Today's General Counsel, July/August 2022

JULY/AUGUS 202 2 VOLUME 1 9 / NUMBER 5 TODAYSGENER ALCOUNSEL.COM

A Contract Manager’s Perspective

Contract workflow automation Responding to a data breach Working with IT on a legal hold D&O liability The big tech antitrust conundrum $199 SUBSCRIPTION RATE PER YEAR ISSN: 2326-5000 ISSUU.COM/TODAYSGC

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contents 4 EDITOR’S DESK E-DISCOVERY

7 QUICK WINS FOR LEGAL AND IT COLLABORATION Impressive ROI on high-volume, low-risk legal matters.

By John Sanchez

JULY/AUGUST 2022 Volume 19 / Number 5

COLUMN/THE ANTITRUST LITIGATOR

20 AMENDING THE ANTITRUST LAWS TO ADDRESS BIG TECH Exclusionary conduct not per se unlawful

By Jeffery M. Cross

10 CONTINUOUS ACTIVE LEARNING FOR LITIGATION DISCOVERY “CAL” begins with human input.

By Cody Gavalier COMPLIANCE

14 PRODUCT LIABILITY LITIGATION IN FRANCE Utilizing an expert’s report instead of discovery.

By Sylvie Gallage-Alwis 16 ARE BOARD MEMBERS FULLY PROTECTED? Advice from an expert is no guarantee.

By Kenneth A. Rosen CYBERSECURIT Y

18 THREE BEST PRACTICES FOR PREPARING A DEFENSIBLE BREACH RESPONSE PLAN "Double extortion," and an OFAC ruling up the ante.

By Ray Pathak

FEATURES

22 INTERVIEW WITH ANDRA ROBINSON Contracts and contract cycles at Airship.

24 CONSIDER CONTRACT MANAGEMENT SOFTWARE FOR LEGAL DEPARTMENTS Intelligent workflow automation and life cycle management.

By Sean Heck JULY/AUGUST 202 2 TODAYSGENERALCOUNSEL.COM

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EDITOR’S DESK

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n this issue we feature an interview with Andra Robinson, Assistant General Counsel at Airship, a mobile app company.

Robinson deals almost exclusively with contracts which become

more complicated as customer concerns about data privacy and regulation increase, to the point where they may include separate security agreements. In contract negotiations, she estimates that privacy concerns and the fast-changing regulatory landscape come up in about eighty-five percent of discussions. The main reason for those concerns is the financial penalty companies risk for not taking proper care of customer data. In an article by Ray Pathak, best practices for preparing a response when customer data is breached are discussed.

Defensible response is a key step in minimizing the risk of financial penalties.

Jeffery Cross, in his column, points out some problems with legislation to address the conduct of big tech through the antitrust laws, Sean Heck argues for the advantages of contract management software, and Kenneth Rosen shows how directors and officers can follow the advice of experts and still be liable for breach of fiduciary duties. John Sanchez takes up a perennial process issue: How legal and IT departments can cooperate to their mutual advantage.

Bob Nienhouse, Editor-In-Chief bnienhouse@TodaysGC.com

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E-DISCOVERY

Quick Wins for Legal and IT Collaboration

By JOHN SANCHEZ

H

ave you ever forgotten to create a legal hold only to get a multi-milliondollar sanction ordered against your company?

Even if you’ve never lived your worst nightmare, the events that became your most significant compliance issues probably didn’t start big — or concern many people. However, while each legal event may not necessarily involve terabytes of data, they collectively consume considerable personnel time and resources. From internal investigations to responding to subpoenas to privacy compliance and more, this steady stream of small legal events combined with leadership’s calls for corporate digital transformation requires frequent and extensive collaboration between the office of the general counsel (OGC) and the company’s IT department. As a result, the little legal events add up.

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As elusive as they may seem, opportunities do exist for legal and IT teams to collaborate more effectively — not just to get a handle on the growing pile of little legal events in less time but to reduce their risks and costs to the business. Let’s take a look at a few ways the OGC and IT teams can work together to achieve these efficiency and compliance gains.

• Start small by targeting highvolume, low-risk legal events.

No legal team wishes to spend their whole week creating a legal hold, yet it’s a common occurrence.

The disproportionate spend and personnel resources required to respond to small legal events like holds make a strong case for enterprise investment in software tools whose use can save money, time and resources, while at the same time managing risks and compliance defensibility. Although there

are always areas where the OGC and IT teams can work towards something better, faster and cheaper, starting small with lowrisk, high-success tools is a tried and true strategy for building consensus and confidence among these stakeholders and their teams.

Legal hold compliance is one such high-volume, low-risk legal event that consumes an inordinate amount of OGC and IT time and resources, particularly for companies that manage these repetitive workflows manually. For companies with distributed teams working across time zones and multiple source data repositories subject to legal hold, the inefficiencies of these manual workflows only compound, and the OGC and IT teams will often struggle to coordinate sending notices and preserving data across enterprise repositories.

As a result, it can take weeks or even months for preservation to come into full legal hold compliance.

• Enable self-service legal hold with integrations.

Starting from scratch every time your company has to issue a legal hold is a sure sign that implementing self-service software could return efficiency gains right away. These tools enable the business user to execute all steps of a target workflow from end to end.

For legal hold, the OGC user should be able to manage the processes of sending preservation letters and tracking custodian acknowledgment entirely, while at the same time preserving data for identified custodians. In each aspect, integration of your legal hold software tool with enterprise applications is fundamental to success.

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Pro tip: Managing the termination process in the context of legal hold requires a tool that can send automatic reports to IT and legal stakeholders, and integrate with your HRIS (human resource information system, e.g.,Workday) and computer asset management applications to minimize risks of unwitting spoliation.

• Draft and send preservation letters faster with custodian directory integration.

OGC teams can centralize their legal hold playbook with a self-service legal hold platform.

