GlaxoSmithKline China Office Raided, Investigated

GlaxoSmithKline, the British pharmaceutical company, is under investigation in China, reportedly for alleged bribery.

The Times of London reported that police raided GSK offices in China on Friday looking for evidence of alleged bribery by sales staff.

“Plain-clothed officers visited the drug company’s offices in Shanghai, Beijing, and Changsha on Friday, detaining staff and seizing accounting documents,” the Times said.

GSK spokeswoman Mary Anne Rhyne told CorpCounsel.com Tuesday, “I can confirm that we are aware of an ongoing investigation by China government authorities. At this stage it is still unclear what the precise nature of the investigation is.”

Rhyne said the company was cooperating with the inquiry.

About two weeks ago, after the Wall Street Journal reported on bribery allegations by a whistleblower, GSK issued a statement saying it had investigated the accusations for four months and had found no evidence of wrongdoing.

"We have used significant resources to thoroughly investigate each and every claim from this single, anonymous source and have found no evidence of corruption or bribery in our China business," the company’s June statement said. “GSK wants to reiterate to its patients, staff and partners in China that these allegations are false.”

The company, which also has offices in the U.S., has previously said in its regulatory filings that it was in “discussions” with authorities from the Department of Justice and the Securities and Exchange Commission about possible violations of the Foreign Corrupt Practices Act, including in China.

The FCPA prohibits the bribing of a foreign official to obtain or retain business. These same authorities have been examining several Big Pharma companies for over two years.

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Supreme Court Altering Class Action Landscape

By Philip R. Sellinger, David Jay, and Todd Schleifstein All Articles 

Corporate Counsel

July 5, 2013

The U.S. Supreme Court has recently issued several important decisions that will affect the future of class actions. Although these opinions involve different industries and subject areas, they send a clear message to the plaintiffs bar that it is going to get increasingly difficult to get class actions certified. If current trends continue, it looks like mostly good news for in-house counsel faced with defending their companies in class actions.

Much of the court's recent attention has focused on the viability of so-called class action waivers, which are found in the arbitration provisions of many standard-form customer agreements. A watershed decision on this issue was AT&T Mobility v. Concepcion (2011), in which the court upheld the enforceability of the waivers, ruling that the Federal Arbitration Act preempts any state law that would invalidate as unconscionable all class waivers in the consumer context.

Plaintiffs have tried to find a way around Concepcion, but the court so far has refused to soften its holding. In CompuCredit v. Greenwood (2012), the court rejected the argument that a federal statute (the Credit Repair Organizations Act) precluded the enforcement of an arbitration agreement in a private CROE claim, and in Marmet Health Care v. Brown (2012), the court held that FAA preemption also applies in state court actions.

The next major battle will come in In re American Express Merchants Litigation, in which the U.S. Court of Appeals for the Second Circuit ruled that a class waiver is unenforceable if it precludes plaintiffs from vindicating federal statutory rights (e.g., antitrust).

The Supreme Court heard arguments in late March, and many believe that a majority may be ready to reverse. That would represent another significant victory for defendants, as it would limit plaintiffs' ability to challenge class waivers to only traditional contract formation defenses such as fraud and duress, and to arguments that the specific arbitration provision is unconscionable (as opposed to Concepcion, in which the court held that state laws invalidating as unconscionable all class waivers in all consumer agreements are preempted).

If Amex Merchants is reversed, corporate counsel can continue to rely on the enforceability of such class waivers in their clients' customer agreements. To best insulate such waivers from attack, counsel should use clear and conspicuous waiver language and avoid including provisions that could be attacked as substantively unconscionable. In addition, when the arbitration provision and class waiver appear on a website or online contract, the consumer should be required to click on a link acknowledging that he reviewed and agreed to both before proceeding with the transaction. Such "clickwrap" agreements are generally enforced. In contrast, plaintiffs have successfully invalidated arbitration provisions on websites that do not require affirmative confirmation ("browsewrap" agreements).

