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Is Your LPO Partner Breaking the Law? | eDiscovery Journal

March 30, 2010 By

The 2009 economic downturn created a boom in the offshore review industry. The cost of review still dominates the eDiscovery lifecycle and is the top target for budget-conscious corporate legal departments. Corporate counsel tends to start with the actual hourly wages of reviewers because that does not change their current workflow. Some work with pools of contract attorneys to bring the hourly rates down to $25-$80 per hour. But this still requires outside or inside counsel to manage the review and invest in the review platform to host the data. Outsourced service providers have traditionally handled the large, multiparty matters and supplied both project management as well as offshore contract reviewers. This is the root of the new Legal Process Outsourcing (LPO) service model. Integreon, one of the largest LPO players, announced that it had been named in a writ for unlicensed practice of law to the Madras High Court in India.

The root issue seems to be a culture clash between the ‘Noble Profession’ that India advocates aspire to and the harsh economic reality of global law firms as multinational business entities. The writ from the Association of Indian Lawyers accuses the firms of using the LPOs to effectively practice law in India without being enrolled as advocates as required by law. There are monetary arguments and issues, but the Association seems to care more about the territorial intrusion as well as the way that the LPO’s have commoditized legal services. They even go so far as to level charges of immigration law violations due to the practice of using tourist visas for associates and visiting counsel.

via Is Your LPO Partner Breaking the Law? | eDiscovery Journal.

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Look Out! They’re Gonna Get YOU | Law.com

March 18, 2010 By

The heightened focus by the Department of Justice on possible violations of the Foreign Corrupt Practices Act (FCPA) has received much attention from corporate counsel over the last few years — particularly those in-house counsel whose business unit clients conduct business abroad.

The statute was enacted in 1977, but prosecutions were few and far between for nearly three decades. In the last three years, however, the U.S. has prosecuted more FCPA cases than in all previous years combined.

While the substantial uptick in FCPA prosecutions has been well publicized, a new DOJ tactic has arisen: The targeting of individuals (e.g., CEOs, officers, directors, etc.) — in addition to companies — for suspected FCPA violations. Moreover, DOJ is now employing aggressive investigative tools such as the use of undercover agents in targeting individual employees.

On Nov. 17, 2009, the assistant attorney general for DOJ's criminal division, Lanny Breuer, remarked: “[This past year,] we tried more individuals for FCPA violations than in any prior year. And we indicted more individuals than ever before. That is no accident. In fact, prosecution of individuals is a cornerstone of our enforcement strategy.”

DOJ backed up its rhetoric when, on Jan. 19, 2010, 22 executives and employees of companies in the military and law enforcement products industry were indicted for participating in a scheme to bribe a minister of defense in connection with what they believed to be an opportunity to outfit the country's presidential guard. This represented the largest single investigation and prosecution of individuals in the history of DOJ's enforcement of the FCPA.

via Look Out! They’re Gonna Get YOU.

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He Shut It Down: GC Smashes Bribery Ring at Own Company

February 12, 2010 By Leave a Comment

General counsel for high-risk companies who stay up at night worrying about bribery could take a page from Jay Daltons playbook.

The now-retired general counsel of Panama-based Willbros Group, Inc., an international oil and gas pipeline company, not only helped find employees who were bribing foreign government officials to win contracts. He stopped them from doing it, according to federal court documents.

From what Ive seen, he did the absolute right thing,” said Patrick Brady, a partner in Barnes & Thornburgs white-collar crime defense practice group. “When he discovered what was going on, or at least had a hunch what was going on, he shut it down.”

In late January, a federal judge in Houston sentenced two former executives of a Willbros Group subsidiary to prison for bribing Nigerian government officials with $6 million to win a contract for a large natural gas pipeline.

via He Shut It Down: GC Smashes Bribery Ring at Own Company.

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Little-Known Case Offers Lesson for In-House Counsel on Risk of Fraudulent Schemes | Law.com

February 5, 2010 By Leave a Comment

An article in the most recent issue of the Food and Drug Law Institute’s FDLI Update talks about the important benefits — and risks — when a corporate defendant tells the prosecutor that “my lawyer said it was OK.”

The article (pdf) was written by John Fleder, a principal in the Washington, D.C., office of Hyman, Phelps & McNamara. Fleder writes that the government has become more aggressive in prosecuting corporate lawyers who become part of a fraudulent scheme.

He cites the little-known case of general counsel Paul Kellogg, who was sentenced to a year in prison and three years probation in 2008 for allegedly obstructing proceedings before the Food and Drug Administration and the Federal Trade Commission.

According to government records, Kellogg was in-house counsel at Berkeley Premium Nutraceuticals in West Chester, Ohio. Among other things, the company sold dietary supplements and other pills that it claimed in TV ads would increase the size of a man’s penis by four inches.