These tools’ integrations with corporate directories such as Google Directory and Active Directory automate custodian identification.

Next, streamlining the drafting and sending of preservation letters and tracking of custodian acknowledgments provides measurable productivity ROI for both the OGC and IT departments. Adding new custodians or updating preservation letters is seamless. Comprehensive activity logs underpinning the entire process bolster defensibility and act as a knowledge management and transfer tool.

Pro tip: Automatic, built-in acknowledgment reminders are a must-have for any legal hold tool.

• Execute in-place preservation (IPP) quickly via API integrations.

If you fear (or shudder to remember) opposing counsel alleging spoliation because you forgot to put Google, Office365 and Slack on hold, self-service legal hold platforms can help you reliably prevent any repeats. Equipped with application programming

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interface (API) integrations with data source repositories that bestin-class self-service legal hold tools feature, you can minimize the risk of compliance leakage by issuing a new legal hold notice while automatically preserving data.

Say the OGC user creates a new hold and sends the preservation letter to identified custodians.

With fully automated integrations, the data for each identified custodian could be preserved in place instantly via API integrations that automatically create holds for them in Google Vault, Office 365, Box Governance, Code42, Slack, Box and Dropbox.

Pro tip: With IPP, there is no need to make unnecessary copies of your data in thirdparty archives when you can instead reduce monthly storage fees and minimize the risks of data access and copies living in multiple repositories – a quick win for both the OGC and IT in the eyes of the CFO and CISO. • Select the right self-service legal hold tool.

Resolving key challenges can provide a framework for selecting a self-service legal hold software platform for your business — and earning serious kudos for bringing in the right one. Here are some considerations to take into account when choosing legal hold software: ■ ■

■ ■ ■

■

What are its security protocols?

Can it automate a legal hold playbook?

How does it help reduce risks?

How does it help lower costs?

Does it integrate with our organization’s enterprise applications and data sources?

Is it easy to use, including for legal stakeholders?

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■ ■ ■

■

■

■

How scalable is it?

Does it support single sign-on?

What reporting capabilities does it come with?

What activity logs does it come with?

How does it support knowledge management and transfer among team members and employees?

How responsive are customer support and training?

When procuring a legal hold management application requires measurable ROI on productivity and compliance, opting for a self-service platform that integrates with enterprise applications is critical to achieving that ROI. Workflow automation complemented by API integrations streamlines compliance both with sending preservation letters and preserving electronically stored information. In addition, centralized tooling brings teams and playbooks together into a single system of record with a complete audit trail of legal hold compliance.

By bridging the gap between legal and IT, you can achieve quick wins in confidence, productivity, morale and collaboration.

John Sanchez is Senior Director, Product Strategy, DISCO. He leads teams that build and implement legal technology solutions that optimize operations of global legal departments.

He is a recognized authority on legal outsourcing and compliance automation.

Prior to DISCO, he was head of legal technology at Congruity360. jsanchez@csdisco.com

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E-DISCOVERY

Continuous Active Learning for Litigation Discovery

By CODY GAVALIER

T

here is no denying that the technological revolution has had a substantial impact on every major industry, including the legal sector. While many technologies have influenced the legal landscape, one is altering the litigation discovery process: Continuous Active Learning, or CAL. It has had the most significant impact on the document review process, so much so that it has become a necessity in the current legal ecosystem.

WHAT IS CAL? Artificial Intelligence (AI) is increasingly being used to analyze

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documents and predict whether they’re relevant to specified criteria. CAL is the most effective and popular method of training AI for use in eDiscovery. As the name suggests, the model learns continuously: It updates its predictions regularly with new coding decisions from human reviewers.

While there are no other technologies quite like CAL, it’s has similarities to the popular music application “Pandora.”

When using Pandora, the application monitors the artists and genres of music that you listen to most frequently while providing a “thumbs up” or “thumbs down”

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to specific songs. Over time, Pandora presents you with more of the songs and artists that you like while screening out music that you have responded negatively to in the past. Similarly, CAL learns what is relevant from reviewer feedback, makes suggestions based on that feedback, and updates its predictions until it reliably provides reviewers with relevant documents. It is also active in its own learning process, selecting documents for human review that will be most helpful in improving its predictions.

This tool can be used in a variety of innovative and valuable ways, BACK TO CONTENTS

but it is still not widely adopted.

A recent survey found that 36 percent of practitioners were not using it. CAL can be a powerful tool to help practitioners and their clients. The technology helps attorneys honor their fiduciary duty to their clients by verifying the thoroughness of the discovery process and providing faster access to insights and evidence.

USE CASES FOR CAL CAL solutions are not meant to replace the human element in document review or litigation discovery. They enhance the effectiveness of the human component by building a predictive model to rank documents based on relevance. These rankings can then be used to augment or supplement the review process.

CAL FOR QUALITY CONTROL One common myth is that CAL requires an all-or-nothing approach — that human review is automatically eliminated once a litigation team leverages CAL. In reality, CAL augments human review for purposes like quality control (QC), providing an AI-generated opinion about a document’s coding to double-check against human reviewer decisions.

The model can help uncover presumptively incorrect documents beyond that capability of keywords and targeted searching.

Firms and legal departments should look to deploy CAL for QC as a low-risk method of adoption since attorney eyes can still be placed on all documents.

With near-immediate benefits and minimal setup to achieve these results, this approach can lead to as much as a 30 percent decrease in total QC hours, which lowers overall review cost without BACK TO CONTENTS

eliminating the human element from the review process.

AVOIDING IRRELEVANT DOCUMENTS Parties seeking to control litigation spend can look to CAL to drive significant cost savings by reducing the need for human review or augmenting workflows to incorporate global review teams. In a recent case involving more than four million documents, CAL use immediately saved roughly 60,000 review hours (the equivalent of 250 months of full-time work) and an estimated $3.5 million in upfront fees. Subject matter experts trained the CAL model for responsiveness, and immediately 900,000 documents were excluded from the review.

