Risk Update

Conflicts Allegations — Financial Matters

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‘Clash of interests’ at Herbert Smith Freehills over FCA review of business interruption insurance” —

  • “One of the City’s most prominent law firms has been accused of being compromised by representing the financial watchdog in a test case over business interruption insurance. Herbert Smith Freehills is advising the Financial Conduct Authority after the watchdog said that it would seek a High Court review of policies after a large number of claims were rejected during the Covid-19 lockdown.”

Additional Detail: “Role of Herbert Smith Freehills questioned in FCA review of rejected Covid-19 business interruption claims” —

  • “Mactavish, the specialist outsourced insurance buyer and claims resolution expert, has reviewed the list of insurance policies that the FCA has published as being subject to review by the Court in the Covid-19 related legal review of failed business interruption claims.”
  • “Mactavish is calling on Herbert Smith Freehills, which is representing the FCA in this case, to disclose if it also represents any of the insurers or brokers whose wordings will be subject to scrutiny since Mactavish believes that if that is the case it is difficult to see how conflicts of interest would not arise. Mactavish believes that there is a public interest in this disclosure because the FCA, which will presumably be paying their fees, is funded by the taxpayer and was set up to be an independent body to protect the interests of consumers.”
  • “Mactavish has also discovered that several of the policy wordings in the policies being considered for the FCA’s legal case were drafted by brokers, not by insurers. Given this, it is calling on the regulator to run a more in-depth review of the role played by brokers around the failed Covid-19 business interruption claims. It says the Covid-19 crisis has revealed several conflicts facing brokers that it believes are detrimental to their clients.”

Ex-Client Lodges $1.3M Fraud Suit Against Foley & Lardner, 2 Houston Lawyers” —

  • “A Houston company is seeking $1.3 million from Foley & Lardner and two of its lawyers, alleging they ‘perpetrated an outright fraud’ to induce it to invest and loan money to another firm client.”
  • “The plaintiff, Schumann/Steier Holdings, accuses Foley and the attorneys of ‘numerous misrepresentations and omissions as well as breaches of fiduciary duty.’ In addition to the law firm, the suit names special counsel Anacarolina Estaba, partner Peter McLauchlan and McLauchlan Family Properties. Bedfeld and McLauchlan split their practices between Houston and New York.”
  • “‘The obvious conflict of interest created where plaintiff’s investment was ultimately going directly to his own law firm to pay for another client’s legal bills was a clear breach of fiduciary duty and not appropriately disclosed,’ the petition alleges.”
  • “A spokeswoman for Foley wrote in an email that the firm declines comment on the allegations in Schumann/Steier Holdings v. Foley & Lardner.”
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Risk Update

Interesting Conflicts Cleared — Expert Malpractice Opinions from Partners, Independent Contractor Clash

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Appeals Court Revives Legal Malpractice Suit, OK’s Same-Firm Lawyer’s Expert Affidavit” —

  • “Ruling in a case of first impression, the Georgia Court of Appeals revived a legal malpractice lawsuit after finding the trial judge improperly dismissed it simply because the expert affidavit supporting the complaint was written by an attorney who also was a law partner of the filing attorney. The defendants had argued there was an “inherent conflict” in allowing the affidavit, but the Court of Appeals said the lawyer who wrote it met all the requirements of the law.”
  • “Far from creating a conflict with the client’s interests, the lawyer’s affidavit actually ‘serves to advance those interests,’ wrote Presiding Judge Anne Elizabeth Barnes, with the concurrence of Judges Elizabeth Gobeil and John Pipkin III on Friday.”
  • “Plaintiffs attorney William Ney of Ney Rhein said of the ruling, ‘It just confirms what the ethics rules are: That members of the same firm can provide pretrial affidavits on behalf of each other’s clients and still comply with [the statute].'”

