Bressler Risk Blog

I’m taking a moment of our your regularly scheduled risk news to update our risk reader community on the 2024 Risk Staffing Compensation Survey.

You’re all doing great! (But I’d love to do even more.)

Two weeks in, we have 100 participants, sharing data on about 350+ individual risk leadership and staff positions. (This trends well against our aspirational goal of exceeding last year’s metrics: 125 and 515 respectively!)

The ration of participants to data points also suggests more individuals sharing personal details vs managers sharing team data. (So, catch up, managers!)

Here’s a bit of interesting inside survey detail — over the past year, I’ve had close to 100 non-participants ask for the report or a personal benchmark. So if everyone who provided data last year or asked for the results, participate this year, I’ll really have my hands full getting everyone the results and reports.

Remember:

• The survey closes end of September. (If timing’s an issue, reach out!)
• We’re collecting detail on a variety of staff roles, as well as on management/director roles, which have been a popular data point
• Participation open to law firm risk professionals only (US and Canada at this time)
• All responses will be treated confidentially.
  • (And if anyone has questions/concerns preventing them form participating, please do reach out to me directly. In particular, if having an “anonymous” path to participation would get you over the line, let’s talk. Email readers can do that by just replying to this note — it’ll reach me. Others can use the contact form as well.)
• NEW: We’re collecting some qualitative feedback from managers on staffing issues and investments. Looks like several have contributed, thank you!
  • If you want to see those questions and/or the survey questions ahead of time, feel free to reach out and I can help.

You can read more background on the survey via this link.

Or if you’re ready to jump in now, you can access it directly via this one.

Thanks for reading. More risk news and updates on the way!

“Troutman Pepper, Locke Lord Merger Conflicts Rattle Lawyers” —

• “Some Locke Lord affordable housing and energy lawyers may be unable to represent longtime clients after a merger with Troutman Pepper Hamilton Sanders, according to three people familiar with the matter.”
• “At least a trio of lawyers have left Locke Lord, citing such potential challenges post-merger, the people said. The firms in a statement declined to comment on client conflicts and said merger talks are ongoing.”
• “The conflicts snag, common in Big Law tie-ups, shows the complexity of patching together two large operations without having the combined firm represent many clients with adverse interests toward one another. Firms can seek conflict waivers, though clients often hesitate to approve them.”
• “Troutman Pepper in the past two years has represented large financial services companies and affiliated entities, including JP Morgan Chase & Co., Wells Fargo & Co., and Bank of America Corp., the firm disclosed June 20 in an application to represent a client in a bankruptcy case.”
• “Those banks have provided financing to Locke Lord clients for housing development and energy deals, according to press releases by the law firm. The firm represented Tampa Electric Co. in two short-term credit facility transactions with financing from JP Morgan and Bank of America, according to a Locke Lord press release in April 2023.”
• “A Troutman Pepper client, electric and gas company Ameren Illinois, challenged a request by Locke Lord for guidance on wind and solar generating equipment, a 2021 filing with the Federal Energy Regulatory Commission shows. The firm didn’t identify a client in the request.”
  Answering Concerns”
• “Locke Lord told lawyers concerned about losing clients due to the merger that work would be made up through new business from Troutman, according to two people familiar with the matter. Some lawyers found that explanation unsatisfactory, the two people said. They spoke on condition of anonymity to protect relationships at the firm.”

“‘Firms Fear the PR Hit, Not the Sanction’: Big Law on Edge After Simpson Thacher AML Prosecution” —

