Risk Update

Reputation Risk (When Practice Provokes PR Peril)

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The questions of how and where firms draw the line in terms of completely legitimate engagements that raise public scrutiny and those that might be more problematic, how they address member behavior that may cause issues, and how organizations just generally traverse the challenges and uncertainties of reputation risk is one that’s always intrigued me. Here are some recent stories making news on this theme:

Federal Prosecutors Are Thinking About Going After Skadden: The Biglaw firm is under fire for its work on behalf of Paul Manafort.” —

  • “The work that Skadden Arps did for Paul Manafort on behalf of the Ukrainian government — specifically, writing a report justifying the prosecution of former Russian-aligned Ukrainian President Viktor Yanukovych’s political rivals — has long been in the spotlight, what with it being a featured part of the Mueller investigation’s case against Manafort. In addition to being well-known, it has also triggered a series of legal woes for Skadden attorneys that worked on the matter.”

  • “Former Skadden associate Alex van der Zwaan pleaded guilty to lying to investigators in the Mueller probe. And the case against former Skadden counsel Greg Craig was referred to the Southern District of New York for potentially acting as an unregistered lobbyist.”

  • “As CNN reports: In addition, these sources said, prosecutors in the US Attorney’s Office for the Southern District of New York are considering taking action against powerhouse law firm Skadden, Arps, Slate, Meagher & Flom LLP, where Craig was a partner during the activity under examination. Prosecutors are considering a civil settlement with the firm or a deferred prosecution agreement with Skadden, these sources said.”

On Leave From Willkie, Where Does Gordon Caplan Go From Here?” —

  • “A lapse in ethical judgment can quickly turn a Big Law leader into a target of an internal investigation, industry sources said.”

  • “Willkie placed Caplan on leave Wednesday as he defends himself against charges related to allegations that he spent $75,000 to have his daughter’s standardized test score fudged. Caplan was allegedly overheard on federal wiretaps saying he was not concerned with “the moral issue” related to lying to colleges about his daughter’s ACT score.”

  • “Caplan is confronting the potential that the law firm he once helped lead will now turn an investigative lens toward him. Legal industry sources said it is possible—some said likely—that Willkie would view Caplan’s apparent dishonesty in prosecutors’ claims unveiled Tuesday as an entrée to investigate his work on behalf of clients. Law firms are also often obligated to report their lawyers’ unethical conduct to state bar regulatory bodies.”

  • “The question, in one way, is how to square a law firm’s brand as an imprimatur of the ethical exercise of good judgment with a partner allegedly overheard on federal wiretaps arranging for cheating on a standardized exam.”

David Boies’s Fall From Grace” —

  • “Boies’s firm soldiers on and continues to rake in money by the barrel-load. Yet cracks in its once-burnished veneer are now visible to the naked eye.”

  • “When news first trickled out about his work on behalf of Harvey Weinstein, his supporters winced and his legacy began to creak and yawn. As further evidence established that this representation included an attempt at silencing, and undermining the statements of, possible sexual assault victims, and doing so in an underhanded attempt to stymie The New York Times, which also happened to be his client, that legacy tottered over and came crashing down.”

  • “When it was later revealed that Boies was complicit in the great Theranos tragedy, people were less surprised… Boies was a Theranos board member and stockholder. He was also, somehow, the company’s lawyer. This conflict of interest may have been the impetus for Boies’s aggressive and distasteful defense of the company. He worked to intimidate whistleblowers, running up their legal bills and threatening litigation, and acted in a manner that Wall Street Journal reporter John Carreyrou, who exposed both Theranos and Boies, described as thuggish.”

  • “He is steadfast in asserting that it was not a conflict of interest to represent the New York Times while also attempting to silence a New York Times journalist at the behest of another client, Weinstein… Boies notes that his attempt to “completely stop,” as his contract with a covert investigator put it, a NYT article was completely appropriate because ‘reporters do not have a monopoly on investigating facts.'”

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Risk Update

A Thank You, “Irreconcilable” Lead Conflicts, “Baby” Conflict, Client Security Concerns & More

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I’d like to take a moment to thank everyone for their support of BRB. The blog is off to a strong start and I sincerely appreciate the many who took a moment to send in notes of encouragement, share the news with colleagues, and “like” this on social media this week.

(That last part is something I thought I’d never say… but now that it’s working I’ll take every “like” everyone out there might be kind enough to click here and help out with. >smile<) Starting fresh was definitely a bit of a risk, but one that’s paying off well in terms of job satisfaction. Now, back to work.

Lawyer asks judge to disqualify Nessel’s office from Flint civil lawsuits” — 

  • “A lead lawyer in the civil lawsuits linked to the Flint lead-contaminated water crisis has asked a judge to disqualify the entire Michigan Attorney General’s office from further representation in dozens of Genesee County civil lawsuits.”

