Author: National Law Forum

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Search Warrant Basics

Recently The National Law Review published an article from Risk Management Magazine a publication of the Risk and Insurance Management Society, Inc. (RIMS) regarding Search Warrants in the Office:

When armed government agents enter your office, seize your computers and talk to your employees, the business day has gotten off to a rough start. It only gets worse when the news shows video of agents in raid jackets carrying your eye-catching, focus group-tested logo. As the days go on, you are busy reassuring customers, vendors and employees that despite early reports and comments made by the government and your competitors, it is all going to be fine and you are going to get back to business as usual.

Presented with this hypothetical situation, many adopt a similar response: it won’t happen to me. But any business that operates in a heavily regulated area or partners with any federal agency needs to appreciate that government inquiries are simply part of operating in that space. The FBI is not the only investigative agency; it is just as likely that the Environmental Protection Agency or the Health and Human Services Office of the Inspector General will be at the front desk with a warrant in hand and a team ready to cart away the infrastructure and knowledge of your business. Will you be ready?

Good planning as part of a regular annual review can help settle nerves, avoid costly mistakes, and put you in the best defensive position should that fateful day come when the feds show up at your door. Follow this five-part plan and you will be much better off.

Summon the Team

Just as the agents did the morning before the search, you need to assemble your response team. The government has specialized people with individual roles and you need to have the same type of team. Some people on your team are there because you want them there. Others make the team because they sit at the reception desk or close to the front door. Either way, they are now on the same team.

The point person on the team has to be the in-house counsel. The agent may not let the receptionist place a series of calls, but the receptionist should be permitted to call the in-house counsel to notify her of the situation. From that point on, the command center shifts from the front desk to counsel’s desk.

The next call should be made from the company’s general counsel to outside criminal counsel. A general litigation or M&A background may be well suited for the company’s general needs, but on this day, the needs are quite different. Outside criminal counsel needs to begin the dialogue with the agent and the prosecutor, and should send someone to the scene if possible.

The response team should also include the heads of IT, security and communications. The IT officer must make sure that, as the search is conducted, intrusion into the system can be minimized so that the business may continue operation. If the IT officer is not permitted to assist with the search, it is critical that he observes all actions taken by the government related to any IT matters. This observation may be valuable at some point in the future if computer records are compromised or lost. This is just as important for information that may tend to show some violation of the law as it is for information that may support defense or a claim of actual innocence. The Computer Crime and Intellectual Property Section of the Criminal Division has produced a manual for the search and seizure of computer records and an expert can help evaluate law enforcement’s compliance with its own approved procedures.

If your company is a manufacturer or scientific production company where the question at issue may be the quality, characteristics or integrity of a product, it is important that you demand an equal sample from the same source and under the same conditions as those taken by the seizing agents. This is important so that your own experts can review a similar sample for your own testing in defense. If this is not possible given the type of product seized, your outside counsel will work with prosecutors and agents to assert your rights to preserve evidence for future testing. Just as the IT expert can be a helpful observer, a technical expert who observes the government sampling can also provide valuable insight into issues related to the sampling that may make a world of difference at some time in the future.

The communications expert is the final member of the team, but no less significant. She can be an important point of contact for media inquiries that will inevitably follow. It is vital to be able to communicate to your customers that you are still performing your daily support and that, as you address this matter, you will never take your eye off the customer’s needs and deadlines. With a disciplined response, many companies will survive a search warrant and government investigation. This process will help ensure that your customers are there for you when you get through this difficult time.

Depending on the size of your company, all of the response team roles may be performed by one or two people. Think of the function of the tasks that need to be accomplished instead of job titles alone. The other factor that you must consider at the outset is what role will these people have in the case going forward. Try and identify people who can perform these tasks but will be outside the case itself. If you know that the company lab has been under investigation, the lab director may be a target of the investigation. If that is the case, you do not want to have that employee serving as your only witness observing the search. Instead, an ideal observer might be the outside counsel’s investigator.

Execute a Pre-Established Plan

An important part of this response is that you have a pre-established plan that can be taught and disseminated instantaneously. The first rule of any plan is to not make matters worse. In this case that means, “Let’s not have anyone arrested for obstruction.” If the search team has a signed search warrant for your address, they have a lawful right to make entry.

Challenging the search warrant is for another day and both state and federal laws prohibit interfering with the execution of a search warrant. This is the time to politely object to the search and document what is happening. With a copy of the search warrant in hand, outside legal counsel may be able to challenge the scope of the search, but that is not an area where the novice should dabble.