• “Earlier this week, Simpson Thacher & Bartlett became the latest major law firm to find itself on the sharp end of the Solicitors Regulation Authority’s push to ensure compliance with anti-money laundering rules.”
• “Dentons and Clyde & Co have previously come under the gaze of the SRA’s newfound hawkishness on AML frailties in law firms. But it is the news that the regulator has taken action against one of America’s most prestigious firms that has sent ripples across the wider industry.”]
• “Indeed, according to people at another major U.S.-headquartered law firm in London, the story has been widely discussed and set off fears about their own AML practices.”
• “But people with deep knowledge of the SRA and large law firms say that concerns are not so much for the sanction itself, but rather the bad press the news can generate, the effect it can have on Google search results and, consequently, the perception it creates among prospective clients.”
  Harder Line”
• “To briefly recap, the regulator has alleged that Simpson Thacher ‘failed to have in place fully compliant policies, controls or procedures’ relating to money laundering regulations between June 2017 and January 2023. It has referred the firm to the industry’s Solicitors Disciplinary Tribunal.”
• “One partner at a U.K.-based firm, who has deep knowledge of SRA procedures, suggested that the regulator may be choosing to pursue what it perceives as more ‘watertight’ cases, given the initial failure of its case against Dentons.”
• “The partner believes that firms live in fear of SRA action on AML rules—but not necessarily due to fear of financial penalties. “
• “‘It’s not so much the sanction, it’s the PR hit,’ they said. ‘Some of these firms do a lot of AML work themselves for other organisations. If you google the name of a law firm and ‘AML’, and you see stories about alleged breaches by that firm, rather than the firm’s own AML practice, that’s obviously a concern for management.”
• “‘Therefore any AML failure is bad news, and has the potential to be a problem commercially.'”
• “The news has rattled similarly prestigious U.S. law firms, with people at the London office of another large New York-headquartered law firm expressing concern over the Simpson Thacher news, indicating that many firms will have taken notice.”
• “In a statement following the SRA’s decision on Simpson Thacher earlier this week, a spokesperson from the firm said that the London office was ‘disappointed that the SRA has decided to bring proceedings in the SDT in relation to certain alleged historic AML compliance shortcomings concerning some of our written policies and procedures’, adding that ‘at no point did any money laundering occur nor was there any harm to clients or third parties in connection with the alleged shortcomings’. “

“Troutman Pepper Accused of Inattentive Case Management in $59M Malpractice Suit” —

• “Troutman Pepper Hamilton & Sanders was hit with a malpractice suit Wednesday in New York by a former client, who claims that the firm’s alleged subpar representation, inadequate communications, and a crucial conflict of interest resulted in the client facing a combined $60 million in liability dispersed across two construction cases.”
• “The suit, filed in New York County Supreme Court by Barclay Damon and Rottenstreich Farley Bronstein Fisher Potter Hodas on behalf of client Judlau Contracting, claims that Troutman Pepper and construction litigation partner Frank Cara failed to properly investigate claims against the company and consequently offered ill-informed defenses on its behalf in two cases.”
• “‘Instead of benefiting from [Troutman Pepper and Cara]’s advertised abundance of construction law expertise and litigation acumen, Judlau received a trash basket overflowing with professional incompetence,’ in both underlying suits, the complaint claims.”
• “In the first underlying case, the malpractice complaint asserts, Judlau was facing down a potential class action filed by three of its non-union crossing guards claiming that they were owed ‘prevailing wages’ as a result of performing of union-designated work. Filed in 2017 with the New York Supreme Court and titled Herman v. Judlau Contracting, this underlying case, initially overseen by Judge Andrew Borrok, resulted in a summary judgment ruling against Judlau according to court documents.”
• “‘Judlau does not substantively dispute the plaintiffs’ characterization of their work on the job sites…Instead, Judlau argues that the plaintiffs are not entitled to prevailing wages because any prevailing wage work performed by them was de minimus. The argument fails,’ reads Judge Borrok’s original opinion. ‘Judlau has also offered no defense with respect to its failure to provide the plaintiffs with statutorily required wage notices.'”
• “However, the malpractice complaint alleges, Troutman Pepper and Cara failed to conduct appropriate investigation into the nature of the claims. If they had, the complaint says, the firm ‘would have learned that Judlau never used these non-union workers to perform uncompensated union work.’ “
• “‘Had competent attorneys put any thought into developing Judlau’s defense, they would have explored one or more three separate options,’ ranging from seeking a dismissal or stay while underlying legal issues were addressed by the appropriate administrative agency, to investigating and refuting the facts presented by the plaintiffs, or seeking action against the government project owner, the suit continues. ‘Troutman failed to pursue any one of these available options—and, incredibly, set forth no other viable defense.'”
• “Compounding these elements of alleged malpractice, the overarching malpractice suit claims, is that Cara was serving as outside general counsel and eventually as an executive vice president and general counsel to Iovino Enterprises, one of Judlau’s competitors.”
• “‘Beginning in 2018, Cara served as outside general counsel to Iovino Enterprises. Then, on information and belief, from November 2019 through July 2020—critical periods in both the Herman and SOJV litigations—Cara became Iovino Enterprises’ in-house Executive Vice President and General Counsel while remaining a partner at Troutman,’ the malpractice suit alleges.”
• “‘Incredibly, not only was Cara simultaneously and improperly representing Judlau as a Troutman partner in the Herman and SOJV matters while at the same time serving as Executive Vice President and General Counsel for one of Judlau’s competitors, but during that very time period, Judlau and Iovino Enterprises were directly averse to one another in a contentious arbitration,’ the suit continues. ‘Naturally, these conflicting obligations interfered with Cara’s ability to devote proper time and attention to Judlau and its matters,’ thus resulting in the offloading of work onto inexperienced associates in both underlying matters.”
• “Cara also previously served as Judlau’s general counsel and executive vice president before joining Troutman Pepper, according to profile on the firm’s website.”
• “The malpractice suit accuses Troutman Pepper and Cara of legal malpractice in both underlying cases. It is seeking at least $59 million in damages to cover the verdicts from the two underlying cases and asks that the firm disgorge fees related to those two cases; the complaint further seeks costs, disbursements, pre-judgment interest, and attorney’s fees.”
• “‘While we regret that this lawsuit became necessary, we had no choice but to move forward with this action,’ said Judlau COO Bard Nystrom in a written statement. ‘The courts’ decisions in Herman have had industry-wide effects including multiple lawsuits against other contractors.'”
• “‘We are aware of the complaint and deny the claims. The Friedman Kaplan law firm is representing Troutman Pepper and Mr. Cara in this case. The lawsuit is without merit, and we will present our defenses in court at the appropriate time,’ said a Troutman Pepper spokesperson in an emailed statement.”

