safeguarding client info and file retention

SafeguardingClientInformationandFileRetentionRequirements

MichaelDowneyDowneyLawGroupLLC

August2017

SafeguardingClientInformation

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1/8/17, 9(45 PMChinese Nationals Charged With Hacking Firms to Steal M A Info | The American Lawyer

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Chinese Nationals Charged With HackingFirms to Steal M&A InfoMark Hamblett, The Am Law Daily

December 27, 2016

Three Chinese nationals face federal charges for allegedly hacking into two major U.S. law firms ina 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 IatHong, Bo Zheng and Hung Chin have been charged with infiltrating the servers of two law firms in2014 and 2015 and accessing nonpublic information about pending deals. According to Bharara'soffice, 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 Firm1 and Law Firm 2. According to the charges, Law Firm 1 advised Intel Corp. on its 2015 acquisitionof Altera Corp. for $16.7 billion and represented a company that was in deal talks with InterMuneInc., 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 Alterabuy and Cravath is identified in securities filings as Pitney Bowes lead deal counsel.

Representatives of both firms, reached Tuesday, declined to comment.

"This case of cyber meets securities fraud should serve as a wake-up call for law firms around theworld: you are and will be targets of cyber hacking, because you have information valuable towould-be criminals,” Bharara said.

In addition to infiltrating the two firms, Bharara said the defendants went after at least five other lawfirms between March and September 2015, trying to get unauthorized access to the firms' networksand servers on over 100,000 occasions.

DUTYofConfidentiality

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Duty ofConfidentiality– Rule4-1.6

Alawyershallnotrevealinformationrelatingtotherepresentationofaclientunlesstheclientgivesinformedconsent,thedisclosureisimpliedlyauthorizedinordertocarryouttherepresentation,orthedisclosureispermittedbyRule4-1.6(b).

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DutyofConfidentiality– MissouriRule4-1.6

• Informationfromanysource

• Relatingtorepresentation

• Limiton"revelation"• Limiton"use"inRule

4-1.8

Client

Mediareports Opposingcounsel

Pleadings

Adverseparty

Thirdparty

Lawyer

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TheMythofPrivacy

"Therecanbenoreasonableexpectationofprivacyinatweetsentaroundtheworld."

Peoplev.Harris(N.Y.Crim.Court2012)

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Internetvs.Privacy:"HelpfulVenndiagram"

ByDavidHoffman,availableathttp://bit.ly/bqU5vU

TheInternet Privacy

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ProtectingInformationModel Rule1.6(c):"Alawyershallmakereasonableeffortstopreventtheinadvertentorunauthorizeddisclosureof,orunauthorizedaccessto,informationrelatingtotherepresentationofaclient."

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WhatAre"Reasonable"Protections?

EvaluationofSafeguards• Factorstobeconsideredindeterminingthereasonableness

ofthelawyer’seffortsinclude,butarenotlimitedto,– thesensitivity oftheinformation– thelikelihoodofdisclosureifadditionalsafeguardsarenot

employed– thecost ofemployingadditionalsafeguards– thedifficulty ofimplementingthesafeguards (and)– theextenttowhichthesafeguardsadverselyaffectthelawyer’s

abilitytorepresentclients(e.g.,bymakingadeviceorimportantpieceofsoftwareexcessivelydifficulttouse)

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Rule1.6(c)– TwoMoreCaveats• Aclientmayrequirethelawyertoimplementspecialsecurity

measuresnotrequiredbythisRuleormaygiveinformedconsenttoforgosecuritymeasuresthatwouldotherwiseberequiredbythisRule.

• Whetheralawyermayberequiredtotakeadditionalstepstosafeguardaclient’sinformationinordertocomplywithotherlaw,suchasstateandfederallawsthatgoverndataprivacyorthatimposenotificationrequirementsuponthelossof,orunauthorizedaccessto,electronicinformation,isbeyondthescopeoftheseRules.

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WhereIstheData?

