and Disengagement Letters Structuring Scope of Engagement, - - PowerPoint PPT Presentation

Drafting Patent Counsel Engagement and Disengagement Letters

Structuring Scope of Engagement, Confidentiality, Conflicts of Interest and Other Key Provisions

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THURSDAY, JULY 27, 2017

Presenting a live 90-minute webinar with interactive Q&A

• Dr. Angela Foster, Ph.D., Esq., Principal, Law Office of Angela Foster, North Brunswick, N.J.

Michael E. McCabe, Jr., Founder, McCabe Law, Potomac, Md.

• Dr. Andrew W. Williams, Ph.D., Esq., Partner, McDonnell Boehnen Hulbert & Berghoff, Chicago

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ETHICAL CONSIDERATIONS FOR PATENT COUNSEL ENGAGEMENT AGREEMENTS

Strafford Webinar Series

July 27, 2017

Michael E. McCabe, Jr. McCabe Law LLC www.IPethicsLaw.com

Engagement Considerations

• Are they necessary.
• Defining the client.
• Defining the scope.
• Defining the fee.
• Defining client’s and lawyer’s duties.

5

Are Written Agreements Required?

• Generally: No rule of ethics requires a written

“Engagement Agreement.”

• ABA M.R. 1.5, PTO Rules, and most state rules

say writing “preferable.”

• Notable exceptions:

– D.C., N.Y.: Written agreement for all new clients. – All jurisdictions: Contingency fee representation must be in writing.

6

Are Written Agreements Required?

• No but . . . . Lawyers’ duty to:

– Promptly inform client of situation when client’s informed consent is needed. – Consult about means for accomplishing client’s

• bjectives.

– Explain matter to extent needed for client to make informed decision.

37 C.F.R 11.104; ABA M.R. 1.4

• Can be addressed in Engagement Agreement.

7

Are Written Agreements Required?

• “Informed consent” requires adequate

disclosure of information, risks and alternatives.

• PTO ethics rules require “informed consent”

to be “confirmed in writing”

– Conflict waivers – 37 CFR 11.107; 11.109 – Biz transactions w/clients – 37 CFR 11.108(a)

8

9

Defining The Entity Client

Entity Client Questions

• When you represent the parent, do you

represent its subsidiaries?

• When you represent a subsidiary, do you

represent the parent?

• When you represent a subsidiary, do you

represent other subsidiaries?

• What does “client” believe who is the client?

What does lawyer believe?

10

Defining Entity Client Matters

• Duties of loyalty and confidentiality to

“clients”.

– Shall not take position adverse to present “client” even in unrelated matters.

• 37 C.F.R. 11.107(a); ABA Model Rule 1.7(a).

– Shall not represent a new client against a former “client” in a matter substantially related to former representation.

• 37 C.F.R. 11.109; ABA Model Rule 1.9.

11

Engagement Agreement Tip: Identify Entity Client

• Who Is Our “Client” Sample:

“By agreeing to take on the representation, the parties agree that the Firm’s client in this matter is limited solely to XYZ, Inc. The Firm does not represent any parent, subsidiary, subsidiary of subsidiary, joint venture, or other entities, divisions,

• r organizations within any of the foregoing.”
• Such provision at least can start dialogue.

12

13

Entity vs. Constituent Client

Single Entity “Clients”

• When you represent the entity, do you

represent just the entity?

• What about those in entity whom you may

communicate with during representation?

– Officers – Board members – Employees – Inventors

14

Entity as Client

• A lawyer retained by an organization

represents the organization acting through its “duly authorized constituents.”

– 37 CFR 11.113(a); ABA Model Rule 1.13(a).

• But that general rules does not automatically

insulate lawyer from claim that individual believed they were “client.”

– E.g. Employed inventors.

15

Engagement Agreement Tip: Remove “Constituents”

• Who Is Our “Client” Sample:

“By agreeing to take on the representation, the parties agree that the Firm’s client in this matter is limited solely to XYZ, Inc. The Firm does not represent any officer, director, employee, agent, attorney, inventor, co-inventor, or any other person associated with or acting on behalf of XYZ, Inc.”

16

17

Inventor Clients

Multiple Inventors

• Joint representation raises possibility that

relationship may unfold into a conflict of interest.

– E.g. Claims change, inventor drops off.

• Lawyer representing multiple parties cannot

put interests of one above the other.