While your specialized team members perform their tasks, the company is generally at a standstill while the search continues. Let your team members work and have the rest of your employees go home. You are shut down for the time being just as you would be any other time your business is closed. You do not want to allow employees to wander the halls and interact with agents. Off-hand comments that make it into a law enforcement report may distort the facts and be difficult to explain later.

Make sure that company employees understand what is happening and what their rights are in this situation. It is important to avoid interfering with the actual lawful execution of a search warrant; it is also unlawful to tell your employees to not speak to the agents. If they know they have a right to meet with a company-retained counsel of their own and have a right to remain silent at this point, it may go a long way in calming nerves.

Assert Privilege

This is not a difficult matter to explain, but it is critical: if there are documents that are covered by the attorney/client privilege or any other similar privilege, it is critical that you assert that privilege. One reason for the receptionist to be allowed to call company counsel is that there are materials that are covered by the privilege.

It is critical to make privilege claims at this juncture so that the agents are aware of the assertion and that they formally recognize it. This may simply mean that they put those documents in a different box for review by a team subject to judicial review at a time in the near future or it may mean that the team will review the materials for immediate decisions to be made on scene. Whatever procedure the agents have established can be reviewed later, but if you do not assert privilege now, it changes the options available to you as the proceedings go forward

Record the Search

Given the concerns of civil liability, it is not uncommon for agents to make a video recording of their entry and departure from the scene. Their goal is to document any damage that may have been caused by the lawful execution of the warrant. The agents also want to be able to document their professional execution of the warrant in the event that claims are raised at a later point. But that tape is going to stay in their custody and not be available for your team to review as you prepare the defense.

A video record of the search may provide a key piece of support to the defense that could not possibly be understood on the day of the search. However, this process must be handled in a very unassuming manner and with a clear understanding by the agents that you are doing it, and that, in the event there are undercover officers who are masked, that you will make no effort to record them. In some states, recording voice without consent of all parties is a felony, so this is a matter that you must review with outside counsel when you are developing your procedures for search warrant response. Again, you do not want to do anything to make your situation worse.

Collect Your Own Intelligence

Just as the agents are trying to learn about your operations, they will be giving you valuable information about their own operations and the focus of their investigation. Your first tasks are to determine who is in charge, document the names of the agents in attendance and note all the agencies involved in the search. This is information that you can gather directly by politely asking for the names of the agents and observing the insignia of the agents’ uniforms or badges around their necks.

The other opportunity available to you in this unique situation is the opportunity to listen to the language the agents use, the apparent hierarchy of the agents, and the small bits of casual conversation that may give you valuable insight into the goals of the search. As the day wears on, the agents will feel more comfortable around your response team and they will talk more freely. This is not to suggest that your team should attempt to interrogate the agents, however, because that will open a two-way dialogue that may lead to statements that are difficult to explain or put in context. The suggestion is simply that you serve as an active listener.

Help Establish Rapport

Throughout the day, the agents are going to be forming opinions about your company and your employees. Use this time to make a good impression about your company. A professional, disciplined response in a time of crisis sends a very different message than the one sent by yelling obstructionists. Even though the agents have quite a bit of information about you as their target, it may have all been gathered from third parties. This may be your opportunity to impress them and to help them question the veracity of your accusers. Remember that there will be meetings about your company, your executives and their futures, and the only people in those meetings will be the agents and the prosecutors. You want their memories of this day to weigh in your favor.

Risk Management Magazine and Risk Management Monitor. Copyright 2012 Risk and Insurance Management Society, Inc.

RIMS 2012 Annual Conference & Exhibition

The National Law Review is pleased to bring you information about the

RIMS 2012 Annual Conference & Exhibition – REGISTRATION IS NOW OPEN!

Join us April 15-18 in Philadelphia


No Boundaries

If your organization is like most, risk is not confined to just one department. Everyone has risk management responsibilities. At RIMS 2012 Annual Conference & Exhibition, there are no limits to the information and resources available to help you and your organization innovatively minimize risks. You’ll find a wide array of educational sessions offering practical strategies, no matter what your business area. Sessions are offered at all experience levels—from beginner to advanced—so you can design an educational experience that fits your needs. And, the Exhibit Hall is jam-packed with solutions–everything you’ll need for the upcoming year.

RIMS ’12 will be held at the Pennsylvania Convention Center located on 1101 Arch Street, Philadelphia, PA 19107.

What’s New!

Continuing Education:  RIMS has partnered with the CEU Institute to administer CE/CEU/CPE credits at RIMS ‘12! Learn more.

Exhibit Hall Pass:  Available for Wednesday, April 18 only. Register now.

Strategic Risk Management (SRM):  New sessions offering concepts and analytic resources to enrich organizational strategic risk decisions. View sessions.