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The"Cloud"

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"DataFarms"

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TermsofServiceGoogleDocs(8/2017)

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SecureCommunications

• WhatsApp• Apple-AppleiMessagetexting(blue,notgreen)

• FaceTime

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BeatingSecurity

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InternetAccess

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PrivatePublic

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EmailEncryption

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“AlawyergenerallymaytransmitinformationrelatingtotherepresentationofaclientovertheInternet withoutviolatingtheModelRulesofProfessionalConductwherethelawyerhasundertakenreasonableeffortstopreventinadvertentorunauthorizedaccess…

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…However,alawyermayberequiredtotakespecialsecurityprecautionstoprotectagainsttheinadvertentorunauthorizeddisclosureofclientinformationwhenrequiredbyanagreementwiththeclientorbylaw,orwhenthenatureoftheinformation requiresahigherdegreeofsecurity.”

SevenConsiderations1. Understandthethreat

2. Understandhowclientinformationistransmittedandstored

3. Understandandusereasonablesecuritymeasures

4. Determinehowclientinformationshouldbeprotected

5. Labelclientinformationconfidential

6. Trainaboutinformationsecurity

7. Conductduediligenceontechnology

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“Thus,theuseofunencryptedroutineemailgenerallyremainsanacceptable methodoflawyer-clientcommunication.However,cyber-threatsandtheproliferationofelectroniccommunicationsdeviceshavechangedthelandscapeanditisnotalwaysreasonabletorelyontheuseofunencryptedemail.”

Attorney-ClientPRIVILEGE

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Attorney-ClientPrivilege

• Confidential• communications• betweenanattorneyandhis[orher]client• concerningtherepresentationoftheclient• areprotectedbytheattorney-clientprivilege.

Diehlv.FredWeber,Inc. (Mo.App.E.D.2010)

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DUTYofConfidentiality– Rule4-1.6

Client

Court Filings

Real Estate Records

Newspaper

Depositions

Pleadings

Opposing Party

Lawyer


• Confidential• communications• betweenanattorneyandhis[orher]client• concerningtherepresentationoftheclient• areprotectedbytheattorney-clientprivilege.

Diehlv.FredWeber,Inc. (Mo.App.E.D.2010)

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Client Lawyer

Renditionof

LegalServices

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"Necessary"Agents– Kovel

Client Lawyer

Agent

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JointRepresentation

Client1 Client2

Lawyer

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DeBoldv.Case (8th Cir.BAP2005)

“Whentwoormorepersons,eachhavinganinterestinsomeproblem,jointlyconsultanattorney,theirconfidentialcommunicationswiththeattorney,thoughknowntoeachother,willofcoursebeprivilegedinacontroversyofeitherorbothoftheclientswiththeoutsideworld,thatis,withpartiesclaimingadverselytobothoreitherofthosewithintheoriginalcharmedcircle.”

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JointDefense/CommonInterestPrivilege

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Client1 Client2

Lawyer1 Lawyer2


CommonInterest

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AdverseinBusinessTransaction

Seller

Buyer

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SharedInterestinEvaluatingLawsuit

Seller

Buyer

Plaintiff

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WorkProductProtection– MORule56.01(b)(3)

• SubjecttotheprovisionsofRule56.01(b)(4),apartymayobtaindiscoveryofdocumentsandtangiblethingsotherwisediscoverableunderRule56.01(b)(1)andpreparedinanticipationoflitigationorfortrialbyorforanotherpartyorbyorforthatotherparty'srepresentative,includinganattorney,consultant,surety,indemnitor,insurer,oragent,onlyuponashowingthatthepartyseekingdiscoveryhassubstantialneedofthematerialsinthepreparationofthecaseandthattheadversepartyisunablewithoutunduehardshiptoobtainthesubstantialequivalentofthematerialsbyothermeans.Inorderingdiscoveryofsuchmaterialswhentherequiredshowinghasbeenmade,thecourtshallprotectagainstdisclosureofthementalimpressions,conclusions,opinions,orlegaltheoriesofanattorneyorotherrepresentativeofapartyconcerningthelitigation.

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Rule56.01(b)(3)Parsed

§ [A]partymayobtaindiscoveryofdocumentsandtangiblethingsotherwisediscoverableunderRule56.01(b)(1)and

§ preparedinanticipationoflitigationorfortrial§ byorforanotherpartyorbyorforthatotherparty'srepresentative,

includinganattorney,consultant,surety,indemnitor,insurer,oragent,§ onlyuponashowing

– thatthepartyseekingdiscoveryhassubstantialneedofthematerialsinthepreparationofthecaseand

– thattheadversepartyisunablewithoutunduehardshiptoobtainthesubstantialequivalentofthematerialsbyothermeans.