“Orrick, Herrington & Sutcliffe LLP Data Breach Litigation: Notice of Class Action Settlement” —

• “A settlement has been proposed (the ‘Settlement’ or ‘Settlement Agreement’) with Orrick, Herrington & Sutcliffe LLP (‘Orrick’) in a class action lawsuit about a security incident impacting Orrick (the ‘Data Breach’). This notice summarizes the proposed Settlement. If you are a Settlement Class Member, there are benefits available to you from the proposed Settlement. The Settlement includes all individuals residing in the United States who were sent notice of the Orrick Data Breach. The easiest way to submit a claim under the Settlement is on this website under File a Claim.”
• “For the precise terms of the settlement agreement, please visit the Case Documents“
• “The Settlement provides payments and other benefits to people who submit valid claims for lost time, certain documented out-of-pocket expenses, and additional credit monitoring services. More specifically, the settlement relief includes:”
  • “Compensation for Lost Time: If you spent time addressing issues relating to the Data Breach, you can make a claim for reimbursement for up to 5 hours of time at a rate of $25.00/hour. To submit a valid claim, you must represent that the time and/or effort spent was incurred as a result of the Data Breach.”
  • “Credit Monitoring: Orrick previously offered 24 months of credit monitoring services with its initial notice of the Data Breach. With this Settlement, you can submit a claim for three additional years of three-bureau credit monitoring services, including $1 million in identity theft insurance.”
  • “Compensation for Out-of-Pocket Expenses: If you have incurred actual, unreimbursed expenses as a result of the Data Breach, you can make a claim for reimbursement for up to $2,500.00. Examples of actual, unreimbursed losses include: (i) costs and expenses spent addressing identity theft or fraud; (ii) preventative costs including purchasing credit monitoring, placing security freezes on credit reports, or requesting copies of credit reports for review; and (iii) other documented losses that were not reimbursed. You must include documentation to support that the out-of-pocket expenses were the result of the Data Breach.”
  • “Compensation for Documented Extraordinary Loss: If you experienced out-of-pocket losses for actual identity theft or fraud and submit documentation to support that such losses are the result of the Data Breach, you can make a claim for up to $7,500.00.”
  • “CCPA Payment: If you are a California resident, you can make a claim for a payment of $150.00 in recognition of your claims under the California Consumer Privacy Act.”
  • “Alternative Cash Payment: In lieu of submitting a claim for lost time, out-of-pocket expenses, or extraordinary loss, you may submit a claim for a $75.00 Alternative Cash Payment.”

“Cyber attacks on law firms jumped by 77% over the past year” —

• “The number of successful cyber attacks against UK law firms rose by 77% in the past year to 954, up from 538 the year before, according to a new study of the threat. Chartered accountants Lubbock Fine said that the wave is driven by criminals seeing law firms as prime targets for ransomware attacks or blackmail. This is due to the sensitive personal and financial information they hold, which hackers can sell on the dark web or threaten to publish on the internet. Earlier this month, a global survey revealed that ransomware attackers have been paid off at least eight times in recent years.”
• “‘The data that law firms hold on behalf of their clients is often highly sensitive – and therefore, valuable if you intend to blackmail a law firm,’ said Lubbock Fine partner Mark Turner. ‘This makes them a very attractive target. Hackers will often demand a blackmail payment from law firms or threaten to post that sensitive data on the internet.'”
• “Ransomware attackers have been paid off at least eight times in recent years”
• “Another tactic is to lock firms out of their own data until a ransom is paid.”
• “Nearly three quarters of the UK’s top 100 law firms have been impacted by cyber-attacks, according to a report by The National Cyber Security Centre.”
• “Turner said that, in the face of such attacks, law firms need stronger cyber defences than most businesses. ‘This might include segregating data across different departments, teams and individual clients,’ he said.”

