “These circumstances suggest that a key step in bridging the gap between client expectations and law firm efforts is for both sides to open a dialogue about needs and obstacles and how to develop collaborative ways to address them. Below, we discuss a few specific areas to consider as a starting place for those initial conversations, and for making the investment in better understanding clients’ specific business and legal needs.”
• “The Value of Data. Leveraging data and analytics is one way in which firms can accede to client requests for more predictable pricing, staffing and results. Metrics about prior matters and their variables can also provide clients with more information about anticipated turnaround time, settlement value, jury verdicts and other considerations, which, in turn, clients can use at the outset of an engagement to make decisions that align with their broader business goals and directives. Essentially, data allows for a more informed decision-making process… Outside counsel are well-positioned to help clients navigate their in-house use of legal technology. In turn, this effort may result in clients being able to provide more and better data to firms, which firms can then use to augment their services—including data and analytics on particular matters and broader trends.”
• “A New Staffing Model. One way for firms to address these issues is to establish dedicated teams for particular clients and encourage those attorneys and staff to invest in a deeper understanding of the clients’ business and requirements… Instead of having a partner or associate manage all tasks, the team, with collaborative input from the client, may be better positioned to assess which tasks can be managed by paralegals, passed off to a consulting arm, or even outsourced to alternative (and more cost-effective) service providers… A benefit of any secondment program is that it gives the firm insight into the client’s day-to-day business needs and culture; seconded lawyers gain experience that serves them, the firm and the client long after the secondment period ends.”
• “Incentives to Add Value. Rather than relying solely on client pressure to create attorney buy-in, firms should also consider internal policies and incentives to help their lawyers meet client demands for greater understanding of their business and proactive advice… It is all too easy for both clients and outside counsel to sit back and expect the other party to present ideas for innovation and improved services. For law firms, waiting to change until a client asks for something new runs the risk of not seeing a problem until it is too late: the client never asks and instead moves the work elsewhere.”

From Stephanie Spangler, an associate at Norris McLaughlin PA, and Dai Wai Chin Feman a director and corporate counsel at Parabellum Capital LLC, comes an overview on the latest news and view on litigation finance: “What Courts Are Saying About Litigation Finance Disclosure” —

• “That debate continues, with defendants persisting in propounding document requests, interrogatories and deposition questions regarding the identity, terms and other aspects of financing arrangements. As defendants continue to seek discovery, courts continue to weigh in.”
• “In Pipkin v. Acumen,[3] the U.S. District Court for the District of Utah prohibited any discovery regarding litigation funding on the basis of relevance… In granting the plaintiff’s motion for a protective order, the Pipkin court held that ‘information related to funding of the litigation is irrelevant to the claims and defenses of the case and, therefore, Plaintiffs’ funding of the lawsuit is not discoverable.’ With respect to credibility, the court found the defendant’s argument to be ‘entirely speculative and insufficient to demonstrate the relevance of the sought-after fee agreements.'”
• “In Fulton v. Foley, the U.S. District Court for the Northern District of Illinois quashed a subpoena to a litigation funder on the grounds of relevance and attorney work product. However, the Fulton court ordered the plaintiff to produce ‘all non-mental impressions, fact-based information and documents including any statements provided by Plaintiff directly, if any, that was provided to [the litigation funder].'”
• “In looking at the specific discovery issues at hand, the court held that the funding agreement documents are irrelevant to the mitigation of damages because in the event of a successful outcome, the plaintiff will be obligated to repay the funder and, therefore, the funds are not income.”
• “However, the Fulton court took the rare step of ordering production of nonprivileged fact-based communications between the plaintiff and litigation funder. This may be of limited ultimate utility for the defendant, as the common interest privilege will likely apply to most, or all, of the materials shared.”
• “In Continental Circuits LLC v. Intel Corp., the U.S. District Court for the District of Arizona denied the defendants’ motion to compel the production of litigation funding agreements on the basis of work product.”
• “However, the court ordered the plaintiffs to identify “all persons or entities (other than counsel) with a fiscal interest in the outcome of the litigation,” and held that ‘the fact of the funding agreements’ existence’ does not, in and of itself, constitute work product.”
• “In support of their motion to compel, the defendants argued the discovery is relevant to ‘to refute any David vs. Goliath narrative at trial, to evaluate the value of the patents at issue and any damages claimed by Plaintiff, to address bias and prejudice of witnesses who may appear at trial, and to identify any jurors who may have a relationship with a litigation funder.’ The plaintiff asserted that the requests were not relevant and disclosure was barred by the work product doctrine.”