While elimination of first-pass review is most considered, CAL opens the door to risk-balanced work allocation using global teams.

Hesitant parties may elect for human review of all documents; however, CAL can help segregate presumptively non-responsive documents for human review in low-cost geographies. This can be a very effective method of reducing overall cost.

SPEED TO INTELLIGENCE CAL helps litigation preparation by prioritizing presumptively relevant documents for human review and doing so before review fees pile up. Documents that can make or break cases are served up quickly through prioritization. CAL accelerates the process but doesn’t eliminate the use of human review because it recognizes which documents need human eyes first. In this use case, CAL saves time and money by eliminating the need for the review team to search through unnecessary information like bulk

calendar items. Prioritized review is like getting a second opinion, with CAL as the first review option.

CAL also leverages existing work product to provide rapid insight into new case data. For example, key or “hot” documents identified during review can be used to train a model that is then applied to inbound opposing party productions to identify records relating to the same concepts.

THE BENEFITS OF CAL One notable advantage of CAL technology is its ability to learn.

Instead of the protracted learning process during manual, linear review, CAL models can be trained quickly and iteratively throughout the review process. Although a human reviewer must manually start the process to provide the model feedback, the algorithm can begin predicting ranks after review of only five relevant and irrelevant documents.

This initial sample helps the algorithm establish a baseline, which is then used to queue up additional relevant documents. As the reviewer progresses through the document assessment process, the software will make more and more accurate suggestions.

Another significant advantage of using CAL is that it can facilitate the elimination of first-pass review. Traditionally, first-pass reviews waste time and resources.

CAL eliminates this barrier to productivity by actively learning and prioritizing relevant documents, allowing smaller, specialized teams of highly qualified human reviewers to focus on privilege, hot documents and other areas of vital importance to the case.

CAL allows attorneys to assess relevant documents more rapidly, speeding the entire case preparation process. This streamlining

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leaves them with more time to conduct investigations, plan case strategies or interact with clients.

CAL CAN LOOK BEYOND KEYWORDS CAL can look beyond keywords to queue up documents relevant to the review process. A recent case study examined the impact of CAL’s review and queue capabilities.

Though search terms provide clarity for the review process, you don’t want an algorithm to ignore a “lunch meeting” because the search term was looking for “dinner.” In this case, CAL can eliminate unnecessary documents, while also serving up relevant “hot” documents. In a case study of 80,000 documents, CAL served up a little more than 4,000 that needed review. This search saved an estimated 2,000 review hours and approximately $65,000.

OVERCOMING CHALLENGES OF CAL DEPLOYMENT Technology assisted review (TAR), including CAL, has been well accepted by the courts since at least 2015, when U.S. Magistrate Judge Andrew J. Peck noted that “the case law has developed to the point that it is now black letter law that where the producing party wants to utilize TAR for document review, courts will permit it.”

Despite the courts’ acceptance and significant benefits associated with using CAL for litigation discovery and QC purposes, 36 percent of legal teams haven’t used any of these technologies in their practices. Clearly, the benefits show that it’s time for that to change.

Successfully implementing any new technology involves overcoming a set of internal and external challenges. One of the most notable barriers to deploying CAL technologies is a widespread

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lack of buy-in from outside counsel and litigation teams. Qualms over an all-or-nothing approach coupled with the elimination of the human element remain, even though these fears are unfounded.

A well-trained review team coupled with the technical and workflow expertise to deploy this powerful technology has proven itself across litigation types and industries. A lawyer’s duty to communicate under ABA Model Rule 1.4 requires that attorneys “reasonably consult with the client about the means by which the client’s objectives are to be accomplished.” Fortunately, fulfilling this requirement with respect to CAL is usually as simple as presenting stakeholders and decision makers with relevant case study data.

Upon observing the substantial time and cost-saving benefits of CAL solutions, the overwhelming majority of stakeholders will be open to at least testing the technology for review purposes.

THE WORRY OF “DIRTY DATA” If CAL technology has any real shortcoming, it is the “garbage in/garbage out” phenomenon that plagues any active learning solution. Although CAL technology is extremely resilient, the efficacy of CAL solutions are reliant on the input of the reviewer. CAL is most effective when the reviewer is a subject matter expert who exhibits consistency during the learning process. CAL’s resilience can eventually overcome an initial lack of subject matter expertise as reviewers gain familiarity with a matter, but the time to the model’s peak efficiency will be affected.

Therefore, all team members must be trained on the technology prior to deployment.

Organizational leadership should also establish document review

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best practices to ensure that all items are assessed using standardized guidelines.

USING CAL IS NECESSARY FOR LITIGATION Due to the sheer complexity and volume of modern data sets, using CAL has become a necessity for in-house attorneys and private firms. The courts have frequently upheld the use of continuous active learning over simple keyword searches because of its capabilities. CAL provides the most pragmatic solution for increasing organizational time and fiscal efficiency, enhancing the accuracy of the document review practices and minimizing the need to use time-consuming manual processes.

For organizations searching for a way to enhance litigation discovery and document review practices, CAL is the solution. ABA Model Rule 1.1 requires attorneys to bear a duty to provide competent representation to their clients.

This includes the duty to stay “abreast of changes in the law and its practice, including the benefits and risks associated with relevant technology.” (ABA Model Rule 1.1, cmt. 8.) Given the current acceptance in courts and wide range of potential use cases, the time may soon come when failing to consider CAL will be viewed as a failure of the practitioner’s ethical obligations.

Cody Gavalier is Director of Review Solutions in the Global Litigation Services group at UnitedLex. He is responsible for assessing and optimizing review processes and application of technology throughout the eDiscovery life cycle.

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PRESS RELEASE

2022

KLDiscovery Launches Regulatory Technology Offering with Compliance-Focused Nebula Intelligent Archive™ Powered by Shield Coupling Information Governance capabilities with the Nebula Ecosystem’s best-in-class eDiscovery platform.