RIMS ’12 Mobile App: Get live event updates, interactive floor maps, exhibitor collateral and more. Coming soon! Check back for details.


Protecting Your Rights as an Additional Insured: Why a Certificate of Insurance Is Not Enough

An article by Daniel J. Struck and Neil B. Posner of Much Shelist, P.C. regarding Certificates of Insurance recently appeared in The National Law Review:

When entering into some types of contracts, you likely require that your business be named as an “additional insured” on the other party’s insurance policies. You might do this so that your insurance will not be depleted by defense and indemnification costs for losses for which you might be legally liable by virtue of your relationship to the other party, rather than due to your own direct negligence.

There are many situations in which it makes sense to be named as an additional insured. If you are a building owner, for example, you want to be an additional insured on the property and general liability insurance of your tenants in case one of them damages your building or an accident occurs involving a visitor. If you are a mortgagee, you want to be an additional insured on the property and general liability insurance of your mortgagors in case there is damage to the mortgaged property that reduces its value. If you are the owner or a contractor on a construction project, you want to be an additional insured on the general liability insurance of your contractors and subcontractors in case there is an injury to one of their employees. If you are a distributor or a retailer, you may want to be an additional insured on the insurance programs of the manufacturers of the products that you sell. Other examples abound. Despite the ubiquity of additional insured requirements, however, misconceptions about them are numerous.

Your efforts to protect your business cannot stop at simply including an additional insured requirement in your commercial contracts. Even the strongest possible additional insured provision does little good if the other party does nothing to secure your status as an additional insured with its insurers. Nor are your interests served if you do nothing to confirm that your business has indeed been named as an additional insured. In this context, trust is never a suitable substitute for concrete verification, and otherwise careful and responsible businesses are too often surprised because one of two very basic pre-conditions have not been met: (1) they never actually became additional insureds, or (2) there is no insurance in effect that provides coverage for a particular accident or loss. How is it possible that such basic conditions can trip up sophisticated businesses? And what can be done to avoid these pitfalls?

A Certificate of Insurance Is Not Insurance

It is not unusual that the only evidence of additional insured status is a form document—known as a certificate of insurance—that is usually prepared by the insurance broker for the named insured. The standard certificate of insurance generally states that the additional insured is an insured under the listed policy(ies) and that nothing in the certificate supersedes, changes or replaces what is contained in the identified policy(ies). All too frequently, certificates of insurance are collected, stored away and quickly forgotten. But a certificate of insurance does not create insurance coverage or confer status as an insured, nor is it part of an insurance policy.

Additional insured status is effectively conferred through an additional insured endorsement (i.e., an amendment to the terms of an insurance policy that is expressly incorporated into the relevant insurance policy). These amendments can take the form of an endorsement that specifically names a particular additional insured, or a general endorsement that identifies some class of parties as additional insureds.

If there is a dispute about whether the necessary additional insured endorsement was actually issued, the certificate will only be one of the factors that is taken into account. For example, if there is evidence that the insurer failed to act on a request to add an additional insured, the putative insured may be able to establish that it actually is an insured. If no endorsement was ever issued, and all the intended additional insured has is a certificate of insurance, the frustrated party may have a basis for a declaratory judgment claim against the insurer, as well as claims against the named insured and its insurance broker. But being forced to sue to establish insured status is not the same as being provided with a defense against an ongoing claim.

Here are a few best practices that a party can implement to help make certain its status as an additional insured is in place:

  • At a minimum, always insist on receiving a copy of the relevant additional insured endorsement because this is the instrument that establishes its status. A certificate of insurance is not enough.
  • An additional insured endorsement does not, however, state an insurance policy’s terms and conditions. In order to avoid being surprised by unexpected policy terms (e.g., a strict notice requirement or unfavorable notice of cancellation provisions), require a copy of the entire insurance policy under which you are an additional insured and be sure to read it.
  • Retain additional insured endorsements and the relevant insurance policies for as long as there is any potential that claims triggering those policies might be made.

A Certificate of Insurance Does Not Necessarily Entitle You to Notice of Cancellation

When you require that you be named as an additional insured, is it reasonable to expect that your status will remain in effect throughout the stated term of the insurance policy? Not necessarily. For example, what if you are a landlord and there is a fire at a restaurant operated by a financially troubled tenant in one of your properties? Unknown to you, the first-party property insurance policy to which you are an additional insured was cancelled two months before the fire. You may still be able to recover under your own property insurance policy, but that will affect your loss experience.

