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Safeguarding Client Information and File Retention Requirements
- 3. 3 1/8/17, 9(45 PMChinese Nationals Charged With Hacking Firms to Steal M A Info | The American Lawyer NOT FOR REPRINT Click to Print or Select 'Print' in your browser menu to print this document. Page printed from: The American Lawyer Chinese Nationals Charged With Hacking Firms to Steal M&A Info Mark Hamblett, The Am Law Daily December 27, 2016 Three Chinese nationals face federal charges for allegedly hacking into two major U.S. law firms in a scheme to trade on information about imminent mergers and acquisitions. U.S. Attorney Preet Bharara of the Southern District of New York announced Tuesday that Iat Hong, Bo Zheng and Hung Chin have been charged with infiltrating the servers of two law firms in 2014 and 2015 and accessing nonpublic information about pending deals. According to Bharara's office, the information was used in trades that reaped roughly $4 million in illegal profits. The indictment unsealed Tuesday does not name the law firms, which are referred to as Law Firm 1 and Law Firm 2. According to the charges, Law Firm 1 advised Intel Corp. on its 2015 acquisition of Altera Corp. for $16.7 billion and represented a company that was in deal talks with InterMune Inc., which sold to Roche AG in 2014 for $8.9 billion. The second major law firm advised Pitney Bowes Inc. in the 2015 acquisition of New York-based e- commerce company Borderfree, the indictment states. Based on those details the two firms appear to be Weil, Gotshal & Manges and Cravath, Swaine & Moore, firms where cyberbreaches previously were reported. Weil represented Intel in the Altera buy and Cravath is identified in securities filings as Pitney Bowes lead deal counsel.
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- 10. Duty of Confidentiality – Missouri Rule 4-1.6 • Information from any source • Relating to representation • Limit on "revelation" • Limit on "use" in Rule 4-1.8 Client Media reports Opposing counsel Pleadings Adverse party Third party Lawyer 10
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- 16. Evaluation of Safeguards • Factors to be considered in determining the reasonableness of the lawyer’s efforts include, but are not limited to, – the sensitivity of the information – the likelihood of disclosure if additional safeguards are not employed – the cost of employing additional safeguards – the difficulty of implementing the safeguards (and) – the extent to which the safeguards adversely affect the lawyer’s ability to represent clients (e.g., by making a device or important piece of software excessively difficult to use) 16
- 17. Rule 1.6(c) – Two More Caveats • A client may require the lawyer to implement special security measures not required by this Rule or may give informed consent to forgo security measures that would otherwise be required by this Rule. • Whether a lawyer may be required to take additional steps to safeguard a client’s information in order to comply with other law, such as state and federal laws that govern data privacy or that impose notification requirements upon the loss of, or unauthorized access to, electronic information, is beyond the scope of these Rules. 17
- 19. The "Cloud" 19
- 20. "Data Farms" 20
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- 29. Seven Considerations 1. Understand the threat 2. Understand how client information is transmitted and stored 3. Understand and use reasonable security measures 4. Determine how client information should be protected 5. Label client information confidential 6. Train about information security 7. Conduct due diligence on technology 29
- 32. Attorney-Client Privilege • Confidential • communications • between an attorney and his [or her] client • concerning the representation of the client • are protected by the attorney-client privilege. Diehl v. Fred Weber, Inc. (Mo. App. E.D. 2010) 32
- 34. Attorney-Client Privilege • Confidential • communications • between an attorney and his [or her] client • concerning the representation of the client • are protected by the attorney-client privilege. Diehl v. Fred Weber, Inc. (Mo. App. E.D. 2010) 34
- 44. Rule 56.01(b)(3) Parsed § [A] party may obtain discovery of documents and tangible things otherwise discoverable under Rule 56.01(b)(1) and § prepared in anticipation of litigation or for trial § by or for another party or by or for that other party's representative, including an attorney, consultant, surety, indemnitor, insurer, or agent, § only upon a showing – that the party seeking discovery has substantial need of the materials in the preparation of the case and – that the adverse party is unable without undue hardship to obtain the substantial equivalent of the materials by other means. 44
- 45. FRCP Rule 26(b)(3)(A) Parsed • Documents and Tangible Things. • Ordinarily, a party may not discover • documents and tangible things that • are prepared in anticipation of litigation or for trial • by or for another party or its representative (including the other party's attorney, consultant, surety, indemnitor, insurer, or agent) 45
- 49. Waiver of Privileges § Martha Stewart is being investigated for insider trading § Stewart prepares chronology of events around ImClone stock sale – Stewart sends chronology to her lawyers – Stewart then sends chronology to her daughter § Is attorney-client privilege waived? § Is work-product protection waived? 49
- 50. Waiver § Attorney-Client Privilege – Express waiver – At-issue waiver – Disclosure • Work Product – Express waiver (by client or firm) – At-issue waiver – Disclosure – where inconsistent with purpose or litigation advantage 50
- 51. Crime-Fraud Exception • Key – communications are not (really) for the purpose of giving or receiving legal advice, but to commit a crime • US v. Williams (8th Cir. 2013) – defendant asked lawyer to smuggle cell phone into prison 51
- 54. 54 Inadvertent Production • Old Rule – recipient of metadata – Notify producing party of production of privileged information – Refrain from reviewing privileged information – Abide by producing counsel's instruction – at least until a court orders otherwise
- 56. In re Eisenstein (Mo. 4/5/2016) • Eisenstein represented Husband in divorce • Husband accessed Wife's email without permission, and gave Eisenstein documents including questions Wife's attorney had prepared for direct examination • Eisenstein did not produce the documents received from Wife's email, until giving them to opposing counsel as exhibits during trial 56
- 59. Why Improper • Illegal – may be incriminating client – Evidence may be barred – Lawyer may be disqualified • Permitted – may use documents 59
- 63. Six Years – Unless Written Consent • A lawyer shall securely store a client's file for six years after completion or termination of the representation absent other agreement between the lawyer and client through informed consent confirmed in writing. Such informed consent confirmed in writing may be made between the lawyer and the client at any point during the six years after completion or termination of the representation. If the client does not request the file within six years after completion or termination of the representation, the file shall be deemed abandoned by the client and may be destroyed. • The six year client file retention requirement shall apply to all client files where the completion or termination of the representation occurs on or after July 1, 2016. All client files where the completion or termination of the representation occurs prior to July 1, 2016, shall be governed by the previously required 10 years. 63
- 69. Six Years – No Matter What Complete records of client trust accounts shall be maintained and preserved for a period of at least six years after the later of: (1) termination of the representation, or (2) the date of the last disbursement of funds. Client trust account records may be maintained by electronic, photographic, or other media provided that they otherwise comply with Rules 4-1.145 to 4-1.155 and that printed copies can be produced. These records shall be readily accessible to the lawyer. 69
- 70. Required Trust Account Documentation (Missouri) (1) receipt and disbursement journals (2) client-specific ledgers (3) fee agreements and similar documents (4) accounting statements showing disbursements made (5) bills and expenses sent to clients (6) disbursement records (7) check-book registers and bank statements or the equivalents (8) electronic transfer records (9) account reconciliations (10)credit-card transaction information 70