Another win for defendants came in mid-March in Standard Fire v. Knowles. There, a unanimous court held that a class plaintiff's stipulation to limit damages below $5 million does not remove the case from the Class Action Fairness Act of 2005, which provides federal jurisdiction over multistate class complaints. The court reasoned that a plaintiff filing a proposed class action cannot legally require members of a not-yet-certified class to limit their damages. Knowles effectively eliminates plaintiffs' ability to keep class actions out of federal court by limiting damages to under $5 million.

Corporate counsel should bear Knowles in mind when determining whether to seek removal of a proposed state court class action. If the plaintiff limits her class to members of one state (or if most class members and the defendant are from that state), there may be little that corporate counsel can do about the plaintiff's choice of venue.

But if the only obstacle to federal jurisdiction is the plaintiff's allegation that the amount at issue is under $5 million, the plaintiff's characterization need not be accepted. Instead, corporate counsel should review the company's records to determine how much is really at stake. If counsel can support an argument that over $5 million in damages or other relief (e.g., the value of an injunction) are implicated by the plaintiff's claims, then removal becomes a viable option that must be carefully considered against the plaintiff's choice of venue.

Defendants experienced yet another victory when, in late March, the court decided Comcast v. Behrend, an antitrust action. In Comcast, the court held that to obtain class certification, the plaintiff's damages theory must be legally sufficient, not merely theoretical. This means that a class cannot be certified where the plaintiff cannot propose a methodology that identifies, on a classwide basis, damages resulting from the particular harm that the plaintiff seeks to prove at trial. If a proposed class includes members who may not have been affected by the defendant's conduct or whose damages cannot be measured by common proof, then the class should not be certified. Comcast rejects a common plaintiffs argument that the court need not determine at class certification that damages are measurable on a classwide basis.

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Two Phila. Hospitals Say They Won't Hire Smokers

The giant University of Pennsylvania Health System and the prestigious Children's Hospital of Philadelphia have joined the ranks of employers who are banning smokers—not just from hospital property but also from their employee rosters.

UPHS said a job applicant must be tobacco-free for six months—and applicants caught lying, including doctors, may be fired. Children's Hospital said it would actually test applicants for nicotine, just as applicants are tested for drug use.

According to a Philadelphia Inquirer story, the ban doesn’t apply to current employees, who must pay a $7.50 per week health insurance surcharge for every insured smoker on a policy.

Such hiring policies have repeatedly been upheld by the courts, except in states that prohibit them.

Still, the ban has sparked another round of debate about workers’ rights and privacy.

“Critics still raise the same stale objections,” says George Washington University law professor John Banzhaf. He supports the policies and has helped to legally defend them.

The Cleveland Clinic and Baylor Health Care System, along with dozens of other companies across the country, have adopted similar policies.

But a Reuters story in Philadelphia last week said the hospitals’ decision “has relit a debate about the wisdom of regulating workers’ behavior away from the workplace.”

“It's not all slopes that are slippery, but this one really is,” Lewis Maltby, a former American Civil Liberties Union lawyer who now runs the National Workrights Institute in Princeton, New Jersey, told Reuters.

“What you do in your own home on your own time is none of your boss's business unless it affects your work,” Maltby insisted to Reuters.

At least three scholars also oppose the ban. They published an opinion article in March in the New England Journal of Medicine stating, “Categorically refusing to hire smokers is unethical: it results in a failure to care for people, places an additional burden on already-disadvantaged populations, and preempts interventions that more effectively promote smoking cessation.”

But Banzhaf, the public interest law professor, disagreed. He cited increased health care costs for smoking employees, second-hand smoke dangers, and other workplace problems.

He added, “The concept of imposing conditions on employees even when they are away from the job site are widely accepted,” citing pilots who must refrain from drinking for 48 hours before a flight, and reporters who are not allowed to accept gifts from sources.

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Corporate Counsel Spotlight: Who Reps 2012

Corporate Counsel

September 21, 2012

Editor in Chief Anthony Paonita is in the Corporate Counsel Spotlight this month. He visited Eugene Assaf, a partner at Kirkland & Ellis, to talk about the sometimes bumpy relationship between corporate law departments and their outside counsel. Their recent conversations are also featured in the cover story that Paonita wrote for our October 2012 issue, which highlights our annual Who Represents America’s Biggest Companies survey.

