CCBJ September-October 2020

Corporate Counsel Business Journal September  October 2020 VOLUME 28, NUMBER 5

Leading by Example, with Authenticity and Transparency LVMH GC, LOUISE FIRESTONE, ON HOW SHE GOT STARTED AT ONE OF THE WORLD’S LARGEST LUXURY BRANDS

INSIDE Project Zipcode: And Then There Were 13...

Custody Problems with Bitcoin and Other Crypto-Assets Before the Deluge: Courts Weigh COVID-19 Insurance Coverage Disputes A Contract Lifecycle Management Tool That Meets Your Needs

AT THE HEART OF BUSINESS® Uncommon value for clients who shape our everyday lives.

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SEPTEMBER • OCTOBER 2020

In This Issue

SEPTEMBER  OCTOBER 2020 VOLUME 28, NUMBER 5

Corporate Counsel Business Journal LAW BUSINESS MEDIA

Kristin Calve

CO-FOUNDER AND PUBLISHER

Kimberly Fine

AT THE TABLE . . . . . . . . . . . . . . . . . . . 2 Leading by Example, with Authenticity and Transparency

Kristin Calve

MANAGING DIRECTOR PROGRAMMING

Dylan Shepard

EDITORIAL ASSISTANT

FRONT . . . . . . . . . . . . . . . . . . . . . . . . . 7

Rachel Dwyer

GRAPHIC DESIGNER

Neil Signore

SVP & MANAGING DIRECTOR OF EVENTS

PULSE . . . . . . . . . . . . . . . . . . . . . . . . .13 13 Custody Problems with Bitcoin and Other Crypto-Assets

Lainie Geary

Preston J. Byrne, Robert V. Cornish and Stephen D. Palley

Amy Lemel

17 Drug Testing, Medical Marijuana and CBD oil . . . Oh, My!

DIRECTOR OF BUSINESS DEVELOPMENT

DIRECTOR OF BUSINESS DEVELOPMENT

Jennifer Coniglio VP FOR EVENTS & SPECIAL PROJECTS

Matthew Tortora

SENIOR DATABASE MANAGER

Pat Hanelt

OFFICE ADMINISTRATOR

Rob Williams WRITER

Taylor Highbloom

Denise Elliot

FULFILLMENT MANAGEMENT

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The material in this publication contains general information, is not intended to provide legal advice and should not be relied on to govern action in particular circumstances. The sources of material contained in this publication are responsible for such material, and any views or opinions expressed are solely those of the source.

35 Before the Deluge: Courts Weigh COVID-19 Insurance Coverage Dispute Matthew D. Fender

38 International Trade Law Remains in the Spotlight Matthew Nicely and Suzanne Kane

44 Reflecting on Ohio’s Energy Restrictions Rebekah Glover

47 Evaluating Legal Trends in Uncertain Times Kris Satkunas

52 Increased Business Risk is Changing the Way General Counsel Think— and Their Level of Influence Mike Hamilton

20 Setting the Right Tone on Financial Crimes Katherine Goldstein

24 As LIBOR Sunsets, Contract Intelligence Takes Center Stage Ryan Drimalla

27 In the Age of COVID-19, ADR is More In-Demand Than Ever Rhonda Epstein

SOCIAL MEDIA

Omeda

IDEAS . . . . . . . . . . . . . . . . . . . . . . . . . 35

31 Trailblazers in the Fight for Racial Justice and Diversity Ahmed J. Davis

OPS . . . . . . . . . . . . . . . . . . . . . . . . . . . 55 55 A Contract Lifecycle Management Tool That Meets Your Needs Lee Matthews

59 Expanding Roles and Comfort Zones Rob Williams

62 Preventing Cyber Threats, Now and in Years to Come Victoria Blake

Kristin Calve At the Table

Leading by Example, With Authenticity and Transparency  Louise Firestone, general counsel at LVMH for North America, talks about how she got started at one of the world’s biggest luxury brands, her influences and management style, and what she hopes to see in the legal industry going forward.

CCBJ: What led you to your position with LVMH? Louise Firestone: Prior to LVMH, I worked in the finance industry, and in the late 1990s I was let go, during a time when there was a lot of restructuring in the industry. It was a big shock to me, and frankly very humiliating. But I realized it was really an opportunity for me to rethink what I wanted to do with my career. I started networking and exploring other opportunities, and it was a law school classmate of mine who got me the opportunity at LVMH, by putting me in touch with a headhunter who had initially contacted them first. At the time, I knew nothing about the world of luxury or retail – or LVMH, for that matter – but I had been a general counsel, which does give you a certain amount of insight that’s independent of any one industry. I suddenly found myself in a whole different world, and I’ve been there for 21 years.

Please tell us about your leadership style and who has influenced it?

What I hope to do for my team is to empower them.

My team is pretty senior, so I expect a certain level of professionalism from them, and that’s what I get.

I’m not a micromanager. I believe it’s important for everyone to be responsible for what they’re doing and make their own mistakes. I’m there as a backstop. In other words, the buck stops with me, 2

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but I think we all learn best from our mistakes. I encourage people to try their own way of solving problems, and I’m there as a resource when necessary.

But my view is that you allow your team to develop by empowering them to do so.

As far as who has influenced me, there have been people both internally in the various jobs I’ve held, as well as externally. I’ve had some outside counsel who have been really supportive of me – people who helped me at a time when I was struggling because I was in a new industry. I had to learn a lot. And they were there to provide sanity checks, support and encouragement when I felt like I might have been going in the wrong direction.

NETWORK The participants in the CCBJ Network demonstrate, through their many contributions, their unwavering commitment to the advancement and success of corporate law departments. The engagement and support of these “partners of corporate counsel” assure we continue to develop and distribute the news and information this unique and sophisticated audience relies on to meet the evolving legal and business needs of their organizations.

Strategic Partners

I’m not a micromanager. I believe it’s important for everyone to be responsible for what they’re doing and make their own mistakes.

What qualities do you look for when hiring new people for your team?

Well, technical expertise is assumed, so at the end of the day, it’s really about whether they will be comfortable in the LVMH environment. It’s not necessarily an easy place to be. We are a holding company, and we have many, many brands that we support, which all have their own DNA, unique personalities and way of working. And we have to adapt to that. I look for people who are flexible and curious, because every business is different. People often equate us with fashion, but LVMH is the world’s largest luxury retailer, with many different businesses.

We have fashion brands, obviously. We also have a perfumes and cosmetics division. We have a wines and spirits division, a watch and jewelry division, I want someone on my team who is curious, who is interested in learning about the various businesses, and who understands that at the end of the day, as the legal department in a corporate environment, our job is to support the business But that doesn’t mean that we can’t be important and excellent partners, and that’s what I’m looking for.

What is the best career advice you’ve ever received?

The best advice I ever received was actually the opposite of the advice the person was trying to deliver. This was before I joined LVMH. When I had

Akin Gump Strauss Hauer & Feld LLP Barnes & Thornburg Clifford Chance Jones Day McGuireWoods LLP McNees Wallace & Nurick LLC National Association of Corporate Directors (NACD) Sills Cummis & Gross P.C. Weil, Gotshal & Manges LLP

Advisors American Arbitration Association Exterro FRONTEO FTI Consulting iDiscovery Solutions JAMS LexisNexis CounselLink NAM (National Arbitration and Mediation) OpenText™ Discovery Wolters Kluwer’s ELM Solutions Zapproved

Contributors AlixPartners LLP Fish & Richardson Anderson Kill IPro Tech AST Legal Suite Septeo Group Brainspace QDiscovery Burns & Levinson Stradling Yocca ContractWorks Carlson & Rauth Cornerstone Research Please help us improve and expand our services to corporate counsel by sharing your ideas with our publisher, Kristin Calve, at 844-889-8822 or kcalve@ccbjournal.com.

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very engaged with their music outside of work. One

I decided to be open and transparent about what I needed to do, and I hoped that others would feel that they could be as well.

of my team members is an incredible photographer.

Everyone has their own situation in terms of their personal life, right? There are people who are married and/or have children. Some take care of elderly parents, or have other time commitments or interests. I want my team members to be able to express their full

my first child, one of the senior female leaders in the organization took me aside and said, “You’re probably wondering whether you can stay at this job, being a mother, and how you’re going to balance the two.” Then she said, “It’s really not that difficult. At some point, your child will be in school. And at that time, you’ll just tell your assistant that you’ve got a meeting uptown, and you’ll call a black car and you’ll be able to bring cupcakes to their birthday party at school, drop them off and then quickly come back down to the office. And no one ever needs know.”

selves at work. And I hope that I encourage them to

I remember thinking to myself, first of all, I don’t think I could keep up that kind of weird pretense, but secondly, I don’t want to. I have a life besides my job.

And I think it’s important that people understand that. This was much earlier in my career, before I had a team – but when I did start to have my own team, I decided to be open and transparent about what I needed to do, and I hoped that others would feel that they could be as well.

within the profession?

I make it clear when I hire people that I understand they have lives outside of work. Many of the people that I’ve hired are creative. I have a couple of team members who are musical, for instance, and are

in terms of the politics of the day and what has been

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do so by mirroring that myself.

So the end of that story is that I never, ever lied in order to bring cupcakes to one of my kids’ birthday parties at school. I was always open about what I had to do and where I would be. So, authenticity and transparency – I think those are very important qualities. That was my best career advice: Be authentic and be transparent.

Are there any changes that you’re hoping to see

I hope that we become more diverse at the highest levels. Certainly, there have been more women general counsel over time, but we need to also make sure that the profession reflects the population at large, and we need to be more supportive of people of color and people with disabilities. I see very few people with disabilities in any positions of power today. I think we are all undergoing a wake-up call going on in this country. It’s been a moment of great reflection, which I hope will lead to a more inclusive profession going forward. 

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Front Project Zipcode: And Then There Were 13 . . .

In a Q&A from Bloomberg Law, Honeywell senior vice president and general counsel Anne Madden talks about the company’s reduction of its panel of outside law firms from 100 to 13. The following has been edited for length and style.

“A few years ago, in the United States, we embarked upon what we call ‘Project Zipcode.’ We found that if we could avoid always going to a big New York City white shoe law firm – or a big L.A. law firm, or big San Francisco law firm, or big Chicago law firm – and we went deeper into the country into, quote-unquote, different ZIP codes, we found that we could get super-high-quality work from our outside counsel at a significantly reduced spend. We use alternative legal service providers for very repetitive, more commoditized work. For the strategic partner panel, what we’re trying to do is find a fit with one of our strategic partner panel firms for all new matters that require a specialty. And we will continue to leverage our close relationships with the more elite, New York white shoe firms. Those relationships are incredibly important to us, and those will always continue to exist, but our commitment to our panel firms is to give all new matters that emerge to our strategic panel firms in the U.S. and that only by operation of exception will we assign a matter to a non-panel firm.”

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Briefly Kimberly Chainey joins Aptar as EVP general counsel, responsible for global corporate legal affairs.

Michael Francisco joins McGuireWoods as a partner in Washington D.C. Douglas Kelly is named vice president & general counsel of leisure travel organization, AAA.

The Legal Ops Skyrocket: From Nice to Have to Have to Have The bull market in corporate legal operations roars on. In an unprecedented surge, more than four out of five legal departments now have dedicated legal ops staff, according to Thomson Reuters. That’s up 24% from the last edition of TR’s Legal Department Operations Index, which includes benchmarking data from $90 billion in legal spending from more than 1,450 legal departments, as well as responses to a June 2020 survey. This is the first significant shift in legal department ops the survey has ever uncovered. “We weren’t surprised to see that in-house legal departments continue to experience pressure to do more with less,” says Carly Toward of Thomson Reuters. “This is the first time, however, we have seen a significant change in how legal departments are operating and it’s clear legal operations teams are now an expectation for any modern legal department.”

Nareg Sagherian joins FTI as managing director in strategic communications segment.

Akin Gump to advise PIK Lenders on $1.9 billion Swissport restructuring.

Tanner “Bryce” Jones joins Anderson Kill’s New York office as a shareholder.

Barnes & Thornburg adds Andrew P. Young as partner in its San Diego office, a member of their litigation department.

Citigroup and Bank of America join Morgan Stanley in disclosing GHG emissions from loans and investments.

FisherBroyles welcomes Steven Anzalone to its intellectual property and litigation practices.

Cornerstone Research advances Can Çeliktemur, Brian Fryd, Todd J. Kumler, Sean Lew, Kyle Milliken, and Rainer Schwabe.

Consilio announces inside hires; Amy Hinzmann as chief experience officer, Raj Chandrasekar as chief operating officer, and Adam Pollitt as president, EMEAA.

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In-house Counsel as Swiss Army Knife Amii Barnard-Bahn, an executive coach who specializes in accelerating the success of legal executives and their teams, presented a masterclass to Association of Corporate Counsel members focused on promotability and career development strategies for corporate attorneys. Jumping off from that session, and noting how much the legal industry has changed over the last decade, she then compiled a list of additional skills, knowledge and abilities modern in-house counsel should possess today compared to 10 years ago. Among the attributes she highlights, there are some unsurprising basics (financial acumen and project management), a few clear differentiators (executive presence, courage), a handful of less obvious skills (records and information management, adult learning theory), and one overarching must have – a “VUCA mindset” so in-house counsel can stay ahead of emerging risks in our “volatile, uncertain, complex, ambiguous” environment. Above all, she emphasizes “humility” as a key trait. “As a leader,” she writes, “you need an endless feedback loop from your boss, key stakeholders, and your team so that you have a clear understanding of your leadership traits. Not knowing is a blind spot that undermines everything you and your team try to achieve.”

In-house Counsel Go Collaboration Crazy Bloomberg Law recently compared the results of two 2020 surveys, March’s Legal Operations Survey and July’s Legal Technology Survey, to reveal a post-pandemic surge in the use of collaboration tools such as Confluence and SharePoint by law firms and corporate law departments. No, that’s not surprising. What is surprising, however, is just how much more inside counsel seem to value collaboration compared to outside counsel. The numbers tell the tale. Law firms have experienced a healthy 63% increase in use of collaboration tools, while corporate counsel have experienced a staggering 305% increase. Why the gap? “It’s unclear why in-house legal departments are using collaboration tools so much more often than law firms,” Bloomberg says. “One reason could be that inhouse departments had more fully embraced project management and in-person collaboration before the pandemic, sending those attorneys to technological solutions faster when forced to work from home. Another reason could be that firm practitioners simply collaborate less frequently than their in-house counterparts, or do so using older technologies like traditional email.”

Darrick Hooker joins Barnes & Thornburg as a partner in their Chicago office.

Deanna Oppenheimer and Simon Paris to join the Thomson Reuters board of directors George Socha, co-founder of EDRM and premier e-discovery expert, joins Reveal as senior vice president of brand awareness.

Morae Global Corporation announces Brian Stearns as the company’s chief revenue officer, Americas.

Barnes & Thornburg welcomes Jerry Harris as intellectual property partner In Dallas.

Respondents who said their organizations are using collaboration tools

Wolters Kluwer adds AI to clinical surveillance.

FisherBroyles welcomes Soren Lindstrom as a partner in New York and Dallas.

H5 launches new podcast series called H5 Explores.

DRI appoints Sean Dolan as EVP of operations and general counsel, and Wendy Merrill as EVP of growth strategy and branding.

Akin Gump advises Ad Hoc Group of senior secured noteholders on Travelex restructuring.

Law Departments Deploy Cyber Troops New research from the Association of Corporate Counsel shows that more organizations have a dedicated legal counsel for cybersecurity matters compared to two years ago. In its of organizations “2020 State of Cybersecurity Report: An In-House Perspective,” have a lawyer for ACC reports that 18% of organizations currently have a lawyer cybersecurity issues for cybersecurity issues and practices, up from 12% in ACC’s 2018 report. “In a majority of cases,” ACC says, “this lawyer is responsible for cyber across the enterprise and is in an [executive-level] position in 56% of organizations.” Most legal departments with dedicated cybersecurity counsel – 60% – say those lawyers are responsible for coordinating a cyberlaw strategy throughout the company, which is yet more evidence that in-house influence continues to be felt beyond legal.