May 2020 Independent Contractor Misclassification and Compliance Law News Update” —

  • “The new complaint filed in federal court in Pennsylvania alleges that the drivers and other personnel making deliveries for the ISP are actually employed by FedEx through intermediary employers – the ISPs – to perform delivery services for FedEx and that FedEx is the joint employer of the drivers along with the ISP companies. Because the drivers’ counsel, Lichten & Liss-Riordan, P.C., also represent a group of ISPs claiming that they are employees who have been misclassified as ICs by FedEx, the company brought a motion to disqualify the law firm.”
  • “FedEx argued that the law firm’s representation of the drivers in this case against the company and its representation of a class of ISPs against FedEx in another pending federal court case has created a conflict of interest for the law firm under the applicable Rules of Professional Conduct because the new lawsuit asserts that FedEx is a joint employer with the ISPs of the drivers and helpers.”
  • “The Pennsylvania federal court denied FedEx’s motion to disqualify the drivers’ counsel. The court concluded that although the plaintiffs will attempt to prove that FedEx is a joint employer under the FLSA, the ISPs are not a party to the action and ‘there is no circumstance wherein this Court or a jury will be required to find that [Independent] Service Providers are Plaintiffs’ employers.'”
  • “It further found that ‘[w]hile FedEx may pursue indemnification and contract termination following the conclusion of the action, a finding of liability on FedEx’s part in no way establishes FedEx’s right to recover from [Independent] Service Providers,’ and that the court would not be required to determine whether the ISPs, who are not parties to the action, are liable for FLSA violations in order for the drivers to recover.”
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Risk Update

Law Firm Anti-Money Laundering Rules and Monitoring & Commentary on Professional Responsibility Approaches

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SRA to beef up AML monitoring of law firms” —

  • “The Solicitors Regulation Authority (SRA) is to beef up its monitoring of firms’ anti-money laundering (AML) efforts and begin a review of continuing competence, its draft 2020/21 business plan has revealed.”
  • “This is the first time the SRA has consulted on its annual business plan, for the year from 1 November, and follows the recent publication of its corporate strategy for 2020-23.”
  • “To meet its legal obligations to prevent money laundering, the SRA said it would expand its AML visits so as to visit all high-risk firms on a three-year rolling basis, along with visiting a sample of lower-risk firms – the SRA will also review the methodology it uses to risk rate firms.”
  • “Further, every month it will call in and analyse a sample of firms’ AML policies, procedures and controls, or their risk assessments, ‘and we are planning to undertake a thematic review into tax advice.’ This means the 2.5% of the SRA’s £70m budget that is currently spent on AML activities will increase to 3%.”
  • “The oversight regulator, the Legal Services Board, has begun work on a review of continuing competence that could lead to periodic checks on lawyers’ fitness to practise. The SRA is following suit: ‘We recognise the importance of not only high standards at point of entry into the profession, but also throughout a solicitor’s practice over many years, so we will also undertake a strategic review of our approach to regulating solicitors’ continuing competence.'”
  • “It said: ‘As we start to consider our longer-term forward budget, we are acutely aware of the current political and economic context. The impact of Covid-19 on the profession, consumers and, indeed, the wider economy is likely to be significant and long lasting. There is potential need for greater regulatory activity at a time of this significant financial uncertainty for the profession and law firms, at the same time as the economy is adapting to a post-Brexit transition environment.”

And Malcom Mercer shares: “Thoughts about self-regulation in the public interest” —