The ABA Law Practice’s “Law Practice Today” magazine issue focused on ethics my queue thanks to Alberto Bernabe of the Professional Responsibility Blog: “Law Practice Today Issue on Ethics“–

• “When the Rules Stagnate Innovation, Change the Rules: Is the profession of law its own worst enemy when it comes to innovation?” — “Would it be simpler, more effective and perhaps more equitable if lawyers could affiliate with other allied professionals to deliver legal and related services? Many lawyers and those delivering legal services go through major machinations to comply with the Rules of Professional Conduct that dictate business structure or the economics of practicing law. The efforts are becoming more acute as technologists and others who aren’t licensed lawyers seize on inefficiencies and opportunities in the market.”
• “Cybersecurity for Attorneys: Addressing the Legal and Ethical Duties: Neglecting your legal and ethical duties to protect client data carries profound risks.” — “A number of state ethics opinions, for over a decade, have addressed professional responsibility issues related to security in attorneys’ use of various technologies. Consistent with the Ethics 20/20 amendments, they generally require competent and reasonable safeguards… In addition to complying with any applicable ethics and legal requirements, the most prudent approach to the ethical duty of protecting electronic communications is to have an express understanding with clients (preferably in an engagement letter or other writing) about the nature of communications that will be (and will not be) sent electronically, and whether or not encryption and other security measures will be utilized. It has now reached the point where all attorneys should have encryption available for use in appropriate circumstances.”
• “Keep Your Mouth Shut!: Why lawyers must avoid revealing confidential client information in an age of open mouths.” — “In the case, IRTH Solutions, LLC v. Windstream Communications, LLC, the court examined the Rules of Evidence, the attorney-client privilege and other relevant sources, concluding that ‘the privileged documents represent more than 10% of the documents produced; only 2200 total pages were produced and Defendant had months to produce the first production; and the review process ‘mistake’ was not the result of a technical error or mistake borne from hours and hours of review for this case.’ The court concluded that the production was reckless and that the privilege had been waived.”

Thought it worthwhile to highlight several interesting issue-focused stories and articles that have been fermenting in my story library, waiting for their respective moments in the risk sun. Let’s start with and excellence piece by Amy Richardson (partner and co-chair of the legal ethics and malpractice group) and Hilary Gerzhoy (an associate) at Harris Wiltshire & Grannis: “ABA Rules For Departing Attys Set Unprecedented Limits” —

• “ABA Opinion 489, titled ‘Obligations Related to Notice When Lawyers Change Firms,’ is bold: It states that fixed notice periods can be unenforceable, and that firms cannot prohibit a departing lawyer from contacting clients absent client consent.”
• “ABA Opinion 489 is the first opinion to provide an unequivocal statement that a firm’s fixed notice period can be unenforceable. The opinion holds that the actual time a firm can hold a lawyer and prevent her from starting at a new firm is dictated solely by her, and her firm’s, compliance with their obligations to transition client matters. Where those obligations are satisfied prior to the expiration of a fixed notice period, the notice period is unenforceable.”
• “For example, if a firm imposes a 30-day notice period, as most do, but the lawyer’s client files are up to date and the lawyer promises to help in the transition going forward — even if that transition is not complete — the firm cannot hold the lawyer for 30 days or dock the lawyer financially.”
• “That is a significant change. The opinion states that ‘notification periods cannot be fixed or rigidly applied without regard to client direction, or used to coerce or punish a lawyer for electing to leave the firm, nor may they serve to unreasonably delay the diligent representation of a client.’ In other words, fixed notice periods cannot do what many — perhaps most starkly those that exceed 30 days — were designed to do.”
• “ABA Model Rule 5.6(a) prohibits, among other things, partnership agreements that restrict ‘the right of a lawyer to practice after termination of the relationship, except an agreement concerning benefits upon retirement.'”
• “The opinion also holds that a firm cannot separate a departing lawyer from her clients while the lawyer remains at the firm without the client’s consent. This is because clients ‘are not property … [and subject] to conflicts of interest considerations, clients decide who will represent them going forward when a lawyer changes firm affiliation.’ A firm cannot, as many historically have, restaff a case to remove a departing lawyer without client consent.”
• “However, ABA Opinion 489 states for the first time that the preference for a joint communication cannot preclude a departing lawyer from unilaterally communicating her move to her clients.[18] It states that: ‘In the event that a firm and departing lawyer cannot promptly agree on the terms of a joint letter, a law firm cannot prohibit the departing lawyer from soliciting firm clients.'”
• “In other words, a firm cannot drag its feet on agreeing to a joint communication and simultaneously prevent the departing lawyer from notifying her client.”