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Old Hand Gets GC Job at Second Amendment Foundation

Miko Tempski has returned to the Second Amendment Foundation (SAF) as general counsel after two years an assistant attorney general for the State of Washington. But you can’t go home again—Tempski comes back to the pro-gun organization in a post-Sandy Hook political climate.

The SAF is a Washington State-based education, research, publishing, and legal action group focused on the ownership and possession of firearms in the U.S. It has more than 650,000 members.

“It’s a lot busier then when I left here two years ago,” Tempski told CorpCounsel.com. “There was a lot going on, but it was a lot more one-sided in the sense that it was all an aggressive push on the gun-rights side to affirm and specify what the Supreme Court meant in the Heller and the McDonald decision. Now it’s that and dealing with new threats to the Second Amendment all over the place.”

Tempski previously served as legal affairs officer for the organization, from 2010-2011. The Seattle resident is also a former police officer.

“I primarily come from a litigation background, so it will be a little bit of a challenge to step back from that role and do things in-house,” Tempski said.

But he said he is excited to be a leader in steering the foundation’s involvement in cases that pursue a more expansive reading of the Second Amendment.

"I had a great experience with the attorney general's office, and was proud to represent the citizens of the State of Washington," Tempski said in statement from the SAF. "However, when the opportunity came to rejoin my colleagues at the Second Amendment Foundation, which has been on the cutting edge of a relatively new area of law, I couldn't turn it down."

Tempski earned his B.A. in political science at the University of Washington, and his law degree from Georgetown University Law Center, in Washington, D.C.

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'Ongoing Push' for Split CEO and Board Chair Roles

Proponents of splitting chief executive officer and board chair roles will find allies in the real estate and hospitality industries, where more than half of top executives polled in FPL Advisory Group’s 2013 “Corporate Governance Outlook” survey said they favor keeping those roles separate.

FPL surveyed more than 80 CEOs, directors, and board governance committee chairs from real estate investment trusts, hospitality companies, and homebuilders.

“There is an ‘ongoing push’ for independent leadership at the board level,” the report finds. “Fifty-two percent . . . of the respondents in the 2013 survey agreed that the chairman and chief executive roles should be separate.”

This figure is down slightly from last year’s finding [PDF], when 54 percent agreed that the roles should be held by different people. But this year only 12 percent disagreed that the roles should be split, compared to 22 percent who disagreed in 2012.

As for what the respondents would like boards to spend more time on, the report notes a growing emphasis on both CEO succession planning and evaluation of CEO performance.

Forty percent said they’d like to increase time spent on succession planning, compared to 32 percent in the 2012 survey. And 31 percent said boards should devote more time to evaluating CEOs—up from 20 percent last year. “This is due to a generation in the process of retiring, in addition to boards carefully evaluating leadership in underperforming companies,” the report says.

The majority of respondents—61 percent—said directors should spend more time on strategy/risk assessment and planning.

Corporate strategy is also an area where boards may need more help. On one hand, 62 percent of respondents said that their board’s understanding of current company strategy is excellent. But far fewer said the same when looking down the road. Only 38 percent rated as excellent the board’s “understanding of the five to 10 key initiatives needed to achieve long-term company objectives.”

Similarly, only 37 percent said the board’s comprehension of “how long-term objectives would position the company in five to 10 years” is excellent.

Finally, if board members want to be evaluated well, they’ll make the best impression by showing up for board meetings and being prepared: 82 percent of respondents said preparation for board meetings was very important in evaluating directors, while 77 percent said the same about meeting attendance.

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Put Predictive Coding to Work to Save E-Discovery Costs

"[C]omputer-assisted review is an available tool and should be seriously considered for use in large-data-volume cases where it may save the producing party (or both parties) significant amounts of legal fees in document review."

— U.S. Magistrate Judge Andrew J. Peck, Southern District of New York, Da Silva Moore v. Publicis Groupe & MSL Group (2012)

Is computer-assisted review, or predictive coding, the holy grail for in-house counsel? Will it finally curb the explosive growth in costs for electronic discovery in large-data-volume cases?