In order to avoid such situations, additional insured provisions in commercial contracts often contain a requirement that the additional insured receive notice of a cancellation at the same time as the named insured. If your business, however, relies only on a certificate of insurance as proof of its status, you run a heightened risk of an unwanted outcome.

Certificates of insurance are form documents. The most recent version of the standard certificate of insurance—often referred to as an ACORD certificate—contains a change in its terms that has the potential to surprise unsuspecting additional insureds. The current form states that “should any of the above described polices be cancelled before the expiration date thereof, notice will be delivered in accordance with the policy provisions.” In contrast, the pre-2009 version provided that “should any of the above described policies be cancelled before the expiration date thereof, the issuing insurer will endeavor to mail…written notice to the certificate holder in the event the insurance policy is cancelled.”

On its face, the old ACORD certificate at least appeared to support the expectation that an additional insured should receive a notice of cancellation from the insurer. However, it was dangerous to rely on those terms because the certificate itself was not part of an insurance policy. Insurers regularly took the position that the ACORD certificate could not modify the terms of an insurance policy.

The new form, however, is even more problematic. The current ACORD certificate refers to the notice of cancellation provisions of the relevant insurance policy. If the relevant insurance policy provides that the only party entitled to receive notice of cancellation is the named insured, then the new ACORD certificate is not likely to support the argument that an additional insured is also entitled to receive notice of cancellation. It is all well and good that your commercial contracts require that you receive advance notice of any cancellation But remember that an insurer has no reason to know the terms of the contract between you and its insured. If you never insist on reviewing the actual additional insured endorsement and the relevant insurance policy, you have no way of knowing whether or not you are entitled to notice of cancellation from the insurer.

What can an additional insured do to make certain that it receives advance notice of the cancellation of an insurance policy? Following are some things you should consider and steps you can take to protect your interests as an additional insured:

  • The preferred approach is to request that the insured have its insurer provide an endorsement stating that you, as an additional insured, are entitled to the same rights as the named insured in the event of cancellation. This can take the form of a separate endorsement or an amendment to an additional insured endorsement. Although you may receive pushback from the insured and its insurers, with suitable counsel and persistence, you may be able to obtain the requested endorsement.
  • Your contractual additional insured provisions should be revised to reflect the foregoing requirements.
  • If it is not possible to secure the requested notice provisions via endorsement, the best alternative is to require that the insured provide prompt notice of cancellation and/or regular confirmations that the relevant insurance remains in force.

Additional insured status is an asset that imposes certain obligations on the party enjoying that status. Furthermore, it should not be regarded as a “freebie” to be treated in a passive manner. It is important to take an active interest in securing and knowing your rights—or risk erosion of their value. Ultimately, to be sure that you have the additional insured protection that you expect consistent with your needs, consult with your lawyer and insurance broker before signing on the dotted line.

© 2012 Much Shelist, P.C.

Inside Counsel presents the 12th Annual Super Conference in Chicago

The National Law Review  is pleased to bring you information about the upcoming 12th Annual Super Conference in Chicago sponsored by Inside Counsel.

Reasons why you should Attend This Year’s Event:


  1. Who Should Attend – General Counsel and Other Senior Legal Executives from Top Companies Attend SuperConference:    Meet with Decision Makers: You’ll meet face-to-face with senior-level in-house counsel
  2. Networking Opportunities: SuperConference offers several networking opportunities, including a cocktail reception, refreshment breaks, and a networking lunch.
  3. Gain Industry Knowledge: You will hear the latest issues facing the industry today with your complimentary full-conference passes.
  • Chief Legal Officers
  • General Counsel
  • Corporate Counsel
  • Associate General Counsel
  • CEOs
  • Senior Counsel
  • Corporate Compliance Officers

The 12th Annual IC SuperConference will be held at the NEW Radisson Blu Chicago.
Radisson Blu Aqua Hotel

221 N. Columbus Drive

Chicago, IL 60601

Don’t forget – The early discount deadline using the NLR discount code is February 24th!

Illinois Federal Court Sides With Circuits Allowing Non-Disabled Individuals to Bring ADA Claims

The National Law Review published an article by the Labor & Employment Group of Schiff Hardin LLP regarding ADA Claims:

An Illinois federal court recently decided that it could be unreasonable for an employer to require an employee take a mental health exam as a condition of keeping his job, and allowed a former employee’s claim to proceed to trial. Sanders v. Illinois Dept. of Central Management Services, 2012 WL549325 (C.D.Ill. Feb. 21, 2012).