  • “It is no secret that that self-regulation can be compromised by the tension between the public interest and the interest of the regulated profession[i]. This tension leads some to say that self-regulation is inherently flawed and should come to an end.”
  • “In this column, I suggest that:
    • it may be useful to recognize that conflicting professional interests are more in tension in some areas than in others and accordingly to look for ways to mitigate that tension where it is potentially problematic
    • there may be limited measures that can be used to mitigate such tension without having to take more transformative measure that may or may not end up achieving what is sought to be achieved and to avoid the costs that come with transformations.”
  • “Professional regulators have other responsibilities where the public interest and the interests of regulated professionals are less well aligned. Scope of practice is an area of particular tension where there is more than one profession that may be suited in the public interest to perform a function.”
  • “There is a clearly tension between the public interest and the interest of professions where two or more professions would compete for work if permitted to do so.”
  • “There is no perfect approach to professional regulation. Professional self-regulation has advantages. It is a challenge without professional expertise to truly address the fundamental aspects of professional regulation; namely professional competence and conduct. It is good to have regulation of lawyers be independent of government both in criminal law defence and generally. In the early days of the Trump administration, lawyers gathered at airports seeking to defend the interests of those seeking to enter the United States. It is not difficult to imagine that regulation of lawyers by the US government might have cast a pall. Whether a government is on the right or the left, independence from government is desirable. We know that autocratic countries around the world use state ‘tools’ to silence lawyers.”
  • “In my view, it is particularly important that the question of what is required to become a lawyer and requisite professional conduct and competence of lawyers be independently regulated. Self-regulation is one approach to independent regulation. A difficulty with other approaches to independent regulation is that true independence from the state is both hard to achieve and hard to maintain.”
  • “It seems to me that the tension is greatest for self-regulation of lawyers in determining the permitted scope of licensed non-lawyer practice, determining the scope of reservation to licensees (i.e. what is unauthorized practice) and regulating of business activities.”
  • “There is talk of the end of self-regulation in Canada. Experts in professional regulation argue that there is growing governmental and public impatience with self-regulation and that self-regulation is inherently fundamentally flawed given conflicting interests.”
  • “Perhaps the better choice is evolutionary rather than transformative. Approaches in other jurisdictions always look better than our own and better than they are. And transformative change is difficult to effect and to manage. Results of transformative change are inherently unpredictable.”
  • “An alternative that appeals to me comes in part from the Legal Services Board in England & Wales where a Consumer Panel has been established to advocate for consumer interests and in part from the existence of government appointed benchers in Canadian Law Societies.”

 

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Risk Update

Business Conflicts — Firm Advising “Repeat Players” Faces Contention

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Kirkland’s Role Advising ‘Repeat Players’ Highlights Risk of Business Conflicts in Deals” —

  • “Kirkland & Ellis’ resignation from a large debt deal involving multiple firm clients offers a conflicts lesson for firms seeking to rapidly expand client connections in finance and private equity deals.”
  • “Business conflicts can be difficult to identify at the beginning of a deal, experts said, putting law firms in a tough position later on in an acrimonious transaction. Kirkland & Ellis, a dominant force in the deal space, was representing U.K.-based corporate travel company Travelport Worldwide in a $1 billion financing deal. The firm backed out of its advisory role to the company after debt investors that Kirkland also represents got into a legal tangle over the deal, according to a Thursday report in The Wall Street Journal.”
  • “Elliott Management Corp. and private equity firm Siris Capital Group, which collectively made a $2 billion investment in Travelport Worldwide last year, planned on shoring up their investment during the pandemic with an additional $1 billion in debt financing. But the financing was dependent on shifting some of the company’s valued intellectual property assets away from its current lenders, which include Blackstone Group and Bain Capital, both of which Kirkland has represented in other matters.”
  • “Indeed, it isn’t uncommon for firms to negotiate against investors they represent in other matters. It is less common, however, that the advising firm would end up having to back out of its advisory role when the deal becomes too contentious, Talley said.”
  • “‘This is not a conflict under the professional rules of conflict,’ said Stephen Gillers, a legal ethics professor at New York University School of Law. ‘This is a business conflict, which can be harder for firms to identify at the onset of a deal.'”
  • “But business conflicts are harder, and Gillers said that those conflicts are top of mind at the firms he has worked with. ‘When I talk to law firms about conflicts, the issue of business conflicts often arises,’ he said. ‘Law firms are more concerned about business conflicts than ethical conflicts. Not because they are unethical, but because they are able to anticipate ethical conflicts. The can’t as easily identify the business conflicts.'”
  • “Due to the mostly shrouded nature of private deals, it isn’t always publicized when conflicts among legal counsel arise amid these contentions dynamics. ‘It takes a legal fight for this to get into the papers,’ Talley said.
  • ‘That said, in order to handle these potential conflict areas and assess whether those are manageable, you have to monitor all things coming in, and that gets more complicated when you grow large as a firm and have teams that overlap each other.'”

