Contract analysis

I. Executive Summary This memorandum addresses the applicability of Illinois Rule of Professional Conduct 1.9, governing the duties owed by lawyers to former clients, to the conflict that has arisen in connection with the proposed representation of Metropolitan Transit Development Corp. ("MTDC") in Matter No. 1031-00001. Specifically, the memorandum considers whether Rule 1.9 governs or constrains Calderwood & Harkne

II. Background Facts Relevant to This Analysis The following background facts are drawn from the firm's conflicts-clearance files, the new-matter intake form for Matter No. 1031-00001, the engagement file for Matter No. 1031-00001, and communications with relevant attorneys within the firm. The facts are presented in the detail necessary for the Conflicts Committee to evaluate the Rule 1.9 analysis and are organized

III. Text and Requirements of Illinois Rule 1.9 Before proceeding to the substantive analysis, this Section sets forth the text of the relevant provisions of Illinois Rule of Professional Conduct 1.9 and identifies the key elements that govern the analysis. A. Rule 1.9(a) — Substantially Related Matter The full text of Illinois Rule 1.9(a) provides: A lawyer who has formerly represented a client in a matter shall not

IV. Threshold Determination: Rule 1.9 Does Not Apply — Pinnacle Is a Current Client A. Status of the Pinnacle Relationship The threshold question in any Rule 1.9 analysis is whether the client in question is, in fact, a "former" client. That threshold is not met here. Matter No. 1031-00001 remains open and active in the firm's matter-management system. The engagement has been continuously active since its opening on

V. Hypothetical Analysis: If Pinnacle Were a Former Client For the reasons stated in Section IV, this analysis is presented as a hypothetical exercise. It assumes, solely for purposes of analysis, that the Pinnacle engagement has concluded and that Pinnacle has become a former client of Calderwood & Harkness at some point prior to the commencement of the proposed MTDC representation. Under this assumption, the questi

1. Legal Standard for "Substantial Relationship" Illinois courts apply a well-established three-part test to determine whether two matters are "substantially related" within the meaning of Rule 1.9(a): (i) Determine the nature and scope of the prior representation. The court examines what the lawyer did in the prior engagement — the factual and legal issues involved, the types of information exchanged, and the breadt

2. Application to the Pinnacle/MTDC Matters Applying the three-part test to the facts of this case yields a clear conclusion: the matters are substantially related. Step (i): Nature and scope of the prior representation (hypothetical). The Calderwood & Harkness engagement on behalf of Pinnacle (Matter No. 1031-00001) centers on patent-enforcement litigation concerning TruScan 360's core biometric-recognition algorith

1. Legal Standard The "materially adverse" element of Rule 1.9(a) is satisfied when the proposed representation involves asserting claims, defenses, or legal positions that would be harmful to the former client's legal, financial, or business interests. Material adversity does not require that the new representation involve direct litigation against the former client, though that circumstance plainly satisfies the st

2. Application. The proposed MTDC engagement would be materially adverse to Pinnacle's interests in multiple, reinforcing respects: Characterization of TruScan 360 as unlawful. The most fundamental source of adversity is the legal characterization that the MTDC engagement would require Calderwood & Harkness to advance. The firm would be required to argue — in regulatory proceedings, in class-action litigation, and po

1. Categories of Confidential Information Acquired Even apart from the "substantially related matter" analysis under Rule 1.9(a), Rule 1.9(c) provides an independent basis for concluding that the proposed MTDC representation would be impermissible. The firm's possession of Pinnacle's confidential information — and the impossibility of undertaking the MTDC engagement without at least the risk of using that information

2. Materiality to the MTDC Matter Each of the above categories of confidential information is directly material to the claims and defenses at the heart of the proposed MTDC engagement. The core of the BIPA claims against MTDC concerns whether TruScan 360 collected and stored biometric data in compliance with the statutory requirements of notice, consent, retention schedules, and data-destruction obligations under 740

3. Conclusion on Confidential Information The confidential information acquired by Calderwood & Harkness in the Pinnacle representation is material to the proposed MTDC engagement. It encompasses the technical architecture, data-handling practices, and retention policies that lie at the core of the BIPA claims and defenses, and it would provide a significant and unfair advantage in the construction of cross-claims an

1. Legal Standard Rule 1.9(a) permits the representation of a new client in a substantially related matter with materially adverse interests if the former client "gives informed consent, confirmed in writing." The "informed consent" standard requires that the former client be provided with adequate information about the nature and scope of the proposed representation, the risks it poses to the former client's interes

2. Application. Even assuming that Pinnacle (as a hypothetical former client) were willing to consent to Calderwood & Harkness's representation of MTDC, several features of this conflict render the consent mechanism practically unavailable. Breadth and sensitivity of confidential information. The confidential information in Calderwood & Harkness's possession is not limited to discrete facts or documents; it encompass

VI. Comparison: Rule 1.9 vs. Rule 1.7 in This Scenario The foregoing analysis confirms that the proposed MTDC representation would be barred under both Rule 1.7 (as the governing rule for the current conflict) and Rule 1.9 (as the rule that would govern if Pinnacle became a former client). A brief comparison of the two frameworks is instructive for the Conflicts Committee's consideration. Strictness of the governing

VII. Implications for Future Scenarios The analysis in this memorandum has several implications for the firm's conflicts-management practices going forward. Persistence of the conflict upon termination of the Pinnacle engagement. If Pinnacle were to terminate its relationship with Calderwood & Harkness at any point in the future — whether through the conclusion of the Veritas litigation, Pinnacle's decision to engage

VIII. Conclusion Based on the foregoing analysis, this memorandum reaches the following conclusions: Primary Conclusion. Illinois Rule of Professional Conduct 1.9 does not apply to the current conflict because Pinnacle Workforce Analytics, Inc. is a current, not former, client of Calderwood & Harkness LLP. The firm has continuously represented Pinnacle since March 14, 2022, and the active patent-enforcement litigatio