  • “The state created ‘irreconcilable conflicts of interest’ by assigning the same four assistant attorneys general to both defend state officials against suits from Flint residents and represent Flint residents in a civil lawsuit against engineering firms that performed work in the city prior to the water crisis, lawyer Corey Stern said in his motion.”

  • “Stern represents 2,500 Flint children suing the state, was appointed lead counsel for plaintiffs involved in Flint-related litigation in state courts in 2016, and is liaison counsel for individual plaintiffs in federal court.”

  • “An ethics officer in the Attorney General’s office reviewed the case after Stern raised the issue in a letter to Nessel. Ethics officer Frank Monticello ruled in early March that there is no conflict in Kuhl’s dual roles because the office’s interest in the ‘health, safety and welfare’ of Michigan residents doesn’t conflict with its interest in ‘protecting the state treasury.’ But Stern’s legal ethics expert, who submitted his opinion on the issue, disagreed with the Attorney General’s office.”

  • “The Attorney General’s office has received the motion and is reviewing it, said Dan Olsen, a spokesman for Attorney General Dana Nessel’s office.”

Baby Conflict Leads To Resignation” —

  • “The Oklahoma Supreme Court has accepted the resignation of an attorney.”

  • “The Bar’s complaint received by the Bar Association concerning her conduct and alleging she engaged in conflicting representation of clients…. The Complaint against Claborn states she represented Geiser in a criminal case while representing Claborn’s daughter in the guardianship case involving Geiser’s son, and Claborn created a conflict of interest in violation of Rule 1.7 of the Oklahoma Rules of Professional Conduct, 5 O.S.2011, Ch.1, App. 3-A, (ORPC). The Complaint states Claborn had conversations with Geiser when she lacked an attorney, and these conversations were false and misleading regarding Claborn’s interests. The Bar asserts Claborn’s conduct violated Rules 4.1 and 4.3 of the Oklahoma Rules of Professional Conduct, 5 O.S.2011, Ch.1, App. 3-A.”

Judge in Dougherty Case Says Co-Defendants Repped by Same Firm Waived Conflict” —

  • “The federal judge overseeing the case of Philadelphia union leader John Dougherty and several co-defendants has ruled that attorneys from the same firm working for two separate defendants can continue their representation, despite the government’s concerns that a conflict of interest exists.”

  • “Prosecutors claimed that because both defendants were represented by the same firm, there was an inherent conflict of interest. In his Monday order, Schmehl said the defendants waived the right to raise any conflict concerns, but left room for the prosecution to bring up the issue again down the line.”

The other day we noted a story about firm hacking risk, here’s an interesting take from client eyes I took note of last November: “Access to Law Firm Data ‘Just Too Easy,’ Worrying Clients” —

  • “A cybersecurity scare at Foley & Lardner has drawn new attention to a debate over data security at top law firms, and some clients and outside organizations are taking matters into their own hands. The incident last month, described by a firm spokeswoman only as ‘a cyber event that caused a disruption to our IT systems,’ comes as general counsels’ offices express renewed concern about whether even the biggest law firms are adequately protecting highly sensitive data.”

  • “In recognition of the threat, Whipple [Associate GC of DHL Supply Chain Americas] said his company last year revised its outside counsel guidelines to include added cyber protections. This includes giving the company the right to conduct its own audit of outside law firms’ cyber defenses. At stake, he said, is the sensitive DHL information that can include everything from employee pay rates and product pricing to personally identifiable information.”

  • “Gilead, along with the Corporate Legal Operations Consortium (CLOC), a group of legal ops professionals, are working on an initiative to create standardized legal security assessments. CLOC’s Cybersecurity Initiative Steering Committee includes several law firm and in-house leaders, such as Baker McKenzie Global CIO Daniel Surowiec, Greenberg Traurig CIO Jay Nogle, and Google Legal Operations Manager Marika Daggett, group officials confirm.”

  • “‘Sadly, in any industry, most breaches trace back to choices that have been made to choose profits over effective security,’ Jeffrey Ritter, founding chair of the ABA’s cyberspace law committee and an external lecturer for the computer science department at the University of Oxford, said in a written statement.”

