More Diligence in Hiring: “As law firms become more fiscally conservative and intent on saving costs, they are seeking to eliminate risk from their hiring protocol and make better hiring decisions,” writes Danice Kowalczyk, Esq.

She continues: “With law firms moving away from the traditional law firm business model and toward a more corporate business model, firms are likewise instituting hiring schemes which are more corporate in nature and include, but are not limited to, personality tests, unpaid or hourly paid trial periods, and impromptu oral tests setting forth complicated legal scenarios and requiring a 10-minute verbal solution in the interview setting (not unlike the essay portion of traditional state-wide Bar Exams … but oral instead of written).”

An End to Timesheets? Keeping timesheets “isn’t the only standard for measuring the value that the client places on your services,” writes Jay Shepherd. “In fact, it doesn’t measure client value at all. All it measures is a tiny portion of the time spent by lawyers solving their clients’ problems.”

Shepherd’s case for alternative fee structures is just one voice in a chorus on the subject that is growing louder – and affecting real change. Case in point: Late last year, the lobbying division at Holland & Knight formally did away with timesheets. Other firms will likely do the same.

Question is, are these changes temporary or permanent? The LMRM keynote luncheon, Navigating in Uncharted Waters: How Changes in the Legal Market Will Impact the Law Firm Risk Environment, will relate these issues back to the theme of legal risk management.

Noticing other trends worthy of attendees’ attention? Send us an email or a Twitter message to @LMRMConference and we’ll post them here in advance of the conference.

• A matter of ownership: “An American Bar Association commission is considering recommending that nonlawyers be allowed to take an equity stake in law firms for which they work while urging that an existing ban be maintained on the kind of outside investment in U.S. firms that is now possible in the United Kingdom and Australia,” AmLaw Daily reported. Sidebar: The ABA Commission on Ethics has a paper (.pdf) about the issue. [AmLaw Daily]
• “Don’t Do This” of the week: “[I]t is professionally unethical for a practicing attorney to ask a law student to use her free Lexis or Westlaw account for firm work,” wrote blogger Rod Hudson. The full opinion cites the research services’ terms of service. [Legal Skills Prof Blog]
• Now, there’s an app for that: The New York State Bar Association launched a mobile application that gives users instant access to ethics guidance. “I walk around my office, and it’s more common for the younger associates to be on their mobile devices than on their desktop computers,” Bar Association President Vincent Doyle said. [Super Lawyers]
• Callback: After writing that securitization poses new risks for law firms, we noticed issuers brought more than $2b in auto asset-backed securities to market last week. [Wall Street Journal]

This digest is a weekly post that summarizes the stories that made the news during the last week in the field of legal risk management. To submit news tips, contact Andrew Graham via email.

There are certainly some tough questions about securitization lingering in the minds of some legal risk managers. Increasingly, structured finance and law firm risk management go hand in hand. Consider this insight published by Anthony Spain, equity partner at Mendes & Mount, LLP, back in 2009:

[L]aw firms seem to have not been as close to the heart of key issues as they were during past downturns. For example, law firms were not involved in the origination and marketing of subprime loans or the broking of loans or servicing of those loans. While there certainly could be claims against lawyers emanating from collection work and foreclosure activities, overall claims against law firms should be limited since lawyers were not primary players in the subprime debacle.

On the flip side, work done by attorneys on behalf of their clients to securitize subprime loans and in the marketing and underwriting of offerings of collateralized debt obligations (“CDO”) is cause for concern. [Full paper (.pdf): Possible Impact of the Current Economic Downturn on Lawyers’ Professional Liability Claims]

Why is this? Though mortgage securitization gets the lion’s share of attention today, most any asset that generates cash flow can be securitized. Catastrophe insurance. Life settlements. Student loan, credit card, and auto debt. Equipment leases. Royalty payment streams. Turning these assets (or their derivatives) into tradable securities requires exacting legal work.

The risks securitization poses to law firms are highly nuanced. How can firms best perform due diligence on opaque assets as the demand for securitizing them moves increasingly quickly? How should securitization be regulated?