Kim M. Keenan, Esq., joins JAMS in Washington, D.C. to serve as an arbitrator and mediator.

Thomson Reuters acquires CaseLines, a cloud-based court document and evidence management platform.

LexisNexis introduces Lexis+, a legal solution offering data-driven insights and practical guidance.

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FTI appoints Cheyenne Hopkins as a managing director in Washington, D.C. Jason Cowley joins McGuireWoods’ government investigations & white collar litigation department in New York.

Weil partner Susan Shin appointed to commercial division advisory council of New York State Supreme Court.

McNees welcomes tax attorney Meghan Holjes as an associate in Harrisburg.

Hon. Richard T. Andrias and Hon. David B. Saxe join NAM’s New York roster of neutrals.

Jackson Lewis expands with addition of Michael D. Thomas in Los Angeles as a principal.

NACD announces Tracy Gee as first chief people officer.

Corporate and finance partner, Olivia Ngan, joins Sidley Austin.

UnitedLex partners with Passport to Practice to create new legal internship platform.

Cornerstone Research announces the promotion of Greg Eastman, Kristin Feitzinger, Elaine Harwood, Greg Leonard, and Sally Woodhouse to senior vice president.

Wolters Kluwer to acquire XCM Solutions, a cloudbased workflow solutions provider.

Submit your announcements to editor@ccbjournal.com

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Required Reading Too busy to read it all? Try these books, blogs, webcasts, websites and other info resources curated by CCBJ especially for corporate counsel and legal ops professionals.

REPORT: Gartner Legal & Compliance Gartner, a leading research and advisory company, says in a new report, “Behaviors of Effective General Counsel,” that too few GCs are as effective as they could be. It’s a simple equation, according to Abbott Martin, a vice president in the Gartner Legal & Compliance Practice. “General counsel who spend a higher percentage of their time performing strategic work are simply more effective. In an era where corporate success is often defined by assets that legal protects (IP, data rights, reputation) and services legal provides (risk governance), GCs are essential to corporate strategy and must focus their time accordingly.”

Clients of Gartner for Legal & Compliance can access the report free. Others can view the complimentary webinar, “Attributes of an Effective General Counsel,” to learn more.

WEBSITE: TechnoLawyer TechnoLawyer has been quietly making noise in the legal community for quite some time. Its founder, Neil J. Squillante, a former litigator with Wilkie Farr, continues to serve as its publisher. It’s a great source of information about legal tech and related topics. One of the most-read items each year is its list of the Top 10 Tech Products.

According to Squillante, the list is compiled based on “passive voting,” which means click-throughs from TechnoLawyer readers. This year’s winners cover the waterfront from software for creating timelines for litigation to a public record search tool.

Drop by TechnoLawyer.com to check out the full list.

SURVEY: EY Law Nearly three-quarters of in-house legal departments are currently outsourcing legal services such as contract management and guidance on employment law to external non-law firm providers, according to a survey of 1,058 senior legal practitioners from businesses in 25 countries conducted by Euromoney Thought Leadership Consulting on behalf of EY Law. “Over the past decade,” a report about the survey says, “the legal industry has been filled with anecdotal stories of law departments using non-law firm providers, often utilizing technology enabled [legal managed services] models, to increase efficiency and lower cost. Up to now, however, there has been limited data available to analyze this trend.” Check out that data at EY Law.

Contributors Thanks to the law firms, technology companies, alternative legal service providers, management consultants and other supporters of corporate law departments who share their insights and expertise through the CCBJ network. Your parti­cipation is appreciated.

Victoria Blake, senior director of product at Zapproved, has worked in technology and product management for 15 years, with her roots based in entrepreneurship and startups. Blake has been with Zapproved since 2019. Pg. 62

Preston Byrne is a shareholder in Anderson Kill’s New York office.

He advises companies on complex cross-border legal questions arising from the use of cuttingedge technologies. Pg. 13

Robert Cornish is a partner in Anderson Kill’s Washington, D.C. office. He counsels innovators in the global financial, immigration investment and digital assets markets in regulatory, compliance, corporate and litigation matters.

Pg. 13

Ahmed J. Davis is a member of the Management Committee and a principal at Fish & Richardson P.C. in Washington, D.C., where he focuses his practice on complex patent litigation in a wide range of technical areas. He also serves as national chair of the firm’s Diversity Initiative. Pg. 31

Ryan Drimalla is a managing director with FTI. He leads operations and solution development for their contract intelligence service. Drimalla has over 10 years of experience in commercial legal practices, both as an attorney and contracts process subject matter expert.

Pg. 24

Denise Elliot is a member with McNees. She focuses her practice on defending selfinsured employers in workers compensation matters and providing representation and counsel to clients in employment discrimination litigation, ADA/ FMLA compliance, safety drug and alcohol testing and health issues. Pg. 17

Rhonda Epstein is a hearing officer at NAM (National Arbitration and Mediation). She is a seasoned litigator with more than 35 years of wide-ranging experience in civil litigation.

Epstein concentrates her legal practice primarily in the areas of employment law and housing discrimination. Pg. 27

Matthew Fender is a partner with McGuireWoods. He is a trial lawyer and commercial litigator who represents clients in commercial, environmental and insurance coverage matters. Pg. 35

Rebekah Glover, of counsel with McNees, practices in their energy & environmental practice group. She has nearly a decade of professional experience working in the utility industry in Ohio. For the last several years Glover has worked in private practice as an energy and utility attorney. Pg. 44

Katherine Goldstein is a partner with Akin Gump. She regularly advises companies, boards of directors and individuals facing high-stakes investigations by the DOJ, SEC and other regulators.

Goldstein also counsels clients on sensitive internal investigations. Pg. 20

Mike Hamilton is the senior managing director of marketing with Exterro. Hamilton uses his experience in legal to develop surveys, whitepapers, events and other key information to support clients with an interest in developments in e-discovery and privacy. Pg. 52

Suzanne Kane is a partner with Akin Gump. She counsels clients on international trade and business and U.S. import controls.

Kane has served for more than six years as senior attorney-advisor at U.S. Customs and Border Protection (CBP). Pg. 38

Lee Matthews is the lead technology product manager at Wolters Kluwer’s ELM Solutions.

He works directly with customers to understand their goals and bring to market new products that help to address their challenges. Matthews leverages a blend of business development, technological, and legal expertise to expand the ways in which ELM Solutions engages with customers. Pg. 55

Matthew R. Nicely is a partner with Akin Gump’s international trade practice. His practice covers the full range of the U.S. trade regulatory regime, including trade policy, trade remedies, customs, export controls, economic sanctions, antiboycott and anticorruption laws. Pg. 38

Stephen Palley is a partner in Anderson Kill’s Washington, D.C. office. He provides non-litigation counsel and advisory work, including as outside general counsel to technology and media startups. Pg. 13

Kristina Satkunas is the director of analytic consulting at LexisNexis.

The team she leads is part of the LexisNexis Counsel Link division where they review, process and capture data from all invoices received from legal and other vendors. Pg. 47

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Pulse Custody Problems with Bitcoin And Other Crypto-Assets PRESTON J. BYRNE, ROBERT V. CORNISH AND STEPHEN D. PALLEY ANDERSON KILL  While 2020 may be a year on pause, cryptocurrency is continuing at full speed. Preston J. Byrne, Robert V. Cornish and Stephen D. Palley of Anderson Kill offer their insights.

One of the few bright spots in 2020’s unquestionably challenging business environment has been the Bitcoin and cryptocurrency markets. The prices of Bitcoin and Ethereum, the two most dominant cryptocurrencies in terms of market share, currently hover at yearly highs.

Square, a Silicon Valley-based merchant processor, reported that its popular "Cash App" mobile app – one application in one country – generated $875 million in Bitcoin sales in the second quarter of 2020 alone.

Interest from the retail segment is mirrored by interest from institutional asset managers and banks. At the

beginning of 2019, asset management powerhouse Fidelity was the first globally significant financial institution to announce that it was launching a digital assets division.

At the beginning of August, it was joined by Goldman Sachs.

Outward-facing public developments in the cryptocurrency arena also hint at significant furtive work by institutional players to lay the groundwork for future business.

A blinking green light for cryptocurrency custody Growth of business and market activity will by necessity bring many legal issues to the forefront, as cryptocurrencies appear poised to make their way into the financial mainstream. One of these issues is “custody” – what it means for financial and other regulated institutions to hold an asset that can be transferred permanently and irretrievably with a private key (akin to a password).

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Some rudimentary clarity for banks was provided on July 22nd of this year, when the Office of the Comptroller of the Currency ("OCC") - the federal bank supervisor - released interpretive guidance in letter form which stated that, in its view, federally licensed banks may custody cryptocurrency much in the same way that they may custody other physical and financial assets.

This guidance was offered in recognition of the fact that, per Acting Comptroller Brian Brooks, "[f]rom safe-deposit boxes to virtual vaults, we must ensure banks can meet the financial services needs of their customers today.

This opinion clarifies that banks can continue satisfying their customers’ needs for safeguarding their most valuable assets, which today for tens of millions of Americans includes cryptocurrency."

For this reason, the OCC writes, "A national bank may provide these cryptocurrency custody services on behalf of customers, including by holding the unique cryptographic keys associated with cryptocurrency."

The OCC states that its regulations “explicitly authorize national banks to perform, provide or deliver through electronic means and facilities any activities that they are otherwise authorized to perform," and "[b]ecause national banks are authorized to perform safekeeping and custody services for physical assets, national banks are likewise permitted to provide those same services via electronic means[.]” Furthermore, the OCC states that banks acting as fiduciaries – e.g. trustees, executors, administrators, receivers, or investment advisors – “would have the authority to manage them in the same way banks can manage other assets they hold as fiduciaries."

Deceptively simple guidance The OCC, by referring to “holding . . . cryptographic keys,” offers a deceptively simple summary of what can, under certain circumstances, be a very difficult problem. Bitcoin addresses consist of two parts, a “public key” and a “private,” or secret, key. Unlike in traditional custody, it is not possession, but knowledge of the secret key corresponding to a Bitcoin wallet – a 256-bit solution to a randomly-generated math problem – which is effectively the same thing as controlling that wallet.

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Because the math problem represented by a Bitcoin key is very hard, indeed so hard that it is generally thought that no assemblage of computers currently in existence could crack one on a commercially practical timescale, the presence of a positive Bitcoin balance plus the knowledge of the secret

The problem here is that coins spent improperly or by mistake are nighimpossible to claw back.

key associated with that balance is generally referred to as “possession” of cryptocurrency which is then “held” by the person with knowledge of the private key, because it is exceedingly unlikely that such a secret would be randomly guessed or happened upon by another person, even though nothing physical is actually possessed.

Whereas land passes by deed, chattels pass by possession, and intangibles might transfer by assignment, effective control of Bitcoin is conferred by knowledge of a 64-character password that cannot be changed. There are two ways to confer control. The first is to write down the key and provide it to the recipient, but this is problematic given that it provides no guarantee that the transferor has not retained a copy for himself. The second is for the transferee to provide the public, or non-secret, component of

a Bitcoin address where only the transferee knows the secret key, and require that the transferor send coins (or, in industry parlance, ‘spend coins’) to that address.

The problem here is that coins spent improperly or by mistake are nigh-impossible to claw back.

“Possession” as used in common parlance can mean that a forgotten key to a large cryptocurrency balance is potentially less retrievable than a chest full of gold thrown into the deepest reaches of the Pacific Ocean. This is a hard technical problem which numerous technology companies and financial institutions are hurriedly competing to solve; equally difficult is the problem that virtually all aspects of custody of financial instruments, whether securities or currency, are, and in the case of cryptocurrency will CORPORATE COUNSEL BUSINESS JOURNAL

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be, governed by state-by-state adaptations of the Uniform Commercial Code (“UCC”). The very definitions of “property,” “security interest” and “bailment” for digital assets fit nowhere in the OCC’s guidance. This precludes any commercial commonality required to make custody of digital assets and related functions as envisioned by the OCC (such as swaps and secured lending) practicable.

Banker beware: State law not yet there Although some states, such as Wyoming, began last year to provide the basic UCC tools for financial institutions in the state to facilitate lending and custody in digital assets, including definitions of the arcane definitions that serve as the bedrock of financial markets, most states’ legislative efforts in this arena are below-par.

In essence, the recent OCC letter is what Merle Haggard once called “Rainbow Stew” for virtually all of the United States. That is, perhaps a very nice idea but, considering the current reality of federal regulation and rule making, impossible to implement. For the time being, those with “Rainbow Stew” visions of leveraging recent OCC guidance should consider Preston J. Byrne is a shareholder establishing operations in Anderson Kill’s New York office. in progressive states like He advises companies on complex cross-border legal questions Wyoming at the risk of arising from the use of cuttingawaiting either harmoedge technologies. Reach him at nized UCC revisions from pbyrne@andersonkill.com.

49 states and 5 territories, or a well-funded banking market disruptor 16

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from abroad who can unscramble disparate legislation to its benefit.

Inadequate or legally uncertain custodial provision ahead of time can lead to disasters (such as the loss of access to an estimated nine-figure fortune by the estate of banking heir Matthew Mellon, who was unable to make such provision before his death in 2018 and is reported to have taken his cryptocurrency keys to his grave).

Counselling your clients – whether they be high net worth individuals seeking to pass on their wealth to the next generation, or companies seeking to accept payments through non-traditional rails, comply with government orders or act in a fiduciary capacity – requires an understanding of how difficult the custody problem really is and how important it is for custody to be provided correctly. 

Robert V. Cornish is a partner in Anderson Kill’s Washington, D.C. office. He counsels innovators in the global financial, immigration investment and digital assets markets in regulatory, compliance, corporate and litigation matters. Reach him at rcornish@andersonkill.com.

Stephen D. Palley is a partner in Anderson Kill’s Washington, D.C. office. He provides nonlitigation counsel and advisory work, including as outside general counsel to technology and media startups. Reach him at spalley@andersonkill.com.

Drug Testing, Medical Marijuana And CBD Oil . . . Oh, My! DENISE ELLIOT McNEES WALLACE AND NURICK

Denise Elliot, member with McNees Wallace and Nurick, examines two court decisions on drug testing and medical marijuana that have come into play during the pandemic shutdown.

Yes, we are in the middle of a global pandemic. Yes, the main focus of most employers is effective COVID-19 mitigation efforts to keep the business operating and to keep employees and customers safe. And for the past several months, companies have focused on applying for and properly using PPP loans and navigating new rules around the Families First Coronavirus Response Act (FFRCA) and expansions of the Family Medical Leave Act (FMLA). Yet, despite the pandemic, the tried and true employment issues have continued to be relevant and that includes issues around drug testing. During the shutdown, you may have missed two key court decisions regarding drug testing and medical marijuana. Understandably, you may have been distracted. So, here’s what you need to know.

An employee who is fired for a positive drug test, but alleges use of CBD oil only, may be eligible for unemployment compensation.

automatically means that the employee did not commit willful misconduct. So, what did the Court say and what does it mean for employers in Pennsylvania?

The Court reiterated the legal standard and burden of proof where the claimant is terminated for a failed drug test. The case is analyzed under Section 402(e.1) of the Unemployment Compensation Act, which places the burden on the employer to demonstrate that it had an established substance abuse policy and that the employee violated that policy. Where the employer meets its burden, the claimant will be ineligible for benefits unless she can show that the policy is in violation of the law or a collective bargaining agreement. The Washington Health System Court was careful to note that there is no mechanism under which a claimant is permitted to show good cause or justification for the policy violation.

For an employer to meet its burden of proof, absent an admission by the employee, test results are critical to demonstrating that a claimant violated an established drug testing policy. In Washington Health System, the employer failed to introduce documentation supporting the positive

This spring, the Pennsylvania Commonwealth Court addressed unemployment compensation eligibility for a claimant who was fired after testing positive for marijuana, despite denying illicit drug use and alleging that she used over the counter CBD oil to manage cancer-related symptoms.