MCLEAN, Va. — (BUSINESS WIRE) — KLDiscovery Inc. (“KLDiscovery” or “KLD”), a leading global provider of electronic discovery, information governance and data recovery technology solutions, today announced the release of Nebula Intelligent Archive, made possible through a new partnership with Shield, the world’s leading workplace intelligence platform for compliance teams that is disrupting existing legacy vendors with its award winning Artificial Intelligence (AI)powered communication compliance and RegTech platform.

Nebula Intelligent Archive, powered

by Shield, brings the power of Artificial Intelligence, Machine Learning, and Natural Language Processing to monitoring and surveillance, allowing compliance teams to conduct efficient investigations, do more with less, and stay ahead of emerging

trends in enforcement. Coupled with Nebula Intelligent Archive’s unparalleled data portability, deployment flexibility, data source coverage, and integration options, Nebula Intelligent Archive’s industry-leading time to ROI brings unprecedented value to the Compliance and Information Governance space.

“Our solution will allow KLDiscovery to further bolster their forensic investigations with Nebula Intelligent Archive, thanks to our cutting-edge ability to automatically capture, archive and alert on specific content and data that may be considered nefarious or illegal,” said Eran Noam, CBO at Shield. “This a great opportunity to work with KLDiscovery and its clients to ensure they are getting a complete and advanced solution, fit for the modern age, while also providing further validation for our in-demand technology.”

Shield takes the tedious manual compliance process and automates it by identifying potential breaches, analyzing alerts, and providing comprehensive reports to organizations, saving compliance teams, financial institutions, and other organizations, time and money.

“Shield is leading the market in RegTech innovation and this partnership represents a win for KLDiscovery’s customers. Coupling their capabilities with the Nebula Ecosystem’s best-in-class eDiscovery platform means that we can provide our customers with a comprehensive solution to a host of challenges related to data volumes and complex requirements across the entire compliance, investigations, and litigation life cycle,” said Aaron Gardner, Vice President of Compliance, Information Governance, and Archiving at KLDiscovery.

Information Governance, Regulatory Compliance, Data Protection, and Privacy are at a critical point across multiple industries,“ said KLDiscovery CEO Chris Weiler.

“Pre-discovery best practices are evolving and moving quickly from conceptual discussions to actual implementation. Partnering with a technology pioneer like Shield and introducing Nebula Intelligent Archive demonstrates our commitment to being at the forefront of that evolution and gives our clients incredible value through innovation and best-in-class service and consultation.”

Nebula Intelligent Archive joins Nebula Archive (formerly Nebula Big Data) and Nebula Legal Hold, rounding out the Nebula Ecosystem of considerable pre-event, Information Governance, and Compliance capabilities.

For more information, please visit KLDiscovery’s Governance and Archiving Solutions.

COMPLIANCE

Product Liability Litigation in France

By SYLVIE GALLAGE-ALWIS

F

oreign manufacturers are often surprised to be first introduced to a French product-related issue by being served with a summons to appear before a French Court. This is a standard process in France. Here is what you need to know about what happens next.

There is no provision under French civil procedure for discovery/disclosure of documents, nor ex parte expert or witness reports to be submitted. Expert proceedings are used to gather elements of fact and provide the court with an independent authorized technical opinion.

As such, when the solution of a dispute is dependent on a technical issue, the plaintiff asks for the appointment of an expert in summary proceedings — or emergency summary proceedings — before she or he launches any case on the merits. An order appointing an independent expert may be obtained within weeks, days or hours, depending on the urgency of the matter.

It is very difficult to oppose a claim for expert proceedings unless the defendant sued is obviously the wrong party, for instance, they have not manufactured/ sold the product at issue. Courts appoint an expert in 99 percent of cases.

A hearing for the appointment of an expert(s) tends to be quite short. Generally, only the scope of the expert’s assignment is debated.

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The parties may suggest experts in the field in question, but the court has discretionary power to decide who it will appoint. Usually, the expert is selected from an official list registered with the court of appeal that has jurisdiction over the case or with the French Supreme Court.

The party that is to pay the expert’s advance fees (the plaintiff, unless provided otherwise in the court order) must deposit the amount set forth in the order with the clerk of the court.

Various meetings will generally be convened by the expert.

These meetings are attended by the expert, the parties’ lawyers, the parties’ representatives (managers, business and/or technical people, as required) and, if needed, by ex parte technical experts retained by the parties. The expert questions the attendees on the matter at stake and requests the production of necessary documents.

The merits of the case are not discussed. The expert may only address technical issues.

The expert proceedings are closed when the expert files her

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or his final report with the clerk of the court, a copy of which is sent to the parties’ lawyers. The report must contain all pieces of information necessary to understand the issues at stake and the expert’s conclusions.

Should the expert’s conclusions support plaintiff’s claim, then she or he needs to initiate proceedings on the merits, requesting the court to rule that the claim is well founded against the party or parties deemed to be liable, order compensation of the loss sustained, and rule that the defendants are to bear the expert’s costs as well as part of the legal fees incurred.

The expert’s report is nonbinding on the court. However, in most cases, the complexity and technicality of the issues at stake mean that the court adopts the conclusions of the expert. This is why it is important for manufacturers to be as involved as possible in the expert proceedings. The report will be crucial in determining the liabilities.

Sylvie Gallage-Alwis, a Partner at Signature Litigation, is both an Avocat à la Cour in France and a Solicitor in England and Wales.

She specializes in complex product liability disputes, product safety, toxic tort, mass litigation/class action, regulatory compliance and environment.

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COMPLIANCE

Are Board Members Fully Protected?

By KENNETH A. ROSEN

A

re board members fully protected against officer and director liability claims if they rely on management and the company’s professional advisors in making key decisions?

Maybe not.