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Risk Update

Conflicts News (Waivers, Disqualifications & Non-conflicts DQ)

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It wouldn’t be a Bressler Risk Blog if I didn’t crib updates from the unmatchable Bill Freivogel. So with a hat tip and clear credit to him (and some more to come) let’s have a look at what he’s seeing on the conflicts front:

  • “Cedar Rapids Bank & Trust Co. v. Mako One Corp., 2019 WL 1283988 (8th Cir. March 21, 2019). Corp. hired Law Firm to draft a tax credit bond to finance a building restoration project. Bank purchased the bond. When a default occurred, Bank hired Law Firm to bring this foreclosure proceeding against Corp. Corp. moved to disqualify Law Firm. The trial court denied the motion. In this opinion the Eighth Circuit reversed, based upon an “inadequate” written advance waiver signed by Law Firm, Corp., and Bank, before hostilities broke out. The court said “the letter makes no pretense to elucidate any risk involved,” only that the parties’ interests “are or may be adverse.” The letter also contained an unfortunate drafting error. There is more, but the reader should get the idea by now.”
  • “Re: Nat’l Prescription Opiate Litig., 2019 WL 1274555 (N.D. Ohio March 19, 2019). From 2009 until 2017 Carole Rendon (“Rendon”) was a lawyer in the office of the U.S. Attorney for the N.D. of Ohio (“the Office”). During that period Rendon represented the Office in an opioid task force, which included health professionals, state and local law enforcement, and others. Included were City of Cleveland (“City”) and Cuyahoga County (“County”). In 2017 Rendon left government and joined Baker & Hostetler (“B&H”). After Rendon joined B&H, City and County joined in lawsuits against opiode providers, including Endo Int’l PLC (“Endo;” full name from press account). Rendon appeared for Endo. City and County moved to disqualify Rendon and B&H. In this opinion the court granted the motion. The court found that Rendon did not violate Ohio Rule 1.11(a), but did violate Rule 1.11(c). The court relied in significant part on a letter from a Senior Trial Counsel from the Office claiming that City and County did share relevant nonpublic information with Rendon while she was on the task force.
  • And see also Law.com on: “Judge Disqualifies Baker & Hostetler Partner From Defense of First Bellwether Opioid Trial
  • “Jarvis v. Jarvis, 2019 WL 1254013 (Cal. App. March 19, 2019). Todd Jarvis and James Jarvis are the 50% owners of Jarvis Properties, a limited partnership (“LP”). They are at odds over what to do with property in the LP. James filed this action for partition against Todd and LP. Todd hired a lawyer for himself and and hired a different lawyer, William Roscoe, to represent LP. A California statute provides, in effect, that a 50% owner cannot act on behalf of a partnership. Therefore, James moved to disqualify Roscoe. The trial court granted the motion. In this opinion the appellate court affirmed. The court could not nail down precedent for this situation. While repeatedly emphasizing that this was not a conflict of interest situation, the court discussed California conflicts law extensively. The court did not say how LP’s successor lawyer should be selected but seemed confident that the trial court would figure something out under its “inherent and equitable powers.

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Risk Update

Risk Roundup (Disasters, Ethics Rules & Engagement Letters)

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Okay, let’s get on with the business. I’ve had my eye on some interesting developments over the past few months and thought a broad summary of key developments would be interesting. Just in case folks haven’t tracked all the in’s and out’s of what’s been going on out there.

ABA releases new ethics guidance on dealing with disasters

  • “Recent large-scale disasters like Hurricane Florence and wildfires on the West Coast have reinforced the need for the ABA to address the myriad rules that lawyers must consider under these challenging circumstances. ABA Formal Ethics Opinion 482, released on Wednesday by the Standing Committee on Ethics and Professional Responsibility, clarifies the variety of ethical obligations attorneys face when disaster strikes.”
  • “Following a disaster, a lawyer must evaluate available methods to maintain communication with clients… Lawyers should also remember that the duty of competency, Rule 1.1 includes a technology clause that requires lawyers to consider the benefits and risks of relevant technology. Because a disaster can destroy lawyers’ paper files, lawyers “must evaluate in advance storing files electronically” so that they can access those files after a disaster. Storing client files through cloud technology requires lawyers to consider confidentially obligations.”

And on the broader topic of evolving ethics rules: “Crafting Legal Ethics Rules For The 21st Century: How can the profession’s rules of conduct keep pace with the rapidly evolving technological landscape?

  • “Anecdotally, at least, there is a significant disconnect between the rules of professional conduct and the day-to-day reality of practicing lawyers. There is an apparent sea change happening in the world of legal ethics as attorneys confront previously uncontemplated ethical issues. Can you reference facts about a case when responding to a negative or false online review? Is it ethical for a lawyer to Facebook “friend” a judge before whom she appears? Can you allow your firm’s web consultant to view the names of your potential clients through your website contact form?”
  • “Above the Law and the Data-Driven Ethics Initiative are partnering on an unprecedented research effort to explore attorney perceptions of the rules of professional conduct, particularly as they intersect with emerging digital technologies. Our ultimate goal is to create an open source legal ethics resource. We hope this resource will serve to deliver actionable intelligence to the legal community by synthesizing data from actual practicing lawyers.”