In Washington Health System v. UCBR, the Court held, in a 2-1 decision, that the claimant was eligible for unemployment benefits. While at first glance, the decision appears to be bad news for employers, the fallout of the case is not so dire. The Court’s holding is limited and was based on an evidentiary failing of the employer. Notably, the Court did not hold that CBD use renders a positive drug test meaningless or that the alleged use of CBD products CORPORATE COUNSEL BUSINESS JOURNAL

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test results. The only evidence regarding claimant’s alleged violation of the employer’s policy was claimant’s testimony that the employer told her she tested positive for marijuana.

However, the claimant denied that she failed the drug test.

She testified that she did not use illegal drugs; that she only used over the counter CBD oil, which could cause a false positive for marijuana. Accordingly, the Court held that the employer did not carry its burden.

Following the Washington Health System decision, uncertainly remains regarding a claimant’s eligibility for unemployment compensation when the claimant tests positive for marijuana, but alleges use of over the counter CBD oil only. One thing is certain, to contest eligibility, the employer should absolutely introduce testimony and documentation supporting the positive test result. Further, for employers who are concerned that employees may use the excuse “but I only use CBD oil” as a proverbial get out of jail free card, a well written policy is key.

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Reasonable suspicion drug tests remain critical for ensuring a safe workplace in the age of marijuana legalization and even a medical marijuana user can be tested where there are reasonable grounds to suspect impairment.

In May, the Rhode Island Supreme Court rejected a former employee’s claim that his employer violated the Rhode Island drug testing statute when he was fired for refusing to submit to a drug test. The former employee was certified to use medical marijuana and alleged that the employer requested that he submit to a drug test without reasonable grounds. The Court disagreed.

In Colpitts v. W.B. Mason, the plaintiff, a disabled veteran, worked as a delivery driver for employer from 2015 – 2018.

In 2017, he began using medical marijuana to treat his military injuries and PTSD. The plaintiff denied ever using marijuana on the clock and said he was never impaired at

The Rhode Island Supreme Court agreed, noting: “The trial

While there could be an alternative explanation for strange behavior – i.e. someone being in pain – it is also reasonable that strange behavior may be a result of drug use. work. In May 2018, the plaintiff reported a work injury.

While questioning the employee about the work injury, the plaintiff’s supervisor observed and documented “weird behavior.” The supervisor sought assistance from a human resources manager, who suggested that another warehouse manager observe the plaintiff. The second manager confirmed the “weird” behavior. Specifically, the manager reported that the plaintiff used the “F” word excessively, did not complete his sentences, could not articulate which hand was injured, staggered back and forth and would repeatedly bend over saying “I’m f**cked up,” and that he was going to vomit. As a result of this behavior, the supervisor told plaintiff he must undergo a drug test. The plaintiff became agitated and said he was fine and would just go back to work. When the supervisor repeated the directive that the plaintiff undergo a drug test, the plaintiff produced his medical marijuana card in support of his refusal and explained that he would no doubt test positive, while continuing to deny that he was under the influence. The employer ultimately terminated the plaintiff’s employment for refusing to submit the drug test in violation of employer policy.

The trial judge noted that for “reasonable suspicion,” the standard of reasonableness is a low standard to meet. While there could be an alternative explanation for strange behavior – i.e. someone being in pain – it is also reasonable that strange behavior may be a result of drug use. Accordingly, she found that the employer was within its rights to request that plaintiff submit to a reasonable suspicion drug test.

justice expressly relied on the testimony of [the employer supervisors] in holding that they had reasonable grounds to believe that Mr. Colpitts was under the influence of a controlled substance on March 5 and that, therefore, they were authorized to require that he undergo a drug test. In our judgment, the trial justice clearly did not abuse her discretion in so concluding.” Notably, neither the trial judge nor the appellate court addressed plaintiff’s secondary justification for refusing to undergo the test – his medical marijuana use.

Though the Colpitts decision turned on the specific facts of the case, the case is nonetheless instructive to employers who may be concerned that their ability to drug test is hamstrung by marijuana legalization. Simply, this is not the case and employers remain able to use reasonable suspicion drug testing as a mechanism for maintaining a safe and drugfree workplace.

Further, employees who refuse a reasonable request to undergo drug testing may be disciplined, even terminated. There are a few best practices that employers should utilize in connection with a reasonable suspicion drug testing policy.

Managers and supervisors Denise Elliot is a member with should receive reasonable McNees. She focuses her practice on defending self-insured employers suspicion training, at least in workers compensation matters two managers or superviand providing representation and counsel to clients in employment sors should observe and discrimination litigation, ADA/FMLA interact with the employee, compliance, safety drug and alcohol and the suspicion factors testing and health issues. Reach her at delliott@mcneeslaw.com. should be clearly articulated and documented.  CORPORATE COUNSEL BUSINESS JOURNAL

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Setting the Right Tone On Financial Crimes

of other law enforcement agencies. You learn to work closely

Katherine Goldstein, partner with Akin Gump, served as a federal prosecutor in the U.S. Attorney’s Office for the Southern District of New York for more than a dozen years, including several years as the chief of the Securities and Commodities Fraud Task Force, before bringing her expertise to the private sector. We discussed what companies can do to avoid getting involved in everything from traditional financial crimes like insider trading to newer kinds of fraud related to the COVID-19 pandemic.

CCBJ: Please tell us about your experience working as a federal prosecutor.

Katherine Goldstein: It was an extraordinary professional experience. The Securities Unit in Manhattan attracts some of the most experienced prosecutors in an office that’s already full of incredibly talented people. As the unit chief, I supervised between 15 and 20 prosecutors and investigators.

It was really a privilege to hold the position.

Being headquartered in Manhattan, with jurisdiction over the Southern District, really gives the unit its mission and its purpose, which is to keep an eye on the capital markets.

The focus is on crimes like insider trading, accounting and disclosure fraud, valuation issues, and all manner of investor frauds. Increasingly, those offenses intersect with cybersecurity issues. So it really deals with every kind of traditional and also cutting-edge issue that arises on Wall Street.

Another really important aspect of the job is that the chiefs of the unit are liaisons with our law enforcement partners in the Securities and Exchange Commission, the Commodities Futures Trading Commission, the Department of Financial Services, the New York District Attorney’s Office, the Federal Bureau of Investigation, and all manner 20

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with those agencies, you learn their missions, you learn their people, and you learn how to effectively bring cases together.

What are some trends you’ve noticed in the investigation and prosecution of insider trading and other securities fraud issues over the past 10 years?

When I was at the U.S. Attorney’s Office, from 2004 to 2017, the office saw the biggest increase in insider trading enforcement since the Boesky Milken days in the early to mid 1980s. There were more than 100 prosecutions brought against individuals. There were prosecutions brought against funds. There was a very well-publicized enforcement push against insider trading that involved new uses of investigative techniques, including the use of wiretaps.

The education and training that prosecutors got during the course of that enforcement push is now really ingrained in the U.S. Attorney’s Office, and the emphasis on insider trading is not going away anytime soon. Now it’s actually seen as being part of the bread and butter of the unit – part of the core mission for prosecutors in the unit and their partners at the SEC. When you spend a lot of time in a particular enforcement area, like insider trading, you become really well versed in how the markets work, with a particular focus on alternative investments, like hedge funds and private equity funds, the experts who advise them, and the expert networking industry.

As I said, that knowledge has become ingrained in the unit, and the focus on insider trading is here to stay.

The other big issue that has gained traction in the last eight years or so is the focus on accounting and disclosure. When I began my career as a prosecutor in 2004, one of the first matters that I worked on was the WorldCom case, the prosecution of Bernie Ebbers. The office was handling the fallout from the bursting of the tech bubble in 2000 and 2001. That cycle repeated itself, and every time there are large market

The emphasis on insider trading is not going away anytime soon. If the tone at the top emphasizes compliance, that can also go a long way. shifts, you see a renewed focus on accounting and disclosure issues. Both the SEC and the U.S. Attorney’s Offices have kept a close eye on these accounting and disclosure cases. It was certainly a focus for me when I was the chief of the unit.

That area, which is one of the hardest to investigate and prosecute, has been and will continue to be a real enforcement focus for the Southern District of New York.

What are the most important things for in-house counsel and directors to know about compliance and risk management in these areas?

I can’t emphasize enough that when regulators or prosecutors evaluate business conduct, either of individuals or of entities, they do so with the benefit of 20/20 hindsight. What can seem murky or unclear in the moment can take on sharp focus for regulators with the benefit of hindsight.

In-house counsel compliance and risk functions need to remember that their actions could potentially be evaluated by people who don’t have their knowledge or expertise of their particular business – people who essentially get to armchair quarterback decisions that are made after the fact. So, what are the implications of that? It’s really important to have up-to-date and state-of-the-art policies and controls. At the end of the day, you want to be able to show regulators that your firm was attentive to those issues from the outset, so that even if something has gone wrong, or a decision is being second-guessed, you are in a position of being able to fall back and say, in good faith, “We were doing our very best and making the best judgments that we could at the time.”

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There’s often a tension between the business-generating aspects of a firm and the non-business generating aspects like compliance or legal. Prosecutors and regulators will take firms to task for perceived compliance weaknesses, including underfunding, understaffing, the subordinating of compliance functions, failures to follow internal policies or procedures. So it’s important for compliance folks to remind the business-generating side of their singular importance in preventing these kinds of issues.

The other thing I want to say is that, although it sounds like a cliché, the tone that’s set at the top of a business is actually incredibly important. If the tone at the top is equivocal, regulators using 20/20 hindsight can really come in and second-guess judgments that have been made. But if the tone at the top emphasizes compliance, that can also go a long way. Mistakes can be made, but when there’s a perception that the people at the top aren’t attentive, or don’t care, or aren’t placing the proper emphasis on certain issues, it can make every decision afterward seem much worse.

How has COVID-19 impacted law enforcement activity?

How have you been advising clients?

COVID-19 has impacted every part of our lives, including areas of law enforcement. What we’ve seen over the last several months is that there’s a renewed focus on, one, insider trading, and two, accounting and disclosure issues, making sure that there’s a real focus on public entities making fair disclosures to the public about the impact of COVID on their businesses, both now and in the future. Then, three, there’s a huge focus on frauds or scams that take advantage of COVID – investor frauds or cyber schemes that prey on people’s COVID-related concerns.

Those are areas that you typically see prosecutors and regulators paying a great deal of attention to, but there’s a new urgency and focus on these issues that is brought by a national, and in this case global, crisis. This is not surprising, 22

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but everyone needs to be aware that regulators are paying very careful attention to these issues.

As I’ve said to my clients, they need to be really attentive to, for example, issues around trading. If the client generates significant material nonpublic information that involves COVID, or if it has a relationship with the government, or if COVID is particularly impacting their business, they have to be incredibly focused on insider trading issues and disclosures.

It’s also important to note that companies can be victims of COVID-related schemes. We’re seeing that in the cyber area. There are those who are taking advantage of the fact that people are working from home, for example, or the fact that IT departments may not be centralized right now, and people are trying to take advantage of those vulnerabilities.

So there are two hats that clients need to wear. One is being attentive to their own conduct, and two is protecting themselves from COVID-related schemes.

Is there anything that we missed?

One of the challenges of a market environment like this is that the facts on the ground are changing so quickly. This is one of the most fluid, dynamic times certainly in my lifetime. It creates added pressure on clients and companies to really stay up to date with all of the issues that we’ve been discussing, and it reinforces the need to have good, trusted folks that you can rely on to help you think through issues as the facts continue to change. 

Katherine Goldstein is a partner with Akin Gump. She regularly advises companies, boards of directors and individuals facing high-stakes investigations by the DOJ, SEC and other regulators. Goldstein also counsels clients on sensitive internal investigations. Reach her at kgoldstein@akingump.com.

CO R P O R AT E CO U N S E L B U S I N E S S J O U R N A L P R E S E N T S

TUESDAY, NOVEMBER 17, 2020 A N IN T E RACTIVE VIRTUAL E VE NT

This event is complimentary to in-house counsel.

Until October 31, other professionals can receive a 50% discount.

U S E COD E: CC B J M AG

U S E CO D E : 50 M AG O CTO B E R

We are pleased to announce our 2nd annual Women in Business & Law event. Building on the momentum from our inaugural event, we continue to work to drive connectivity and collaboration among women executives - including in-house and law firm leaders, boards of directors and other professionals.

• Your Personal Brand in the Time of Disruption • The Power of Inclusion • Privacy in the New Normal

This year's theme is The New Normal.

Speakers and sessions are updated regularly, please visit the event website for updates:

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S E SS I O N H I G H L I G H TS

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As LIBOR Sunsets, Contract Intelligence Takes Center Stage RYAN DRIMALLA FTI CONSULTING

 What happens when “the most important number in finance” is eliminated? With the impending retirement of the London Interbank Offered Rate (LIBOR), financial institutions around the world are now faced with that question.

The longtime global basis for most agreements with a variable interest rate component, LIBOR will officially sunset at the end of 2021. During the latest financial crisis, it was manipulated by certain parties and became the source of several scandals. In response, the Federal Reserve and regulators in the United States and the United Kingdom eventually decided to replace LIBOR with other rate benchmarks. With less than two years to go, banks are now beginning to prepare for the transition.

An estimated $400 trillion in financial contracts rely upon LIBOR. While the phase out will impact banks across numerous fronts, one of the most significant effects will be addressing the identification, analysis and repapering of all related contracts. By the time it is retired, any contracts that either lack a fallback provision or have not been renegotiated will be left without a rate benchmark.

Many financial institutions are unprepared but are beginning to recognize the urgency and complexity of repapering their LIBOR-based agreements. Banks and other institutions that take quick action and allow ample time for contract renegotiation will be in a much stronger position to reduce their overall risk and exposure relating to new rate benchmarks and standards.

Also of note is the impact of the current coronavirus pandemic. In late March, the UK Financial Conduct Authority (FCA) issued a statement that it is considering the impact of the coronavirus on firms’ transition plans. For now, the timeline is moving forward unchanged. Financial institutions are 24

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expected to continue working toward the existing deadline, while monitoring for any updated guidance from the FCA. Repapering LIBOR Contracts: Key Challenges The process of identifying contracts subject to transition, determining how they are impacted, and remediating agreements according to new and evolving standards will require significant runway ahead of the deadline. The alternative is potential litigation exposure post-transition.

Size and scope: LIBOR is central to millions of contracts, including mortgages, student loans, pensions and business investments. For a single financial institution, the universe of impacted contracts likely spans numerous systems, languages, business units and international borders. The sheer volume of contracts and repository and management systems that must be addressed will make this change a significant burden for legal, compliance and treasury teams at financial institutions.

Contract collection: The first step in transitioning is collecting contracts for analysis and review – a complex process of pulling large volumes of documents from multiple systems in numerous locations, including across borders, into a centralized repository. This is similar to the type of work computer forensic investigators undertake in largescale investigations and electronic discovery matters.

The U.S. Securities and Exchange Commission (SEC) and the UK Financial Conduct Authority (FCA) are advising public companies and regulated entities to assess their risk exposure, quantify the financial impact, develop remediation plans and communicate material information to stakeholders.

Banks will need support from experts experienced with these types of collections to ensure an efficient and thorough effort with minimal business disruption.

Identifying and analyzing impacted agreements: Artificial intelligence technology solutions – that can automatically identify and extract LIBOR transition-relevant terms and conditions and prioritize them for remediation – will be a critical component of quickly identifying contracts that must be amended or repapered. Tools that can bulkextract metadata from repository and management systems will further enhance the process of classifying and analyzing documents and may even reduce the need for more costly artificial intelligence–based processing. Legal teams with limited experience using these types of tools may struggle to select the right technology or apply tools in

The Financial Accounting Standards Board (FASB)

the most effective way.

is working to provide relief for organizations

Renegotiating terms: Once identified, many contracts

chairman said in a statement: “We’re committed to

will undergo a renegotiation process with counterparties, even if just to acquire a consent to amendment. Legal counsel will drive this process but will need adequate time to address each contract individually. Counsel will rely on visibility into the results of the contract analysis process

impacted by the LIBOR transition. In 2019, FASB’s ensuring standards help stakeholders successfully adapt to changes ahead . . . ” Tentative contract modification relief decisions include:

but may still require additional head count to manage the project and complete it on time. Organizations should also

• If criteria are met, a change in a contract’s

be prepared for certain parties to leverage LIBOR repapering

reference rate may account for continuation

as an opportunity to revisit or renegotiate other terms in their agreement. Creating a cushion in the timeline to deal with these scenarios will help reduce risk.

