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High Tech Tools - and Traps - for Mergers and Lateral Hiring

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As a Kentucky lawyer observed recently, layoffs of lawyers during the current economic decline resulted in making many good lawyers available for lateral hire in Kentucky. For this reason the portions of the program High Tech Tools – and Traps – for Mergers and Lateral Hiring concerning risk management for lateral hires and departing lawyers should be useful information for Kentucky lawyers.

As a refresher here are some of the risk management considerations for firms when making a lateral hire:

  • Before hiring screen candidates thoroughly by checking for:
    • Legal qualifications by getting authority to obtain information from law schools and bar admission and disciplinary authorities – trust, but verify.
    • Ethics complaints and malpractice claims – inquire about potential claims.
    • Financial status and credit record.
    • Membership in organizations such as officer, director, or other interests in a business; and fiduciary services such as trustee, conservator, administrator, or executor.
    • Powers of attorney held involving financial matters.
  • After hiring:
    • A firm lawyer should review every file brought by a lateral hire. Get client consent in writing before accepting a client’s file brought by a lateral hire.
    • Determine if the lateral hire has client funds and, if so, have them immediately deposited in the firm’s client trust account.
    • Inventory client property for which the lateral hire is responsible. *

* This list is derived in part from the following materials used in the ABA 26th National Conference on Professional Responsibility program On The Road Again: “Insurance Issues Related To Lateral Hire Musical Chairs,” by Professor Susan S. Fortney, and the Alexander & Alexander article “Evaluating and Managing the Risks of Mergers, Acquisitions and Lateral Hires” edited by Anthony Davis.

Program panelists emphasized that technology tools provide excellent ways to investigate and evaluate candidates, streamline the application process, consider conflicts of interest and screens, and ethically integrate into the firm client files, forms, and electronic devices such as thumb drives, laptops, and cell phones the candidate will bring to the firm. These tools includes electronic files management programs, conflict of interest programs, and Internet search engines. If technology is not used effectively in the hiring process, it can result in firm and public relations problems, and the Three “D”s – Disqualification; Discipline; and Disgorgement.

Technology tools are equally useful in out-processing departing lawyers by coordinating what client information, work product, and other documents may be taken electronically from the firms IT system. The panelists stressed the importance of conducting an exit interview to assure that the departing lawyer and firm are in agreement on these issues.

The materials provided with the program included risk management guidance for these issues. What follows is a gloss of the key points:

Arriving Attorneys Transferring Electronic Content to the Firm’s Systems

Electronic Data Intake Acknowledgement
Before loading any electronic documents onto the firm’s computer system, require the new attorney bringing paper and electronic documents to certify in writing that the documents and electronic files conform to the firm’s guidelines for loading new documents on the system using an Electronic Data Intake Acknowledgement form:

Sample Form: This document acknowledges that I have been given a copy of the Firm’s technology and data policies for arriving attorneys and have read and understood the contents. I agree to abide by the rules and procedures set out in these policies. I agree that the list below is a complete and accurate record of all data that I will be bringing into the Firm, and that all listed data meets the Firm’s policies.

Signature ___________________________________________Date ___________________________
Printed Name _______________________________________________________________________
Data Device (e.g. flash drive, CD)
Format (e.g. .doc, .pdf)
Nature of Data

Restricted Documents
A firm should not accept documents into its records system or computer system that are not documents of the firm’s clients. Accordingly, attorneys who arrive at the firm from other law firms should not bring with them files, e-mails, or documents of clients of their former firm moving with them unless and until the clients have cleared conflict checks. The firm should not accept documents that were removed from an attorney’s prior firm without that firm’s permission.

Approved Documents
Arriving attorneys may have personal specimens, exemplars, or form files that the attorney has developed. Such documents will be accepted provided they do not contain confidential information regarding persons or entities that are not clients of the firm, and provided that the documents are not the property of the attorney’s former law firm.

Departing Attorneys

Frequently attorneys leaving a firm for employment at other law firms require information about matters on which they worked to permit their new firm to do a conflict check. It is good policy to assist departing attorneys in performing conflicts checks in a manner that does not require disclosure of client-confidential information.

Because it may not always be known whether a particular matter on which the attorney worked was one that the client did not wish disclosed, the following steps should be taken in dealing with the departing attorney:

  1. Produce a printout of the clients and matters on which the departing attorney logged time during the past five years (or shorter period during which the attorney was with the firm). Provide this printout to a partner designated by management in the practice group in which the attorney practiced for review for possible confidential matters (the "Reviewing Attorney"). Regarding departing summer associates, the Reviewing Attorney may be an associate.
  2. The Reviewing Attorney will discuss the contents of the printout with the departing attorney so that the departing attorney will be generally familiar with the services performed. The departing attorney will be cautioned on non-disclosure of client-sensitive information, and will be provided a copy of the firm’s policy for departing attorneys. With this caution, the departing attorney may be given a copy of the printout, and may make notes of the discussion.
  3. The departing attorney should be instructed to ask the new employer to indicate for what clients he or she will be likely to be working, so that the attorney can determine whether work performed at the former firm conflicts with such representation. By approaching disclosure in this fashion, the attorney can avoid giving a detailed listing to the new employer of all matters worked on while at the former firm.
  4. If the foregoing procedure is not satisfactory to the new employer, attempt to work with the new employer to assist it in performing its conflict check in a manner that will not require disclosure of client-sensitive information.
  5. Upon request by an attorney who has given notice that he or she is leaving the firm, create a disk or other electronic media containing the following, which may be taken by the attorney leaving the firm:
    1. That attorney’s Microsoft Outlook contacts.
    2. That attorney’s Microsoft Outlook calendar.
    3. That attorney's personal Microsoft Outlook e-mail messages that they moved to a personal folder.
  6. Departing attorneys shall not copy or remove electronic data from the firm’s computer systems. Departing attorneys may request that electronic data other than those listed in the preceding paragraph be provided as well. The request should be directed to firm management for consideration.
  7. The departing attorney may not take:
    1. firm training materials,
    2. masters, forms or exemplars developed by or for the firm,
    3. documents that contain or disclose client confidences,
    4. documents that are subject to a protective order, or
    5. client contact information other than client contact information contained in the departing attorney’s own Outlook contacts file.
  8. The exit interview of the departing attorney should include a discussion of the documents and electronic files that he or she proposes to take, and these parameters should be enforced at that time. The person conducting the exit interview may request to examine documents or electronic files being taken by the departing attorney.

 


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