In evaluating transactions outside the ordinary course that will materially change a company’s balance sheet or capital structure, boards must be more diligent than simply accepting the judgment of management.

Subsections (e) and (f) of § 8.30 of the Model Business Corporation

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Act say: “In discharging board or board committee duties, a director who does not have knowledge is entitled to rely on information, opinions, reports or statements, including financial statements and other financial data, prepared or presented by any of the persons specified in subsection (f).”

Subsection (f)(1) specifies officers or employees of the corporation whom the director reasonably believes to be reliable and competent in the functions performed or the information, opinions, reports or statements provided.

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Subsection (f)(2) adds: “[L]egal counsel, public accountants, or other persons retained by the corporation as to matters involving skills or expertise the director reasonably believes are matters within the particular person’s professional or expert competence, or as to which the particular person merits confidence.” And then subsection (f)(3) says that a board member may rely on: “[A] board committee of which the director is not a member if the director reasonably believes the committee merits confidence.”

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However, there are several limitations in the Act. The director: • Has to actually rely on the information; • Cannot rely on the information if on notice that reliance is unwarranted; • Must have some reason to believe that the information being provided is pertinent and relevant; • Must have cause to believe that the information relied upon is within the expertise of the person providing it; • Cannot rely on persons who have a financial interest in the transaction; • Cannot rely on expert advice if it is clearly inconsistent with other information provided; • Must question the conclusion of a report if the circumstances indicate that it is not well-founded.

Under Delaware law, the reliance statute states that members of the board of directors shall, in the performance of duties, be “fully protected in relying” upon

the case. But, in its analysis, the Court referred to it in a footnote, as follows: “Along similar lines, if the directors followed a process or reached a result falling outside the range of reasonableness, but did so in reliance on the advice of experts, they could be found to have breached their fiduciary duties under the applicable standard of review and yet be ‘fully protected’ against liability under Section 141 of the DGCL.” Even conscientious directors may be deemed to have breached their fiduciary duty by following advice received from the expert.

The lesson learned is that when certain matters come before a board, they should cause board members to be inquisitive. Some examples are transactions, proceeds of which will be used in whole or in part to make payments to insiders or related parties; transactions where the company’s capital structure will be materially changed; a transaction whereby creditors of the old company will carry over to the new company; when the company is financially distressed; and where

board members made the right inquiries of all the right people to determine the right questions to be asked, and validated and understood the answers.

Not having financial liability is good, but a finding that the director breached his fiduciary duties can cause reputational damage. You cannot be too cautious.

Kenneth A. Rosen is Of Counsel and Chair Emeritus, Bankruptcy & Restructuring Department, Lowenstein Sandler.

He advises on restructuring solutions, including Chapter 11 reorganizations, out-of-court workouts, financial restructurings and litigation. krosen@lowenstein.com

Even conscientious directors may be deemed to have breached their fiduciary duty by following advice received from the expert. experts. However, are they really fully protected? Now comes the “but. . . . ” In a footnote to its decision in In re Rural Metro Corporation Stockholders Litigation, March 7, 2014, the Delaware Court of Chancery touched on what it means for directors to be “fully protected” when they rely on information, opinions, reports or statements provided to them.

Section 141(e) was not at issue in BACK TO CONTENTS

significant shareholders or members of management may benefit from the transaction.

With respect to material, out-of-the-ordinary course transactions, it is not a two-party discussion between management and the board. It should be a three-party discussion between the board, management and the company’s professional advisors in order to demonstrate that JULY/AUGUST 202 2 TODAYSGENERALCOUNSEL.COM

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CYBERSECURIT Y

Three Best Practices for Preparing a Defensible Breach Response Plan

By RAY PATHAK they happen. Instead, they must be proactively engaged in defining an incident response plan, training the staff to carry out the plan and coordinating the activity during the event. And they need to start now.

NEW CHALLENGES FOR THE GENERAL COUNSEL

F

ootball teams understand that it’s hard to be a contender without an elite quarterback running their offense.

A top-tier quarterback excels at real-time situational awareness, clear communication with key personnel, and making sound decisions that put the team in a position to win.

In a breach situation, the general counsel must serve as the primary signal-caller, ensuring that all of the legal facets of incident response are coordinated

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across a large and growing set of internal and external stakeholders.

The ACC’s 2021 Chief Legal Officers Survey found that “cybersecurity, compliance, and data privacy top the list as the most important issue areas for businesses rated by CLOs. However, this year for the first time, cybersecurity has overtaken compliance for the number one spot.”

Because the stakes are so high, the general counsel can no longer afford to be passive and react to data incidents and breaches as

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Beyond navigating through evolving regulatory challenges, the general counsel must also grapple with today’s most pressing cyberthreat — ransomware, and the real possibility that a data breach will expose them to financial penalties for not taking proper care of their customer’s private information.

The Department of the Treasury’s Office of Foreign Assets Control (OFAC) recently ruled that the payment of a ransom might violate federal anti-terrorism laws.

This means organizations may find themselves in an impossible position: Either pay up to save your data and risk criminal exposure or face expensive fines for violating data privacy laws.

And if that weren’t bad enough, criminals are getting more devious with their tactics. New threats are being deployed, such as “double extortion,” by which ransomware operators not only demand payment to decrypt files but also threaten to leak sensitive data as a means to exert additional pressure to extract payments. For general BACK TO CONTENTS

counsel, today’s threat landscape has become a veritable minefield of risk and liability.

THREE STEPS TO BOLSTER YOUR RESPONSE POSTURE Although a comprehensive breach response will require an investment of time and resources, three key steps should be common to every practice.

1. Assess Your Notification and Reporting Requirements.

Not all incidents are created equal. Reporting requirements can vary significantly according to jurisdiction, industry or size.

The standards that regulators

communications should be established, including what can be communicated, the sequence of communications and how those communications should be delivered.