Market inconsistency: Replacement standards for LIBOR have not been fully determined and are expected to change over the course of the next two years. They will also vary between jurisdictions. Transition plans and supporting technologies should be flexible to adapt to evolving standards

of a contract.

• In certain cases, the creation of a new contract would not be necessary.

• Standards changes to reduce accounting costs and complexity relating to LIBOR transitions.

• Applicability to loans, debts, leases and other arrangements.

as they are defined or revised.

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Addressing LIBOR with Contract Intelligence To tackle the LIBOR retirement in a timely manner and reduce risk, financial institutions need a cost-effective solution for finding, reviewing, analyzing and repapering their global contract universe. While artificial intelligence (AI) can identify the terms and language affected by LIBOR retirement in each contract, the process should be supported with organized analysis workflows and quality-control methodologies to interpret and prioritize the impacts. The benefits of a centralized contract intelligence methodology, which incorporates people, process and technology, include: • Support from experts who provide deep technical experi- ence in forensic collection and the contract-review process.

• Guidance for the overall effort, technology optimization and adjustment of technology applications as needed.

• Sophisticated application of advanced tools to automat- ically identify relevant documents and extract implicated elements and clauses.

• The ability to process multiple languages and convert captured information to structured, actionable data in required languages.

• Project reporting and analytics to visually demonstrate contract content, inform counsel of key data trends and support repapering efforts.

• Integration and plug-ins to seamlessly connect to other tools, and to automatically document key information and migrate it to repapering platforms.

• Robust workflows and quality assurance.

FTI’s Technical Excellence FTI Technology offers a purpose-built, structured analytics engine that identifies and analyzes a company’s relevant contract universe. Working alongside legal counsel, our AI-driven solutions assess the current state of fallback 26

SEPTEMBER • OCTOBER 2020

As in most critical business initiatives, technology is not a silver bullet. At FTI Technology, our Contract Intelligence practice provides legal and financial services industry expertise, deep technical capabilities, innovative technology solutions and proprietary workflows to holistically approach LIBOR contract transition.

provisions and prioritize contracts that require remediation or renegotiation. Our team is deeply invested in technology and includes in-house programmers devoted to building customized solutions for clients. We understand the complexity of the LIBOR phaseout and that no one-stop technology solution exists. That’s why we have dedicated technologists building, managing and refining our technology stack and application programming interfaces to integrate with the other tools needed in the process.

FTI Consulting has established a LIBOR Transition Task Force to work with clients, industry groups, law firms and policymakers, and to advise affected stakeholders on the most challenging issues related to the shift in reference rates. One of the crucial services performed by this task force is identifying and inventorying firmwide LIBOR exposure, which we accomplish via our Contract Intelligence service. 

Ryan Drimalla is a managing director with FTI. He leads operations and solution development for their contract intelligence service. Drimalla has over 10 years of experience in commercial legal practices, both as an attorney and contracts process subject matter expert. Reach him at ryan.drimalla@fticonsulting.com.

In the Age of COVID-19, ADR is More In-Demand Than Ever

 Rhonda Epstein is a neutral with NAM (National Arbitration and Mediation) and a longtime proponent of alternative dispute resolution. She’s also a seasoned litigator with an extensive background in employment law and commercial matters relating to the representation of corporate and other for profit and not for profit entities. She talked with us about how that experience helps her work as a mediator and arbitrator, especially as COVID-19 wreaks havoc on businesses and the court system alike.

CCBJ: You have deep experience in employment law.

Could tell us about your career as an employment lawyer?

Rhonda Epstein: I was admitted to the bar in 1984, and after a few years of practicing at a small boutique firm in lower Manhattan, I joined a major insurance company, where I started, developed and grew their in-house specialty law department. I began by representing insureds of Chubb Insurance in employment matters in New York, and then expanded throughout the country. In this capacity, I oversaw a group of talented attorneys who litigated in the state and federal courts, as well as in administrative agencies. Our wide variety of clients included commercial businesses, nonprofit organizations, co-ops and condos, housing associations, private schools, country clubs, and their boards of directors. The cases ran the gamut of federal and state employment and human rights laws, as well as various business claims against the entities and their boards.

Currently, in addition to working as a neutral at NAM, I’m giving back by volunteering as a mediator for the U.S. District Court in the Southern District of New York and at the Equal Employment Opportunity Commission.

How does your professional experience help when you mediate or arbitrate disputes?

Given my wide breadth of experience, I’m quite familiar with the applicable laws and the various scenarios and claims that form the basis of most legal disputes. When I’m with the parties, I draw on my experiences to help move them through the process. As a practicing attorney, I’ve been responsible for a myriad of cases, and I understand the issues and concerns of the parties. While I come into each mediation with a blank slate, my experiences and my humanity allow me to connect with the parties in an authentic fashion, gaining their trust and respect.

What led you to become a mediator and arbitrator after so many years as a litigator?

With more than three decades of litigation experience, I knew that the vast majority of cases settle before trial, and that often the cost of a litigation was the driving factor – and even an obstacle to resolving cases. I would listen to my clients, and I saw the toll that litigation took – the interruptions to their businesses, the financial expense, and the emotional costs, and I knew that the impact had to be as great, if not greater, on the other side. I thought there had to be a better way to resolve these very personal disputes. The more I participated in alternative dispute resolution (ADR), the more it became clear that ADR was the solution, and that’s how I found my calling.

Additionally, ADR affords my clients self-determination and confidentiality that you don’t necessarily get in the courts or with some of the administrative agencies. There’s also the time factor: It was quicker and much more efficient. It cuts down on a lot of the discovery, which comes with its own financial expenses, both in terms of human capital and financial capital. ADR really provides the parties an opportunity to be heard, resolve the case on their own terms, and if they can’t resolve it, at least be given enough information to fully assess where they’re going and how they’re going to move forward.

And as an administrator of ADR, NAM provides the resources to expedite cases in a cost-effective and time efficient manner.

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My experiences and my humanity allow me to connect with the parties in an authentic way.

As an employment law specialist with NAM, what is your approach when mediating a dispute?

I don’t have a one-size-fits-all approach. I’ve been told I’m very relatable. I try to establish a rapport with the parties to make people comfortable and to gain their trust and respect. I begin by explaining the process, setting the stage to minimize surprises. With virtual mediation, which has become the go-to forum for hearing cases during the COVID-19 pandemic, this has become even more important, as I want to make the parties comfortable with the technology. I’m constantly trying to facilitate a resolution, and when it’s appropriate, I’ll evaluate as well. I sincerely try my hardest to resolve each and every case, because I believe it’s best when the parties control the outcome and fashion their resolutions.

If it’s a dispute in which the opposing parties are particularly contentious, how do you bring them together?

Well, the very nature of the disputes that I mediate causes contention, especially when individuals are accused of discrimination or harassment. I always ask the parties to remain respectful in joint sessions. When there is yelling, or even tears, I remain empathetic while striving to restore calmness and rationality to the room. I do my best to keep the parties talking and engaged in the process, to find points of agreement so that I can help them reach a deal, because I believe that the more you have people talking, the more they’re committed to the process.

If a dispute isn’t settled in mediation, I will continue the dialogue a day or so later to see if the parties have begun 28

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to rethink their positions, because I’ve found that when it’s the mediator reaching out, neither side will view reengaging with the process as a sign of weakness.

What considerations should a company make in determining whether they should institute ADR provisions, and how should they go about it? In other words, why arbitrate or mediate?

As I said before, ADR offers a quicker, less expensive, less disruptive, and confidential way to resolve all sorts of business disputes. It gives the parties the ability to fashion their own resolution. It takes the power away from third parties, such as the judges and juries, and places the control back in the parties’ own hands. That self-determination is a big factor in getting people to fashion some type of a resolution. As an attorney, I would always recommend that my clients participate in ADR because there’s really nothing to lose and everything to gain. NAM administrates

employment ADR programs and the arbitration/mediation of commercial matters in accordance with NAM’s rules and procedures and, subject to NAM’s approval, in accordance with the customized and nuanced ADR provisions that are contained in the employment program or agreement between the parties.

In the design phase of a corporate employment ADR program, how could a company ensure that they are providing a level playing field?

That’s a simple answer: By engaging a third party like NAM to administrate a corporate ADR program, the company can ensure that they’re providing a level playing field. The administrator would be the one providing the list of neutrals for the parties to choose from. NAM has clear written rules that are not created by the employer. The program takes the process out of the court system, and yet NAM has a process that duplicates the function of a court, but gets it done in much less time and for much less money. There are case managers to help guide a pro se through the process, which is also a big step in leveling the playing field. The assigned case manager helps facilitate the process for the

party, and can bring issues to the arbitrator very quickly, as they do not have the backlog that courts have, and they can devote personalized attention throughout the process – from the selection of the arbitrator to any discovery issues, all the way through the arbitration itself.

What are some trends that you see emerging with respect to employee-sponsored programs, and how might that change in the future?

Well, to state the obvious, COVID-19 has changed the world in so many ways. I might have answered this question differently six months ago, but as companies and employees become more familiar with ADR and corporate sponsored programs, and now with the frequent and ubiquitous use of virtual conferencing and the slowing of the court system, I believe that more and more companies and employers are going to be seeking faster, more efficient ways to resolve disputes, and an ADR program is the answer.

Has the coronavirus pandemic affected the way you mediate cases, and what do you foresee in terms of ADR in employment disputes as we emerge from the pandemic?

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When there is yelling, or even tears, I remain empathetic while striving to restore calmness and rationality.

The coronavirus has absolutely affected the way I mediate cases. As we’ve already touched on, the mediations have all been virtual for the last several months. NAM made this transition seamless, offering four videoconferencing platforms, and customized technology for Zoom that is HIPAA compliant. It also has an experienced IT team that’s always available, if needed.

As time has gone by, more and more people have become familiar and comfortable with the virtual platforms, and there’s less reluctance to participate. Although parties are not actually sitting in a room next to their attorney during the mediation, the virtual breakout rooms offer the same type of privacy, and parties are more comfortable in their own homes. The virtual platform allows for participation by anyone with access to a computer or mobile device throughout the country, or quite frankly, throughout the world, without the cost of travel. Really the only thing that has to be managed are the different time zones. The occasional appearance of a dog or a child hasn’t diminished the effectiveness of the process. In fact, it often humanizes it.

As for the substance of a mediation, I’ve found that parties have been more motivated to resolve their differences during the pandemic. Employees that have been furloughed or those that are not working are more interested in a settlement than ever before, especially if they were working for an employer that has not yet reopened or has reopened in a limited capacity. There has also been a lot of concern by employees about the ongoing viability of their employer.

And for their part, many employers would like to resolve 30

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these matters so that they can stop devoting time and resources to claims in these trying and uncharted times.

I believe that there will be many more cases as a result of the employment decisions being made due to the pandemic, including hiring, firing, accommodations, working from home and returning to the workplace.

How do you envision the future of employment law matters as it pertains to ADR? I have always believed that employment cases should be handled through some form of ADR, which, again, is why I became a mediator. And that’s even truer now than ever before, during this pandemic, as courts around the country have slowed their calendars. Some have even stopped taking civil trials. This is creating a backlog in the court system, forcing parties to seek alternatives to litigation.

ADR is a tried and tested format for resolving these kinds of disputes, and as more and more employment cases are participating in the process, more parties are getting to experience firsthand, just how effective and beneficial it is. I believe that ADR and Virtual ADR are here to stay, and that there will actually be a continued Rhonda Epstein is a hearing officer increase in its use. From at NAM (National Arbitration and beginning to end, ADR is Mediation). She is a seasoned not only less expensive litigator with more than 35 years of wide-ranging experience in civil and more expeditious litigation. Epstein concentrates than going through the her legal practice primarily in the court, it’s also easier areas of employment law and housing discrimination. Reach her when you work with an at repstein@namadr.com. experienced administrator like NAM. 

Trailblazers in the Fight for Racial Justice and Diversity

 Ahmed J. Davis, principal at Fish & Richardson and national chair of the firm’s Diversity Initiative, talks about the work Fish is doing on the racial justice front, from the firm’s efforts to hire and promote more diverse leaders to its broader efforts to help address systemic inequalities in our society.

CCBJ: As the long-time national chair of Fish’s Diversity Initiative, what do you believe are the most critical issues that the legal profession needs to confront in order to dismantle racial biases and address systemic racism?

Ahmed J. Davis: The most critical issue to confront in addressing systemic racism also happens to be the most fundamental: an acknowledgment that it exists in numerous aspects of our society – such as in education, economics, health care and law enforcement. Far too many times, we see fundamental failures of equity that are misdiagnosed as personal or group failures (which create feedback loops for bias), when the issue is, in fact, systemic. We must acknowledge those systemic causes, and then purposefully and proactively legislate to eradicate them.

On a personal level, my Christian beliefs impel me to recognize racial bias foremost for what it is – sin – so unfortunately, I do not think we can ever truly “dismantle” it. We can minimize its impact by continually educating ourselves about the more nuanced, implicit biases that drive us each day – think of the Central Park incident in May between a white woman walking her dog and a Black birdwatcher, for example – and by doing so, hopefully disrupt those patterns and practices.

In June, Fish launched its Racial Justice Initiative to begin the hard work of tackling these issues. Tell us about the program and what the firm hopes to achieve.

The Racial Justice Initiative was born out of an acknowledgment that we as a firm have an obligation to help effect change in our society beyond the general practice areas that are our core competencies and the pro bono work that we have historically done. It is a commitment to be a boon and an encouragement to the racial justice movement, since we ourselves have been so fortunate. It is intended to be both inward-facing and outward-facing.

The internal component focuses on providing resources and education to firm members about racial justice issues (and addressing any within the firm). The external component is directed at Fish using its legal abilities, diverse workforce and financial wherewithal to assist in addressing societal and systemic issues we know exist.

The Racial Justice Initiative kicked off with a firmwide diversity town hall where firm leaders and members of your management committee read the anonymous personal stories and experiences of what it’s like to be diverse in Big Law. What was your goal with this approach, and was it effective?

We had more than 425 firm employees join the town hall.

In addition to reading anonymous stories, we conducted real-time polling that allowed the participants to share how the stories made them feel, and we finished with a robust Q&A session. The goal of this approach was really twofold.

First, by dissociating the stories from their authors (including their offices and positions), it encouraged candor in the disclosures and also demonstrated that these issues are not unique to lawyers or staff, but common across pay grade and diversity characteristics. Second, by having well-known, nondiverse firm leaders read the stories, it allowed our leaders to see what’s happening in the organization while allowing the organization’s top firm leaders to actively (and voluntarily) participate in the process. It was incredibly effective, and based on the feedback I received from staff and attorneys alike, it was an overwhelming success. We will definitely do it again.

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Many companies require that their law firms meet certain diversity and inclusion metrics. Why is this so important to clients, and what role do they play in moving the needle forward on racial justice?

Diversity and inclusion (D&I) is important to clients because they have learned, empirically, that you obtain better overall results with a diverse team. They’ve recognized the value of diversity of thought and experience in their own organizations, and requiring it of outside counsel is a natural outgrowth of that learning. And just as clients have moved (and continue to move) the needle on diversity and inclusion, they can do so on issues of racial justice. The private practice of law is a service industry, and distinguishing yourself as a firm means doing great work and caring about the things your clients care about.

If clients and potential clients show an interest in racial justice matters, law firms will respond.

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At the beginning of this year, Fish partnered with Mind Gym, a consultancy that uses the latest psychology and behavioral science to analyze organizational culture.

How will their findings help you expand and improve the firm’s racial justice and diversity and inclusion efforts?