A jury in federal district court in Cincinnati found that the company and the individuals illegally made millions of dollars after sending customers supplements they did not order, charging customers' credit cards without authorization, misrepresenting their business activities, and laundering money through bank and investment accounts. Along with other executives, Kellogg was convicted on six counts of conspiracy and money laundering.

According to an earlier article on the law firm’s Web site, Kellogg’s case is one of only a handful of criminal charges against in-house lawyers arising under FDA violations. And it contains important lessons for in-house counsel.

Kellogg did more than offer legal advice, the article states; he actually took part in the scheme. When FDA inspectors tried to check labels on bottles of supplements, Kellogg allegedly directed employees to ship them to another site and then bring them back when the inspectors left.

A second count involved a trust set up to hide and launder illegal money. Although an outside lawyer created the trust, Kellogg allegedly had knowledge of its purpose and agreed to be the trustee.

One lesson for in-house lawyers, the article states, is that playing any role beyond legal advice could land the counsel in hot water. Also, the article suggests that simply claiming that the company or the general counsel relied on advice of outside counsel is not enough “where that advice suggests a clearly unlawful path.”

via Law.com – Little-Known Case Offers Lesson for In-House Counsel on Risk of Fraudulent Schemes.

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Western District of Oklahoma Adopts Best Practices for Electronic Discovery in Criminal Cases : Electronic Discovery Law

December 17, 2009 By Leave a Comment

If you needed more proof that electronic discovery is not just for civil cases, the Western District of Oklahoma has adopted “Best Practices for Electronic Discovery of Documentary Materials in Criminal Cases.”  Adopted on August 20th, these Best Practices recognize the lack of guidance in Federal Rule of Criminal Procedure 16 or in U.S.C. § 3500 regarding the production of discovery materials in electronic from and are intended to “summarize proposed electronic discovery practices.”

Included in the Best Practices are requirements that counsel for the parties shall, by a time proscribed, address issues including the volume of discovery, the litigation capabilities of counsel, and timeframes for production, among other things.  Additional requirements include the production of electronically stored information in .PDF format, the production of an index identifying the “source and/or nature of the materials” produced, and mandatory good-faith discussions of possible cost-sharing measures when handling voluminous discovery.

via Western District of Oklahoma Adopts Best Practices for Electronic Discovery in Criminal Cases : Electronic Discovery Law.

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Legal Blog Watch

December 9, 2009 By Leave a Comment

A survey of private-practice lawyers, corporate counsel and law students found widely divergent views on the state of the legal industry and the future of the law firm business model. Released Thursday during a panel discussion in New York City on the future of the law firm business model, the LexisNexis-commissioned survey (executive summary) found that 71 percent of corporate counsel say that law firms are not doing enough to respond to the current financial pressures on their business model. By contrast, 77 percent of private-practice lawyers believe that their clients are too focused on reducing costs, at the expense of quality and long-term results.

Described as the first substantial survey of the legal industry since the beginning of the economic crisis, the survey polled 300 law firm lawyers, 150 in-house counsel and 100 law students. Their responses suggest perspectives on the crisis differ significantly based  upon one's vantage point. Nearly half of in-house counsel, for example, say they have requested rate cuts from their outside firms. Yet just 18 percent of private-practice lawyers say their firms have implemented such cuts.

Only 38 percent of in-house counsel believe that law firms are hearing their plight and responding by cutting fees and costs. Maybe as a result, 69 percent of corporate counsel have shifted work in-house and 56 percent have reduced their spending on outside firms. Yet the firms report that they have taken steps to respond to the economic crisis: 43 percent have had layoffs, 41 percent have offered clients alternative fee arrangements, 33 percent have frozen their hiring, 29 percent have deferred start dates and 26 percent have reduced salaries.

[continued] Legal Blog Watch.

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Defining the Law Firm of the Future | Legal Blog Watch

December 8, 2009 By Leave a Comment

What will the law firm of the future look like? That was the question for a panel of general counsel, law firm partners and industry observers at a panel in New York City Thursday night. If there was consensus among them on any point — and I'm not sure there was — it was this: The firm that will thrive in the future is the firm that is able to deliver better value through innovation and technology.

The panel was hosted by LexisNexis to highlight its release of a survey on the state of the legal industry, which I recap in a separate post. D.M. Levine of The American Lawyer has already provided his report on the panel. It was moderated by Darryl Cross, vice president of client profitability at LexisNexis, and included:

  • Richard N. Baer, EVP, general counsel and CAO, Qwest
  • Martin F. Cunniff, partner, Howrey
  • Michael S. Helfer, general counsel and corporate secretary, Citigroup
  • William D. Henderson, professor of law, Indiana University
  • Peter J. Kalis, chairman and global managing partner, K&L Gates
  • Thomas J. Sabatino Jr., former EVP and general counsel, Schering-Plough
  • Michael F. Walsh, president and CEO, U.S. legal markets, LexisNexis

All on the panel agreed that law firms should change how they do business. All did not agree, however, on what that change should look like. In fact, the one other point of consensus among the panelists may have been that there is no one-size-fits-all answer for firms or for clients. The legal industry is not a monolith, said Kalis, and any attempt to define it as such is a fallacy.