2. Build a Rapid Response and Notification Team.

Every minute counts when it comes to responding to a data breach in terms of mitigating the damage, as well as ensuring that each of the stakeholders fully understands its role and responsibilities. An incident response team should be cross-functional, with the roles and responsibilities of each team member clearly

The Department of the Treasury’s Office of Foreign Assets Control recently ruled that the payment of a ransom might violate federal anti-terrorism laws. are setting to hold organizations to account vary significantly, yet there are no exceptions made based on an inability to keep pace. Throughout the response timeline, it is crucial that the general counsel will be able to manage the flow of information within the organization as well as with external stakeholders. This includes the regulators, the technical team dealing with the fallout and restoration of services, the privacy and legal teams, outside counsel, management, shareholder relations, and the board and key investors.

Of course, just because a breach has been mitigated, the general counsel’s job isn’t done.

Ensuring the accurate and transparent flow of information is also essential post-breach. A baseline set of communication guidelines for business-critical and urgent BACK TO CONTENTS

defined, and should include stakeholders from the C-suite and the board as well as from legal, operations, HR, PR/communications, engineering and so forth.

A modern response plan must also be defensible. It should, for instance, be able to demonstrate in the event of a breach how an attacker was able to establish and escalate administrative rights, or determine what jurisdictions are in play and what the decision process is to determine reportability in each jurisdiction. It’s also important to remember that it’s not enough to have a plan. Any good plan needs to be regularly tested and refined to ensure that what’s been mapped out on paper also works in a real-life situation.

effective in their response typically resides in departmental silos, hampering collaboration efforts that will ultimately delay a timely response. A unified legal governance, risk and compliance (GRC) strategy can help connect the people, processes and technologies needed to ensure compliance, reduce risk and optimize operations to meet the tight timelines required of these regulations.

Those that have a unified legal GRC approach will have greater visibility into their data, will be able to better assess the impact that a breach will have on their organization, and will be able to manage the specific response tasks in a more holistic and efficient manner. Those that do not will be left with siloed approaches that misrepresent their risk exposure, and have the potential to fail compliance due to a lack of available information.

Although no amount of careful planning will guarantee that your organization won’t become a victim of a data breach, having a thorough and battle-tested plan in place will serve as a vital roadmap in the event that the unthinkable actually happens.

Ray Pathak is Exterro’s Vice President of Data Privacy Solutions and leads the company’s privacy solutions strategy. Ray has been involved in the privacy space for over 15 years as a privacy operations leader and privacy software business executive. Prior to joining Exterro, he led Nymity as COO, and led the Privacy and Information Security program for Target Canada.

3. Unify your Governance, Risk and Compliance Silos.

The data that a team needs to be JULY/AUGUST 202 2 TODAYSGENERALCOUNSEL.COM

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COLUMN / THE ANTITRUST LITIGATOR

Amending the Antitrust Laws to Address Big Tech

By JEFFERY M. CROSS

I

n April, I participated in a debate at the Dole Institute of Politics at the University of Kansas. The topic was whether the antitrust laws should be amended to address conduct of Big Tech. I took the position that the current antitrust laws were sufficient. A key point I made during this debate was that a monopoly is not illegal. Indeed, in a market economy, we want to encourage producers to strive for a monopoly by innovating or using business acumen. The mere possession of a monopoly is not only not unlawful,

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it is an important element of a freemarket system.

It is also well-established that monopolists are both expected and permitted to compete. As courts have stated, a monopolist is not obliged to “watch . . . the quality of its products deteriorate and its customers become disaffected” and “lie down and play dead” because “even a monopolist is entitled to compete.” To encourage the risk-taking that results in innovation, we reward the producer lawfully establishing a monopoly with monopoly

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profits, at least for the short term.

The theory is that new entrants will be attracted by the monopoly profits and will drive profits back to competitive levels.

However, aspects of several Big Tech firms — Facebook, Google, Amazon — create substantial barriers to entry that hinder this mechanism. Perhaps the most significant is the so-called “network effect,” in which a business becomes more valuable to users the more people use it. For example, the more people that are on Facebook, the more developers BACK TO CONTENTS

write applications for Facebook.

The more applications that are written for Facebook, the more consumers are attached to using Facebook.

Senator Amy Klobuchar and other senators introduced a bill in February 2021 to amend the antitrust laws to deal with conduct by Big Tech perceived to be anti-competitive, which the sponsors argue is not achieved by the current antitrust laws. The bill is titled the Competition and Antitrust Law Enforcement Act of 2021. It has two main sections — one dealing with mergers, one dealing with exclusionary conduct. It is this second aspect of the bill that I would like to discuss.

The bill defines “exclusionary conduct” as conduct that “materially disadvantages one or more actual or potential competitors” or “tends to foreclose or limit the ability or incentive of one or more actual or potential competitors to compete.” This definition is consistent with traditional antitrust

capture unsatisfied customers from an inefficient rival, whose own ability to compete may suffer as a result.” The Court went on to state that “[t]his is the rule of the marketplace and is precisely the sort of competition that promotes the consumer interests that the Sherman Act aims to foster.”

How then should the law distinguish between conduct that affects a rival but benefits consumers and conduct that ultimately harms consumers? This is where the Klobuchar bill stumbles. The bill makes exclusionary conduct “that presents an appreciable risk of harming competition” unlawful.

The key is what is meant by the term “harming competition.” If it means harming a rival or competitor, then the bill clearly runs afoul of the Supreme Court’s view of a monopolist being entitled to compete, even if such conduct affects an inefficient rival. However, if the phrase means harming the competitive process or harming consumers, then the bill leaves open many questions.

The bill proposes exceptions to the prohibition of exclusionary conduct. These exceptions include when pro-competitive benefits of the exclusionary conduct eliminate the risk of harming competition or there are new entrants that eliminate the risk of the conduct harming competition. These exceptions raise the same question, what does the phrase “harming competition” mean?