The Illinois Department of Central Management Services (the “Department”) employed Michael Sanders as a data processing technician. In 2005, Mr. Sanders was disciplined with suspension for various infractions including not following procedures, leaving his work station and sending an email to his supervisor, Victor Puckett, accusing him of being racist and needing mental health treatment. Thereafter, on August 26, 2005, Mr. Sanders accused Mr. Puckett of screaming, cursing and threatening to throw him out the window during a work dispute, which Mr. Puckett disputed. Mr. Sanders was disciplined for the August 26 incident. On September 9, 2005, the union representative at the pre-disciplinary hearing relating to the August 26 incident notified the Department that Mr. Sanders had threatened to harm Mr. Puckett (which Mr. Sanders disputed).

A.    The Discharge Decision

Thereafter, the Department placed Mr. Sanders on administrative leave and directed him to undergo an independent psychological evaluation, but Mr. Sanders did not attend any of the three appointments made for him. The Department initially terminated Mr. Sanders on November 23, 2005 for not undergoing the psychological exam, but voluntarily reinstated him and placed him on administrative leave effective February 1, 2006. During his leave, the Department made additional appointments for him to undergo an independent psychological evaluation, but Mr. Sanders did not attend any of them.

In January, 2007, the Office of Executive Inspector General (“OEIG”) determined that there was no evidence that Mr. Sanders violated Department rules during the August 26, 2005 incident. The Department scheduled another appointment for an independent psychological evaluation on September 5, 2007. Mr. Sanders sent two memos to the doctor who was to examine him, threatening to take legal action, disciplinary action and contact the media if the doctor did not cancel the appointment.

Mr. Sanders was discharged for refusing to undergo the independent psychological examination. He appealed his termination to the Illinois Civil Service Commission. The Commission found that it was not reasonable for the Department to require Mr. Sanders to submit to an independent psychological examination, and the Department’s decision to discharge Mr. Sanders was unsupported, based on a number of factors including that the Department had not interviewed Mr. Sanders to obtain his version of events relating to the alleged incidents, and also that, according to the Commission, there was no “credible evidence” that Mr. Sanders had threatened Mr. Puckett. The Department’s appeals of that decision to the Commission and the circuit court were denied.

B.     The ADA Suit

Thereafter, Mr. Sanders filed suit against the Department in Illinois federal court alleging violation of the Americans with Disabilities Act (“ADA”). The court allowed Mr. Sanders’ suit to proceed to trial on the question of whether Mr. Sanders’ discharge for refusal to undergo a psychological examination violated the ADA. The court noted that an employer’s demand that an employee submit to a medical exam may be permissible if the employer has a reasonable belief that the employee’s ability to perform essential job functions is impaired by, or the employee poses a direct threat due to, a medical condition. Here, however, the court focused on the OEIG’s finding that there was no evidence that Mr. Sanders violated the Department’s rules during the August 26, 2005 incident, and held that a jury should decide if it was reasonable for the Department to continue to schedule the psychological exams for Mr. Sanders after the OEIG’s determination. The court also noted that what may be reasonable in some employment settings, such as law enforcement or school personnel, may not be reasonable in others.

The case is significant because the district court in this case joined a number of federal circuit courts that allow a non-disabled individual to bring suit under the ADA, including the U.S. Courts of Appeal for the Ninth and Tenth Circuits. The Seventh Circuit has not ruled on the issue. Here, the court did not even consider the question of whether the plaintiff was a qualified individual with a disability under the ADA.

The case reinforces that any request for a physical or mental examination must be carefully examined for necessity and job-relatedness. It also highlights the importance of conducting thorough investigations into alleged instances of misconduct before taking any employment actions.

© 2012 Schiff Hardin LLP

ICC Conference Cross-Border Sales – April 19, 2012

The National Law Review is pleased to bring you information about the upcoming ICC Conference Cross-Border Sales in London April 19, 2012:

What is the Best Legal Framework for Business-to-Business Contracts?

Thursday, 19 April 2012
London, United Kingdom

Objective

The contract of sale is certainly the most commonly used agreement in international commerce. When drafting a sales contract or general conditions of sale (or purchase) to be used in cross border trade, it is essential to choose the legal framework (applicable law) within which the agreement is to be placed.

Choosing one solution instead of another may have very important effects on the rights and obligations of the parties. Parties therefore need to have the information which is necessary in order to make the best possible choice between the various alternatives.

The speakers will examine and discuss on one side the project of a Common European Sales Law, which has been recently proposed by the European Commission, and on the other side the CISG (Vienna Sales Convention), which is the law applicable to cross-border sales in most countries of the world.

Members of the ICC task force that has been revising the ICC Model International Sales Contract will also take the opportunityto discuss their approach and present issues that have been the subject of relevant discussion.

Who should attend?