Retired litigator Marcel Strigberger opines: “Conflicts of interest: Are lawyers held to too high a standard? Let’s talk about baseball.” —

• “Former Blue Jays catcher Danny Janson made major league baseball history this week by being the only major”league player to play for both teams in the same ball game. Yes, you read right.”
• “Janson was up at bat in the second inning against the Boston Red Sox at Fenway Park in Boston back on June 26, 2024, when it started raining and officials decided to suspend the game and resume it on Aug. 26. Meanwhile, Janson got traded to the Red Sox, and on Aug. 26, he was in their lineup playing against his former team. As this game was officially a resumption of the June game, his name was listed on the Jays roster. However, when it came time for him to bat for the Jays, he would have had a bit of difficulty given that he was now wearing a Red Sox uniform. Another Jay, Daulton Varshow, did the official pinch hit for Janson, who now took up his position as the Rex Sox catcher.”
• “As a lawyer, the first thing that jumped into my mind was the issue of conflict of interest. Lawyers have no wiggle room at all in this area.”
• “Is it time for the law to be relaxed somewhat and soften this stringent prohibition? Looking at baseball, I would say the game has many helpful philosophical connotations. It can teach us many lessons. Oodles of baseball expressions have already found their way into the legal vernacular.”
• “Can we allow some conflict of interest in practice? It would certainly be interesting say if a lawyer is a Crown attorney prosecuting a criminal in the earlier stages of the case and this Crown leaves his prosecution job, becomes a defence counsel and meets up with the accused who then retains them to complete the case.”
• “The accused certainly might not have issues with this. Nor might the prosecution. The prosecutors are so busy, do they really care which defence counsel steps up to the plate? And the good thing is the switching lawyer, unlike Danny Janson, come trial time would not even have to get a new uniform. Same robe. Said lawyer would just have to make sure they only complete one counsel slip. Otherwise, they would look like pooh-bah.”
• “Will the system relax the rules a bit? The legal world is a bit conservative. Maybe it’ll think about it for now. Blue sky it. Take a rain check.”

“Revised ethics opinion: Judges should disclose prior prosecutions but assess recusal individually” —

• “A judge is not required to automatically recuse themselves from all cases involving defendants they previously prosecuted. Instead, the judge must assess each case individually to determine if recusal is necessary, taking into account the specific circumstances of the case, according to the [Florida] Judicial Ethics Advisory Committee.”
• “‘Additionally, if a judge is aware of his or her involvement in a prior prosecution, the judge must disclose the relevant facts to the defendant even if the facts do not require automatic recusal,’ the ethics panel said in Opinion Number 2024-12 (Amended).”
• “The amended opinion issued August 27, recedes from the original version issued August 2 that opined that judges must recuse from all cases involving defendants whom the judge previously prosecuted.”
• “‘The test for appearance of impropriety is whether the conduct would create in reasonable minds, with knowledge of all the relevant circumstances that a reasonable inquiry would disclose, a perception that the judge’s ability to carry out judicial responsibilities with integrity, impartiality, and competence is impaired,’ the ethics panel said citing commentary to Canon 2A. ‘Additionally, the Commentary to Canon 3(E)(1) states clearly that, ‘…a judge is disqualified whenever the judge’s impartiality might reasonably be questioned, regardless of whether any of the specific rules in Section 3E(1) apply.'”
• “The panel said the inquiring judge may need to recuse from a case but must evaluate each case individually…The rules require that the inquiring judge disqualify himself or herself where his or her impartiality might reasonably be questioned.”
• “The committee noted that one JEAC member expressed an opposing view and believes that a former prosecution by the judge would always call into question the judge’s impartiality. That committee member prefers the ‘bright line’ position that a judge must recuse from all cases involving a defendant who the judge previously prosecuted.”