How, then, do the current antitrust laws address exclusionary conduct? The best model can be found in the District of Columbia Court of Appeals’ 2001 decision in the Government’s case against

The court set a step-wise, burden-shifting approach to determine whether exclusionary conduct violates Section 2 of the Sherman Act. law. Anti-competitive conduct of a monopolist is “exclusionary” conduct affecting rivals. The monopolist is able to lawfully charge consumers monopoly prices, so we focus on the impact of the monopolist’s conduct on rivals.

But if a monopolist is able to compete, its conduct will affect rivals. The Supreme Court has noted that “an efficient firm may BACK TO CONTENTS

Microsoft. There the court set a step-wise, burden-shifting approach to determine whether exclusionary conduct violates Section 2 of the Sherman Act. Under this approach, the plaintiff has the initial burden of establishing a prima facie case of anti-competitive effect. If the plaintiff is successful, then the burden shifts to the defendant to proffer a pro-competitive justification. If the defendant does so, the burden shifts back to the plaintiff to show that the proffered justification is not cognizable under the antitrust laws, or that it does not fit the facts of the case, or that the restraint is greater than necessary to achieve the proffered justification. If the defendant’s justification survives, then the plaintiff has the ultimate burden of establishing that the anti-competitive effects are greater than the pro-competitive benefits.

The Klobuchar bill to amend the antitrust laws to address perceived anti-competitive conduct of Big Tech has fostered an important conversation regarding the adequacy of current antitrust law. The bill is a step in the right direction, but clearly needs further clarifications to avoid ultimately harmful, unintended consequences.

Jeffery Cross is a columnist for Today’s General Counsel and a member of the Editorial Advisory Board. He is a partner in the Litigation Practice Group of Freeborn and Peters LLP and a member of the firm’s Antitrust and Trade Regulation Group. jcross@freeborn.com

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Interview With Andra Robinson

A

ndra Robinson is Associate General Counsel at the app experience platform Airship.

She was formerly the General Counsel for

Concord, a leading contract management SaaS platform, where she had responsibility for all legal, commercial and compliance matters. She is licensed to practice in California and holds a Certified Information Privacy Professional certification.

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What is Airship, and why are contracts and contract cycles central to what it does as a company?

How have privacy regulations impacted the contract cycle, and what problems do those impacts create?

Airship helps brands master mobile app experiences. At the dawn of apps, Airship actually powered the first commercial messages, and has since expanded with a data-led approach to all re-engagement channels — mobile wallet, SMS, email. Our enterprise Software-as-a-Service (SaaS) platform AXP (short for App Experience Platform), helps product, digital or marketing teams create and adapt rich native app experiences without ongoing developer support.

Contracts are central to guiding Airship’s relationship with our customers. The market is increasingly conscious of privacy and data compliance regulations, so our contracts with customers have become more complex. Now they may include the main services agreement, as well as separate data and security agreements. Thinking through all of the data compliance considerations for our customers from the start of the sales cycle means faster contracting cycles, and ultimately faster go-live and deployment cycles for our customers’ apps.

Our customers are routinely working at the forefront of mobile applications. Interactions with their own customers and questions around complying with the evolving privacy landscape are fundamental to how the mobile app will function. These types of questions are no longer exclusive to companies concerned with EU transactions because of the General Data Protection Regulation. Questions about privacy compliance come up in almost all of our pre-sale evaluation and contracting conversations with customers, regardless of their location. For customers based outside the United States, the contract cycle must include time to build up additional trust in how we will protect their data once we go live. Those considerations can typically add 30-90 days to the contract cycle, meaning that brands’ marketers and app developers have to pause their projects while all the data protection agreements are finalized.

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BACK TO CONTENTS

How do you keep the contract cycle as short as possible?

From the beginning of development for Airship’s Application Extension Platform, the company has been hyper-focused on these issues. We took particular care to incorporate the principles of Privacy

by Design throughout the process. The contracting transaction very much follows the same spirit. Our legal and security teams work to evaluate the contract terms so they align with the evolving privacy ecosystem.

The most effective way is to have a practical conversation from the start about how data will be handled, and getting as much of the data privacy compliance information passed through the teams in charge of compliance approvals. We mapped our security policies and measures with the EU guidelines on GDPR compliance. We also make sure to give our customers information pre-sales, including talking through their specific use case, determining the types of data that will be sent through their systems, breaking down the security measures in place, and giving any other information needed for them to conduct data mapping or transfer impact assessments. Legal and privacy professionals need to have a tremendous amount of knowledge of how their company’s product works, and the specific use cases customers want to enable.

on working with our Senior Contracts Manager to improve team operations and efficiency. We are a small and mighty legal team, so another large part is pitching in on all other aspects we need to help with, including vendor negotiations, which are also heavily impacted by privacy compliance requirements.

Navigating the alphabet soup of privacy regulations that change almost weekly — the GDPR, CCPA, CPRA and more — is a challenge for marketers, but it also introduces a whole new set of roadblocks for businesses with respect to the length of the sales process and contract cycle. These delays prevent brands from implementing new solutions as quickly as they’d like.

Once terms are finalized with the marketing lead/buyer, and pricing and features are approved, other functions like data privacy or information security can introduce additional review and requirements. Naturally, these folks aren’t as clued into the use cases for the technology as the buyer and what they are trying to achieve. They just don’t want to deal with having to manage any more data. This typically adds 30-90 days to the contract cycle and means that brands’ marketers and app developers have to pause while all the details are sorted out — unless you have a practical conversation about handling data privacy in the right way, and educate your company about why this is happening.

Businesses can no longer let the data privacy conversation come at the end of the sales cycle. If the salesperson isn’t aware of this other set of stakeholders and processes, it could delay your project launch or cause you to miss a budget window.

Shockingly, a lot of tech providers tend to put a wall up, and won’t engage in the data privacy conversation unless it’s with a large enterprise company. We embrace a proactive approach to data privacy as a competitive advantage. Doing the right thing is good for business.