• Must communicate with both.

18

Engagement Agreement Tip: Multiple Inventors

“Although the interests of both of you in this matter are generally consistent, you both acknowledge that you recognize and understand that differences may exist or become evident during the course of our representation. Notwithstanding these possibilities, the two of you have determined that it is in your individual and mutual interests to have a single law firm represent you jointly in connection with this matter.”

19

Engagement Agreement Tip: Multiple Inventors (cont’d)

“Accordingly, this confirms the agreement of [Client A] and [Client B] that we may represent you jointly in connection with the above- described matter. This will also confirm that the two of you have each agreed to waive any conflict of interest arising out of, and that you will not object to, our representation of each

• ther in the matter described herein.”

20

Engagement Agreement Tip: Multiple Inventors (cont’d)

• Consider potentially conflicting “instructions”

and practical issues of communicating with multiple persons.

• One possible solution:

“Firm will communicate directly with Client A, and Clients A and B agree that Client A is their agent. Firm authorized to rely on Client A as speaking for and on behalf of Clients A and B jointly.”

21

Defining Scope in Engagement

• Patenting normally involves multiple discrete

transactions that can extend over many years and can implicate rights in many countries.

• Defining the scope of the representation is

essential to limiting uncertainty.

• Three types of scope limits:

– Action-based – Temporal-based – Geographic-based

22

Defining Action Limits

• Action limits in Engagement considerations:

– Is representation solely for filing application? – Prosecution included? – Limiting number of O/A responses? – Appeals? – Continuations, CIPs, divisionals?

23

Defining Temporal Limits

• A “perpetual” patent client is one who

maintains a belief in current client status long after patent issues.

• Consider express end of representation

language when patent issues.

• Identify who is responsible for docketing/

paying maintenance fees.

– Reminders may cause belief in “current client” status.

24

Defining Geographic Limits

• Since patent rights may be filed in many

countries, ought to consider if Firm is agreeing to take on obligation of:

– Advising client of foreign rights. – Taking action to help client acquire foreign rights.

• Consider Limiting geographic scope of

engagement solely to U.S. unless otherwise agreed in writing.

25

Communicating Fees and Expenses

• Arguably most important point of an

Engagement Agreement.

• “The scope of the representation and the

basis or rate of the fee and expenses for which the client will be responsible shall be communicated to the client, preferably in writing, before or within a reasonable time after commencing the representation.”

– 37 CFR 11.105(b); ABA M.R. 1.5(b).

26

Reasonable Fees

• Factors include:

– Time, labor, skill involved; – Will it preclude other employment; – Customary fees; – Results obtained; – Experience, reputation and ability of practitioner; – Whether fee is fixed or contingent.

37 CFR 11.105(a); ABA M.R. 1.5(a).

27

Fee Considerations for Patent Matters

• Intertwined with scope of engagement.
• Ethical issues arise when there is insufficient

communication:

– Firm offers “fixed fee” services but not clear about whether includes PTO fees. – Firm offers “fixed fee” but not clear if “fixed” includes post-filing services, O/A responses. – Whether “ancillary” services included in “fixed” or a la carte.

28

Defining Lawyer’s Duties

• Part of defined scope of engagement.
• Duty to communicate important information.
• Inform client about its duties under Rule 1.56.
• Diligent representation. Consider time frames for

prosecution-related activities, costs for extensions of time.

• Consult with client about taking action before

taking such action.

• Exercise independent professional judgment.

29

Defining Client’s Duties

• Rule 1.56 compliance.
• Provide complete and accurate information to

the Firm.

• Cooperate with the Firm.
• Timely respond to Firm requests.
• Advise Firm about important developments

coming to the client’s attention.

• Pay fees and expenses.

30

31

QUESTIONS?

Michael E. McCabe, Jr.

mike@ipethicslaw.com 301.538.1110

www.IPethicsLaw.com

Angela Foster, PhD, Esq. Law Office of Angela Foster

33

• NDA serves the purpose of protecting a party’s

confidential business and financial information by placing a contractual duty on the other party not to use or disclose that information.

• Attorneys are bound by the ethical rules and

requirements of the profession not to disclose the confidential information shared with us by a client.

34

• A lawyer does not need to sign a confidentiality

agreement with a client.

• A lawyer’s confidentiality obligations are much

ch more e stringent ngent that those in the typical NDA.