Time and experience have shown that when you know better you do better, and the empirical information the Mind Gym consultants collected and shared helps us to “know” better. I believe this is particularly true in an intellectual property law environment such as ours, where so many of my colleagues have backgrounds and training steeped in scientific rigor. Scientists and engineers naturally rely on data to formulate hypotheses and confirm results. The qualitative, data-driven analyses that we receive from Mind Gym will help us validate the importance and impact of our D&I efforts with empirical evidence, which I expect will resonate here.

Diversity and inclusion (D&I) is important to clients because they have learned, empirically, that you obtain better overall results with a diverse team.

the creation of a truly diverse and inclusive workspace.

Firm management must not only set policy but also diligently practice the policy so that others can see leadership by example. Everyone won’t always agree on everything – that is to be expected – but there must be an earnest effort.

More than anything, it has to be authentic. It is not enough for the leaders of an organization to mouth the words of

Fish was one of a small number of law firms to participate in the Mansfield Rule pilot in 2018, and it has been certified at the highest level every year since. Participants in this program pledge that when hiring for leadership roles, the candidate pool will consist of at least 50 percent women, LGBTQ+ members, lawyers with disabilities, and racial and/or ethnic minorities. What has the effect been in terms of helping Fish increase diversity and

diversity and inclusion – they have to be willing to wear the badge and carry the banner.

What is your vision for the future? Where do you hope Fish will be in one year? Five years? Ten years?

We have positioned ourselves well and continued to provide exceptional legal services in the intellectual

inclusion among its ranks?

property space, even in the face of a pandemic. One year

It has been said that if you do not know where you are

and that we are moving through the inevitable backlog

going, then any road will take you there. In the D&I context, broadly defined (or undefined) targets and goals can lead you down an indeterminate path that can result in at least two problems: protean definitions of success and an impaired ability to diagnose D&I failure points within your organization. To me, participating in the Mansfield Rule program has been important for Fish because it provides our management with external, measurable criteria and key performance indicators whereby we can evaluate quantitative success and home in on

from now, I pray that the coronavirus will be behind us, of civil IP cases and also doing great pro bono work as a part of our racial justice initiative. In five years, I hope that we will be viewed as a beacon and a trailblazer – an IP firm that lent its considerable talents and abilities to racial justice causes and

where failure points may be in the organization.

stayed committed beyond

Where does management fit into the picture – can true

Ten years from now, I

the George Floyd moment.

change happen without them?

hope to look around the

No, it really can’t. In my view, as a member of our nine-

many more Black faces

person, firmwide Management Committee, top-down

Fish principalship and see than just mine. 

Ahmed J. Davis is a member of the Management Committee and a principal at Fish & Richardson P.C. in Washington, D.C., where he focuses his practice on complex patent litigation in a wide range of technical areas. He also serves as national chair of the firm’s Diversity Initiative.

Reach him at adavis@fr.com.

leadership on D&I is a necessary but insufficient factor in

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Ideas Before the Deluge: Courts Weigh COVID-19 Insurance Coverage Disputes  Matthew D. Fender, a litigator who focuses his practice on representing policyholders in insurance recovery disputes, discusses an array of COVID-19 issues and claims, including a recent federal case in which the court concluded that the coverage trigger “physical loss or damage” is satisfied by the presence of novel coronavirus on surfaces.

CCBJ: What is your first piece of advice to a business facing losses that might implicate different types of insurance coverage? How should they assess their existing coverage?

First and foremost, and this is hardly novel advice, you must put your insurance carriers on notice. Failure to do so can forfeit coverage in many states. Giving notice is simple and easy to do. Just write them a letter citing all potentially applicable policies and tell them the general subject matter of the claim or potential claim. I don’t like to go into a lot of

detail about the policy or the coverage in the notice letter.

That way the insurer will take the opening position on coverage, and you can respond. I never like to go first in that kind of exchange.

What is the difference between business interruption and contingent business interruption?

Business interruption coverage provides replacement income and expenses when there is damage to your insured property. Contingent business interruption coverage provides the same kind of protection when there is damage to the property of another company in your supply chain, either a customer or supplier. Policy language varies as to how far up and down the supply chain, but that is the basic idea.

Many policies require that losses flow from “physical damage” or “direct physical damage.” How do the courts construe this when it comes to claims arising from COVID-19 and the government response to the pandemic.

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That is really the central issue with all the COVID-19 business

This is particularly interesting because in Studio 417, as

interruption claims. It was a new issue when all this started,

in most cases, the bulk of the claim centered around the

and we aren’t going to have a definitive answer until it has

civil authority coverage in the property policy. Civil au-

percolated through some appellate courts. Some trial level

thority coverage pays the policyholder for business inter-

courts have dismissed cases, finding that the presence of the

ruption when a government order restricts access to the

virus is not sufficient damage to trigger coverage. There was,

insured business property. The policyholder has to show

however, a great, and in my view correct, decision issued by

that there was physical loss or damage to someone else’s

the U.S. District Court for the District of Missouri on August

property that led to the government order. If the presence

12, in which the court declined to dismiss a COVID-19 busi-

of the virus is sufficient to constitute physical loss, that

ness interruption case. The case is called Studio 417, Inc.

won’t be terribly hard to do, as many of the emergency

v. Cincinnati Insurance Company. The policy in that case,

closure orders made in response to COVID-19 expressly

like most of the policies I have read, has “physical loss or

recite that the virus was present at property in the state,

damage” as the coverage trigger. The court construed that

and there are ample news reports documenting the same.

phrase disjunctively: you can prove coverage by showing

If the reasoning applied in Studio 417 takes hold, and I

either physical loss or physical damage. The court concluded

certainly think it should because it is correct, then carriers

that alleging the presence of the novel coronavirus on

are going to be required to pay a lot of claims.

surfaces at the property in question was sufficient.

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Writing back and asking for more information is an almost universal response from an insurance carrier upon receiving a claim they don’t want to pay.

We have a general liability policy and a directors and officers liability policy. Are these useful for pandemicrelated claims?

Commercial General Liability (CGL) and Directors & Officers (D&O) policies are not going to pay for business interruption, but they could be very important in the COVID-19 context.

Many companies, particularly those in the hospitality and retail sectors, may be faced with liability claims where plaintiffs allege they were infected with the novel coronavirus as a result of the company’s actions. I think there is also a real possibility of shareholder derivative claims alleging mismanagement in response to the virus, and those kinds of claims would implicate the D&O coverage.

When I notified my insurer of a potential claim, it came back with a request for more information – much more.

Is this typical?

It is absolutely typical. Writing back and asking for more information is an almost universal response from an insurance carrier upon receiving a claim they don’t want to pay. I have always suspected that they are hoping you will just give up and drop it. Otherwise, they are trying to build a case against your claim. Remember, they are not on your side, and they are not trying to help you. Those letters back and forth are part of the adversarial process, and how you respond may make or break your claim. When in doubt, get help from an experienced coverage lawyer.

It seems that some fundamental issues will need to wind their way through the courts, which could take years.

Is arbitration an option?

Some insurance policies have arbitration provisions. Most commercial property policies do not contain arbitration language for coverage issues, but most have an appraisal provision that either side can invoke where the amount of the loss is arbitrated by a panel of three appraisers. If the carrier is willing to stipulate there is coverage, then appraisal to set the amount may be a fine option. As far as the issue of coverage, parties can always voluntarily agree to arbitrate after the fact, but given the uncertain state of the law, I am not sure I would advise a client to arbitrate the question of coverage for a COVID-19 claim if the client had a choice. There is almost always no appeal from an arbitration award.

Are you anticipating a major surge in coverage litigation? What form will that take?

We have certainly seen an uptick in litigation of claims arising from COVID-19, particularly business interruption claims based on the civil authority coverage extension. There are many companies that have given notice to their carrier, received a denial, and are waiting on the sidelines to see how the law develops before committing to litigation. If we see more favorable decisions like Studio 417, I think many of those companies will get in the game by filing suit. 

Matthew Fender is a partner with McGuireWoods. He is a trial lawyer and commercial litigator who represents clients in commercial, environmental and insurance coverage matters. Reach him at mfender@mcguirewoods.com.

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International Trade Law Remains In the Spotlight

Matthew Nicely and Suzanne Kane, partners with Akin Gump, have extensive experience in international trade law and related regulatory matters. Here, they discuss the current state of trade law and compliance, how it has been effected by the Trump administration and the ongoing COVID-19 pandemic, and what participants in this space can expect in 2021.

CCBJ: International trade is an incredibly complicated area. Can you describe what it is like under normal circumstances, as a baseline, compared to what you’ve been seeing during this global pandemic?

Matthew Nicely: Even prior to the pandemic, so much was handled electronically already. In a lot of areas of legal practice, and business matters in general, so much of what we do is communicated over email, but now you’ve had the huge increase in the use of virtual meeting platforms. That applies to our everyday work and our interactions with the agencies. So in many respects, in both of our practices, obviously a few things needed to change, and agencies were quick to make changes to things like required paper service for filings. They got rid of that requirement, because people aren’t in their offices and don’t want paper going back and forth. So we all joined the 21st century, and we’re now sharing everything electronically, instead of on paper as much as we used to.

For the most part, I think it’s fair to say that we haven’t really missed a beat in our practice areas. From a trade remedy perspective, which is what I do, there have actually been more cases, like antidumping and countervailing duty cases, filed this year than ever before. Even though the Commerce Department officials and International Trade Commission officials who handle these cases are working from home, they’ve figured out how to continue their work and interact with private practitioners in a 38

SEPTEMBER • OCTOBER 2020

seamless way. Sometimes the agencies have given themselves extensions – and given the parties extensions in turn – because of the pandemic, but for the most part it’s sort of been business as usual. We’re not having the faceto-face meetings we would usually have, but we have just as many phone calls, and if we need to see people’s faces, we have the video platforms. And surprisingly enough, I would say that the body of work is even greater than it was before the pandemic.

Suzanne Kane: On the import side, from a practice perspective, I’ve seen the same thing during the pandemic. I mostly interact with the government agencies on behalf of clients, and the agencies haven’t missed a beat. Even though they’re not physically at the ports as much as they used to be, they are certainly online, and they’re continuing their audits and requests for information. On the company side, in terms of what our clients are seeing as a result of the pandemic, I would agree with what Matt said: If anything, there’s probably been an increase in enforcement actions.

For our clients, and for us as well, there have been episodes of extreme supply chain uncertainty. There were periods of time when we had questions about whether goods could come in from Canada and Mexico at all, and that led to some upheaval, but for the most part it’s already been ironed out. It’s actually been remarkable how the logistics companies and our clients have managed to adapt and have their supply chains operate very seamlessly as this has all gone on. Another disruption on the client side, however, was when the Federal Emergency Management Agency (FEMA) instituted some export restrictions on personal protective equipment (PPE). There was a decent amount of confusion around what was actually covered by these restrictions, but they’ve been revised a couple of times and at this point are actually fairly narrow. But when the restrictions were first announced, it was pretty amazing how much they affected companies across

If anything, there’s probably been an increase in enforcement actions since COVID-19.

–SUZANNE KANE

various industries (not just medical supply companies) that are used to shipping items like gloves and masks and hand sanitizer between their affiliated companies in other countries. There were supply chain disruptions that we helped manage, but now these types of disruptions have really seemed to abate, and things are working pretty well, which is surprising. I wouldn’t have predicted it at the beginning.

The Organisation for Economic Co-operation and Development (OECD) has identified four priorities for

keeping trade flowing. Number one, boost confidence in trade and global markets by improving transparency about trade-related policy actions and intentions. Two, keep supply chains flowing, especially for essentials such as health supplies and food. Three, avoid making things worse through unnecessary export restrictions and other trade barriers. And four, even in the midst of the crisis, think beyond the immediate. How are you seeing companies and governments respond to these priorities?

Nicely: I generally agree with the OECD that these are good priorities, and I think most companies would agree as well. They see the benefit of trade flowing freely.

However, there are plenty of companies and industries that are import-sensitive, meaning they compete with imports and therefore are on the lookout for instances in which they perceive there to be unfair trade activities occurring, in which case they may trigger a petition to

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impose a greater level of duties on those imports. In other words, they’re seeking some form of a protectionist policy in that instance.

As for how governments are reacting, I can really only speak about our own government. President Trump has always claimed that his America First policies are aimed at a less internationalist perspective and much more of a nationalist approach to protecting our economy.

However, most of the products that come across the U.S. border are inputs to manufacturing. They’re not products that people are going to buy at Walmart. So when he imposes additional duties on steel, is he making the steel mills happy? Yes. But is he making the folks who use products that come out of the other end of a steel mill happy? No, because they can’t get all of the product they need from U.S. steel mills, so they depend upon an international free-trading system.

Generally, I think that the Trump administration would disagree with the OECD’s priorities – at least with regard to those industries for which it is politically expedient for the administration to protect. I don’t expect to see a lot of change in the Trump administration’s policies in response to these OECD priorities in light of the pandemic – a least not with respect to the trade remedies area of the law.

Kane: This is interesting. Certainly U.S. Customs and Border Protection (CBP), and the Department of Homeland Security as a whole, has a dual mission where they’re always trying to strike the right balance between facilitating trade but also securing our borders and identifying any imports that are dangerous or injurious to public health. So they’ve always had to balance those four items, and it’s interesting to see it today. It’s not only CBP but also the Food and Drug Administration (FDA) that has the same challenge, and it’s interesting to see CBP and the FDA working together right now. They want to facilitate the quick importation of items for use in treating COVID-19, 40

SEPTEMBER • OCTOBER 2020

Surprisingly enough, the body of work is even greater than it was before the pandemic.

–MATTHEW NICELY

yet there is an influx of counterfeit and other dangerous items, so the FDA has task forces to monitor the shipments of not only PPE but also ventilators and any kind of medical supplies that are needed. So they have teams to identify dangerous or possibly counterfeit items, but they are also working with companies to get legitimate goods in quickly, and they’re working with the big pharmaceutical companies and medical supply companies to get their legitimate shipments in smoothly.

What are governments doing to offer economic solutions, and are there any solutions that stand out as best in class?

Nicely: Economic solutions have been part of the CARES Act and the various stimulus bills that have been passed, but those have not necessarily alleviated the impact of duties. Early on in the pandemic, there was talk of there being a tax holiday, or a duty holiday, so to speak, on some products. That was announced and then pulled back a couple of times, perhaps because of a failure to communicate between CBP and the White House. Suzanne can talk about this in more detail, but the solutions that some folks at CBP initially thought would be useful during a pandemic weren’t really delivered, or perhaps only in a limited way.

Kane: In my area, the White House and CBP together ended up offering very, very limited duty relief to importers at the beginning of the pandemic, which was really just a deferral of time to pay certain duties – and only for a very short period of time. As Matt alluded to, I think there were very few companies for which it actually made

any economic difference. And the confusion around the deferral was problematic too – the agency announced one thing, which got pulled back, and the implementation of the deferral was very difficult for importers to utilize.

So that was not a best-in-class solution. These days, one thing I do very often, which companies are much more interested in than ever before, has to do with the fact that there have been so many laws enacted in the past decades that offer duty mitigation opportunities for specific categories of merchandise. There are scores of preferential duty provisions that an importer might be able to use for, e.g., certain medical devices, prototypes or U.S.-origin goods that are being returned to the U.S. And there are free-trade agreements that many companies hadn’t previously thought to pursue beyond the United States–Mexico–Canada Agreement (USMCA) or the North American Free Trade Agreement (NAFTA), simply because the administrative burden to pursue the duty relief, or to comply with the FTA provisions, were just not worth it.

But these days, we are living in a world where most importers are paying around 25 percent extra in tariffs for a large portion of what they import, and all of a sudden these other duty preference provisions and FTAs are worth dusting off, looking at and perhaps implementing.

How has law enforcement responded during the pandemic?

Kane: To Matt’s earlier point, CBP agents are mostly working from home, but some are back at the ports. And they haven’t really missed a beat in terms of enforcement actions. In fact, it feels like I’m seeing more enforcement actions than before the pandemic, which might be because the import specialists actually have more time to issue enforcement actions now that they’re not on duty at the ports as much. And our auditors have not slowed down.