Not yet, but predictive coding is here to stay. If used effectively, predictive coding can be a valuable tool, significantly cutting fees generated by outside counsel to review and code documents in large, complex litigation. Using predictive coding effectively, however, typically requires buy-in from all parties — as well as the court, if one side objects to its use.

As most in-house counsel know, predictive coding relies on computer software and proprietary algorithms to determine whether electronic documents are relevant to a case. Predictive-coding software is similar to spam-filters that train a computer program to identify unwanted, mass emails.

Litigation team members feed the software a seed set of potentially relevant documents to begin training the software. After lawyers identify the seed set, senior attorneys provide additional feedback to the software, which teaches it what is truly relevant. This process may be repeated several times.

The software then analyzes the seed set and identifies common characteristics, such as people, places, words or concepts. These allow the software to create rules it can apply across all harvested documents.

Once the software is sufficiently trained and it has established these rules, the litigation team can use the software to cull responsive documents from the entire universe of data, potentially saving the client significant attorney-hours in review time.

While some have raised concerns about the accuracy of computer-assisted review, Peck wrote in Da Silva that "statistics clearly show that computerized searches are at least as accurate, if not more so, than manual [document] review." Despite this, it still may take time for lawyers and courts to accept predictive coding.

Predictive coding, like traditional methods of handling electronically stored information in litigation, works best when the parties agree on the type of electronic files to search, the custodians whose files they will search and the protocol for searching those files.

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DPAs No Longer MIA in the U.K.

On June 27, the U.K. authorities—the Director of Serious Fraud Office and Director of Public Prosecutions—put out a draft Code of Practice on Deferred Prosecution Agreements ("the Code"). The Code provides U.K. prosecutors with guidance on negotiating a deferred prosecution agreement (UKDPA), applying to a U.K. court for approval of a UKDPA, and oversight of UKDPAs after approval by the court. The UKDPA is similar to the U.S. model but with some significant differences.

Over the past century, it has become easier for U.S. prosecutors to charge and convict corporations. In 1993, in the wake of the Organizational Guidelines’ implementation, prosecutors began to break from the binary choice to either indict or not charge at all, and instead entered into arrangements not to prosecute a company, called a non-prosecution agreement (NPA), or an agreement to defer prosecution against a company—a DPA. We’ve written extensively about these agreements, starting with an article published in 2006: “Devolution of Authority—the Department of Justice’s Corporate Charging Policies” [PDF]. We wrote the article as a resource for practitioners to find out more about these DPAs and NPAs—how much companies were paying for fines, which ones were waiving privilege, and other features of the agreements. No one was writing about DPAs and NPAs at the time, with the exception of Russell Mokhiber at Corporate Crime Reporter.

DPAs and NPAs are agreements between the Department of Justice and a corporation to resolve a criminal case short of a criminal conviction, provided the company keeps its end of the bargain. Conditions typically include business and compliance reforms, cooperation, a substantial fine, and a promise to refrain from future illegal conduct. In these agreements, a company typically:

Admits to wrongdoing.Waives the statute of limitations for a period of time.Acknowledges that the agreement and the factual basis is admissible in court.Agrees that the company will no longer violate the law.Consents to help the DOJ prosecute any wrongdoers (e.g., by making employees available to testify for grand jury proceedings or at trial, and providing documents in addition to other evidence to the DOJ)Agrees that company employees will not contradict the terms of the agreement.

Under 9-28.300 of the United States Attorney's Manual (USAM), U.S. prosecutors have to consider nine factors before entering into a DPA or NPA.

U.S. Corporate Charging Factors
(USAM 9-28.300)U.K. DPA Code of Practice FactorsNature and Seriousness of OffensePervasiveness of Wrongdoing Within the CompanyAdverse Impact on Economic Reputation of U.K.Conduct Part of Established Business PracticePre-existing Compliance ProgramRemedial Actions/Post-Compliance EnhancementsAdequacy and Accuracy of Self-DisclosureFailure to Report Wrongdoing Once KnownAdequacy of Prosecution of IndividualsEffectiveness of Compliance ProgramOffense Represents Isolated Acts by Individuals

The substantive result under both DPAs and NPAs is the same: a significant monetary penalty, typically in the millions of dollars, and no criminal conviction for the company. Virtually every DPA and NPA now requires some modification to a company’s compliance program.