35

• Potential of drafting language that is in conflict

with state bar ethic rules.

• Attorneys should not put themselves in a

situation where they are bound by contractual

• bligations to their client that potentially alter the

existing ethical obligations they already have under the law.

• The duty of confidentiality is at the essence of the

attorney-client relationship.

36

• Verbally explain:

 Under the [State] Rules of Professional Conduct, lawyers are prohibited from revealing information related to the representation of a client.

37

 A lawyer shall not reveal information relating to the

representation of a client unless the client gives informed consent, the disclosure is impliedly authorized in order to carry out the representation or the disclosure is permitted by paragraph (b).

 Confidential information is to remain confidential throughout

he representation and thereafter, even after the death of the client.

 Exceptions to the Rule vary state to state.

38

 When an attorney accepts payment for legal fees

from a third-party, the third-party payor is not a client by virtue of paying the attorney’s fee.

 Attorney may want to add language in the

agreement that in the event of a third-party payor, the client is responsible for the agreed payments recited in this agreement unless otherwise modified by the parties.

 Attorney should consult state-specific ethics rules

for guidance.

39

 A lawyer shall not accept compensation for representing a

client from one other than the client unless:

• The client consents after consultation;
• There is no interference with the lawyer’s independence of professional

judgment or with the client –lawyer relationship; and

• Information relating to representation of a client is protected as required

by Rule 1.6.

40

 The conditions of Rule 1.8(f) should be read together with the

general conflicts of 1.7(b), which provides:

• A lawyer shall not represent a client if the representation of the client

may be materially limited … by the lawyer’s own interests.

• Examples:

 Defense under a reservation of rights;  defense of alternative claims one with coverage and one without coverage;  defense of claims in excess of the policy limits; and  Defense of multiple insured.

41

42

 Also known as “Hold Harmless Clause”.  An indemnity clause may be:

• limited to indemnification or
• include the obligation to “defend” and/or “hold harmless.”

43

 The purpose of an indemnification clause is to

allocate risk between the indemnifying party and the indemnified party.

 First, determine why your client wants an

indemnification clause.

44

 If a law firm is asked to include an indemnification

clause say “no”.

 Consult with your malpractice insurer.  Negotiate with the client such that the

indemnification clause creates no greater obligation than the coverage provided in your professional liability insurance.

45

 Indemnification clauses could undermine the law

firm’s malpractice insurance.

 Malpractice insurance policies usually cover the law

firm only against malpractice claims.

 Such policies exclude breach of contract claims from coverage.  Indemnification is a contract.

46

 If the firm grants the client’s request for an

indemnification clause, the client could find, when some error or omission by the firm or its agents harms the client months or years later, that the indemnification clause renders unavailable the insurance money that otherwise could have made it whole.

47

 Exclude any liability for errors or omissions

by subcontractors or other third parties.

 Exclude liability for events the law firm

could not have reasonably prevented.

48

 If the client insists on an indemnification clause try

limiting the terms of the indemnification clause.

 limit the indemnification obligation to circumstances

where the law firm already would be liable at common law.

 limit the law firm’s indemnification obligation to a

monetary amount lower than the deductible on the law firm’s insurance policies.

 limit the indemnification obligation to particular

enumerated circumstances.

49

• The indemnification obligation does not apply to

the extent its enforcement would limit the availability of the law firm’s insurance coverage.

50

Law Firm warrants that its work will be done by competent attorneys within the appropriate specialty and experience, and that it will indemnify and hold Client harmless for any damages arising from any error

• r claim of error in the Work

51

 Client expects law firms to be aware of the potential

risks of disclosing material non‐public, proprietary, or confidential information and to have the necessary procedures and safeguards in place to ensure that such disclosure does not occur.

 If a breach of data privacy or data security occurs due

to the Firm’s fault or negligence and Client incurs liability or cost or suffers damage as a result, the Firm must indemnify Client for such liability, cost, or damage.

52

53

State Specific Requirements:

• At least 7 states require lawyers to disclose their

professional liability insurance status directly to clients.

• Oregon is the only state that requires lawyers to carry

malpractice coverage.