Lucian Pera writes: “Explaining the Least-Known Ethics Rule” —

• “But even three years ago in 2021, 19 years after the ABA’s adoption, I published an article in this space on ABA Model Rule 1.18. I called it ‘The Least-Known Ethics Rule’ (March/April 2021). I observed then that it might be the most useful ethics rule you’ve never heard of.”
• “Even in 2021, with some 46 jurisdictions having a version on their books, we ethics lawyers continued to get calls from lawyer clients that demonstrated that lawyers had no idea the law touched by this Rule had changed. Remarkably, those calls continue today.”
• “And today, 22 years after the Rule’s adoption, the ABA Standing Committee on Ethics and Professional Responsibility has offered fresh guidance on this useful Rule in its new ABA Formal Opinion 510, Avoiding the Imputation of a Conflict of Interest When a Law Firm is Adverse to One of its Lawyer’s Prospective Clients (March 20, 2024).”
• “Prior to 2002, the law was simple: if a lawyer received any confidential information from a prospective client—one that consulted, but never hired, the lawyer—then that lawyer and her law firm were disqualified from representing any new client adverse to that prospective client on any matter related to the same subject.”
• “Now, under Rule 1.18, a lawyer who is consulted by, but not retained by, a possible client is only personally disqualified from being adverse to that person in a new matter where: 1. the new matter is the same or a substantially related matter (e.g., the prospective client consults the lawyer about a divorce, and the new matter would be to represent the prospective client’s spouse in that divorce), and 2. the lawyer received from the prospective client ‘disqualifying information’ (i.e., information that could be ‘significantly harmful’ to the prospective client in the matter).”
• “Note that the information the lawyer had received could well be confidential, but if it was not ‘significantly harmful,’ the same lawyer is permitted to take the new matter, and act directly adversely to the prospective client. That alone was an epic change in the law.”
• “For a nice primer on what ‘significantly harmful’ means, see ABA Formal Opinion 492, Obligations to Prospective Clients: Confidentiality, Conflicts and ‘Significantly Harmful’ Information (June 9, 2020). The Opinion, quoting a New Jersey opinion, said the question is ‘exquisitely fact-sensitive and -specific.’ Indeed.”
• “More importantly, Rule 1.18 significantly limits the imputation of any conflict to the lawyer’s firm in this situation—that is the Rule changes when the individual consulted the lawyer’s conflict; if the lawyer is disqualified, it means that the lawyer’s whole firm is also disqualified.”
• “It works this way. If the individual consulted lawyer is disqualified because she heard something ‘significantly harmful,’ the law firm may take on the new matter adverse to the prospective client if 1. the lawyer “took reasonable measures to avoid exposure to more disqualifying information than was reasonably necessary to determine whether to represent the prospective client,” and if 2. the firm screens the individual consulted lawyer and gives notice to the prospective client. “
• “Second, the hard part. And this is where the Opinion breaks a little new ground.”
• “To avoid imputation and allow the individual consulted lawyer’s firm to later take on the new matter, the information sought must be ‘reasonably necessary’ to allow the consulted lawyer to make that original determination. It’s very clear that the Committee thinks this is a quite different, and tougher, determination.”

Definitely worth reading Lucian’s analysis in full.

And for those looking for the deeper dive, see more detail on and analysis of the opinion he noted: “ABA Formal Opinion 492” —