Legal directors and corporate counsel from companies involved in international trade, practising lawyers, legal practitioners advising international trading companies, business people involved in international trade and dispute resolution

Privacy-on-the-Go: California Attorney General and Major Mobile Application Platforms Agree to Privacy Principles for Mobile Applications

Recently The National Law Review featured an article written by Cynthia J. Larose and Jake Romero of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. regarding Mobile Apps and Privacy:

Application developers have been put on notice by the State of California. It is time to pay attention to user privacy and collection of information from user devices.

In an effort led by the office of California Attorney General Kamala D. Harris, the state has reached an agreement committing the six largest companies offering platforms for mobile applications (commonly referred to as “apps”) to a set of principles designed to ensure compliance with California’s Online Privacy Protection Act. The agreement with Apple Inc., Google Inc., Microsoft Corp., Amazon.com Inc., Hewlett-Packard Co., and Research In Motion Ltd., who collectively represent over 95% of the mobile application market, is significant for two reasons. First, it operates as an acknowledgement that California’s Online Privacy Protection Act applies to app developers as well as platform providers. Second, the agreement may effectively create a minimum standard for disclosures and transparency with regard to the collection of personal information by mobile applications. Because of the global nature of the Internet, the law will apply to every mobile app provided through the six firms’ app stores even though it is a state law.

This alert includes a description of the principles underlying this agreement, as well as certain best practices to help mobile app developers ensure compliance. The full text of the agreement, as well as comments from the Office of the Attorney General, can be accessed online at http://ag.ca.gov/newsalerts/print_release.php?id=2630.

Mobile Applications and Data Privacy

The most recent data from the Pew Research Center shows that 50% of all adult cell phone owners have apps on their mobile phones, a percentage that has nearly doubled over the past two years. This same survey also indicated that approximately 43% of those surveyed purchased a phone on which apps were already installed. Many of these mobile applications, in order to facilitate the functionality of the app, allow the app developer broad access to data held on the user’s mobile device. However, as noted by Attorney General Harris in a press conference announcing the agreement, many mobile applications, including twenty-two of the thirty most popular apps, lack a privacy policy to explain how much of the user’s data is accessible by the developer, and how and with whom that data is shared.

California’s Online Privacy Protection Act provides that “[a]n operator of a commercial Web site or online service that collects personally identifiable information through the Internet about individual consumers residing in California who use or visit its commercial Web site or online service shall conspicuously post its privacy policy on its Web site,” or in the case of an operator of an online service, make that policy reasonably accessible to those consumers. In entering into this agreement, the six major platform providers have acknowledged that this requirement applies equally to mobile app developers (as “online services”) and the platform providers have agreed to, among other things, implement a means for users to report apps that do not comply with this requirement and a process for investigating and responding to those reports.

The New Privacy Standard and Ensuring Compliance

A likely outcome of this agreement is that compliance with California’s Online Privacy Protection Act will become a minimum standard for the mobile application industry, because even those developers located outside the state of California will likely conclude that it is easier to have a single policy that meets California’s requirements, rather than risk inadvertent non-compliance.

To ensure compliance, developers or providers of mobile apps that collect personal data from users’ mobile devices will be required to have a privacy policy that meets the requirements set forth in Section 22575(b) of California’s Business and Professions Code (as an incorporated portion of the Online Privacy Protection Act, Section 22575(b) can be accessed in full by following the link provided above). Specifically, the privacy policy must:

·         Identify the categories of personally identifiable information that the operator collects through the Web site or online service about individual consumers who use or visit its commercial Web site or online service and the categories of third-party persons or entities with whom the operator may share that personally identifiable information.

·         If the operator maintains a process for an individual consumer who uses or visits its commercial Web site or online service to review and request changes to any of his or her personally identifiable information that is collected through the Web site or online service, provide a description of that process.

·         Describe the process by which the operator notifies consumers who use or visit its commercial Web site or online service of material changes to the operator’s privacy policy for that Web site or online service.

·         Identify its effective date.

In establishing a compliant privacy policy, an app developer or provider should take great care to ensure that the descriptions and processes contained therein match the actual operations of the company and the information it collects, and the policy should be reviewed periodically by both legal counsel and the app developer’s technical experts so that it can be updated as necessary. The policy should be clear and easy to understand, especially with regard to the collection and sharing of personal data. For those companies who may be affected by this agreement and already have a privacy policy in place, that policy should be reviewed to determine whether it should be updated. Developers and platform providers that do not comply with the law can be prosecuted under California’sUnfair Competition Law and/or False Advertising Law, which has penalties of up to $500,000 per use of the app in violation, Harris said. “If developers do not follow the privacy policies we will sue,” she added.