• The ABA model rule requires that a lawyer disclose whether

the lawyer is currently covered by professional liability insurance to the highest court of that jurisdiction. :

54

Oregon

 Lawyers in private practice must carry professional

liability insurance in the amount of $300,00 per claim and $300,000 aggregate insurance coverage through the Oregon Professional Liability Fund. and

 if, at any time, a lawyer's malpractice insurance

drops below either of those amounts or a lawyer's malpractice insurance coverage is terminated.

55

Pennsylvania

 Require that the client be informed in writing if a

lawyer does not have malpractice insurance of at least $100,000 per occurrence and $300,000 in the aggregate per year and

 if, at any time, a lawyer's malpractice insurance

drops below either of those amounts or a lawyer's malpractice insurance coverage is terminated.

56

Ohio

 Ohio does not require lawyers to purchase professional

liability, however, the lawyer must notify the client in writing if their professional liability coverage is less than $100,000 per

• ccurrence or $300,00 in the aggregate.

 The Ohio rule requires that the lawyer send written notice to

the client with an acknowledgment that the client is asked to sign and return.

57

Disclosure Sample

 In accordance with Pennsylvania Rule Professional Conduct

1.4(c), you are advised that I do not have malpractice insurance coverage of at least $100,000 per occurrence and $300,000 in the aggregate per year.

 In Ohio rule requires that the lawyer send written notice to the

client with an acknowledgment that the client is asked to sign and return.

58

Omission & Errors Provision

 The Firm maintains errors and omissions insurance

coverage applicable to the services to be rendered to the Client.

59

Safeguard Clauses

 The Client should be offered the opportunity to consult

with counsel before signing the retainer agreement:

• The Client agrees and affirms that the Firm has not

represented the Client in negotiating this agreement, nor has the Firm induced the Client to enter into this Agreement.

• The Client affirms that it had the opportunity to receive the

advice of independent counsel in negotiating this Agreement and that it has not relied on legal advice from the Firm in deciding to enter into this Agreement.

• The Client also agrees and affirms that the Firm has made no

representations or promises regarding the likelihood of

• btaining patents.

60

 Most states allow attorneys to include a provision that requires the

binding arbitration of malpractice claims and fee disputes provided that certain conditions are met.

 The ABA Model Rules provides it is permissible to include an

arbitration clause provided the client has been fully apprised of the advantages and disadvantages of arbitration and has given consent to the inclusion of the arbitration provision. Formal Ethics Opinion 02-425.

 The arbitration provision cannot limit the liability to what the

attorney would otherwise be exposed unless the client is independently represented in making the agreement.

61

 Attorney should review his or her insurance policy and discuss this

issue with the insurer to avoid mistakenly invalidating malpractice coverage.

 Best practice to obtain the insurer’s written consent before deciding

to include an arbitration clause that covers malpractice claims in a retainer agreement.

 Attorney should check stat-specific rules and decisions before

deciding to include an arbitration clause in a retainer agreement.

 The arbitration provision must explicitly disclose the nature of the

claims covered by the arbitration clause.

62

 We do not anticipate having any disagreements

with Client regarding this Agreement, however, if any disputes arise, the Client should provide notice to the Firm immediately.

 If the Firm is unable to resolve a dispute between

the Firm and the Client, the Firm and the Client herein agree to submit the matter to arbitration before the American Arbitration Association.

63

 Any controversy or claim arising out of or

relating to this contract, or breach thereof, including any dispute relating to patent validity or infringement, shall be settled by arbitration administered by the American Arbitration Association and judgment of the award rendered by the arbitrator(s) maybe entered in any court having jurisdiction thereof.

64

 Any dispute between the parties regarding any

payments made or due under this Agreement will be settled by arbitration in accordance with the JAMS Arbitration Rules and Procedures.

 The parties are not obligated to settle any other

dispute that may arise under this Agreement by arbitration.

 Either party may request arbitration.

65

• A lawyer does not need to add confidentiality language in its

engagement agreement or sign confidentiality agreement with the client.

• A lawyer should not include an indemnification clause in its

engagement agreement nor sign one without first consulting its insurance provider.

• Do not add any language that could potentially undermine your

insurance policy.

• In all states in which it is required to do so, include a statement

about the firm’s insurance coverage.

66

THANK YOU!