• “The use of the phrase significantly harmful distinguishes the duties owed to prospective clients from those duties owed to current and former clients.”
• “Information viewed as significantly harmful typically includes information about settlement issues, personal accounts of relevant events, the prospective client’s thoughts about how to manage the matter, and discussions in which the lawyer outlined potential claims and addressed potential settlement options. Significantly harmful information is not information that is simply detrimental to the formerly prospective client; to give rise to a potential conflict of interest, the information must be ‘prejudicial to the former prospective client within the confines of the specific matter in which disqualification is sought.” O Builders Assocs., Inc. v. Yuna Corp. of N.J., 19 A.3d 966, 978 (N.J. 2011) (citations omitted).'”
• “Comparing the conflict-of-interest protections afforded to current and former clients under Model Rule 1.9 with those owed to a prospective client under Model Rule 1.18 demonstrates an important distinction between the impact on the lawyer’s current/former work and the impact on the lawyer’s future work.”
• “When the basic facts of a consultation are contested, a review by the court or disciplinary authority may help to determine the credibility of the person invoking Model Rule 1.18. However, such review may not be necessary; if conducted, though, it should avoid having the prospective client reveal confidential information.”
• “Evidence that the prospective client communicated information that could be significantly harmful does not require disclosure of the prospective client’s confidential information or the substance of the conversation. Rather, the evidence required is described as similar to a privilege log, including the date, duration, and manner of communication and a high-level description of the topics discussed. Fed. R. Civ. P. 26(b)(5) (requiring that privilege logs ‘describe the nature of the documents, communications, or tangible things not produced or disclosed—and do so in a manner that, without revealing information itself privileged or protected, will enable other parties to assess the claim [of privilege or other protection]’).”
• “A lawyer may avoid receiving significantly harmful information from a prospective client by warning prospective clients against disclosing detailed information. The caution to the prospective client is not meant to discourage lawyers from having a thorough discussion during the consultation; rather, it serves as a reminder that the more information disclosed to the lawyer while consulting with a prospective client, the more likely that the lawyer may be precluded from representation of other parties in a substantially related matter.”
• “There remains the possibility, as noted above, that the prospective client may give informed consent that no information disclosed during the consultation prohibits representation of a different client in the matter. Alternatively, the lawyer and prospective client can come to an agreement that ‘expressly so provides’ that the lawyer can subsequently use information received from the prospective client.”
• “Informed consent under Rule 1.18 may occur in different contexts. For example, informed consent may be obtained at the outset of a consultation via a condition that any information provided by the prospective client will not be disqualifying. Model Rules of Pro. Conduct r. 1.18 cmt. 5. Informed consent may allow a lawyer who has received significantly harmful information from a prospective client to represent an adverse party pursuant to Model Rule 1.18(d). (For the requirements of informed consent, see Model Rules of Pro. Conduct r. 1.0(e); Model Rules of Pro. Conduct r. 1.0 cmts. 6, 7.)”

“Foley Must Face Texas Claims From Former Client Turned Opponent” —

• “Foley & Lardner LLP must face claims in Texas that it took confidential information from a former client and sought to use it to seize funds in that client’s bankruptcy proceeding, a state appeals court said Tuesday.”
• “Reversing a Houston trial court, the appeals court said the judge shouldn’t have dismissed claims against Foley under the Texas Citizen’s Participation Act. The act is meant to dismiss harassing lawsuits that attack free speech protections, but it shouldn’t apply here because the claims against Foley relate to conduct, not communications, the unanimous opinion said.”
• “Foley was sued by partners in an oil and gas exploration and production company who the firm once represented. The partners, Stephen and David Dernick, say Foley used confidential information from their past representation of the Dernicks to try to seize funds the Dernicks obtained through a shareholder settlement.”
• “Foley argues it didn’t represent the Dernicks in their individual capacities as officers of the company. The Dernicks say otherwise, that there was ‘an explicit attorney-client relationship.’ Foley negotiated the Dernicks’ exit packages, valued at $25.8 million.”
• “On remand, the trial court is to determine whether Foley’s motion to dismiss was frivolous or solely intended to delay, the appeals court said.”

VIDEO from George Mason University: “Court Hearing on Motion to Disqualify” —

• “Under Rule 1.9 A, what factors determine whether a lawyer’s prior representation of a former client is substantially related to a potential new representation of another client in a matter that will be materially adverse to the former client in this context, what is the significance, if any, if the lead counsel and the prior representation are no longer associated with the law firm?”

“Ex-Holland & Knight Attorney Improperly Accessed Client File to Gain Upper Hand in Divorce Proceedings, Suit Alleges” —