Comments are welcome. Post them to Twitter at @LMRMConference or send us an email

• Provocative headline of the week: My Data Might Be Safer in the Cloud. PC World columnist Tony Bradley writes, “It can be argued that my data is actually more secure in the cloud than it would be under my own stewardship. And, by storing my data in the cloud I get the benefit of virtually ubiquitous access from anywhere I can get a Web connection, and redundant backups so I am not trusting my data to a single drive that is prone to crash or fail.” [PC World]
• Of Note: Hinshaw & Culbertson LLP associate Evan Brown outlined how data breaches can cost organizations millions of dollars, which tends to trickle down to consumers. [SmartMoney]
• Regarding Rule 26 for expert witness testimony: Know three things, advises BullsEye, a legal blog published by IMS ExpertServices. 1) Not following directions can get you banned. 2) Having a complete expert report is an imperative. 3) 2010′s changes made Rule 26 simpler. [JDSupra]
• The standards that regulate how law firms are structured are changing in the United Kingdom. Writes Neil Rose, editor of legalfutures.co.uk: “There are various efforts to build national legal brands, backed up by networks of law firms, most notably QualitySolicitors, which is shortly to launch a £10m advertising campaign after securing significant private equity investment. Law firms on the stock exchange? Don’t rule it out.” [Guardian UK]

This digest is a weekly post that summarizes the stories that made the news during the last week in the field of legal risk management. To submit news tips, contact Andrew Graham via email.

• Quotable: Regarding insider trading risk, “what we’re finding is that, once you get on the inside, there’s not the security there that [law firms] would like to see,” said Brian Lynch, director of the risk practice group at IntApp, Inc. The Matthew Kluger insider trading case, which the Wall Street Journal earlier this year reported spanned 17 years, illustrates this risk. [Risk Roundtable webinar]
• Law tech perspective: “Large legal firms need to get smarter about social media to compete,” Lawyers.com Editor in Chief and LawMarketing Blog author Larry Bodine told TechJournal. Also, an infographic visualizes responses from a LexisNexis survey of social media and law. [Tech Journal South]
• “Research In Motion has resorted to creating proprietary security system for the iPhone and Android handsets, which have rapidly begun to replace the BlackBerry as the serious smartphone of choice,” Andrew Couts wrote on Digital Journal. In related news, more details on the survey that suggests lawyers really like iPhones. [Digital Trends]
• Profile: How the merger of two of India’s largest law firms fell apart. [LiveMint, in collaboration with The Wall Street Journal]

This digest is a weekly post that summarizes the stories that made the news during the last week in the field of legal risk management. To submit news tips, contact Andrew Graham via email.

BullsEye, a legal blog, issued its round-up of the year’s top cases earlier this month. From the post:

Two Supreme Court opinions top our annual list of the year’s most important cases involving expert witnesses. While one of the Supreme Court cases makes the list for what the court did, the other is included for what the court did not do.

Also on the list are two Federal Circuit cases that provide further guidance for attorneys and experts in patent litigation, two circuit cases that push the boundaries of Daubert, a mass-tort case right out of a John Grisham novel, and even a case from across the pond that is causing ripples here in the U.S.

Read it in full here.

Expert witness cases and strategies will be a prominent panel at the LMRM conference next February. It is routine, and in many cases, mandatory, in legal malpractice trials and summary judgment motions. [full conference schedule]

In addition to the year-end list, Legal Malpractice Review has a great database of expert witness precedents for readers to review and analyze.

Questions? Feedback? Let us know on Twitter at @LMRMConference. We’re listening.

As a consequence, cyber liability policies are among the most talked-about insurance instruments in legal risk management.

• Rogue hacker groups organized around common targets. In 2011, organized chaos like Anonymous and Wikileaks effortlessly embarrassed data-security experts who were responsible for keeping corporate data secure. These hackers are highly skilled and can probably get into just about any system they want to. Law firms, because of the confidentiality of their client relationships as well as the general nature of their work, will likely be new targets for these groups going forward.
• Open-source software gained legitimacy. Though there are still technologists in the legal community that are skeptical of it, 2011 saw more accolades given to open-source software and some noteworthy implementations of it in the legal field. One common question about open-source software in general is its level of security. One routine critique about open-source software in the legal field is the lack of a critical mass of volunteer coders to keep the programs adequately updated.