The U.K. approach is similar. In a UKDPA, similar to the U.S. practice, when a prosecutor charges a company with a criminal offense, proceedings are suspended. The company agrees to a number of conditions, such as paying a financial penalty and cooperation with future prosecutions of individuals. The Code notes that UKDPAs should not be considered unless in the public interest and with sufficient evidence to move forward with a case (similar to USAM 9-27.000 that federal prosecutors must consider for every case, not just corporate ones). The Code for UKDPAs provides a number of non-exhaustive factors that address whether the prosecution is in the public interest similar to the factors in USAM 9.28.300 (noted in the chart). Strangely, the U.K. factors do not specifically contemplate the collateral consequences of conviction, adequacy of other remedies, and remedial reforms.

The Code includes a process for prosecutors to initiate UKDPA discussions including confidentiality and limitations on the use of information discussed as part of UKDPA discussions (and clear guidance on how information may be used). The Code also prescribes the elements of a UKDPA including a statement of facts, start and end date, offenses covered, financial terms, and monitors. The Code includes guidance on calculations of the financial penalty and other victim-related considerations. This ensures transparency and that the public understands the penalty calculation. The guidance includes procedures for approval of a UKDPA with the court, issues related to breach of a DPA, and termination after successful completion by the company. The latter two issues are typically addressed within the U.S. version of a DPA (or NPA). The U.K. Code ensures consistency with the procedural aspects of DPA approval, breaches, and termination for British authorities.

The Code additionally prescribes selection criteria for monitors, including standards for avoiding conflicts of interest and the monitor’s role. Interestingly, the compliance features that are part of the monitor’s responsibility closely track compliance features already included in typical DOJ DPAs, including:

Code of conduct.Appropriate training and education program.Effective internal reporting procedures.A risk identification process.Third-party due diligence procedures.Gift and hospitality policy.Internal controls, including effective procurement procedures.Compliance-related contract terms.Effective audit process.Compliance policies and procedures applicable to company and joint ventures.

First, the U.K. Code does not address NPAs and requires court approval for UKDPAs. NPAs in the U.S. need no court approval and have been criticized for lack of transparency and judicial oversight. It is unclear whether an NPA, essentially a private party agreement between the DOJ and a company, would be permissible under U.K. law. Moreover, for a UKDPA, the Code of Practice suggests the court’s role is more substantive than court approval in for U.S. DPAs. In a DPA created by the DOJ, court approval focuses on the procedural mechanisms of tolling the 70-day time clock mandated by the Speedy Trial Act—18 U.S.C. § 3162—during the DPA and dismissing the charging instrument under Federal Rule of Criminal Procedure 48 after the DPA concludes.

Second, the U.K. approach fails to expressly consider collateral consequences as a factor for a UKDPA, remedial measures, or the adequacy of other remedies. These omissions in the U.K. Code do not address a major purpose of a DPA, which is to avoid an Arthur Anderson-like scenario in which thousands of employees are punished for the alleged misdeeds of a few at the company.

The Code does not provide the detailed commentary that is provided by USAM 9-28.000, which outlines what is captured in each of the charging factors. This may yet evolve in the U.K. law such that collateral consequences, remedial reforms, and adequacy of other remedies become considerations for entering into a UKDPA. The Code says that DPAs will be available to British prosecutors from February 2014. The big question now is whether this new tool will result in more corporate cases being brought before U.K. courts.

Both Larry Finder and Ryan McConnell are former federal prosecutors in Houston. Larry is the former U.S. Attorney and Ryan is a former Assistant U.S. Attorney. Larry is currently a partner at Baker McKenzie and Ryan is a partner at Morgan Lewis. The pair began writing about deferred and non-prosecution agreements in 2005. Their research was mentioned in The New York Times twice (here and here) and cited by Congress on the need for legislation on these agreements. U.K. authorities are seeking comments via email to dpateam@sfo.gsi.gov.uk. You can send suggestions for this column to rdmcconnell@uh.edu.