Here’s the WSJ article for additional detail.

 

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Risk Update

I See IG Resources — One Video + One Podcast on Important IG, Security, Risk and Disposition Strategies

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A few interesting IG related media resources to share today. First, a recorded webinar presentation from Christopher Egan at Akin Gump:

  • Information Governance for the Modern Age — Where Vision Meets Execution” — Chris Egan (Assistant General Counsel for Information Governance at Akin Gump Strauss Hauer & Feld LLP) outlines his vision for modernizing law firm information governance, sharing insights from his firm’s journey to adapting policy, process and technology to deliver on that vision.

Next, from ILTA comes a podcast recording:

  • Disposition: Importance to Maintain a Modern Policy and Procedure” — Chuck Barth (Director of Information Governance at Davis Wright Tremaine LLP) reviews:
  • “The importance of records retention and disposition is even more acute now that we are in a time of transition. Law firms have had to quickly transition to a work from home digital environment recently, while some firms had already transitioned to a more digital environment prior to moving remote. It is important that records policies maintain relevancy by addressing the current state of where client data is located. Some firms may not have a policy and procedure in place or may be working with an older policy that does not take into consideration all of the new places and repositories that client data might be stored. This podcast will provide guidance on ways to structure and maintain a modern records policy and procedure.”
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Risk Update

IG in the Time of COVID-19 — Insights from IG Experts and Practitioners on Navigating the Pandemic

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This caught my eye, as it addresses how risk teams are struggling and succeeding to manage their resources, charter and success with the firm: “The IG Elephant in the Room: Protecting Your Team and Your Firm in the Age of COVID-19” —

  • “The coronavirus pandemic is causing significant disruption, uncertainty and change across the globe. The legal profession isn’t unique in having to face monumental challenges — but many of the challenges it is facing are most certainly unique, and call for unique responses.”
  • “Over the past several weeks, I’ve been speaking regularly with information governance leaders at law firms nationally — to better understand the evolving issues they’re facing and the specific measures they’re taking to cope. While there’s tremendous pressure facing IG and records teams, there are also success stories to be told, and response strategies that we can all learn from. In this update, I’ll explore both, and share my own perspective on the unprecedented landscape we face.”
  • “The leaders I’m speaking with are all confronting varying obstacles based on their scope of responsibilities, the state of their firm, and the resources they have to work with. But when it comes to information governance there is indeed an urgent elephant in the room. And that’s the fundamental reality that IG teams — both the people comprising them and the functions they perform — are at risk.”
  • “They are at risk because many firms are in “cost-cutting” mode — searching for projects to put on hold and staff to furlough or even discharge. They are at risk because in a world that’s now 100% remote their role and function are unclear or misunderstood by management. And they are at risk because as firms adjust to new work patterns, some resources have just found themselves idle.”
  • “The good news is that this “elephant” is not unmovable. The world has changed, but IG remains a critical function.  And even during these incredibly challenging times, there is opportunity for IG to expand its support for firms in ways that help organizations improve efficiency, better support lawyers, and manage critical risk and compliance responsibilities that remain as relevant and urgent as ever.”
  • “I know this because firms are telling me about positive change that is already happening. Of course, not automatically. And definitely not without the determined, focused effort of committed IG leaders. But it is happening.”

See the full article for various interesting examples and advice shared.

 

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Risk Update

Potential Clients — ABA Issues New Opinion on Confidentiality & Conflicts Guidance

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Thank you to the longtime reader who sent in: “Confidentiality obligations to prospective clients addressed in new ABA ethics opinion” —

