How do you do, readers of Inside Track? It's Law.com reporter Dan Clark and I'd like to welcome you back to another edition of your favorite newsletter. Before we get into it, I'm curious to know if you were surprised by any of yesterday's election results. Some people I know are shocked Ted Cruz was re-elected. I am not particularly surprised about that one. What shocked you? Or, which race was everyone making a big to-do about that you weren't surprised over?

The November edition of Corporate Counsel dropped last week, featuring a story about how the gig economy is impacting the legal profession. We also discuss a security breach that led to trade secrets being leaked and a new draft data bill that could put executives behind bars. Read on for one GC's view that law firms shouldn't sweat (or charge for) the small stuff.

I can be reached anytime through my email at [email protected] or you can find me on Twitter @DanclarkALM.

What's Happening-

 

Responding to a New Cybersecurity Bill

I've been looking into a new cybersecurity proposal from Senator Ron Wyden of Oregon that would target companies with over $1 billion in revenue or those that hold the data of 50 million or more people. Violators would face a 4 percent fine of their total revenues and board members could face anywhere from 10 to 20 years in prison for criminal breaches.

My reporting brought me to Andrew Burt, the chief privacy officer and legal engineer of Immuta, a data management platform. Burt, who builds legal compliance into the company's AI tools, shared his views on the bill. Here's a brief excerpt:

Dan: What are your thoughts on Senator Wyden's draft legislation?

Andrew: I think it's a really interesting approach. I agree with Wyden and others that the current state of how our privacy is regulated is terrible. We need a change. I think that this tries to create a single national standard through the FTC. It's really just targeting the biggest organizations. I think the scope of the act is pretty interesting. I think it's really fascinating that the hook for liability is directed to the board of directors or specifically the CEOs. It's almost marrying personal and corporate responsibility at the C-suite level. 

Do you expect companies to push back on a bill like this?

I think what's really interesting is that this is one proposal among many that are floating out there. I think the tech companies have acknowledged that there is going to be a new standard when it comes to legislation and federal regulation of privacy. I think Senator Wyden has a long history of making some bold proposals and I think this was probably done to help shape that larger conversation. I don't think this was done with the expectation that all of these provisions will be enacted. 

The full story will be coming later this week. In the meantime, send me an email with your thoughts on cybersecurity and data protection laws in the U.S..

The Gig Economy for Lawyers

In the November issue of Corporate Counsel, Law.com reporters Caroline Spiezio and MP McQueen shed light on how the gig economy is impacting the legal profession. Below are a few takeaways from the report.

➤ Public perception matters. Caroline and MP spoke to Michael Boro, a partner at PricewaterhouseCoopers, who said that even when using independent contractors, a company can be held liable for the actions of its third parties.

➤ Review insurance. A company that uses contractors should have its legal department review all insurance policies because hiring contractors does not get rid of liability for workers' injuries. If an independent worker is injured on a job site, the company could be held liable.

➤ Beware of fraternization. Even a holiday party can have risks when a large part of the company's employees are contractors. That's because strengthening ties between contractors and full time employees may “strengthen a misclassification lawsuit.”

 

The Enemy Within

The DOJ announced indictments last week against 10 Chinese nationals for stealing trade secrets related to aerospace technology. I spoke to two cybersecurity experts, one of whom is also an IP attorney. Both said what surprised them the most were allegations that the Chinese government had employee-insiders stealing secrets.

Joseph P. Facciponti of Murphy & McGonigle called it “a lesson that oftentimes the biggest threat is already inside. The insiders that are there pose two threats: to assist with the exfiltration of the data and to subvert investigators.”

Edward McAndrew, a partner at Ballard Spahr, said that companies should begin to protect their IP like they protect personal information that they collect. He also explained that many times, foreign actors aren't looking for a quick payday. He said they often wait around for years.

“If you look at similar indictments you will see the cyber conduct at issue has gone on over a number of years,” McAndrew said. “These companies are being looted on a daily basis and they don't even know it.”

Attn. Law Firms: Keep Your Eye on the Prize

Now for some advice from Noel Elfant, VP and general counsel for North American operations of DeLaval Inc. Sharing his message with this audience is probably preaching to the choir, but it's likely to stir up some grumbles from your law firm partners.

Elfant wrote on Law.com this week that law firms should consider offering the following services free of charge in order to win more valuable client business.

➤ Attending meetings to learn the client's business, risk tolerance, and business objectives.

➤ Training business teams in applicable laws and providing helpful compliance tools.

➤ Keeping up with industry news and sharing important developments on a regular basis.

➤ Handling short calls and answering questions that can be addressed without research.

➤ Helping with formulaic contracts.

Handling these tasks without charging demonstrates “a law firm's commitment to its client.” Firms, Elfant said, should focus on landing “the big stuff” which includes pursuing or defending critical litigation and other complex legal issues.

“There is nothing more frustrating for the client than receiving a bill for these services – a ten minute call, a template that obviously has not been drafted at the client's request (or simply has been redacted for the client), or for the time it takes for a partner to understand the client's business or business initiative,” Elfant writes.

Agree? Disagree? Are you seeing a changing mindset from law firms? Let me know your thoughts: [email protected].

Don't Miss-

Wednesday, November 14. In-house lawyers from leading Bay Area companies will come together at Perfecting Your Pitch in San Francisco, a forum for women lawyers to practice pitch delivery, perfect their presentation skills and get business development tips straight from top in-house lawyers. Panelists include Ashlie Beringer, deputy GC at Facebook; Eleanor Lacey, general counsel at Sophos; and Dana Rao, general counsel at Adobe.

Wednesday, November 28-Thursday, November 29. Legal industry players will gather at ALM's LegalWeek Connect in London for keynotes, workshops and roundtables on collaboration, diversity and talent. Featured speakers include Clare Wardle, general counsel of Coca Cola European Partners; Helen Hayes, legal director for Uber in Northern and Eastern Europe; and Jeremy Barton, general counsel of KPMG UK.

The Global Leaders in Law on Dec. 4 will be having an event in London on the year of change. They will be having the same event in Dublin, Ireland, on Dec. 5. GLL is an invitation-only membership group offering general counsel a global platform for in-person collaboration to exchange ideas and receive advice and guidance from peers. For more information, contact Meena Heath at [email protected].

On the Move-

Shaking things up with a new GC. Amid a shake up of executives, agricultural product producer and distributor Cargill Inc., announced the hiring of Anna Richo (above) as its new general counsel. Richo currently works as the top lawyer for Belgium based pharmaceutical company UCB. Richo replaces Laura Witte who retired after 30 years with Cargill.

Moving Out. The top lawyer at a public hospital system in Florida was fired last week following allegations that she failed to sign contracts and that she funneled millions of dollars to outside law firms. Lynn Barrett was fired by the board of the North Broward Hospital District. According to a report in the Sun Sentinel, she denied any wrongdoing after she was fired.

Pain Management. A pain management and addiction company, BioDelivery Sciences, announced on Monday that James Vollins will be its new general counsel, chief compliance officer and corporate secretary. Most recently, Vollins worked as the top lawyer for Bio Products Laboratory and has held in-house roles at Pfizer Inc. and Grifols.