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Privacy Liability Arising From Credit Card Checkout

Under recent developments in state data privacy law, seemingly innocuous business practices can result in major liability for retailers.

Consider the following everyday scenario: A cashier in one of your retail stores swipes a customer’s credit card and asks the customer for her ZIP code. Without a second thought, the customer recites her ZIP code, and your cashier enters it into your electronic system. The customer leaves your store, and the cashier moves on to the next customer. Has your customer just become the newest class member in a potential class action? Is your company now a potential defendant in a class action seeking triple damages and attorneys’ fees for unfair and deceptive practices?

Unless your company has put appropriate policies and procedures in place, the answer to these questions is likely a resounding “Yes.”

Consistent with a California trend, Massachusetts’ highest court recently held that ZIP codes are “personal identification information,” and their collection during a credit card transaction can give rise to a legal claim against the retailer for unfair and deceptive practices. The decision, Tyler v. Michaels Stores, arose under a Massachusetts statute enacted in 1991. Back then, retailers would often request a customer’s bank account number or other “personal identification information” and then write it on the carbon paper form as part of the credit card transaction. To protect against identity fraud, the legislature prohibited merchants from writing personal identification information on credit card transaction forms.

Now, however, a law originally enacted to avoid abuses of the carbon copy form will be applied to the modern equivalent of the same, the electronic credit card transactions. The Tyler case effectively gives the green light to hundreds of potential class action suits—all seeking treble damages and attorneys’ fees—based on events similar to those described above. The outcome of those suits will depend on what information the merchant collected, how it was collected processed and stored, and the use to which the information was put.

The Massachusetts law applies only to the collection of information that is not required by the card issuer. Thus, if the retailer collects only what is required by the issuer, and nothing more, the retailer should avoid liability, although maybe not a lawsuit. Second, the actions the law technically prohibits are the “writing” of the personal identification on the “credit card transaction form.” Though the court held that it would apply the law to electronic as well as paper credit card transactions, it provided little guidance on what constitutes an electronic “credit card transaction form.” While still an open question, a retailer might avoid liability by storing the customer’s ZIP code or other personal identification information separately from the credit card data.

Retailers are also now providing notice to customers as to the purpose of the ZIP code request. Specifically, retailers are using signage at the check out counter to make clear that any request for a ZIP code is expressly for marketing purposes and not for purposes of the credit card transaction. Accordingly, the consumer is on notice that the request is not part of the “credit card transaction.”

A retailer may also reduce liability risk by limiting its use of any personal identification information it gathers. The Tyler court held that, at least in this instance, private lawsuits under the unfair and deceptive trade practices law follow the principle of “no harm, no foul.” That is, unless the customer can show that she suffered “injury” as a result of the retailer’s collection and subsequent use of the personal identification information, the customer should have no claim.

What, then, constitutes injury for purposes of this inquiry? The court identified “at least” two uses of the consumer’s personal identification information that would qualify. The first is direct marketing. Where the customer shares personal identification information and then receives unwanted marketing materials as a result, she has suffered an injury under the law. Second, the retailer’s sale to others of either the collected personal identification information or data obtained by using that information also qualifies as injury. The court left open the possibility that other uses of the collected information could violate the statute.

The law from other states suggests that some uses may be allowed. In California, online transactions for the purchase of music or video Internet downloads are currently protected due to the retailer’s legitimate need to obtain personal identification information to protect against fraud. California courts have expressly noted that online retailers cannot avail themselves of the built-in protections against fraud available to the traditional “brick-and-mortar” retailers, such as examining the physical card (including signature). The same rationale has been applied to self-serve gas-pump transactions.

A review of these decisions makes clear that “use” by the retailer is the key. For example, another California court held that a retailer did not violate the law by collecting information to confirm membership in a customer rewards program. So, uses of the information for incidental purposes may be permissible.

Since the first California decision in 2011, over 150 class actions have been filed there against retailers. Since the Tyler decision, at least five more class actions have been filed in Massachusetts. Accordingly, retailers that have traditionally asked consumers for personal additional information during credit card transactions should expect demand letters from plaintiffs’ attorneys hoping to represent massive classes of card users. If that describes your business practice, such a demand may be on the way.