Shockingly, a lot of tech providers tend to put a wall up and won’t engage in the data privacy conversation unless it’s with a large enterprise company.

How does the company modify privacy policies, strategies and procedures to accommodate commercial negotiations and contracts?

We continuously monitor the evolution of data privacy regulations and global business trends to make sure our contract terms — and company policies and procedures — are responsive and aligned with market standards. A big part of my role is commercial negotiations and privacy. Privacy aspects come up in about 85 percent of the negotiations that I am personally involved in. This also involves working on the company’s privacy policies, procedures and strategy. The other aspects of my role are focused BACK TO CONTENTS

JULY/AUGUST 202 2 TODAYSGENERALCOUNSEL.COM

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FEATURE

Consider Contract Management Software for Legal Departments

By SEAN HECK

T

he contract negotiations process can be daunting, to put it lightly.

The back-and-forth nature of negotiations can feel like a never ending game of chess. In turn, general counsel can face confusion and contract life cycle management inefficiencies internally and with external stakeholders. Without a centralized procedure, both sides of the contract negotiations chessboard can become befuddled — unsure of their next move.

There are several reasons that manual or obsolete contract management methods can lead contract parties in negotiation to reach a stalemate, unaware of how to proceed with contract collaboration.

These reasons often include: • Inclusion of high-risk contract clauses.

• Time-consuming contract drafting.

• Too many unaccounted for revisions.

• Unclear and disorganized contract versions.

• Incomplete or untimely contract negotiation tasks.

• Missed key dates and milestones.

Thankfully, there is a resource at the disposal of general counsel to leave contract negotiations stalemates behind and make headway with streamlined, automated, and

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user-friendly contract collaboration. That resource is contract management software for legal departments.

CONTRACT MANAGEMENT SOFTWARE FOR LEGAL DEPARTMENTS Contract management software for legal departments can allow general counsel to centrally manage the contract life cycle, and offer in-demand legal operations tools, including: • Easy-to-use contract request intake forms.

• Intelligent clause extraction and text extraction.

• Automated contract authoring and assembly.

• Version tracking with comprehensive audit trails.

• Clause ownership.

• Intelligent workflow automation and task management.

General counsel and legal departments should consider contract management software for better clause management. General counsel can leverage intelligent clause extraction within webenabled contract management software to easily extract clauses and other legal text. AI-based contract life cycle management software offers natural language processing with fuzzy language

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matching for clauses, legal phrases, and terms. Contract intelligence can identify positive, negative, or neutral contract language based on easily configured rules. General counsel can merge clause language with contract templates within their pre-approved clause library.

Additionally, the more contract documents are introduced to AI-based contract management software, the more contract intelligence can recognize different types of clauses — presenting a confidence percentage in clause recognition each time a contract clause is introduced during data extraction (Figure 1). This way, general counsel can be ever more confident in a system that exponentially learns from contracts!

LEGAL CONTRACT AUTHORING Contract authoring is a crucial aspect of contract negotiations – so general counsel should consider investing in contract management software that can streamline contract writing.

Leading contract management software can allow general counsel to streamline the contract creation process by merging mission-critical data fields with templates from an organization’s pre-approved library.

Documents can easily be exported in MS Word, PDF, and other file formats.

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INTELLIGENT CONTRACT WORKFLOW AUTOMATION

Figure 1: When new contract documents are introduced in contract management software, contract intelligence can learn to identify different contract clauses, presenting a percentage of confidence in contract clause recognition.

Contract document collaboration can be performed internally and with stakeholders within a native, online document editor.

Advanced solutions offer seamless MS Word, MS Outlook, MS Office 365, and Google Workspace connectors as well for streamlined collaboration on familiar word processing tools.

Advanced contract management software can streamline contract authoring and document editing on a native, online document editing and collaboration tool that provides an experience similar to leading, familiar word processing tools.

Version tracking and audit trails are essential features to bear in mind when considering the implementation of contract life cycle management software for legal operations.

Leading contract management software empowers general counsel to track contracts down to the document and contract data field level.

For contract document editing, AI-based contract management software can automate document version tracking by saving tidy, BACK TO CONTENTS

numbered versions whenever edits are made to a contract document.

This feature allows legal teams and stakeholders to clearly see the editing progress of a document and navigate document versions for reference.

Advanced legal operations software can track original values, dates, times, and employees that modify a field. This way, not only can general counsel oversee contract document versions, but they can track contract life cycle down to the metadata level.

Clause ownership is an instrumental feature in safeguarding the integrity of clauses and enforcing accountability during contract negotiations. Contract management software can be configured so that if changes are made to a section or clause, the clause owner can be notified. Users can assign an owner to a specific contract clause. If that assigned clause is drafted into a contract and any stakeholder tries to edit it, CLM software can add the owner of that clause or section to the contract approval process and prompt them to approve changes.

Another critical reason organizations implement contract management software is the incredible ROI of contract workflow automation for task completion and more.

Intelligent workflow automation can help general counsel engage the right people at the right time with virtually unlimited contract notifications and automated task alerts that seamlessly sync with email inboxes, MS Outlook or Gmail calendars, and contract life cycle management software calendars.

Workflows can easily be configured for virtually any area of contract life cycle management software, including workflows based on contract request types, data fields, rules, and more.

Contract software administrators can accept and reject actions, escalate tasks for accountability, and gain visibility with a graphical workflow visualizer that displays contract approval expectations.

KEY TAKEAWAYS • Manual contract management processes can result in contract negotiations delays.

• These stalemates can stall CLM, decrease revenue, and increase risk.

• Contract management software can eliminate CLM bottlenecks.

• Consider implementing contract life cycle management software for its leading tools for legal operations.

Sean Heck is Content Marketing Manager at CobbleStone Software. s.heck@cobblestone software.com

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