Our onsite audit visits were canceled, but nothing else.

The audits themselves haven’t been canceled, and the

pace of questions has continued – on the customs side, I’m seeing increased enforcement.

Nicely: So, they are still ensuring that importers are complying with all of the requirements. One of the hallmarks of U.S. customs law, and a hallmark of the notion of trade facilitation, is to prevent product from sitting at the port for lengthy periods of time, and instead to get it into the customs area, to get it into commerce. The assumption through the Customs Modernization Act is that importers are regulating themselves, so to speak. CBP can come along after the product has already been consumed and say to an importer, “Hey, wait a second, did you value that product correctly? Did you classify that product correctly?

Did you accurately report where that product was coming from?” Those are the three pillars of customs law. I think what Suzanne is saying is that in essence they’re doing those audits on paper now instead of in person.

If anything, there’s probably been an increase in enforcement actions since COVID-19.

–SUZANNE KANE

Kane: Yes, and in fact many of them were already done that way, because it’s often financial auditing. It’s kind of like we all just caught up to the 21st century. The meetings that typically took place in person, on site at the company, were often not really necessary for what the agencies were looking into anyway.

Nicely: The trade remedy laws are administered by the Commerce Department and the International Trade Commission. We don’t typically think of these agencies as part of law enforcement in the same way we think of CBP. But, they do go through a similar process. They conduct CORPORATE COUNSEL BUSINESS JOURNAL

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an investigation, and as part of that investigation, after they collect information through a questionnaire process, they will go and visit a company in another country and do what’s called a verification, kind of like an audit. Now, instead of doing that, they’re issuing more and more supplemental questionnaires. They’re papering the record with more information than they would otherwise, because they can’t go and visit the company on site. So the answer to the question of how law enforcement has responded during the pandemic is that they are doing less face-toface work and more interrogatories, if you will. And that doesn’t mean that the enforcement level has changed.

Arguably it’s gone up. It’s just a different format.

What kind of disputes are you seeing related to trade, and how are organizations resolving those disputes?

Kane: So many disputes. So many different kinds.

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Nicely: Right. But a lot of them have nothing to do with the pandemic. Rather, they have everything to do with who is sitting in the White House. But in terms of how the U.S. government agencies are doing their jobs, not much has really changed. There are several agencies that are delegated authority by Congress under various statutory provisions, and they’re resolving disputes in the ways they have always resolved them. There is more litigation, however, because President Trump has gotten more creative in how he’s using these various laws. So there have been challenges to how the Trump administration is imposing these duties.

I’ll give you one example that got a lot of attention in the press. At one point, President Trump decided to apply 50 percent duties on steel from Turkey instead of the 25 percent that was applied to most other countries (and which had previously applied to Turkey for a long time).

Obviously, importers of steel from Turkey were taken

If we get a Biden administration, they will likely approach trade relations much differently than the Trump administration has.

–MATTHEW NICELY

aback. Really it’s an example of the Trump administration willy-nilly saying, “OK, because of the concern about the way that Turkey is valuing its currency, we’re going to impose a higher duty rate on Turkey.” But they didn’t follow any procedures, and the U.S. Court of International Trade ultimately said, “No, you can’t do that. You didn’t follow the procedures you’re supposed to in order to do that.”

There are other examples of litigation that we’re involved in where the Trump administration has done similar things – or where they’re not following the procedures, either the specific statutory authority that’s been granted to them by Congress or the Administrative Procedures Act (APA) requirements that have been deemed to apply in this context. So we’ve been seeing a lot of activity like this, where the agencies have not gotten it right and the judiciary has stepped in and said, “No, wait a second, you’ve got to go back and do that over again.”

nationalist type of trade policy than anything the country has seen since before World War II. I think a Biden administration would approach things very differently.

Does that mean they would remove all of the additional duties that President Trump has imposed? Not necessarily, but there will certainly be some changes. Most of what Suzanne and I do typically was not front-page news before the Trump administration. And nowadays it is. Ever since Trump got into office, trade has been on the front pages.

If Biden is elected, I think there’s going to be a serious reconsideration of several aspects of the Trump trade policy. And what would that do for companies going forward? What would it do to companies’ planning? There has been a huge shift in supply chains as a result of Trump administration trade policy, and one of the things the Biden administration would need to be careful about is the whipsaw effect that happens when trade policies change dramatically overnight. It’s going to be fascinating to see how things play out. 

How are organizations planning for 2021?

Kane: Day by day, I’d say.

Nicely: There’s a lot packed into that very short question.

I think there’s an assumption that if Vice President Joe Biden is elected, the new administration will approach trade relations with our trading partners much differently from how the Trump administration has approached those relationships. This administration, despite being Republican, has implemented a much more aggressive,

Matthew R. Nicely is a partner with Akin Gump's international trade practice. His practice covers the full range of the U.S. trade regulatory regime, including trade policy, trade remedies, customs, export controls, economic sanctions, antiboycott and anticorruption laws. Reach him at mnicely@akingump.com.

Kristina Satkunas is a partner with Akin Gump. She counsels clients on international trade and business and U.S. import controls.

Kane has served for more than six years as senior attorney-advisor at U.S. Customs and Border Protection (CBP). Reach her at skane@akingump.com.

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Reflecting on Ohio's Energy Restrictions REBEKAH GLOVER MCNEES WALLACE & NURICK Northeast, LLC, and Green Mountain Energy Company

Rebekah Glover, of counsel with McNees Wallace & Nurick, offers insight into Ohio’s decisions on energy limitations, and its effects, amidst the COVID-19 pandemic.

(collectively, “NRG”) filed an application for a waiver of the Commission’s Entry suspending in-person marketing, but only as it pertained to in-store marketing. NRG’s reasoning was that as Governor DeWine and the Director of the Ohio Department of Health (ODH) began issuing orders

The COVID-19 global pandemic has had immediate and long-lasting effects on nearly every type of business in existence, and retail energy supply is no exception. In March of this year, after the Governor of Ohio Mike DeWine declared a state of emergency, the Public Utilities Commission of Ohio directed all utilities and other entities under its purview to, among other things, limit in-person activities that were not strictly necessary. For retail energy suppliers in the state, one of the most severe impacts of these Commission directives was the limitation on in-person marketing – specifically, door-to-door marketing.

In its March 17, 2020 Entry, the Commission directed all competitive retail electric and natural gas service providers to immediately suspend door-to-door and other in-person marketing activities for the duration of the emergency or until otherwise ordered by the Commission, in order to avoid the risk of unnecessary social contact. This Entry was in line with other directives being given to the utilities in the state; on March 20, 2020, the Commission directed all utilities to cease in-person meter reading and other non-essential functions that could create unnecessary COVID-19 risks associated with social contact.

allowing stores to reopen, the impetus for that particular portion of the Commission’s order no longer applied.

Shortly thereafter, on May 14, 2020, a coalition of energy suppliers filed another joint application to waive the Commission’s restrictions on in-person marketing, including door-to-door marketing. The argument in this application was that a blanket restriction no longer made sense, but rather that requirements for strict adherence to safety guidelines and protocols in line with the governor and ODH director’s orders would be more appropriate. The application went on to list several protocols in different marketing scenarios, including door-to-door, that would allow distance to be maintained while still permitting suppliers to reach potential customers.

The primary consumer advocate in the state, the Office of the Ohio Consumers’ Counsel (OCC), filed comments in strong opposition to the request to resume door-to-door marketing practices. OCC’s comments echoed a sentiment that has become more prominent in recent years, that suppliers often harm consumers financially rather than help, and that the supplier industry’s marketing practices too often result in deceptive and misleading tactics. This sentiment has manifested in several high-profile Commission-

As the pandemic wore on and it became clear that the state

Ordered Investigations into supplier marketing practices,

of emergency would be a marathon, not a sprint, businesses

including one that allegedly failed to adhere to the

and the Commission alike began examining ways to accom-

Commission’s directions during the COVID-19 emergency.

modate the need to maintain safety protocols with the need for those businesses to resume more normal activities,

The Commission ultimately granted the request to modify

including marketing. On May 8, 2020, Reliant Energy

its earlier Entry and allowed suppliers to resume door-

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to-door and other in-person marketing practices. In its

tain the integrity of the competitive retail market in Ohio.

Entry doing so, the Commission emphasized the need for

One such investigation, into the practices of SFE Energy

suppliers to maintain all state and local requirements

Ohio, Inc. and Statewise Energy Ohio, LLC, was initiated

for safety, but that because ODH had lifted its mandatory

after the start of the COVID-19 emergency and related to

requirements and restrictions on Ohio businesses, and had

marketing practices undertaken during the emergency. This

begun to allow the state’s business operations to begin

proceeding, which is currently ongoing, was prompted by

to reopen, it was prudent to allow supplier marketing to

a Staff letter detailing what it determined to be “deeply

resume as well, including door-to-door marketing, subject

concern[ing]” deceptive and misleading tactics, preying on

to all relevant safety requirements and best practices.

the fears and anxieties of customers during the pandemic.

As pointed out by OCC in its comments, the Commission has

Comments made by several of the Commissioners during

recently taken a more visible and outspoken stance against

their July 1, 2020 meeting, at which they opened this

allegedly improper supplier marketing practices. The

investigation were enlightening about the posture the

Commission-Ordered Investigations that have been under-

Commission is likely to take in the near future toward

taken recently have demonstrated that the Commission is

suppliers perceived to be engaging in allegedly misleading

serious about rooting out what it perceives as “bad actors”

or deceptive marketing practices, and could be instructive

in the supplier industry and either rehabilitating or removing

for suppliers in the long-term concerned about potential

them from the state in order to protect consumers and main-

restrictions on marketing practices across the industry

CORPORATE COUNSEL BUSINESS JOURNAL

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in the state. For instance, Commissioner Dan Conway expressed “surprise” at the fact that an investigation of this nature was in front of the Commission so soon after the Entry was issued allowing door-to-door marketing to resume. Commissioner Larry Friedeman stated that there was a clear expectation that suppliers strictly comply with

For the time being, door-to-door marketing of retail energy supply in Ohio is permitted, while still seemingly unfavored by many.

all state and local requirements in door-to-door marketing, including “Do Not Knock” requirements, a type of limitation that preceded the COVID-19 pandemic.

Chairman Sam Randazzo gave extensive comments, including the following: "The allegations of potential bad behavior by competitive retail suppliers of energy erode the public trust and confidence in the marketplace, and these allegations warrant a prompt and thorough investigation, and that’s what’s going to happen. The Commission is particularly troubled by the apparent attempt to take advantage of the current health crisis, the lack of regard for health-related safety protocols coming on the heels of our order opening up door-to-door sales with some strong signals about our resolve to protect the public from these types of practices."

Chairman Randazzo indicated that not only would the practices of the particular suppliers under investigation be scrutinized, but also anything else that the Commission would “need to be on guard for” regarding door-to-door marketing generally.

In response to the Commission’s Entry allowing door-todoor marketing to resume, OCC filed an Application for Rehearing, seeking a re-examination of the Commission’s decision based largely on the existence of that supplier investigation. The Commission denied rehearing, but noted that as that investigation showed, the Commission will “swiftly act when suppliers violate the precautions” put in place in the June 17 Entry allowing door-to-door marketing to resume. Further, while the Commission 46

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declined to adopt OCC’s position that there was a causal link between door-to-door marketing and the rise in cases of COVID-19 in the state, or that the alleged actions of one entity alone would justify ceasing door-to-door marketing, the Entry could be read as leaving the door open for such developments if additional facts or allegations are discovered.

As we are all aware, the restrictions and safety guidance designed to protect the public from the spread of COVID-19 are constantly subject to change, and as such, the restrictions placed on businesses in nearly every industry are equally uncertain from day-to-day. For the time being, door-todoor marketing of retail energy supply in Ohio is permitted, while still seemingly unfavored by many. Suppliers should take heed to follow the Commission’s directives closely, and be on the lookout for future limitations that may well extend beyond the pandemic. 

Rebekah Glover of counsel with McNees Wallace & Nurick, practices in their energy & environmental practice group. She has nearly a decade of professional experience working in the utility industry in Ohio. For the last several years Rebekah has worked in private practice as an energy and utility attorney. Reach her at rglover@mcneeslaw.com.

Big Law Commands Big Rates

They span many industries, and there isn’t a significant

Kris Satkunas, director of strategic consulting at LexisNexis CounselLink, discusses the major takeaways from the most recent CounselLink Enterprise Legal Management Trends Report, including what we can learn from 2019’s data – and what we can’t.

CCBJ: Let’s start with a broad overview of the CounselLink Enterprise Legal Management Trends Report. What can you tell us about it – how it’s structured, the companies involved, etc.?

Kris Satkunas: The analysis in the report is based on data that flows through CounselLink. CounselLink is both a matter management and an e-billing solution, meaning law firms collaborate with corporate customers about specific matters through CounselLink and also submit invoices for work related to those matters in CounselLink. A massive amount of data results from those processes, and that aggregate data provides valuable information for the industry when mined for trends. I do want to point out up front that we scrub the data of any identifying information and normalize and aggregate the data and put it into a separate database that contains no information that can identify the law firms, the clients they serve, the specific matters or the individual timekeepers.

The database currently has records that represent about $35 billion in outside counsel spending.

As far as the scope of the organizations, there are thousands of law firms that bill through CounselLink – all shapes and sizes from different geographic locations. The only law firm data that we use for the trends report, however, is U.S data. As for the corporations or other entities that are being billed, CounselLink’s market is broad. There are several hundred entities using our solution that range from small corporations to very large ones with billions in revenue.

concentration in specific industries.

What are the top three trends that the report identified this year?

Every year as I do the analysis for the report, I look for the few things that really stand out the most to me. I try to find the things that I think are going to be of the most value to our industry. This year, one relates to alternative fee arrangements (AFAs). And the key finding this year is actually something that we initially reported on last year. But let me back up for a moment and give a bit of context first.

Historically, we’ve been producing the trends report since 2013. For the first five years, what we saw was that alternative fee arrangement usage hovered around 10 percent.

In other words, 10 percent of matters had some sort of non-hourly billing arrangement. But last year when we did the analysis, we found that the number of AFAs had gone up to just over 12 percent. On the surface, that might not seem like a very big increase, but actually, to go from 10 percent to 12 percent after not really moving at all for years, we felt like that was significant – but I also thought that perhaps last year was just a one-time blip.

This year, looking at the data from 2019, we saw that, once again, just over 12 percent of matters were being billed under some sort of AFA. So it feels like a trend has really begun, that finally, after years of talk about increasing the use of alternative fee arrangements, it really is happening.

I think it’s exciting to see that the dial finally has moved.

From our point of view, it’s a move in the right direction.

There are so many benefits to AFAs, and corporate legal departments are starting to realize it as they start using more and more of them. They get much better predictability as far as what their expenses are going to be. And there is accountability because they’ve often already agreed on the pricing with their law firms. It helps them manage CORPORATE COUNSEL BUSINESS JOURNAL

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Our recommendation is to think about law firm segmentation as part of your vendor management strategy.

look back to 2016, their share was 60 percent. So I think it really speaks to the strategy of Big Law that they have an increasingly large share of this higher-value work.

hour. The largest firms, those with more than 750 lawyers,

Part of the point I want to make – which moves into the third key finding – is that if you know that the larger firms are going to charge higher rates, well, there’s value in considering whether the lower-tier firms might be able to handle some of the legal work that you’re giving to the largest law firms today. Because the third key finding is that indeed, it’s true, the larger the firm, the higher the timekeeper rate is – and we provide details in the report itself. If you look at the largest tier of firms, which are roughly the largest 50 firms, and compare their rates to the next tier of firms, which have between 500 and 750 attorneys at them, the larger firms charge, on average, 51 percent higher hourly rates. That’s a huge difference. And even if you look at some of the other tiers of firms, as you

had 77 percent of all billing for M&A work in 2019. If I

start to break them down, you see increases that are

their spend. These advantages have always been there, and now we’re starting to see them pay off more.