As in-house counsel, it is thus imperative to know what information your company’s employees collect, how that information is stored and processed, and the reason you collect it. Further, preemptive measures, such as signage, should be strongly considered. While technology has rendered the carbon paper credit card transaction obsolete, the statute designed to prevent abuses in carbon paper transactions has just been reinvigorated.

Anthony A. Bongiorno and Matthew R. Turnell are partners at McDermott Will & Emery in Boston. Bongiorno is the head of the trial group in the firm’s Boston office. He has extensive trial experience in a variety of commercial matters, including product liability cases. Turnell focuses his practice in the areas of complex commercial litigation and arbitration, government investigations, and privacy and data security.

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Corporate Counsel 123: October 2012

Corporate Counsel

In the October 2012 episode of Corporate Counsel 123, web editor Brian Glaser highlights three things in-house counsel will want to know about:

The growing role of the law firm pricing director (read here and here).Tracing corporate campaign contributions with MapLight.org.Reporting from the ACC's annual event in Orlando, FL (read here and here).

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Which Firms Provide the Best Outside Counsel?

The year 2013 is just about past its halfway mark, but that still leaves six months where plenty can happen for general counsel and their corporate clients. The BTI Consulting Group’s “Benchmarking Corporate Counsel Management Strategies” report has some late-breaking trend data for GCs, including a look at the law firms that the survey says are providing the best outside counsel.

The benchmarking report draws on interviews with more than 200 in-house counsel at large U.S. corporations during 2012, 53.3 percent of which were general counsel or chief legal officers, and another 37.1 percent who report to the GC.

Toward the end of the report, BTI focuses on outside counsel and how satisfied their in-house clients are. The survey found that “650 core law firms serve large and Fortune 1000 companies” and “of these, corporate counsel nominate just 332 for superior client service.” Winnowing down even further, BTI found that only 30 firms were rated by in-house counsel as “the absolute best.”

The top 10 firms on that list are:

Jones DayMayer BrownSkadden, Arps, Slate, Meagher & FlomMcGuireWoodsSeyfarth ShawThompson HineKirkland & EllisFaegre Baker DanielsBaker & McKenzieSullivan & Cromwell

In another, perhaps more telling measure of client satisfaction, 42 are called out as those most likely to be recommended by in-house counsel to other in-house lawyers, with Jones Day and Latham & Watkins leading the field as “Most Recommended,” and the remaining 40 divided up into those that are “Predominant Recommended Law Firms” and “Strongly Recommended Law Firms.”

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Report Details Data Breaches in California

The personal information of 2.5 million Californians was compromised by 131 electronic data breaches in 2012, according to a report released Monday by the office of Attorney General Kamala Harris.

In 56 percent of the cases, customers' Social Security numbers were exposed. The retail industry reported the largest number of breaches with 34 while finance and insurance companies trailed close behind with 30.

California law requires state agencies and businesses to alert customers when their personal information is exposed. And starting in 2012, those agencies and businesses were forced to start notifying the attorney general's office as well.

The notoriety surrounding data breaches and thefts has led to a boom in sales of so-called cyberinsurance, which offers protection beyond a company's typical theft coverage, said Pillsbury Winthrop Shaw Pittman partner Vincent Morgan.

With potentially enormous costs associated with investigating and stopping a breach, notifying customers and settling third-party liability issues, cyberinsurance "is no longer a niche product," Morgan said.

Valve Corp., an online game software corporation, reported one of the biggest intrusions last year. Online hackers gained access to the Social Security numbers and payment card information of 509,000 people, according to the AG's office.

Not every breach was caused by a hacker or resulted in identity theft. And many of the protection failures were unintentional — someone misdirected an email or lost a computer storage device, according to the report.

Whatever the cause of the data intrusions, more than half of the 2.5 million consumers could have been protected if their information had been encrypted, the attorney general said.

"It is my strong recommendation that companies and agencies implement encryption as a basic protection and reasonable security measure to help them meet their obligation to safeguard personal information entrusted to them," Harris said in a prepared statement.

This article originally appeared in The Recorder.

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