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FRCPRule26(b)(3)(A)Parsed• DocumentsandTangibleThings.• Ordinarily,apartymaynotdiscover• documentsandtangiblethingsthat• arepreparedinanticipationoflitigationorfortrial• byorforanotherpartyoritsrepresentative(includingthe

otherparty'sattorney,consultant,surety,indemnitor,insurer,oragent)

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Work-ProductProtection

Alawyer'sinvolvementisnotrequired

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Work-ProductProtection

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OpinionWorkProduct– FullProtection

§ Inorderingdiscoveryof[workproduct]whentherequiredshowinghasbeenmade,thecourtshallprotectagainstdisclosureofthementalimpressions,conclusions,opinions,orlegaltheoriesofanattorneyorotherrepresentativeofapartyconcerningthelitigation.

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WaiverofPrivileges

§ MarthaStewartisbeinginvestigatedforinsidertrading

§ StewartprepareschronologyofeventsaroundImClonestocksale– Stewartsendschronologytoherlawyers– Stewartthensendschronologytoherdaughter

§ Isattorney-clientprivilegewaived?§ Iswork-productprotectionwaived?

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Waiver

§ Attorney-ClientPrivilege– Expresswaiver– At-issuewaiver– Disclosure

• WorkProduct– Expresswaiver(byclientorfirm)

– At-issuewaiver– Disclosure– whereinconsistentwithpurposeorlitigationadvantage

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Crime-FraudException

• Key– communicationsarenot(really)forthepurposeofgivingorreceivinglegaladvice,buttocommitacrime

• USv.Williams(8th Cir.2013)– defendantaskedlawyertosmugglecellphoneintoprison

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AccessingThird-PartyInformation

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Rule4-4.4RespectForRightsOfThirdPersons

(a)Inrepresentingaclient,alawyershallnotusemeansthathavenosubstantialpurposeotherthantoembarrass,delay,orburdenathirdperson,orusemethodsofobtainingevidencethatviolatethelegalrightsofsuchaperson.

(b)Alawyerwhoreceivesadocumentrelatingtotherepresentationofthelawyer'sclientandknowsorreasonablyshouldknowthatthedocumentwasinadvertentlysentshallpromptlynotify thesender.

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InadvertentProduction

• OldRule– recipientofmetadata– Notify producingpartyofproductionofprivilegedinformation

– Refrain fromreviewingprivilegedinformation– Abide byproducingcounsel'sinstruction– atleastuntilacourtordersotherwise

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NewRule4-4.4(b)

Alawyerwhoreceivesadocumentrelatingtotherepresentationofthelawyer'sclientandknowsorreasonablyshouldknowthatthedocumentwasinadvertentlysentshallpromptlynotifythesender.

InreEisenstein (Mo.4/5/2016)• EisensteinrepresentedHusbandindivorce• HusbandaccessedWife'semailwithoutpermission,andgave

EisensteindocumentsincludingquestionsWife'sattorneyhadpreparedfordirectexamination

• EisensteindidnotproducethedocumentsreceivedfromWife'semail,untilgivingthemtoopposingcounselasexhibitsduringtrial

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ConsequencesinEisenstein

• Eisensteinwasfoundtohaveusedimproperlyobtainedinformation(violatingRule4-4.4)andconcealingdocumentswithevidentiaryvalue(violatingRule4-3.4)

• Eisensteinreceivedanindefinite(minimum6month)suspension

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ImproperAccess– Rule4-4.4(a)

• Inrepresentingaclient,alawyershallnotusemeansthathavenosubstantialpurposeotherthantoembarrass,delay,orburdenathirdperson,orusemethodsofobtainingevidencethatviolatethelegalrightsofsuchaperson.

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WhyImproper

• Illegal– maybeincriminatingclient– Evidencemaybebarred– Lawyermaybedisqualified

• Permitted– mayusedocuments

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FileRetention

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FileOwnership

• “Theclient’sfilesbelongtotheclient,nottotheattorneyrepresentingtheclient.Theclientmaydirectanattorneyorfirmtotransmitthefiletonewlyretainedcounsel.”InthematterofCupples,952S.W.2d226,234(Mo.banc1997).