If change is to come, it should be through the mutual efforts of law firms and clients, several panelists said. The discussion should not about “us” and “them,” said Sabatino, who is also a director of the Association of Corporate Counsel. “There should be synergy between clients and firms.” Qwest's Baer agreed: “This isn't an adversarial situation between clients and firms.”

[continued] Legal Blog Watch.

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Defendants and General Counsel Sanctioned for Failure to Preserve Evidence : Electronic Discovery Law

November 13, 2009 By Leave a Comment

In April 2006, plaintiff Swofford was shot seven times, on his own property, by two deputies in pursuit of two burglary suspects.  Plaintiffs brought suit against the sheriff in his official capacity and against the deputies individually.  In August 2006, plaintiffs’ counsel sent the first of two letters requesting the preservation of relevant evidence.  In February 2007, plaintiffs’ counsel sent a second preservation letter and a notice of claim as required by Florida statute.  Defendants did not deny receipt of these letters, but evidence was nonetheless destroyed.

Despite defendants’ receipt of the letters, no litigation holds were ever issued.  Rather, the letters were forwarded to six senior employees of the Seminole Country Sherriff’s Office (“SCSO”), including named defendant Sherriff Eslinger.  No preservation instructions were provided to the deputies involved in the shooting.

General Counsel for the SCSO, David Lane, later testified that by forwarding the letters, “he believed that the SCSO ‘would cover the course and scope of the evidence requested in the [letters]” and that nothing further need be done.  “In fact, Lane professed not to have ever read the Federal Rules of Civil Procedure to ascertain on even a rudimentary level what his and his client’s obligations were in this regard…”  The senior officials who received the preservation requests also made no effort to sequester or preserve evidence.

In the absence of any effort to preserve evidence, relevant data was lost, including electronically stored information.  Specifically, the laptop of one of the deputies involved in the shooting was wiped of its contents and recycled and emails were manually deleted.

via Defendants and General Counsel Sanctioned for Failure to Preserve Evidence : Electronic Discovery Law.

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FCPA Report Shows Companies Shelling Out to Avoid Nasty Prosecution

November 10, 2009 By Leave a Comment

With the number of foreign bribery cases soaring, corporations — and their general counsel — in mergers or acquisitions are spending more time and legal resources making sure they don’t acquire a nasty prosecution along with the new business.

That’s one of the findings in Shearman and Sterling’s semiannual report on the Foreign Corrupt Practices Act, entitled “Recent Trends and Patterns in FCPA Enforcement.” The report is part of the law firm’s FCPA Digest.

The increased risk of enforcement has directly impacted how companies approach M&A due diligence and other business transactions, according to Danforth Newcomb, the New York-based founder of Shearman & Sterling’s FCPA practice and currently of counsel with the firm. That means general counsel must pay increased attention to anti-corruption controls and compliance programs, Newcomb indicates.

The report says FCPA prosecutions in the United States, and globally, are rising. So far in 2009, 66 corporations have disclosed investigations, according to the report. Meanwhile the Department of Justice has said that at least 120 companies are under investigation — up from 100 at the end of last year.

via FCPA Report Shows Companies Shelling Out to Avoid Nasty Prosecution .

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Sedona Continues Call for Cooperation – Law.com

October 28, 2009 By Leave a Comment

If hell is the last stop for attorneys who are “eternally locked in discovery disputes,” then The Sedona Conference — a nonprofit research and educational institute — wants to be the guardian angel that keeps counsel cooperative and away from that realm. Working Group 1 of The Sedona Conference consists of judges, attorneys and other experts who meet, discuss and publish on issues relating to electronic discovery. Federal judges are now referring with increasing regularity to the e-discovery guidelines set forth in various publications of The Sedona Conference, including the recently issued The Sedona Conference Cooperation Proclamation. See The Sedona Conference, The Sedona Conference Cooperation Proclamation (July 2008).

The Cooperation Proclamation asks a timeless question: Can’t we all just get along? Although this pronouncement by The Sedona Conference is only a few pages long, its drafters seek no less than a “paradigm shift for the discovery process.”  Specifically, the Cooperation Proclamation encourages “a national drive to promote open and forthright information sharing, dialogue (internal and external), training and the development of practical tools to facilitate cooperative, collaborative, transparent discovery. “On the theory that overzealous discovery costs too much and yields too little, the Cooperation Proclamation aims to curb the knee-jerk and often counterproductive aggression sometimes exhibited by counsel in discovery. In this respect, its goal is the same as that of Rule 1 of the Federal Rules of Civil Procedure: to promote the “just, speedy, and inexpensive determination of every action.”

via Law.com – Sedona Continues Call for Cooperation.

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