  • “A prospective client is a person who consults a lawyer about the possibility of forming lawyer-client relationship but then doesn’t form such a relationship. The confidentiality duties owed to prospective clients are not as onerous as that owed to existing or former clients.”
  • “However, Rule 1.18(c) provides that a lawyer is prohibited from accepting a new client with interests materially adverse to a former prospective client in a matter that is the same or substantially related to the consultation with the former prospective client. This prohibition applies if the lawyer previously had received information from a prospective client that could be ‘significantly harmful’ to the prospective client.”
  • “Formal Opinion 492, released Tuesday by the ABA’s Standing Committee on Ethics and Professional Responsibility, sheds light on when information from a prospective client could be “significantly harmful” to that individual.”
  • “Under this ‘significantly harmful’ test, the prospective client seeking protection under Rule 1.18 ‘need not demonstrate that the harm is certain to occur in order to demonstrate a conflict.’ Instead, the rule focuses on information that ‘could be significantly harmful.'”
  • “Such information, according to the opinion, could include views on various settlement issues, the prospective client’s strategic thinking on litigation, sensitive and personal information in a divorce case, knowledge of a settlement position, or the possible terms and structure of a proposed bid by one corporation to purchase another corporation.”
  • “If a lawyer has acquired confidential information from a prospective client, that also disqualifies the lawyer’s firm unless the lawyer is screened and both the prospective and affected clients give informed consent in writing.”

For more, see the complete text of Formal Opinion 492.

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Risk Update

Data Breach — When Privilege Won’t Protect Vendor Incident Reports from Discovery or Disclosure

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This one caught my eye as something worth keeping on radar. While the focus is on client breaches and outside counsel/experts, we’ve read about a law firm or two that has faced similar incidents in recent times…

Data Breach Report in Capital One Litigation Not Privileged” —

  • “On May 26, the District Court found in the In Re: Capital One Consumer Data Security Breach Litigation, MDL No. 1:19md2915 (AJT/JFA)(ED VA) that a report prepared by Mandiant concerning the Capital One data breach (Breach Report) was not protected by the work product privilege and must be turned over to Plaintiffs.”
  • “The Breach Report was prepared by Mandiant at the direction of Debevoise & Plimpton, Capital One’s counsel. Debevoise & Plimpton hired Mandiant immediately after the breach to assist in likely litigation.”
  • “In July 2019, Capital One reported the breach and lawsuits started to be filed the following day. Mandiant performed the work and prepared the Breach Report in September 2019. So far this looks like the normal way experts are hired under the very real prospect of litigation for which the work product doctrine should attach. But as so many TV offers remind us ‘wait, wait, there’s more!'”
  • “The Court found the determinative issue was whether the Mandiant Breach Report would have been prepared in substantially similar form ‘but for the prospect of that litigation.’ The fact that the investigation was done at the direction of outside counsel and the Breach Report was initially provided to outside counsel did not satisfy the ‘but for’ test.”
  • “Capital One failed to demonstrate Mandiant would not have performed substantially similar services in the absence of litigation. In fact, Mandiant had a long-standing relationship with Capital One, going back to at least 2015… The only significant change from prior agreements were that Debevoise & Plimpton would direct the work and receive the Breach Report. Mandiant’s similar, prior work was deemed business critical and not a legal expense. The Breach Report was shared with four regulators. While the Court noted this did not necessarily constitute a waiver, it did not decide the case based on this factor and noted the ‘waiver argument may have some merit.'”
  • “Some clear lessons can be gleaned. When choosing a company to assist with data breach litigation response, clearly vet that company. Past work for the breached company, including prior work relationships and contracts, should be reviewed carefully to make sure the post-breach engagement is not more of or similar to the same. If in doubt, have one firm assist with litigation and the other in breach mitigation.”

I was curious and found a few related updates, including this interesting analysis from 2017: “Cyber Breach Forensic Reports: Is Your Report Discoverable?” —