The takeaway: Cyber coverage at law firms “is a huge hole right now,” says Jim Rhyner, worldwide specialty E&O product manager and specialty law firm practice leader for the Chubb Group of Insurance Cos. in Warren, N.J. “There’s a lot of education going on in the marketplace right now about what the exposures are and how to protect against them.” [National Underwriter P&C]

During the 2012 LMRM Conference, knowledgeable sources will talk about cyber-liability policies for law firms. These are some of the angles they may explore.

• Former Am Law 100 associate Matthew Kluger and trader Garrett Bauer, who were charged earlier this year for their role in a $37m insider-trading scheme, both pleaded guilty. Read the press release about the pleadings here. How can firms best guard against this type of risk? Tweet your reaction to us at @LMRMConference. [Am Law Daily]
• In a reminder of what can happen when a firm takes on work that runs counter to previous corporate social responsibility initiatives, a Seattle-based law firm known for advocating sustainability is receiving criticism for representing the interests of Japanese whaling fleet. [Sea Shepherd Conservation Society, via Digital Journal]
• IPhones and iPad use up, Blackberry use down among law firms. “…Apple products are going strong and gaining ground with small-firm lawyers at the expense of previously dominant legal technology players, such as Research in Motion.” [press release]
• Quotable: “[C]reating a standard information security management system – e.g. ISO – is an inevitability.” Read more take-aways from a risk roundtable session last week. [Law Firm Risk Management Blog]

This digest is a weekly post that summarizes the stories that made the news during the last week in the field of legal risk management. To submit news tips, contact Andrew Graham via email.

In this presentation, Mr. Jones will discuss developing trends and offer some suggestions for how firms might think differently about risk in this rapidly changing environment. He will address how the legal market has undergone profound changes that significantly impact the way lawyers do their work, relate to their clients, and manage their risks. Topics include:

• The shift to a “buyer’s market” for legal services has effectively put clients in charge of key decisions regarding the organization and staffing of legal matters, the scope of work to be performed by outside counsel, and the risks to be taken in a particular representation;
• The imperative to control legal costs has caused clients to focus on efficiency and cost effectiveness as dominant considerations in their dealing with outside counsel, forcing firms to re-think their traditional work processes;
• The rapidly expanding capabilities of technology to streamline traditional labor-intensive legal projects have blurred the nature of the traditional lawyer-client relationship;
• The proliferation of nontraditional outsource providers for various aspects of legal services has complicated issues of liability for firms;
• The expanding use of detailed and invasive “outside counsel guidelines” by many corporate clients has undermined the ability of firms to manage their own affairs;
• The changing external risk environment—including the growing trend toward viewing outside lawyers as “gate keepers” and “whistle blowers”—has complicated the management of risks within firms; and
• The continued growth of firms (both in absolute numbers of lawyers and in organizational complexity) has posed challenges for traditional risk management systems.

If you haven’t already, please register for the conference, http://www.lmrm.com/registration. We look forward to seeing you at this year’s conference!

• New study identified bad enterprise coding practices. If your firm has a password-protected area for clients or sensitive data, you’ll want to check it out. [Ars Technica]
• On Facebook: “Avira and secure.me will offer customers in the US and Canada a bundled product package enabling better personal data and privacy control on Facebook.” Perhaps of importance to law firms that have Facebook policies. [news release]
• Zero: The number of public comments the Florida Bar received after soliciting feedback for a new opinion regarding devices that store data, from USB memory to fax machines. The opinion, which has since been confirmed, advises that lawyers “have an ethical duty to sanitize their storage devices.” [allbusiness.com]
• On that note… Kingston Technologies has some best-practice recommendations for keeping portable data devices like USB drives secure. Summary: provide firm-approved devices, encrypt confidential data, train and educate staffers. [Infographic]

This digest is a weekly post that summarizes the stories that made the news during the last week in the field of legal risk management. To submit news tips, contact Andrew Graham via email.