Angela Foster, PhD, Esq. Law Office of Angela Foster 2906 Birchwood Court North Brunswick, New Jersey 08902 Telephone: 732-821-9363 Fax: 732-821-4692 FosterAtLaw@aol.com

67

Waiver of Conflicts: Current and Prospective

Andrew W. Williams, Ph.D. McDonnell Boehnen Hulbert & Berghoff LLP

68

Two Categories of Waivers to Potentially Include in an Engagement Letter

• Current Waiver
• Advance Waiver
• Specific
• Open-ended

69

Waiver of Conflicts

• Why is it necessary to monitor conflicts of

interest?

• Duty of loyalty to the client
• Maintaining client confidences

70

Waiver of Conflicts

Conflict of Interest: Current Clients

71

(a) Except as provided in paragraph (b), a lawyer shall not represent a client if the representation involves a concurrent conflict of interest. A concurrent conflict of interest exists if: (1) the representation of one client will be directly adverse to another client; or (2) there is a significant risk that the representation

• f one or more clients will be materially limited by the

lawyer's responsibilities to another client, a former client

• r a third person or by a personal interest of the lawyer.

ABA Model Rule 1.7 (emphasis added)

Conflict of Interest: Current Clients

72

(b) Notwithstanding the existence of a concurrent conflict of interest under paragraph (a), a lawyer may represent a client if: (1) the lawyer reasonably believes that the lawyer will be able to provide competent and diligent representation to each affected client; (2) the representation is not prohibited by law; (3) the representation does not involve the assertion of a claim by one client against another client represented by the lawyer in the same litigation or other proceeding before a tribunal; and (4) each affected client gives informed consent, confirmed in writing.

ABA Model Rule 1.7 (emphasis added)

Duties to Former Clients

73

(a) A lawyer who has formerly represented a client in a matter shall not thereafter represent another person in the same or a substantially related matter in which that person's interests are materially adverse to the interests of the former client unless the former client gives informed consent, confirmed in writing.

ABA Model Rule 1.9 (emphasis added)

Informed Consent

74

(e) "Informed consent" denotes the agreement by a person to a proposed course of conduct after the lawyer has communicated adequate information and explanation about the material risks

• f

and reasonably available alternatives to the proposed course of conduct.

ABA Model Rule 1.0 (emphasis added)

Consent to Future Conflicts

75

Whether a lawyer may properly request a client to waive conflicts that might arise in the future is subject to the test of paragraph (b). The effectiveness of such waivers is generally determined by the extent to which the client reasonably understands the material risks that the waiver entails. The more comprehensive the explanation of the types of future representations that might arise and the actual and reasonably foreseeable adverse consequences of those representations, the greater the likelihood that the client will have the requisite understanding. . . .

ABA Model Rule 1.7, Comment 22 (emphasis added)

76

Visa U.S.A., Inc. v. First Data Corp.,

Heller Ehrman conflicts waiver: “In this regard, we discussed [Heller’s] past and on-going representation

• f Visa U.S.A. and Visa International (the latter mainly with respect to

trademarks) (collectively, “Visa”) in matters which are not currently adverse to First Data. Moreover, as we discussed, we are not aware of any current adversity between Visa and First Data. Given the nature of

• ur relationship with Visa, however, we discussed the need for the

firm to preserve its ability to represent Visa on matters which may arise in the future including matters adverse to First Data . . . .” (emphasis added)

241 F.Supp.2d 1100 (N.D. Cal. 2003)

Advance Conflict Waiver

Consent to Future Conflicts

77

If the consent is general and open-ended, then the consent ordinarily will be ineffective, because it is not reasonably likely that the client will have understood the material risks involved. . . .

ABA Model Rule 1.7, Comment 22 (emphasis added)

78

Celgene Corp. v. KV Pharmaceutical Co.,

Buchanan Ingersoll & Rooney 2006 engagement letter conflicts waiver:

“From time to time we may be asked to represent someone whose interests may differ from the interests of the Company. The Firm is accepting this engagement with the Company’s understanding and express consent that

• ur representation of the Company will not preclude us from accepting an

engagement that is adverse to the Company or its interests, including

• litigation. However, the Firm will not accept an engagement that is directly

adverse to the Company if either: (1) it would be substantially related to the subject matter of our representation of the Company; or (2) would impair the confidentiality of proprietary, sensitive or otherwise confidential communications made to us by the Company.” (emphasis added)

• No. 07-4819, 2008 WL 2937415 (D.N.J. July 29, 2008)

Advance Conflict Waiver

79

Celgene Corp. v. KV Pharmaceutical Co.,

Buchanan failed to obtain Celgene’s informed consent:

• Informed consent requires:
• Consultation regarding proposed course of conduct
• Explanation of material risks
• Statement of reasonably available alternatives
• Neither the 2003 Retention Agreement, the 2006

Engagement Letter, or evidence outside the agreement showed informed consent

• No. 07-4819, 2008 WL 2937415 (D.N.J. July 29, 2008)

Advance Conflict Waiver

80

Galderma Laboratories, L.P. v. Actavis Mid Atlantic LLC,

Vinson & Elkins’s conflicts waiver:

“We recognize that we shall be disqualified from representing any other client with interest materially and directly adverse to yours (i) in any matter which is substantially related to our representation of you and (ii) with respect to any matter where there is a reasonable probability that confidential information you furnished to us could be used to your disadvantage. You understand and agree that, with those exceptions, we are free to represent other clients, including clients whose interests may conflict with ours in litigation, business transactions, or other legal matters. You agree that our representing you in this matter will not prevent or disqualify us from representing clients adverse to you in other matters and that you consent in advance to our undertaking such adverse representations.” (emphasis added)

927 F.Supp.2d 390 (N.D. Tex. 2013)

Advance Conflict Waiver

81

Galderma Laboratories, L.P. v. Actavis Mid Atlantic LLC,

Galderma gave informed consent:

• Disagreed with Celgene Court:
• “The Court concludes that the waiver in the 2003

engagement letter is reasonably adequate to allow clients in some circumstances to understand the material risk of waiving future conflicts of interest.”

927 F.Supp.2d 390 (N.D. Tex. 2013)

Advance Conflict Waiver

82

Galderma Laboratories, L.P. v. Actavis Mid Atlantic LLC,

Galderma gave informed consent:

• “The disclosure warns in plain language that Galderma’s

consent means V & E may appear directly adverse to Galderma in litigation . . . .”

• “Galderma is a sophisticated client who has experience

engaging multiple large law firms . . . .”

• “Galderma, through its own counsel, chose to sign the

engagement letter which included the waiver of future conflicts.”

927 F.Supp.2d 390 (N.D. Tex. 2013)

Advance Conflict Waiver

83

Macy’s Inc. v. J.C. Penny Corp.,

Jones Day’s conflict waiver:

“Jones Day’s present or future clients “may be direct competitors of [defendant]

• r otherwise may have business interests that are contrary to [defendant]’s

interests,” and “may seek to engage [Jones Day] in connection with an actual or potential transaction or pending or potential litigation or other dispute resolution proceeding in which such client’s interests are or potentially may become adverse to [defendant]’s interests.” (citations omitted) “However, please note that your instructing us or continuing to instruct us on this matter will constitute your full acceptance of the terms set out above and attached.” (emphasis added)

107 A.D.3d 616 (2013)

Advance Conflict Waiver

84

Macy’s Inc. v. J.C. Penny Corp.,

Jones Day’s conflict waiver was found to be effective:

“That agreement unambiguously explained that Jones Day could not represent defendant unless defendant confirmed this arrangement was amenable to defendant, thereby ‘waiv[ing] any conflict of interest that exists or might be asserted to exist and any other basis that might be asserted to preclude, challenge or otherwise disqualify Jones Day in any representation of any other client with respect to any such matter.’” (citations omitted) “It is undisputed that Jones Day continued to represent defendant with respect to defendant’s Asian trademark portfolio thereafter and, thus, defendant accepted the terms of the agreement, including waiver of the alleged conflict at issue.”

107 A.D.3d 616 (2013)

Advance Conflict Waiver

85

Sheppard, Mullin, Richter & Hampton, LLP v. J-M Manufacturing Co.,

Sheppard Mullin conflicts waiver:

"We may currently or in the future represent one or more other clients (including current, former, and future clients) in matters involving [J-M]. We undertake this engagement on the condition that we may represent another client in a matter in which we do not represent [J-M], even if the interests of the other client are adverse to [J-M] (including appearance on behalf of another client adverse to [J-M] in litigation or arbitration) . . . provided the other matter is not substantially related to our representation of [J-M] and in the course of representing [J-M] we have not obtained confidential information of [J- M] material to representation of the other client. By consenting to this arrangement, [J-M] is waiving our obligation of loyalty to it so long as we maintain confidentiality and adhere to the foregoing limitations.” (emphasis added)