The other two key findings that we highlighted in this year’s report are intertwined, and they relate to the size of law firms. I think that most people know that larger law firms charge higher rates. One of the key findings this year is that Big Law has a very large share of the highest-value legal work – and that share has been growing. For example, the practice area that commands the greatest partner rate, on average, is mergers and acquisitions (M&A) at $765 an

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significant between, say, the group of firms that has between 100 and 200 attorneys compared to the next tier, 200 to

toward the median regardless of the specific type of insurance claim it is. So we see much lower volatility there.

500 attorneys. There’s a 29 percent increase in rates there.

So the takeaway from this analysis – of looking at rates by size of firms – is that our recommendation is to think about law firm segmentation as part of your vendor management strategy. Think about all the types of work that you have and whether you need to have premium pricing in order to get quality results, and consider whether

I think the biggest takeaway in this area is that corporate customers, as they analyze their own data, should not expect to see a lot of volatility. The benchmarks are useful for knowing that there is volatility across the industry, but corporations should be striving for and working with their law firms to have much more consistency as possible in the rates that they are being charged for their legal work.

moving to a smaller tier of firms might deliver more value, in terms of similar results at a lower cost.

Specifically, what did you find out about law firm blended rates and the volatility rate? What did you find about law firm rates overall?

What we saw is that from 2018 to 2019 there was an increase of between 3 percent and 4 percent in rates overall. If you look at practice areas, which I think is really important to consider when analyzing hourly rates, we saw larger increases in 2019 in practice areas like M&A, which I mentioned earlier, and corporate and tax work, regulatory and compliance.

Because we’re looking at data that spans many different corporations and many different types of law firms, you would expect to see a good bit of volatility in the rates that are out there. Especially in areas like regulatory and compliance, there are so many different types of law firms that are billing for this kind of work, but there are also very different sorts of matters that fall into this bucket. It’s the practice area that we see the greatest volatility in.

If you look at practice areas like insurance, on the other hand, we see a very narrow band of rates, because that work has such a high volume that the rates have moved CORPORATE COUNSEL BUSINESS JOURNAL

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Please describe the findings surrounding law firm consolidation and the number of legal service providers used by corporations.

This is another key metric that we’ve reported on for several years. Our definition of law firm consolidation is whether a corporation uses 10 firms or fewer for at least 80 percent of their outside counsel fees. We consider those corporations to be highly consolidated. Several years ago, we began seeing that more corporations were moving toward this degree of consolidation. There are a few reasons: There’s the cost benefit of volume discounts, for instance, as well as the benefit of using law firms that have developed a deeper knowledge of your business, which should lead to both efficiency and positive outcomes.

We found that this number moved up to around 60 percent a few years ago, and it’s pretty much held there. We’ve seen for the past two or three years that law firm consolidation seems to have leveled off – it’s plateaued there at around 60%. In 2019, we found that 58 percent of the companies that use CounselLink are highly consolidated. Part of the reason for this plateau is that many companies are in industries that have to rely on a large number of law firms.

Take insurance, for instance. An insurance carrier has to use many different law firms in many different jurisdictions in order to meet their needs. So they’re never going to be highly consolidated under our metric definition, but that doesn’t mean they aren’t or shouldn’t be looking at consolidation opportunities with their vendors.

What did you find as relates to the use of AFAs? And what industries are the leading users of AFAs? I spoke earlier about how AFA usage has increased, which was one of our key findings overall. But more specifically, the key way that we evaluate the use of AFAs is by practice area or matter type. Traditionally, there has been a pretty high level of AFA usage in insurance – both in insurance 50

SEPTEMBER • OCTOBER 2020

Your goal is to pay as low a rate as possible without compromising results. matter types and in the insurance industry as well. That’s because insurance claims are a very high-volume business, and where there’s higher volume, there’s always been more comfort with using AFAs. All of the data that exists around that volume is useful to arrive at arrangements like fixedfee pricing. Or to break matters down into phases or stages and be able to price certain stages that are more predictable.

The other area that has traditionally embraced AFAs has been employment and labor work. Again, it’s high volume, and there’s an ability to know what to expect something to cost. In employment and labor in 2019, we saw that 25 percent of matters being billed through CounselLink were being billed under some sort of AFA. But the area that had the highest AFA usage in 2019, where we saw about 30 percent of matters being billed non-hourly, is a category that we call finance, loans and investments. This category spans a lot of different types of work, but one of the reasons that the percentage is so high is that it includes collections work. And this too is high volume work. That said, the finance, loans and investments category also includes other kinds of legal work, including securities and mortgage-related matters. And we see that there are AFAs in many of these other categories as well.

So it’s pretty exciting to see that really there is no category of work that cannot potentially lend itself to an AFA. What trends did you see in new legal work?

The dynamic within the legal industry – and within every industry – is significantly different now than it was in 2019, due to the unprecedented nature of events in 2020. At the time we released the Trends Report, we’d just started

looking at 2020 data to provide our insights, which is what we do, as opposed to just talking about what we’re hearing anecdotally.

One of the areas that we can talk about with certainty is volume. How many new matters did we see in the first five months of this year compared to previous years? We compared three years of data, for the volume of new matters created from January through May in 2020, 2019 and 2018. We wanted to point to the matters that stood out as being different than in prior years, and what we saw was that there were three categories of legal work that really showed declining volume trends.

Merger and acquisition work has fallen off at the steepest rate. If I compare the number of new matters for M&A work, looking at May versus February of 2020, May’s volume of new work was 57 percent of what we saw in February. So quite a rapid decline there. Litigation has also had a steady downward trend, but it hasn’t been as steep. We also saw a pretty big drop-off in the category that we call corporate and tax.

Those are the areas where we’ve seen a decrease in volume of legal work in 2020, during the pandemic. But on the flip side, we saw that employment legal work increased significantly in March, as we moved toward a more homebased working environment across the board. The volume of employment and labor matters in March was 25 percent higher than it was in February. And then it grew another 15 percent in April. So that’s a big uptick, though it actually did drop back down to more normal levels in May. What are your recommendations for legal departments going forward?

The first thing is the need to communicate clearly what corporate counsel’s needs are to outside counsel. If there is extra pressure on managing outside counsel spend, having conversations with law firms is critical in order

to be able to find creative approaches that benefit the corporation but also don’t hurt the law firm. Recognize that there’s a relationship there and that law firms are also struggling with cash-flow needs. Having a decrease in legal work is hurting their bottom line as well. I think that managing that relationship is important, and having an open channel of communication to find ways to help both parties is critical – even more so now than it ever has been.

The other recommendation that I would make, which is no different this year than it would be any other year, is that it’s really important that corporations benchmark their rates. As I said when I was talking about the volatility of rates, it’s useful to have external benchmark data, so that you can get a sense of whether your rates are in line. It’s even more important to understand the rates that you’re paying for your own legal work, and to break down analysis by matter type. Take a specific type of legal work that you have, and understand the range of rates that you are paying law firms for that work. It shouldn’t vary that much. And if it does, you need to go back and figure out if it’s because you’re using different sizes of law firms, or if you have inconsistency in the rates that you’re paying within a given size band of firms – and then properly negotiate so that you can have consistency in the rates that you’re paying. Because your goal really should be to pay as Kristina Satkunas is the director of low a rate as possible in analytic consulting at LexisNexis.

The team she leads is part of the order to get cost-effective LexisNexis Counsel Link division where pricing without comprothey review, process and capture data mising results. It’s a balfrom all invoices received from legal and other vendors. Reach her at ance that can be achieved kristina.satkunas@lexisnexis.com. using a thoughtful and analytic approach.  CORPORATE COUNSEL BUSINESS JOURNAL

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Increased Business Risk is Changing How General Counsel Think – And Their Level of Influence MIKE HAMILTON EXTERRO

As business rules and regulations change, obstacles often present themselves. The pandemic has unveiled new business challenges. Only this time, general counsel are feeling a sense of duty not previously felt.

that mitigates their major risks. Therefore, in addition to overseeing the legal operations of the organization, the general counsel or chief legal officer must also play a central role in ensuring the company’s compliance, privacy, and data governance capabilities meet all regulatory obligations.

Below, I’ve outlined in greater detail where the law department must play a central role.

Business challenges, while sometimes predictable, are often random. New laws and regulations are one such example of a fairly predictable business challenge – implementation is often slow, and there’s time to adapt – whereas the COVID-19 pandemic is the epitome of a random business challenge.

Regardless of how these obstacles arise, they have one thing in common: Now, more than ever, general counsel feel compelled to advise on major business decisions rather than those simply tied to legal and regulatory risks.

Aggregate research shows that many heads of legal departments feel that business risks rank as their top priority (63%) over financial (21%) or other legal risks (15%). This follows the concerns found in Exterro’s 2020 In-House Legal Benchmarking Report that business pressures are a greater worry (57%) than the impact of new data privacy laws (27%) or litigation stemming from COVID-19 (7%).

Evolving Regulations Are Creating New Risks The general counsel must understand enterprise risks facing the company, implement appropriate processes to mitigate risk, and quickly and efficiently address any breakdowns should they occur. For enterprises that do business in California and abroad, the major data-related risks they face largely fall into three major areas: • New data privacy laws that grant consumers new rights over their personal data • Data breaches and the resulting fines and reputational risks involved • Ensuring preservation of relevant data for criminal or civil litigation

As the priorities of other departments – privacy, compliance, security, and IT – continue to converge with the law department, the influence of the general counsel in quarterbacking these risks is likely to continue to grow.

These risks are largely due to the EU’s General Data Protection Regulation (GDPR) and the U.S.’s California Consumer Privacy Act (CCPA) – as well as any number of potential privacy bills that may advance through state legislatures in the future - but preservation of important data to prevent data spoliation sanctions during litigation also require attention.

Major business challenges primarily boil down to how an organization manages its data – which may or may not be under the law department's purview, depending on the company. However, because of the regulatory risks and fines that follow noncompliance, the law department now must have a greater say in how the business handles their data in a way

But because the law department is often not equipped to handle the processes and fulfill all the requirements necessary to fully comply with these laws, a new, unsiloed approach to these business challenges in needed – a Legal Governance, Risk and Compliance (GRC) strategy that unifies the people, processes, and technologies needed to ensure

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compliance, reduce risk, and optimize operations to meet the tight timelines required of these regulations.

When quarterbacked by the law department, this type of strategy can be critical in ensuring business risks are minimized – but the organization must take its data management processes seriously.

The Key Is Understanding Organizational Data Because these challenges and risks are all centered around data and how it’s managed, it’s imperative that the law department has a full understanding of the corporate data governance strategy by which all sensitive and other business critical information is (or should be) handled. This means, at a very basic level, being able to find answers to the following five questions – each of which is essential to hygienic information governance and regulatory compliance: • • • •

Where does your data live?

Who owns it?

Which regulations govern it?

Which third parties have access to it – and how do they use it?

• How much data do you really have?

65 percent of the world's population will have its personal data covered under modern privacy regulations. should be deleted because it’s a data breach risk. The data inventory is the library of your enterprise information, and keeping that library in order can only help.

Understanding the regulations that govern that data helps the law department understand how it’s being used – and why it’s being kept in the first place. Details about third parties, and the breach risks they represent, are critical to compliance because third party breaches are relatively common, and according to research are more likely to occur than a direct breach. And knowing how much data is being stored in the organization means Legal is able to understand the gravity of what’s being managed – and hopefully find ways to defensibly delete data through enforcing retention standards.

These are the basic, foundational questions that all businesses must know to understand how at risk they are of noncompliance with major rules and regulations. Understanding your data is not a simple process, but it is one of many challenges that unifies legal, privacy, compliance, security, and IT. Without a comprehensive data inventory, it’s difficult to know whether the corporate data governance strategy is operating correctly, or if the organization is equipped to handle the major obstacles presented by privacy laws.

Most business risks, along with compliance and regulatory issues, likely fall under the legal GRC umbrella. The more interconnected and developed your organization’s risk management becomes, the better suited the general counsel will be to help future-proof the enterprise.

If the data inventory is not up to date, it’s also impossible to know whether an organization can comply with a consumer request for deletion of personal information, for example, or whether stored data has outlived its business use and

Learn how to manage data more effectively with a

Mike Hamilton is the senior managing director of marketing with Exterro. Hamilton uses his experience in legal to develop surveys, whitepapers, events and other key information to support clients with an interest in developments in e-discovery and privacy. Reach him at michael.hamilton@exterro.com.

Legal GRC strategy.  CORPORATE COUNSEL BUSINESS JOURNAL

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COMPLEX COMMERCIAL CASES?

RAISE THE BAR. COMPLEX COMMERCIAL CASES?

RAISE THE BAR. NAM welcomes our newest panel members NAM welcomes our newest panel members

HON. ROBERT C. BONNER (RET.)

HON. EDWARD N. CAHN (RET.) Chief United States District Judge, Eastern District of Pennsylvania

United States District Court Judge, Central District of California

HON. ROBERT C. BONNER (RET.) United States District Court Judge, Central District of California

HON. ARTHUR J. GAJARSA (RET.)

HON. EDWARD N. CAHN (RET.) Chief United States District Judge, Eastern District of Pennsylvania

HON. STEPHEN G. LARSON (RET.)

United States Circuit Judge, HON. ARTHURforJ.the GAJARSA (RET.) U.S. Court of Appeals States Circuit Judge, FederalUnited Circuit U.S. Court of Appeals for the Federal Circuit

HON. MELANIE L. CYGANOWSKI (RET.)

HON. STANWOOD R. DUVAL, JR. (RET.)

United States District Judge, District Court of New Jersey, Special Discovery Master

United States Bankruptcy Chief Judge, U.S. Bankruptcy Court, Eastern District of New York

United States District Court Judge, Eastern District of Louisiana

HON. DENNIS M. CAVANAUGH (RET.)

HON. MELANIE L. CYGANOWSKI (RET.)

HON. STANWOOD R. DUVAL, JR. (RET.)

United States District Judge, District Court of New Jersey, Special Discovery Master

United States Bankruptcy Chief Judge, U.S. Bankruptcy Court, Eastern District of New York

United States District Court Judge, Eastern District of Louisiana

HON. RAYMOND T. LYONS (RET.)

HON. RICHARD B. MCQUADE, JR. (RET.)

HON. STEPHEN N. LIMBAUGH, SR. (RET.)

United States District Judge, HON. G. LARSON (RET.) U.S. STEPHEN District Court, United States District Judge, Central District of California U.S. District Court, Central District of California

United States District Judge, HON. STEPHEN N. LIMBAUGH, SR. (RET.) Eastern and Western Districts of Missouri, Unitedby States District Judge, Federal Judge designation, Arkansas, Eastern and Western Districts Illinois, Iowa and Texasof Missouri,

United States Bankruptcy Judge, HON. RAYMOND LYONS (RET.) District ofT.New Jersey United States Bankruptcy Judge, District of New Jersey

Federal Judge by designation, Arkansas, Illinois, Iowa and Texas

ALAN (RET.) H. NEVAS (RET.)HON. ROBERT HON. ALAN HON. H. NEVAS HON. ROBERT O’CONOR, JR. (RET.) O’CONOR, JR. (RET.)

States District Court Judge, United States UnitedDistrict States District Senior United Senior StatesUnited District Court Judge, Judge,Judge, U.S. District Court, Connecticut of Texas U.S. District Court, Connecticut SouthernSouthern District District of Texas

HON. DENNIS M. CAVANAUGH (RET.)

HON. ANDREWJ.J.PECK PECK(RET.) (RET.) HON. ANDREW United States MagistrateJudge, Judge, United States Magistrate Southern DistrictofofNew NewYork, York, Southern District Special DiscoveryMaster Master Special Discovery

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Ops A Contract Lifecycle Management Tool That Meets Your Needs 1. Full Microsoft Office Suite Integration: For most

 Keep these 10 key requirements in mind when selecting a CLM solution for your organization.

employees involved with contract management at most companies, the Microsoft Office Suite is the base of operations from which they run their workday. Therefore,

CCBJ: Please give us a brief overview of the 2020 Wolters Kluwer Future Ready Lawyer Survey. What was your goal in conducting this survey?