Another topic that continues to continue is engagement letters. Here’s a fresh take on that topic by consultant Mike Quartararo: “Is It Time To Upgrade Your Engagement Letters?

  • “Wouldn’t legal services as a whole and the client relationship in particular benefit from more expansive, specific, individualized engagement letters?”
  • “So, how is it that legal engagement letters became such a perfunctory process? Well, at least in New York, it’s because 20 years ago the court system asked lawyers to begin using them to outline the scope of their legal services, the fees to be charged, and the right to arbitration of any disputes. To be sure, anyone who hires a lawyer wants to know at least these three things. But is that enough?”
  • “Here’s a challenge to GCs and corporate legal operations people: Dig out the engagement letters your organization has signed with outside counsel in the last few years. Go back as far as you like. Lay them out on a table (or across your computer monitor) and see if they aren’t just the same recycled letter with changed dates and increased billing rates.”
  • “If I were a corporate attorney charged with engaging outside counsel, engagement letters that I sign would include a lot more. And I’m sure that some of these things are discussed between client and counsel, but in today’s market, it just makes sense for engagement letters to contain some of these things. Here’s my list of what should be included in an engagement letter: [read more]”
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Judicial Smears (Alleged), Disqualifications and Hacked Firms (Hypothetical)

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Okay, let’s get on with the business. I’ve had my eye on some interesting developments over the past few months and thought a broad summary of key developments would be interesting. Just in case folks haven’t tracked all the in’s and out’s of what’s been going on out there. I’ll be sharing a mix of what’s caught my eyes of the past few months, over the next few weeks.

Let’s start with some drama: “Squire Patton Atty Says Judge Smeared Him In Arbitration DQ” —

  • “A Squire Patton Boggs partner disqualified from arbitrating a fee dispute between a Chesapeake Energy subsidiary and the U.S. arm of a Chinese state-owned oil company wants in on the case now before the Fifth Circuit on appeal, claiming the lower court wrongly and unfairly tarred his reputation.”

  • “Dallas-based Squire Patton Boggs LLP partner Patrick Long told the Fifth Circuit Monday that he wasn’t even aware of the fight between Chesapeake and OOGC America LLC over fees for development in the Eagle Ford Shale until he was given a copy of U.S. District Judge Lynn N. Hughes’ Dec. 5 order partially invalidating an arbitration award after determining that Long spent nearly a year hiding his own business ties to Chesapeake while serving on the arbitration panel. In that ruling, Judge Hughes called Long “corrupt” and a “liar,” finding Long had hid his relationship to people and investments associated with Chesapeake.

  • “But Long told the Fifth Circuit that Judge Hughes’ “accusations were based on a flawed, incomplete understanding of the relevant facts.” He said he’s never represented Chesapeake, nor had any financial or social relationships with any officers or directors of the company or OOGC, as well as any witnesses called in the underlying arbitration.”

Next, an interesting read: “The Lawyer’s Duty When Client Confidential Information is Hacked From the Law Firm” —

  • “Imagine it’s a usual Tuesday morning, and coffee in hand you stroll into your office. Right inside the door, you see a handwritten notice on a big whiteboard which says: All network services are down, DO NOT turn on your computers! Please remove all laptops from docking stations & keep turned off. ‘No exceptions'”
  • “This really happened. In 2017, DLA Piper was hacked by the NotPetya malware, and until the breach was resolved, the 4,400-attorney law firm was reduced to conducting business by text message and cell phone.”

The article goes on to explore relevant opinions and rules, outlining three key duties:

  1. Monitor for Electronic Data Breaches
  2. Stopping the Breach, Restoring Systems, and Determining What Occurred
  3. Providing Notice to the Client
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Risk Update

The Risk Blog Returns (No, It’s Not April Fool’s Day)

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I’m delighted to announce the launch of the Bressler RIsk Blog (BRB). Some of you may remember that from 2009-2017 I published a law firm risk blog, whilst wearing a different hat.

Having changed lanes professionally and re-emerged in 2018 with hands well full, I’ve still felt an itch unscratched. (And appreciate the many who have reached out over the hiatus with blogging encouragement — always nice to know that folks out there are real and reading!)

This new blog is a fresh start and a new experiment — and I’m looking forward to seeing how the story continues to play out. 

I’d like to encourage everyone who isn’t receiving email updates to sign up for them. And to send word to your friends and colleagues to do the same. Tweets, LinkedIn posts, emails forwards to colleagues are all welcome!

Finally, I’d like to encourage anyone with tips, stories and resources to share to get in touch. I’m always grateful for the articles, decisions, and even snarky comments readers have been known to send in from time to time. 

And, as they say, away we go!

#brb

 

 

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