  • “Due to the growing prevalence of data breaches and ransomware attacks, courts have been forced to interpret and nuance privilege in the context of post-breach forensic reports. One major consideration in the context of data breach litigation strategy is how to protect forensic reports prepared by outside forensic firms from discovery in civil litigation. If the forensic report is discoverable, it could be used by the opposing party and ultimately become part of the public record in litigation.”
  • ” Courts have held that, in certain circumstances, such forensic reports are protected by both attorney-client privilege and work product protection. Although there are few cases discussing these doctrines in the context of forensic reports, the cases provide guidance on what a company or organization can do to bolster claims that its post-breach forensic reports are shielded from discovery in civil litigation.”
  • “In Genesco, Inc. v. Visa U.S.A., Inc., a case involving a cyber-attack on a retail store, the defendant’s outside counsel engaged a forensic firm to assist with a privileged factual investigation as to how the cyber-attack occurred. The Middle District of Tennessee court found that the attorney-client privilege protects attorneys’ factual investigations, and the protection extends to attorneys’ communications with agents and experts who are retained for the purpose of providing legal advice. Accordingly, the court held that the report was protected from disclosure by the attorney-client privilege because it was: (1) prepared by the forensic firm at the direction of outside counsel; and (2) prepared to aide counsel in providing legal advice.”
  • “Multiple federal courts have held that in certain instances, forensic reports are protected by work product protection. Whether a document is work product generally comes down to whether the document was prepared in anticipation of litigation.”
  • “Companies should bear in mind that work product protection can be overcome by a finding of substantial need by the adverse party. To strengthen the argument against finding a substantial need, outside counsel should ensure that the forensic firm conducts its investigation based on documentation that can be provided to an adverse party for an independent investigation.”

Court Applies Work Product Protection to Breach Investigation Reports” —

  • “In October 2015, Experian announced that it suffered a data breach. A class action was filed the next day. Experian immediately hired legal counsel who in turn hired Mandiant, one of the world’s leading forensic firms, to investigate the data breach and identify facts that would allow outside counsel to provide legal advice to Experian.”
  • “The plaintiffs requested a copy of Mandiant’s report and documents related to that investigation. Experian objected, arguing that the documents are privileged and protected by the work-product doctrine because they were prepared in anticipation of litigation for the purpose of allowing counsel to advise Experian on its legal obligations. The plaintiffs moved to compel production of the documents.”
  • “The court held that the documents were protected from discovery by the work-product doctrine. Plaintiffs had argued that Experian had an independent business obligation to investigate the data breach, and it hired Mandiant to do that after realizing its own experts lacked sufficient resources. The court rejected this argument because Mandiant conducted the investigation and prepared the report for outside counsel in anticipation of litigation, “even if that wasn’t Mandiant’s only purpose.” The court pointed to, among other things, the fact that Mandiant’s full report was not provided to Experian’s internal incident response team.”

For even more, see the ACC’s: “Protecting Privilege in a Cyber Breach Incident Response.

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Risk Update

Conflicts Accusations Overcome — Sidley Stays In, Keller Rohrback Continues Suit Against Former Client

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Sidley Austin Beats Hiring Challenge in Boy Scouts Bankruptcy” —

  • “Sidley Austin LLP was approved to serve as bankruptcy counsel for the Boy Scouts of America after overcoming a conflict of interest objection raised by an insurance provider the law firm previously represented.”
  • “The firm has shown it’s a disinterested adviser and has established appropriate firewalls in the Boy Scouts’ Chapter 11 case, Judge Laurie Selber Silverstein of the U.S. Bankruptcy Court for the District of Delaware said in an oral ruling issued Friday.”
  • “Sidley’s retention by the Boy Scouts, which filed for bankruptcy in February to deal with the fallout from hundreds of child sexual abuse claims, came under fire because of the firm’s prior engagements with Century Indemnity Company, one of the organization’s insurers.”
  • “Convinced that any sensitive information Sidley learned during the course of its work for Century ‘has not and will not be passed on to BSA’s restructuring team,’ Silverstein said in her ruling Friday that disqualification isn’t necessary.”