Lee Matthews: The market for contract lifecycle management (CLM) solutions is a busy one. There are so many options out there that it can be difficult to understand how companies and their product offerings are differentiated, and which will best meet your needs. There are a few things you can look for, however, to ensure that your company chooses

its integration into the contract editing process is a key part of driving the user adoption and efficiency of a new technology. Many vendors leverage plug-ins as a form of integration, but plug-ins come with limitations. Choosing a solution with native Word integration means you can expect full formatting freedom, tracked changes, redlining, full language support and clause version control.

2. Integrated Clause Library: CLM solutions that rely on templates create the need for manual processes and

a CLM tool that will work well for your organization. When

introduce version control and compliance challenges. Look

beginning your search, keep these requirements in mind to

for a clause library that offers automation and dynamic

achieve the best end result. I would also recommend includ-

contract assembly to ease clause maintenance as well as

ing each of these in your CLM solution request for proposal.

contract initiation and assembly.

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3. Full-Scale Workflow Automation Support: You should not have to change your processes to conform to a new CLM solution. Rather, your solution should have the flexibility to support a wide variety of automated workflows.

Robust solutions support simple serial workflows, as well as parallel workflows that allow multiple people to work on a contract at the same time. It is also important that your solution support ad hoc workflows that can be customized on the fly in nonstandard situations.

4. Rule-Based, Integrated Workflow Engine: The engine that drives those flexible workflows should be rule-based and dynamic to ensure that your organization

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doesn’t need to intervene in your CLM processes. This workflow engine should enforce role-based security along with your defined business policies. It should support both buy-side and sell-side workflows, even if you don’t plan to use both initially. This will ensure that even as your organization and processes evolve, the solution will be able to support all of your contracts.

5. Powerful Metadata: Metadata about key contract attributes such as expiration date or signed date gives you the accuracy you need to correctly drive all stages of the contract lifecycle. Configurability of metadata is critical.

Your CLM solution needs to support the capture of any

data that is imperative to your business. The gathering of metadata should be fully automated and should incorporate machine learning for best results.

6. A Comprehensive and Searchable Central Repository: The user experience of your chosen solution will be strongly impacted by the structure and searchability of the contract repository. First, it should allow for parentchild relationships between contracts and their subcontracts. It should also track related data such as email correspondence, team members and audit logs. Second, the search function should include both metadata and language within your contracts themselves. There should also be drill-down capabilities to allow users to find the precise information they need quickly and easily.

7. Actionable Alerts and Reporting: The alerts and reports provided by your CLM tool are the direct link to ensuring that your team can easily stay up to date on the status of your contracts and help keep you on track with respect to obligation management. Your solution should, for example, automatically identify obligations and provide reminders of them to the correct parties. Reports should offer clear visibility into all aspects of the contracting process, including any bottlenecks, and they should be easy to understand, with simple visual representations of key performance indicators.

8. Time to Go Live: A well-executed and rapid implementation will speed your organization toward your return on investment. Look for a solution that works for you out of the box without the need for extensive customizations. Ask vendors for examples of the timing of key milestones and for references with similar needs and circumstances as yours.

9. Ease of Workflow Adjustments: Even after implementation, it’s important that your CLM solution doesn’t depend on customization to meet your needs. Workflow

and process changes should be simple to execute over time as your way of working and organizational needs change. Custom code changes lead to longer-term projects and greater disruptions to your business.

10. A Simple, Intuitive Interface: You need to know that your solution provider doesn’t think that their work is finished once you go live. A quality vendor will offer support and ongoing guidance without the need for constant professional services fees. Ask about each vendor’s plans for the product and the company as a whole. In addition, look closely at the user interaction interface; a simple and intuitive interface will require less training and support for your users.

When you find a solution provider that meets the above needs, along with any other business-specific requirements you may have, you’ll know that they are worthy of a closer look.

By keeping these requirements in mind from day one of your search, you’ll put your organization on the path to CLM operations that help meet your business goals.

For more detail on the importance of these requirements, download the free e-book Top 10 Contract Lifecycle Management Requirements to Include in

Lee Matthews is the lead technology product manager at Wolters Kluwer’s ELM Solutions. He works directly with customers to understand their goals and bring to market new products that help to address their challenges. Matthews leverages a blend of business development, technological, and legal expertise to expand the ways in which ELM Solutions engages with customers. Reach him at lee.matthews@wolterskluwer.com.

Your Next RFP.  CORPORATE COUNSEL BUSINESS JOURNAL

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Data Drives Dramatic Shifts In Business Roles and Practices ROB WILLIAMS CORP0RATE COUNSEL BUSINESS JOURNAL

 How corporate counsel can meet data imperatives head-on.

Across the United States, and throughout the world, people and businesses are experiencing a period of intense and rapid technological disruption and change. Some of these changes predate the COVID-19 crisis, which has upended business practices across industries, but there’s little question that the pandemic has proven to be a catalyst for further intensifying these existing trends. Due to these new and ongoing structural changes to the economy, and the role technology plays, many companies are redesigning their business around data and leveraging it to increase and add revenue streams.

Companies – like society itself – are becoming more data driven. People are using their smartphones for an everexpanding number of daily tasks – from counting steps and calories to navigating the world around them. All of these

actions create more and more data, which is already taking on unprecedented importance in our lives, and reshaping the economy and how we do business as well. In the legal world, particularly in the realm of e-discovery and digital forensics, this shift has had a tremendous impact on how we collect, interact with, use, and secure data.

With all this in mind, Corporate Counsel Business Journal recently teamed up with e-discovery and technology-assisted review provider H5 for a webcast entitled “Expanding Roles and Comfort Zones: How Corporate Counsel Can Meet Data Imperatives Head-On.” The webcast was moderated by Sheila Mackay, managing director of e-discovery services for H5, and the panel consisted of industry veterans Mira Edelman, senior corporate counsel for DISH Network; Kimberly Quan, global head of e-discovery and digital forensic investigations for Juniper Networks; and Karla Wehbe, director of legal and compliance business solutions for H5.

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The connection of certain processes and requirements has forced us to come out and work together.

–KARLA WEHBE

Karla Wehbe got the conversation started with a discussion about the ways data is contributing to the restructuring of business departments and practices – breaking down walls and forcing companies to rethink and reorganize the way they structure their teams and individual roles.

“It’s a connected and complex world of stakeholders, and for a long time people have worked in their silos, but the connection of certain processes and requirements has forced us to come out and work together,” Wehbe said.

“Our increased need to work together around these com-

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plex issues is highlighting a commonality in the processes and technologies that are being used by these multiple functions. If you look at record retention, data management, investigations, litigation – they’re going to develop similar methodologies, even though they may have different perspectives or different outcomes.”

Ultimately, however, as Wehbe points out, the goal of these new processes and technologies is to allow businesses and their employees to have increased confidence and trust in their decisions – to facilitate action and not paralysis.

Speaking about the convergence of certain roles within organizations, and the increasing number of cross-functional teams working together, Mira Edelman attributed this phenomenon to a confluence of factors, including both the increasing amount of data itself and the increasing amount of regulation that goes hand in hand with it.

“We have a growing body of regulations that are affecting different types of data, both in the U.S. and abroad,” Edelman said. “Think about privacy regulations, export control regulations, and then of course, companies also worrying about data security risks that have been heightened now that much of the workforce is remote

People are really very collaborative, and there are a myriad of broad initiatives where there are overlap.

–KIMBERLY QUAN

because of COVID. Structuring cross-functional groups to dive into issues that involve data and technology can help to provide a better outcome for the company.”

“Successful cross-functional teams have a mission,”

But, of course, not all technology is created equal. “There’s

and milestones to achieve the result, which often a project

such a great variety of technology out there, either in existence or built specifically to handle new data issues, and the type of technology you select at your company to handle your data has a downstream effect across multiple company verticals – in terms of the ability to analyze, preserve, collect, delete, produce any of those items. There are two things driving this convergence, data and technology, and they are interrelated.”

This increasing interrelatedness and convergence has profound effects on the way people work. Discussing her own company, Juniper Networks, specifically, Kimberly Quan said: “People are really very collaborative and there are a myriad of broad initiatives where there are overlap. What I’m finding is that each person or team brings subjectmatter expertise, and we’re coming together. My background, being both a technologist and having a legal side as well, allows me to liaise between disparate groups, but I am finding that willingness is there across the company, which makes the initiatives easier to deal with because of the transparency and the cooperation that’s occurring.”

All that said, no matter how good the technology may be, next-level collaboration relies heavily on the human element as well.

Edelman said. “They benefit from good project management manager can run. So whether you have regularly scheduled check-in meetings or more drawn-out goals, it’s really helpful – on a personal level and for developing synergy.”

Quan agreed: “What’s really important is to have a mission and have organization and follow-through. You need to consider what the size of the team should be; something like enterprise-wide collaboration is very different than a smaller group that’s thinking about the culture of one particular org in the company or something like that. So trying to apply some kind of blanket rules across every group or project is not going to work. Not only does it depend on the organization that you work for, the enterprise, but also the groups within the organization, the initiative, even down to the personalities.”

So, even as technology and data reshape our world, from the way we work to the way we live, it’s important not to forget the human aspect – which makes these changes possible, and ultimately, makes them succeed.

The entire webcast, “Expanding Roles and Comfort Zones: How Corporate Counsel Can Meet Data Imperatives Head-On,” can be seen here. 

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Preventing Cyber Threats, Now and in Years to Come

 Victoria Blake, senior director of product at Zapproved, discusses macro data security trends, and how they apply to the legal realm and beyond.

CCBJ: Please give us a brief overview of the 2020 Wolters Kluwer Future Ready Lawyer Survey. What was your goal in conducting this survey?

Victoria Blake: It’s part of a macro trend that’s been gaining speed over the last 10 or 20 years – the move from on-premises installations to the cloud. I did an analysis of our recent prospects to look for security-related issues that come up in sales cycles, and what I found is that while there is still a percentage of folks that have a no-cloud policy, that percentage is decreasing over time. Decreasing, yes, but more slowly than you’d think. Ten years ago, there was a general assumption that everything would be in the cloud by now, but the transition has actually been a lot slower than everybody originally assumed. A big part of the lag is, I believe, the trust – or lack of trust – in the security practices of cloud vendors, despite the massive gains in cost and efficiency that the cloud can provide.

Running parallel to that, corporate legal departments are not just responsible for legal operations anymore, but now moving into governance, risk management and compliance, as well as information technology and info gov, those kinds of functions. The growing understanding is that data is an artifact of business – and as an artifact, it is a legal artifact as well.

Now, legal still mostly cares about data at a trigger event, but there’s a present and growing awareness of the whole lifecycle of data. And if we’re talking data, we’re talking cloud, and if we’re talking cloud, we’re talking security.

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Can you tell us about the types of security threats facing corporate legal teams today?

Security threats are not specific to corporate legal departments. Threats are part of the digital landscape. In my analysis, threats can be bucketed into several primary categories – things that are most likely to occur.

At the top we’ve got everything related to individuals and identity. The primary threat is phishing and account takeovers. We’re all pretty familiar with that already – who has access to what data and when. Lack of a federated identity management is part of that problem – knowing who somebody is and making sure that they are who they say they are. And, of course, there’s malware. I hate malware.

With malware, we all know what that threat is, but the access point is, again, part of phishing and account takeovers. That’s the primary access point for malware. But there are also threats from within, so what we do is build controls to make sure that the data is safe in the event of a breach from within, due to a malicious actor inside the company itself.

Talking about data, the concept of data location is really interesting – you start thinking about data ownership and the concept of jurisdictions, and how much jurisdiction specific governments or localities do or do not have over your data, if it’s in transit or in storage. That’s an interesting concept in and of itself.

Disaster recovery is crucial as well, so that even when something bad happens, your business can continue to function. Business continuity is so important. Disasters don’t happen frequently, but when they do, companies need to be prepared.

Finally, there’s lack of transparency and a lack of robust service level agreements. Those are two different ones, but they speak to the ability of vendors to be open and honest,

and to clearly communicate with you as a customer about what you can expect and to make sure that the vendor is in compliance with what you, the customer, require.

So those are the primary categories of security threats that we’re seeing. Again, these are not specific to legal, but really they’re part of the macro trends that we’ve been discussing.

Can you tell us more about the privileged user concept?

I know that the word “privilege” has a different meaning in the legal community than it does in software – they overlap, but they have specific meanings. In software, “privilege” refers to the amount of information an individual can see inside of that application. What you want to do is give as little privileged access to users as possible, so that if there is a breach or security event, there’s a wall up around that person or that access point. This is really important when we look at things like the phishing and account-takeover threats. There’s a stat from a research company, Fishing Box, that says that 29 percent of breaches involve stolen credentials, and 94 percent of malware is delivered over email. That’s just an example of this concept of how a single user can be an access point, and

really what you want to do is to control the amount of exposure you have if that single user’s account gets compromised.

A lot of the security features that we’re building and talking about, their maturation over time is about control of the access, if and when a breach happens at the single user’s access point. Not to put too violent a metaphor on it, but if there’s a single access point breach, then your other security features kick in to control the blast radius.

Controlling single-access point breaches is difficult because of the number of users in any given system. If you look at each one of those users as a potential access point, you can get overwhelmed. Or you can look at it and say, “OK, this is part of the threat landscape that we’re dealing with, and we just have to have the right controls, the right visibility, and the right security features set up around it.”

How can legal teams address these threats while still maintaining their day jobs?

I don’t want anybody in the legal department to have to worry about security. There’s no action or activity that CORPORATE COUNSEL BUSINESS JOURNAL

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Ideally, the person who is doing their day job shouldn’t have to worry about security threats at all. a person working their day job, doing the good work of the legal department, should have to do beyond the normal course of business to be safe. I mean, don’t click on that link in that spam email. Wear your badge. Rotate your passwords. That really should be it.

Security should be part and parcel of any kind of vendor relationship. It is a relationship based on trust and validation.

Customers say, “We’re signing up with a company. We have validated that the security controls match our own internal security controls, and we know that these are the best practices in order to keep our data safe.” Ideally, the person who is doing their day job shouldn’t have to worry about security threats at all.

Inside of that, though, it’s important to recognize that there are really two major approaches to security threats. One is on the product side, security features that are actually built into the products or into the technology. The other is on the operations side, and that involves things like badging and credentialing and making sure that when there is a physical person at a physical location with physical access to data, that person is who they say they are.

What are the key cloud-based features that address the data security threats that you’ve mentioned?

One of the key security features that folks should be looking for is multifactor authentication. That goes hand in hand with secure sign-ons. Granular roles and permissions.

Session management. All the security features that help with the user-access threats.

A really basic one? Password reset controls. Our under64

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standing of what makes a secure password is evolving and maturing over time, so being able to work with a vendor that has password reset controls inside of the application, and allows those controls to match your internal IT policy, that is really important.

And the last one I want to mention is user access audit logs.

Good logging is part of a good security stance, so that if and when there is a breach, you actually have the information you need in order to address that breach.

Where does the cybersecurity industry go from here?

We have to recognize that we are in the first 20 years of what’s going to be a massively long time horizon for the maturation of our digital tools, and for our digital ecosystems. Security is going to continue to evolve and change as the threats evolve and change, and that is a never-ending dance. In fact, it’s a never-ending dance that’s been happening in one way or another for the history of mankind.

We’re taking a snapshot in time right now about the primary threats and how to address them. In the year 2030, it’s going to be different. You’re going to have different threats and different tools, and part of the role of any vendor or any company working in this space is to be able to look out into the future and say, “What threats are coming? And how do we have a security stance that is safe and secure and sound – but also able to grow and evolve over time.” 

Victoria Blake, senior director of product at Zapproved, has worked in technology and product management for 15 years, with her roots based in entrepreneurship and startups. Blake has been with Zapproved since 2019. Reach her at victoria.blake@zapproved.com.

BUSINESS, LAW & LEADERSHIP CCBJ Perspectives Podcast, hosted by editor & publisher Kristin Calve, provides access to leaders and influencers within the ever-evolving ecosystem of lawyers and legal professionals.

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