“Ex-Sichenzia Ross Partner Sues Baker Botts for $35M, Alleging Extortion on Behalf of Ex-Client” —

• “Harvey Kesner, a former partner at New York-based securities litigation firm Sichenzia Ross Ference, is suing Baker Botts and one of its partners for $35 million, accusing the Am Law 100 firm of extortion for its threats to sue on behalf of his former client, who is separately suing Kesner for alleged conflicts and fraud.”
• “The allegations center on Shapiro’s work for Kesner’s former client, California biotech company MabVax. That company is now represented by a different law firm, Block & Leviton, in ongoing litigation against Kesner and Sichenzia Ross.”
  Asked for comment on Kesner’s suit, Baker Botts denied the allegations, also noting the litigation currently pending against Kesner and Sichenzia Ross. ‘This complaint has no basis in fact or law,’ a Baker Botts spokesperson said in a statement Friday.”
• “Kesner, after being sued separately by MabVax in California without Baker Botts representation, lost his partnership at what was Sichenzia Ross Ference Kesner, the complaint said. The punitive damages Kesner is seeking stem from him being forced out of his firm.”
• “MabVax sued a group of defendants including Kesner, Sichenzia Ross Ference and other lawyers from the firm in September 2018, alleging that they failed to disclose conflicts of interest, failed to maintain client confidentiality, and failed to provide proper legal advice on financial reporting requirements.”
• “This is not the first time Kesner’s removal from a law firm led to litigation. He sued Haynes and Boone in federal court in 2010 after he was asked to leave the firm, and the firm struck back by suing him in Texas state court. They later settled the dispute.”

And for more historical detail and context on the issues and players: “Judge says Honig’s attorney Harvey Kesner can be Sued for Fraud and Malpractice” —

• “A California federal judge has ruled former Sichenzia Ross Ference LLP attorney Harvey Kesner can be sued for fraud in a malpractice suit filed by biopharma firm Mabvax. Mabvax says whiles attorney Kesner was working for them he didn’t disclose a conflict of interest in his role advising Barry Honig who was an investor in MabVax.”
• “On top of that Kesner stands accused of leaking confidential company information that benefited Honig financially and for charging MabVax to help them in their SEC investigation while recommending decisions that benefited Honig who was also being investigated. The fraud claim against Sichenzia Ross Ference also survived the motion to dismiss.”

And more at: “Haynes and Boone Dueling with Former Partner” —

• “When Haynes and Boone hired Harvey Kesner for its fledgling New York office in 2006, the firm welcomed his corporate group as an illustration of its ‘careful selection’ of laterals who shared its ‘collegial and entrepreneurial spirit.’ Relations between the law firm and Mr. Kesner can hardly be called collegial these days.”
• “Haynes and Boone asked Kesner to leave last year. Kesner sued the firm last month in New York federal court for wrongful termination, demanding $15 million in damages. Haynes and Boone then filed suit in Texas state court last week accusing Kesner of breaching firm policy. In its complaint, the firm accuses Kesner of accepting stock and other benefits through an undisclosed business.”