Keller Rohrback May Represent Homeowner Against Former Client” —

  • “Seattle-based law firm Keller Rohrback LLP may continue to represent homeowners suing USAA Casualty Insurance Co. over its alleged bad-faith refusal to pay for expenses after a house fire, the Washington Supreme Court said in a matter of first impression.”
  • “The case is factually distinct from Keller’s previous defense of USAA in a bad-faith insurance suit involving a house fire, the high court said Thursday. Its decision interpreting changes to professional conduct rules reverses a state appeals court ruling disqualifying Keller and reinstates the trial court’s order.”
  • “USAA sought to have the Keller attorneys disqualified. A team at the firm represented USAA in over 165 matters from 2007 to 2017, was privy to its litigation strategy and many other confidential matters, and handled a bad faith claim involving an alleged refusal to provide alternative housing after a house fire, it said.”
  • “The court looked to other states’ interpretations of the American Bar Association’s version of the rule on conflicts of interest and its comments, which Washington ‘effectively adopted’ in 2006, it said. The rule bars a lawyer from representing someone ‘in the same or a substantially related matter in which that person’s interests are materially adverse’ to a former client’s interests, without the former client’s consent.”
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Risk Update

Lateral Hiring — Recruiter Conflicts, Intrigue, Interesting Data & News

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Not ethical conflicts (well, not in the sense we typically think about and cover them) but interesting developments and insights into the lateral market that caught my eye and I thought worth sharing:

Headhunter’s Case Against Freshfields Over Lateral Hire Narrowed” —

  • “Headhunting agency Boston Executive Search Associates Inc.’s case against Freshfields Bruckhaus Deringer US LLP over the law firm’s lateral hiring of a partner will be narrowed, but not dismissed entirely, a Massachusetts federal court said.”
  • “The international law firm contacted the headhunter in August of 2018 to discuss potential help in recruiting for one of its practice groups, according to the complaint. The agency sent the firm a copy of its standard agreement for recruiting services, but Freshfields didn’t sign it. Instead the firm sent back its own contingency fee agreement which differed materially from the agency’s, including by imposing a fee cap. Boston Executive countered with its standard agreement again, but Freshfields still didn’t sign.”
  • “While these negotiations were ongoing, Boston Executive contacted Ethan Klingsberg, a partner at Cleary Gottlieb Steen & Hamilton, who responded positively to the possibility of joining Freshfields, the agency said. When told of this, Freshfields allegedly expressed great interest in recruiting Klingsberg, but soon after asked the agency to hold off its recruiting efforts.”
  • “In October 2019 Freshfields announced it had hired Klingsberg and three associates from Cleary. Freshfields reportedly told Boston Executive the agency had played no role in the introduction or placement of Klingsberg and wasn’t owed any compensation.”

Headhunter Lawsuits Shed Light On Fierce Lateral Market” —

  • “And because of the slowdown caused by the COVID-19 pandemic, D’Amore and recruiters in other markets said they are expecting the competition for these partner candidates to be even greater, especially now that a number of law firms are putting a pause on recruiting associates.”
  • “‘So, people who can bring revenue, particularly in tough times like this, are in very high demand,’ D’Amore said. ‘Firms often will pay a premium, even in difficult times, because of how important revenues are [to the firms] now.'”
  • “Because law firms are private entities, it allows the attorneys to keep their compensation figures under wraps. Recruiters, however, have access to that information. Therefore, the lawsuits they file often provide a glimpse of some lawyers’ compensation.”
  • “ESA is seeking 25% of Klingsberg’s first-year compensation, which is reportedly $10 million. The recruiting firm also claims it should get 25% of the first-year compensation for each member of the team Klingsberg brought with him, which included three other attorneys from Cleary Gottlieb.”

I was curious about general trends in lateral movement, and a quick search found note of one such “spree”: “Cozen O’Connor, on Lateral Hiring Spree, Adds New Corporate Governance, Securities Chair From Ballard Spahr” —

  • “In an effort to grow its corporate practice, which it cites as a generator of business and client relationships across the firm, Cozen O’Connor has brought on a new practice group leader from a fellow Philadelphia-based law firm… There are about 10 attorneys in the group, and the firm has plans to grow it. Cozen O’Connor’s strategy is to grow its corporate group, with about 70 attorneys to date.”
  • “Cozen O’Connor has brought on 13 corporate attorneys in the last month, 10 of whom are based in Philadelphia, including Jaffari’s hire and its acquisition of nine-lawyer tech and corporate boutique Baer Crossey McDemus. The firm also announced last week that it added a five-lawyer group of litigators from Akin Gump Strauss Hauer & Feld, also in Philadelphia.”
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