244 Cal. App. 4th 590 (2016)

Advance Conflict Waiver

86

Sheppard, Mullin, Richter & Hampton, LLP v. J-M Manufacturing Co.,

Sheppard, Mullin failed to obtain J-M’s informed consent:

• “Here, the undisputed facts demonstrate that Sheppard

Mullin did not disclose any information to J-M about a conflict with South Tahoe. The Agreement includes a boilerplate waiver that included no information about any specific potential or actual conflicts.” (emphasis added)

244 Cal. App. 4th 590 (2016)

Advance Conflict Waiver

87

Sheppard, Mullin, Richter & Hampton, LLP v. J-M Manufacturing Co.,

Sheppard Mullin failed to obtain J-M’s informed consent:

• “Even assuming Sheppard Mullin was not representing

South Tahoe at the time it entered into the agreement with J- M, Sheppard Mullin nonetheless began performing additional work for South Tahoe three weeks later. It did not inform either client of this actual conflict. Because ‘waiver must be informed, a second waiver may be required if the original waiver insufficiently disclosed the nature of a subsequent conflict.’” (citations omitted)

244 Cal. App. 4th 590 (2016)

Advance Conflict Waiver

• Best Practices:
• Understand which rules might apply
• Provide as much information as possible
• Potential future conflicts
• Material risks
• Scope
• Definition of unrelated matters
• Suggest use of independent counsel
• Get a signature that confirms understanding
• Use caution in relying on advance waiver

88

Advance Conflict Waivers

Disengagement Letters

89

Termination of Representation

90

When Does Representation Terminate?

• Completion of the express terms of the

engagement letter?

• The end of actual work for the client?
• Memorialization in a disengagement letter?

Reasons to consider sending a disengagement letter

• To prevent any misunderstanding
• To avoid potential future conflicts, including

future disqualification

• To memorialize certain details of the

representation

• It provides an opportunity to invite

feedback or maintain relationship

91

Disengagement Letters

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Erfindergemeinschaft Uropep GbR v. Eli Lilly and Co.,

Fish and Richardson disengagement letter in this case: In reviewing our records, we see that we have completed our work for you and thus have not had an attorney client relationship with you in

• ver a year. We understand that it may be that your needs are not such

as to require our services. However, at the same time, it is our policy to keep a close watch over our client list to ensure that all clients who are

• n that list are truly current clients.

In accordance with our normal client pruning procedures, we think that it would be best to formalize the end of our attorney/client relationship with Brookshire Brothers. Ltd.

• No. 15-CV-1202, 2016 WL 760909 (E.D. Tex. Feb. 26, 2016)

Disengagement Letters

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Erfindergemeinschaft Uropep GbR v. Eli Lilly and Co.,

Fish and Richardson disengagement letter (cont.): Any litigation materials will be handled in accordance with the Firm’s Litigation Document Retention and Destruction Policy, which provides that the firm will retain certain portions of your file for a period of seven years after the conclusion of the litigation during which time you may request these files. It has been our pleasure to serve you and I wish you continued success. Kindly please sign and return the enclosed duplicate copy of this letter as acknowledgment of receipt.

• No. 15-CV-1202, 2016 WL 760909 (E.D. Tex. Feb. 26, 2016)

Disengagement Letters

94

Erfindergemeinschaft Uropep GbR v. Eli Lilly and Co.,

The Court found Brookshire to be a former client:

• The express language of the engagement letter limited

scope of representation;

• No suggestion of any actual representation outside the

scope of the engagement letter; and

• Disengagement letter indicated that representation had

terminated at an earlier time

• No. 15-CV-1202, 2016 WL 760909 (E.D. Tex. Feb. 26, 2016)

Disengagement Letters

Best Practices related to Disengagement Letters:

• Develop procedures to monitor client activity
• The letter should state that representation has

ended and give an indication as to when

• The letter should address whether files are to

be retained, returned, or destroyed

• The letter could leave the door open to future

representation

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Disengagement Letters

Thank You!

96

Andrew W. Williams, Ph. D. is a partner with McDonnell Boehnen Hulbert & Berghoff LLP in

• Chicago. His practice includes patent litigation,

PTAB proceedings, and prosecution in the areas

• f biotechnology and pharmaceuticals. He is also

an author of the Patent Docs weblog. 312.913.0001/williams@mbhb.com