Anticipated Developments

Per their agreement with Attorney General Harris, the six major mobile app platforms will commence working with app developers to ensure compliance and provide education regarding privacy and data sharing. To increase awareness and promote transparency, mobile app developers will be required, as part of the application submitting an app to the platform, to provide either a link to that developer’s privacy policy, a statement describing the policy, or the full text of the policy itself. In each case, a user who is considering downloading the developer’s app will be provided access to the privacy policy associated with that app prior to downloading it.

The six major platforms have agreed to reconvene within six months to further evaluate any required changes), but no specific timeline has been stated with regard to implementing the changes described above. However, for mobile app developers who hope to continue to be a part of this quickly growing and highly lucrative market, there may not be a more opportune time to take advantage of the resources being provided on both a state and industry level.

©1994-2012 Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.

2012 Launching & Sustaining Accountable Care Organizations Conference – POSTPONED

The National Law Review is pleased to bring you information on the Launching & Sustaining Accountable Care Organizations Conference will be a two-day, industry focused event specific to CEOs, COOs, CFOs, CMOs, Vice presidents and Directors with responsibilities in Accountable Care Organizations, Managed Care and Network Management from Hospitals, Physician Groups, Health Systems and Academic Medical Centers.

By attending this event, industry leaders will share best practices, strategies and tools on incorporating cost-sharing measures in a changing healthcare landscape to strengthen the business model and ensure long-term success.

Attending This Event Will Enable You to:
1. Understand the initial outcomes and lessons learned from launching ACOs, with a focus on how to sustain these partnerships in the future
2. Hear from the early adopters of ACOs or similar cost-reducing partnerships and understand their initial operational and implementation challenges.
3. Learn about the final regulations regarding ACOs and their impact on those who want to initiate the formation process
4. Gain a clear understanding of regulatory issues and accreditation processes
5. Conquering initial hurdles for establishing an ACO
6. Gain knowledge from newly-formed ACOs
7. Ensure longevity by establishing a robust long-term plan

Process Improvement Can Drive Shareholder Returns: Is Your Institution Ready for Process Improvement?

Recently an article by The Financial Institutions Group of Schiff Hardin LLP regarding Process Improvement was published in The National Law Review:

Many banks have been fighting for their lives since the financial crisis began in 2008—focusing on improving credit quality, finding capital and persuading the regulators to release enforcement actions. As the economy slowly improves and bank balance sheets stabilize, boards and CEOs will start to focus on growth opportunities and improving their banks’ operating efficiency, all with the goal of driving shareholder returns. With challenging revenue prospects going forward and increasing compliance costs, banks need to reduce the cost of their operating models while improving customer service and sales. This requires a laser focus on process improvement.

Reviewing your organization’s processes increases the likelihood that you can eliminate redundancy, reduce risk and expense, address regulatory requirements and take advantage of technology to better serve your banking customers. In this article, guest author Kristin Kroeger of Fifth Star Consulting LLC, reviews the criteria for assessing whether or not your bank is ready for an effective process improvement program.

Real Life Examples of Process Improvement Opportunities

  1. A community bank with a focus on C&I (commercial and industrial) lending survived the financial crisis and remains well capitalized. As its focus returned to organic growth in a very crowded and competitive market, the bank undertook a review of its end-to-end commercial lending processes with a goal of reducing its delivery cost and increasing its market responsiveness. By increasing the use of technology through adoption of a workflow tool and electronic document storage, as well as a realignment of its client-facing support staff, the bank was able to remove costly rework and improve its credit risk management process while reducing response time to client requests.
  2. A community bank that experienced a significant contraction in business during the financial crisis found itself with excess real estate and decentralized operations across multiple functions. By undertaking a process review of its deposit and retail operations, the bank determined it could consolidate certain functions, reduce headcount, eliminate a(non-target) leased location, and reduce operating risk within a better controlled environment.
  3. A community bank with new executive leadership decided to centralize its operations functions that historically had been managed within each line of business. This transition required the bank to examine each process it owned, challenge the status quo, and address existing technology and control deficiencies. As a result of the process review, redundant positions and processes were eliminated and a new operating culture emerged, which was better focused on the customer with a lower overall cost to the bank.

Success Begins by Asking the Right Questions Early

Before embarking on a process improvement effort, ask yourself these questions:

  • Does the bank’s executive management team fully support this effort?
  • Does the bank have a culture that rewards performance?
  • Does the bank understand how to effectively change management and, if so, does it have the capacity to make it happen?
  • Does the bank have the people with the right skills aligned with the process improvement project?
  • What value-based outcomes do we expect from the process improvement project?