• “Holland & Knight is being sued in Pennsylvania state court by a client for failing to flag a conflict of interest and safeguard confidential client information after one of the firm’s attorneys improperly accessed a client file to gain an advantage during his personal divorce proceedings.”
• “The suit, filed in Philadelphia’s Court of Common Pleas on Aug. 20, claims that as a result of Holland & Knight’s failure to detect a potential conflict of interest between then-partner Patrick McCabe and a new firm client, McCabe’s soon-to-be-ex-wife’s employer Philadelphia-based personal injury firm Fritz and Bianculli, McCabe and two other firm employees accessed Fritz and Bianculli’s confidential information multiple times from July 2022 to early 2024, violating client confidentiality protections.”
• “Fritz and Bianculli, the plaintiff in the action, alleges that Holland & Knight brought on the firm as a client around the same time as McCabe began his divorce proceedings in March 2022. The suit claims that during the divorce proceedings, McCabe accessed Fritz and Bianculli’s client file despite not being assigned to work on its matters and deduced his wife’s password and login information for her work computer, subsequently beginning to monitor and record communications between his wife and her employer.”
• “‘McCabe admitted such unlawful and unethical access by providing screenshots he took of the laptop during discovery in the divorce proceedings and certifying under oath that he had obtained this information by illegally accessing the Fritz and Bianculli email server,’ the suit alleges, suggesting that McCabe did so in an effort to substantiate his belief that his wife was having an affair with Brian Fritz, a leader at Fritz & Bianculli.”
• “In addition to monitoring Fritz and Bianculli’s confidential communications during his divorce, the suit claims that McCabe began to use information within those communications to harass his wife.”
• “‘on July 19, 2022, over four months after the filing of the divorce action, approached Kristy McCabe after an extended email monitoring session … and there informed Kristy McCabe that he … was going to kill her as a result of his unlawful access to these emails,’ the suit reads.”
• “After McCabe’s wife filed a second temporary restraining order in July 2023, the suit says Holland & Knight flagged the conflict between its representation of Fritz and Bianculli and McCabe, terminating the contract between the two firms and neglecting to inform Fritz and Bianculli of McCabe’s unauthorized file access. “
• “‘There was no explanation why the second restraining order triggered a conflict while the first restraining order did not,’ the suit alleges. ‘Holland and Knight intentionally omitted and failed to disclose that Defendant McCabe had routinely been accessing the confidential files at will[,] … failed to take any precautions to protect the confidential files from Defendant McCabe[,] … [and] failed to take any steps or employ any measures to limit which attorneys and/or staff could gain access to the confidential files.'”
• “After Holland & Knight disclosed the conflict and terminated its relationship with Fritz and Bianculli, the suit claims, McCabe continued to access the file and asked two of his colleagues, Donohue and Berg, to access the file on his behalf as well at the end of 2023 and beginning of 2024.”

“Worried your legal work could contribute to clients’ criminal conduct? New ABA ethics opinion shares guidelines” —

• “What are lawyers’ duties to assess the facts and the circumstances of every client’s or potential client’s situation—to ensure that the representation does not contribute or further the client’s criminal or fraudulent activity? This question is addressed in a new ethics opinion from the ABA’s Standing Committee on Ethics and Professional Responsibility.”
• “Formal Opinion 513, released Friday, centers on Model Rule 1.16(a) of the ABA Model Rules of Professional Conduct. The rule was amended in 2023 because some lawyers were unwittingly involved in clients’ criminal or fraudulent activity or failed to pay appropriate attention to helping clients in activities, such as money laundering and financing terrorist activities.”
• “If a lawyer has ‘actual knowledge’ that their services will further a client’s criminal or fraudulent activity, the lawyer must decline the representation, according to the opinion. Likewise, if the lawyer has knowledge that there is a high probability that their services will further client criminal or fraudulent activity, the lawyer’s conscious and deliberate choice not to inquire and assess further represents the ‘knowing assistance of criminal or fraudulent activity.'”
• “Also, the opinion explains that the lawyer’s investigation must be ‘reasonable,’ rather than ‘perfunctory.’ The lawyer does not have to undertake a ‘dragnet-style operation’ to uncover every single fact about a client, according to the opinion.”
• “In a series of comments, the opinion notes that lawyers’ duties to assess the situation will vary, depending on the situation. Also, it explains that lawyers should follow ‘a risk-based approach,’ which classifies potential risk as either high, medium-high, medium, medium-low or low.”

“Freshfields Scrutinised for Perceived Conflict Over Germany’s ‘Elbtower’ Skyscraper” —

• “A German politician has criticized Freshfields Bruckhaus Deringer over a perceived conflict of interest regarding the problematic construction of Hamburg’s 64-storey Elbtower.”
• “It is the firm’s role in acting at times for more than one party involved in the tower’s development that has drawn the attention of certain individuals, leading to suspicions of a conflict of interest.”
• “Freshfields had been advising the Elbtower’s planned main tenant, Hamburg Commercial Bank (HCOB) and has previously advised the property’s main developer, Signa. It has also acted for HafenCity Hamburg GmbH, the municipal company responsible for marketing the up-and-coming Hafencity district. Freshfields has previously announced these relationships.”
• “The city of Hamburg had initially stated that at least 30% of the building had to be rented out for the construction project to be approved, according to the regional government. Signa had to present rental agreements in order to be awarded the contract for the project by the city.”
• “The controversy turns on the fact that Freshfields has ties to both the developer Signa and a party that enabled the construction to go ahead, HCOB, and other parties.”
• “Heike Sudmann, deputy parliamentary group leader of the Left Party in the regional Hamburg parliament, told Law.com: ‘When I mentioned to the regional government in 2022 that Freshfields had represented HCOB and previously the project developer Signa as well as the city, most people’s faces fell apart. If the same lawyer from a law firm advises several parties involved in the project, this cannot be done neutrally.'”