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Retention– OrdinaryClientRecords

Rule4-1.22

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SixYears– UnlessWrittenConsent• Alawyershallsecurelystoreaclient'sfileforsixyearsaftercompletionor

terminationoftherepresentationabsentotheragreementbetweenthelawyerandclientthroughinformedconsentconfirmedinwriting.Suchinformedconsentconfirmedinwritingmaybemadebetweenthelawyerandtheclientatanypointduringthesixyearsaftercompletionorterminationoftherepresentation.Iftheclientdoesnotrequestthefilewithinsixyearsaftercompletionorterminationoftherepresentation,thefileshallbedeemedabandonedbytheclientandmaybedestroyed.

• ThesixyearclientfileretentionrequirementshallapplytoallclientfileswherethecompletionorterminationoftherepresentationoccursonorafterJuly1,2016.AllclientfileswherethecompletionorterminationoftherepresentationoccurspriortoJuly1,2016,shallbegovernedbythepreviouslyrequired10years.

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BewareSpoliation• AlawyershallnotdestroyafilepursuanttothisRule4-1.22if

thelawyerknowsorreasonablyshouldknowthat:(a)alegalmalpracticeclaimispendingrelatedtotherepresentation;(b)acriminalorothergovernmentalinvestigationispendingrelatedtotherepresentation;(c)acomplaintispendingunderRule5relatedtotherepresentation;or(d)otherlitigationispendingrelatedtotherepresentation.

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KeepItemsWith“IntrinsicValue”

• Itemsinthefilewithintrinsicvalueshallneverbedestroyed.

• AlawyerdestroyingafilepursuanttothisRule4-1.22shallsecurelystoreitemsofintrinsicvalueordeliversuchitemstothestateunclaimedpropertyagency.Thefileshallbedestroyedinamannerthatpreservesclientconfidentiality.

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RememberWhatYouDestroy• AlawyerdestroyingafilepursuanttothisRule4-1.22shall

maintainthewrittenrecordoftheclient'sconsentofdestructionforatleastsixyearsaftercompletionorterminationofemployment.Clientfiles,exceptforitemsofintrinsicvalue,maybemaintainedbyelectronic,photographic,orothermediaprovidedthatprintedcopiescanbeproduced.Theserecordsshallbereadilyaccessibletothelawyer.

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Dissolution– MustProtectRecordsUpondissolutionofalawfirm,thelawyersshallmakereasonablearrangementsforthemaintenanceofclientfiles.Uponthesaleofalawpractice,thesellershallmakereasonablearrangementsforthemaintenanceofclientfiles,whichincludeswrittennoticetoaclientastothelocationoftheclient'sfile.

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Retention– TrustAccountRecords

Rule4-1.15(f)

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SixYears– NoMatterWhatCompleterecordsofclienttrustaccountsshallbemaintainedandpreservedforaperiodofatleastsixyearsafterthelaterof:

(1) terminationoftherepresentation,or

(2) thedateofthelastdisbursementoffunds.

Clienttrustaccountrecordsmaybemaintainedbyelectronic,photographic,orothermediaprovidedthattheyotherwisecomplywithRules4-1.145to4-1.155andthatprintedcopiescanbeproduced.Theserecordsshallbereadilyaccessibletothelawyer.

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RequiredTrustAccountDocumentation(Missouri)

(1) receiptanddisbursementjournals

(2) client-specificledgers

(3) feeagreementsandsimilardocuments

(4) accountingstatementsshowingdisbursementsmade

(5) billsandexpensessenttoclients

(6) disbursementrecords

(7) check-bookregistersandbankstatementsortheequivalents

(8) electronictransferrecords

(9) accountreconciliations

(10)credit-cardtransactioninformation

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Dissolution– MustProtectRecords

Upondissolutionofalawfirmorofanylegalprofessionalcorporation,thepartnersshallmakereasonablearrangementsforthemaintenanceofclienttrustaccountrecords.Uponthesaleofalawpractice,thesellershallmakereasonablearrangementsforthemaintenanceofclienttrustaccountrecords.

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MichaelDowneyDowneyLawGroupLLC

(314)961-6644(844)961-6644tollfree

[email protected]

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