Executive Management Engagement

Process improvement, by definition, invites an organization to question why it does things a certain way. Management support is critical to the success of these initiatives. Bank leadership must champion the value of becoming process-focused and provide the necessary resources—both time and money—to enable the success of the program. Having the CEO repeatedly remind employees why the process improvement program is valuable to the bank, its customers and shareholders, and the employees’ livelihood will motivate and drive employee commitment and performance.

To this end, bank management needs to focus on process improvement as a core initiative and tie it to the strategic vision, shared goals of the organization and compensation program. In doing so, you ensure that process improvement has the continuous focus of the management team and becomes part of the culture and fiber of the organization.

Culture of Success and Commitment To Managing Change

From the lowest paid employee to the top levels of management, a passion for doing the right thing breeds success in a company. Banks will benefit from using their reward and recognition program to complement process improvement plans. Recognize employees who embrace the program early. Continue to build a following by repetitive recognition of early wins and contributions.

Additionally, one of the biggest obstacles to a successful process improvement initiative is resistance from those who may benefit the most. Organizations that are most successful at getting results from process improvement have change management as a core discipline. First, banks should embed a readiness approach into their project plan that addresses training and communication to impacted employees. Second, ensure that affected employees have the time and training they need to learn the new methods. They need to know that management supports time away from daily activities if it is dedicated to learning new skill sets. Finally, be aware that organizations can only absorb so much change at one time. Plan your initiative so that impacted employees have time to adjust prior to adding more change to their environment.

Cross-Functional Engagement

One of the cornerstones of successful process improvement projects is to select what processes to study and then define where they start and where they end. When one particular bank department is sponsoring the improvement initiative, it is easy to become internally focused. Rarely, however, does the same department own the start point, handoffs and end point. Truly transformational change comes from evaluating an organization’s processes across functions. This requires interdepartmental involvement and a commitment to the same vision and goals through proper resourcing and support.

The Right People

While all of the prerequisites for a successful process improvement initiative are important, having the right people resourcing your project is critical to its success. How do you select the right people? Think about your bank organization and the people within it, and ask yourself the following questions:

  • Who is already improving processes on an informal, undirected basis?
  • Who amongst our employees has the credibility and courage to question the status quo?
  • Are there natural leaders in the organization who can establish rapport easily with other departments?
  • Which employees understand our banking business and have the ability to capture processes and document them?

While your employees may be great at what they do, often they may not be good at documenting what they do and explaining why it is done that way. Flourishing process improvement programs select employees who have the respect of their own team, can establish rapport with other departments, have the trust and credibility with management to question and interrogate current processes, and can document them with the level of specificity required by the project team. Lack of properly qualified resources will quickly grind your program to a halt.

Patience and Avoiding Perfection

Process improvement is a journey, and depending on the state of your organization it may take several iterations to achieve the smooth-running, well-oiled machine you are envisioning. If you are considering embarking on this journey, understand that it can be a multi-year voyagerequiring patience and commitment to achieve the long-term vision that enables a series of early wins to grow into an engine of continuous improvement.

Evaluate, Review, Audit

Regardless of your approach, any process improvement effort becomes dated and ineffective without a culture of continuous review. Banking organizations that truly embrace process improvement are evaluating their processes on a regular schedule, reviewing the processes with their business partners, and auditing how the employees perform their jobs against the documented processes.

© 2012 Schiff Hardin LLP

2012 Young Professionals in Energy International Summit

The National Law Review is pleased to bring you information on the 2012 Young Professionals in Energy International Summit:

2012 YOUNG PROFESSIONALS IN ENERGY INTERNATIONAL SUMMIT

April 23-25, 2012
Planet Hollywood Resort & Casino
Las Vegas, Nevada

About the YPE:

Young Professionals in Energy (“YPE”) is the first and only interdisciplinary networking and volunteer organization for people in the global energy industry – a place where bankers can connect with engineers, accountants with geologists and so on. Our mission is to provide a forum for knowledge sharing and camaraderie among future leaders of the energy industry.

The event will feature panel discussions and presentations by YPE members from around the world on such vital energy issues as the world oil supply, shale, renewable energy, career issues and funding new energy projects.

Confirmed speakers include YPE members from the American Petroleum Institute, ExxonMobil, Fulbright & Jaworski L.L.P. the India Ministry of Petroleum and Natural Gas, the Nevada Institute for Renewable Energy Commercialization, Pemex, the University of Southern California and the U.S. Dept. of Commerce.

Highlighting the three-day conference is a keynote speech by Daniel Yergin, author of the best-selling “The Quest: Energy, Security and the Remaking of the Modern World (www.danielyergin.com).