“Attorney Who Tipped SEC About Client Loses Appeal Over Award” —

• “An attorney who blew the whistle on his client can’t collect an award from the Securities and Exchange Commission because the disclosure wasn’t permitted by state bar rules, a federal appeals court decided.”
• “Under rules for the SEC’s whistleblower program, an attorney can’t recover an award for disclosing information learned during the representation of a client unless the disclosure was allowed by state bar rules or SEC attorney conduct regulations.”
• “While Florida bar rules permit an attorney to disclose confidential information if they reasonably believe it’s necessary to ‘serve the client’s interest,’ the attorney in the case at hand blew the whistle intending to subject his own client to an investigation, the US Court of Appeals for the District of Columbia said.”
• “‘In reporting on the suspected wrongdoing, then, Doe was reporting on his own client,’ the court wrote in an opinion unsealed on Friday. ‘Common sense therefore dictates that Doe could not have reasonably believed that he was acting in his client’s best interest.'”
• “The appeal is connected to an enforcement action the SEC brought in 2018 against two individuals, alleging securities fraud. The SEC accused the individuals of misappropriating a large chunk of investor funds for their personal use.”
• “In a sworn declaration he made after tipping off the SEC to the suspected misconduct, the attorney acknowledged his goal was to prevent his client from committing a crime.”
• “On appeal, however, he argued such statements were made with the benefit of hindsight and should be ignored. His tip to the SEC, when read in isolation, supports the idea that he thought his client was a victim, not a perpetrator, when he blew the whistle, he said.”
• “Unconvinced, the D.C. Circuit said there was substantial evidence to suggest the attorney suspected that his employer was engaged in wrongdoing when he submitted the tip.”

Trusting that the fact that there’s a parallel IG staff survey closing this week won’t confuse people, I’m pleased to invite our law firm risk readers to participate in the 2024 Risk Staffing Compensation Survey!

Last year’s exercise, our second go, was a tremendous success. We saw participation from 125+ individuals, who contributed data on 515+ individual risk staff positions. (Let’s see if we can’t top that figure this year, shall we? Given the large number of report requests over the past year from folks who missed or skipped the 2023 exercise, I’m quite optimistic about 2024 numbers!)

Once again, after publishing the 2023 exercise I received many encouraging notes of feedback and input from risk staff, risk managers, and firm leaders. It’s gratifying to see mangers using this data to pursue adjustments for their team and to support recruiting processes. I’m also always happy to hear from individuals using this industry data to self advocate.

Based on input from several of you, I’ve made some changes and enhancements to the 2024 exercise. The two key being:

1. For the “risk lawyer” role several folks are curious to see what the data might say about lawyer “specialization.” So the survey form will now collect optional detail on this front. If you’re a risk lawyer self-reporting, or a manager sharing staff detail, there’s an optional field to note if the individual focuses solely (or primarily) on an area like conflicts or OCG management specifically.
2. For managers & directors, the survey now includes an optional section collecting qualitative feedback from managers on risk staff hiring, budget, challenges, goals, investment plans and wishes, and other related matters. (While participation in this section is not required, if you’d like visibility into the feedback your peers provide, please share your perspectives here as well!)

So if you’re an individual contribution looking to understand how your comp compares to your peers, or you’re a risk manager looking to keep your team (and potential new hires) on par with changing market standards, you don’t want to miss out.

SURVEY DETAILS:

• Participation open to law firm risk professionals only
• All responses will be treated confidentially
• Manager participants sharing data on themselves and their team’s roles and compensation will receive a report summarizing key findings and analysis relevant to their firm demographics
  • (The report may be shared internally within your firm, but not redistributed externally. So if you want the results, your best path is to participate!)
• Individual contributor participants sharing personal compensation data will be receive a personal benchmark compensation summary relevant to their specific role and firm demographics.

The survey will be open through September 30, and can be accessed here: 2024 Risk Staffing Compensation Survey.

Feel free to share the link with law firm peers and colleagues.

And if anyone has questions (or really needs more time), please do reach out to me directly. (Email readers can do that by just replying to this note — it’ll reach me. Others can use the contact form as well.)

Let’s see what we learn this round!