“Court Found No Conflict of Interest with Dual Representation of Law Firm and Partner Against Claims from Departing Partner Shareholder” —

• “Earlier this year [2016], California’s Fourth District Court of Appeal found that a partner’s status as 50% shareholder of a law firm did not give rise to a conflict of interest which would preclude the firm’s counsel from defending the firm and another partner against the departing partner’s lawsuit. (See Coldren v. Hart, King & Coldren (2015) 239 Cal.App.4th 237.)”
• “The Court also found that under the facts specific to that case, the departing partner did not have standing to bring a motion to disqualify the firm’s counsel based on an alleged conflict of interest. The Court’s analysis in this matter is helpful in guiding not only attorneys who are considering whether there is a conflict with such dual representations, but for law firm’s handling the transition of departing partners and who want to avoid potential conflicts in representing the firm’s interests in such disputes.”
• “Coldren brought a motion to disqualify the law firm of Grant, Genovese & Barratta LLP (“Grant Genovese”) from representing both Hart and HKC, claiming it was a conflict of interest for Grant Genovese to represent HKC in claims against Coldren since he was also a 50% shareholder of HKC. The trial court granted the motion to disqualify, but a writ was taken by Hart and HKC and the Court of Appeal ultimately reversed that order.”
• “Although the Court of Appeal reversed the order on two grounds – both due to lack of standing and finding there was no conflict of interest with the dual representation – the conflict of interest analysis is particularly instructive as it relates to partner departures and recurring issues that can arise during shareholder disputes.”
• “In this case, the Court found that no actual conflict existed because Hart’s interests were aligned with HKC’s interests, and that even though Coldren was still a 50% shareholder in the firm, Grant Genovese’s duty was to HKP, not its shareholders and HKC was free to defend Coldren’s lawsuit and assert any relevant counterclaims.”

“Pierce Bainbridge Wants To DQ Ex-Partner’s Atty” —

• “Pierce Bainbridge has asked a New York state court to disqualify an opposing firm in a bitter lawsuit over alleged fraud at an infrastructure investment fund, saying that practice also represents a disgruntled former partner who claims Pierce Bainbridge inflates the value of its contingency cases to secure loans.”
• “Brickman began representing Ahmad a few weeks ago, but he also represents former Pierce Bainbridge partner Don Lewis in a sprawling and intensely personal series of lawsuits against his old firm.”
• “Lewis claims he was fired and falsely accused of sexual assault in late 2018 for threatening to blow the whistle on sketchy financial dealings at Pierce Bainbridge, chief among them the firm’s alleged practice of dramatically overstating the value of contingency fee cases in order to secure the loans that Lewis says are the fast-growing firm’s financial lifeblood.”
• “In Friday’s motion, Pierce Bainbridge said Brickman must be disqualified from the suit because Lewis had full access to the IFG Fund case file and chatted freely with his former colleagues about the case before he was fired, giving him confidential info that could be provided to Brickman, if it hasn’t been already.”
• ““It has nothing to do with the merits of this case. Apparently they don’t like litigating against me,’ Brickman said. ‘It’s the sincerest form of flattery, I suppose.'”

“Ex-Pond Lehocky Partner Wants Court To Stop ‘Client Theft’” —

“The ousted co-founder of Pond Lehocky Stern Giordano LLP on Thursday asked a Philadelphia state court to stop his former partners from allegedly poaching his clients and using the firm’s resources to fight his efforts to break up the partnership, and sought to appoint a receiver or special master to run the firm during the dispute.”
“David Stern, who helped co-found the prominent Philadelphia-based employment firm in 2010, said his former partners were sending ‘client selection’ letters to his clients that allegedly misrepresented his separation from the firm, pressured them into staying with the firm instead of with Stern, and failed to give them his contact information, he said in a brief accompanying his motion.”
“‘The client selection notices are vague and wholly insufficient. The Pond defendants have made it appear that Stern’s whereabouts are ‘unknown,’ causing some clients to believe Stern has been physically harmed and others to believe he stopped practicing law and otherwise causing extreme confusion and upsetment amongst his clients,’ the brief said. ‘At least one of Stern’s clients, and likely others, inadvertently selected to remain with Pond Lehocky believing that he had no other choice but to do so, given the lack of information provided about Stern in the notice.'”
“‘The Pond defendants are using a new ‘Pond Lehocky’ logo and operating the revamped website that has been scrubbed of any mention of Stern, one of its founders,’ the brief said. ‘The Pond defendants are using the partnership’s assets, including its off