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PRIVILEGED AND CONFIDENTIAL ATTORNEY WORK PRODUCT — ATTORNEY-CLIENT PRIVILEGED

CALDERWOOD & HARKNESS LLP

CONFLICTS COMMITTEE

MINUTES OF MEETING

May 14, 2024

Date of Meeting: Tuesday, May 14, 2024

Time: 2:00 p.m. CDT

Format: Secure videoconference connecting the Chicago and New York offices

Location: Calderwood & Harkness LLP, One North Wacker Drive, Suite 4200, Chicago, Illinois 60606 (Conference Room 42-A), with participants also joining from 600 Lexington Avenue, 38th Floor, New York, New York 10022

Prepared by: Colleen Farrow, Director, Conflicts & New Business

Matter Reference: Proposed Matter No. 1031-00001 (Metropolitan Transit Development Corp.) / Cross-referenced with Existing Matter No. 1031-00001 (Pinnacle Workforce Analytics, Inc.)

I. CALL TO ORDER

Lawrence Keating, Senior Partner and Chair of the Conflicts Committee, called the meeting to order at 2:00 p.m. CDT. Mr. Keating confirmed that a quorum of the Conflicts Committee was present, with all five required participants in attendance either in person at the Chicago office or via the firm's secure videoconference platform from the New York office. Mr. Keating noted that the videoconference connection had been established over the firm's encrypted communications system and that no recording was being made of the proceedings.

Mr. Keating stated that the sole agenda item for the meeting was the review and determination regarding a potential conflict of interest arising from proposed Matter No. 1031-00001, which involves a prospective engagement by Metropolitan Transit Development Corp. ("MTDC"). He indicated that the matter had been escalated to the full Conflicts Committee following the identification of a direct conflict with an existing client during the standard new-matter intake process. Mr. Keating reminded all attendees that the proceedings, deliberations, and all related materials are protected by the attorney-client privilege, the attorney work product doctrine, and the firm's internal confidentiality policies, and that no information discussed during the meeting should be disclosed to any person outside the meeting without the express authorization of the Conflicts Committee.

II. ATTENDEES

The following individuals were present for the entirety of the meeting:

No other attorneys, staff members, or third parties were present at any point during the meeting. Attendance was strictly limited to the above-listed participants in order to preserve confidentiality and minimize the potential for any inadvertent disclosure of information related to either the prospective engagement or the existing client relationship at issue.

III. BACKGROUND AND OVERVIEW OF PROPOSED ENGAGEMENT

Mr. Keating invited Rachel Bernstein, Partner in the firm's Privacy & Data Security practice group and the proposed Responsible Partner for the MTDC engagement, to present the background, scope, and details of the proposed engagement. Ms. Bernstein's presentation covered the following matters.

A. The Prospective Client

Ms. Bernstein explained that the prospective client is Metropolitan Transit Development Corp. ("MTDC"), a unit of local government and special-purpose transit authority organized and operating under the Illinois Local Mass Transit District Act (70 ILCS 3610/1 et seq.). MTDC is headquartered at 550 West Harrison Street, Suite 1400, Chicago, Illinois 60607. MTDC operates bus, commuter rail, and paratransit services across Cook County and the five collar counties of DuPage, Kane, Lake, McHenry, and Will. MTDC serves approximately 1.6 million daily riders and maintains an annual operating budget of approximately $3.2 billion, funded by a combination of fare revenues, federal and state transit subsidies, and local sales tax allocations.

Ms. Bernstein identified the following key MTDC personnel relevant to the proposed engagement: Terrence Whitfield, General Counsel; Lucia Marchetti, Chief Information Security Officer ("CISO"); and Darnell Okafor, Executive Director. Ms. Bernstein noted that Mr. Whitfield serves as the primary legal decision-maker for MTDC's outside-counsel engagements and that Ms. Marchetti would serve as the principal operational contact for purposes of the data-privacy and biometric-compliance matters at issue.

Ms. Bernstein reported that MTDC was referred to Calderwood & Harkness by its existing outside litigation counsel, Hargrove, Tillman & Reese LLP, through Constance Hargrove, the lead partner on MTDC's account at that firm. Ms. Hargrove had explained to Mr. Whitfield that Hargrove, Tillman & Reese lacked in-house expertise in data-privacy law, biometric-information regulation, and the Illinois Biometric Information Privacy Act ("BIPA") in particular, and therefore recommended that MTDC engage specialized counsel for the matters described below.

Initial contact between Calderwood & Harkness and MTDC occurred on May 6, 2024, when Ms. Bernstein and Mr. Whitfield spoke by telephone. Mr. Whitfield described the nature and urgency of MTDC's legal needs, and Ms. Bernstein expressed preliminary interest in the engagement. A new-matter intake was opened on May 9, 2024, and assigned proposed Matter No. 1031-00001. The standard conflicts-check process was initiated simultaneously.

B. Nature of the Proposed Engagement

Ms. Bernstein described the proposed engagement as encompassing the following five interrelated workstreams:

1. Defense of Civil Investigative Demand. On April 22, 2024, the Illinois Attorney General's Bureau of Civil Rights issued a Civil Investigative Demand ("CID") to MTDC, bearing Reference No. CRB-2024-0417. The CID was issued under the authority of the Attorney General's office and is led by Deputy Attorney General for Civil Rights Malcolm Jeffries, with support from outside special counsel retained by the Attorney General's office, Ridgeway & Falk LLP (lead partner: Diane Falk). The CID alleges that MTDC's deployment of a biometric workforce-management platform violated the Illinois Biometric Information Privacy Act, 740 ILCS 14/1 et seq., and the Illinois Personal Information Protection Act, 815 ILCS 530/1 et seq. The CID demands production of extensive documentation concerning MTDC's biometric-data collection, storage, use, sharing, and destruction practices, as well as copies of all vendor contracts, employee consent forms, privacy notices, data-security assessments, and internal communications related to the implementation and operation of the biometric platform. Ms. Bernstein noted that the CID carries the potential for enforcement action, including civil penalties and injunctive relief, and that the Attorney General's office has indicated through informal channels that it may expand the scope of the investigation to include technology vendors supplying the biometric platform.

2. Defense of Putative Employee Class Action. On April 29, 2024, a putative employee class action was filed in the Circuit Court of Cook County, Chancery Division, styled as Williams et al. v. Metropolitan Transit Development Corp., Case No. 2024-CH-04417. The complaint was brought on behalf of a putative class of approximately 12,400 current and former MTDC employees by class counsel Kessler, Brandt & O'Neill LLP, with Martin Kessler serving as lead counsel and Yolanda Brandt as co-counsel. The complaint asserts claims under BIPA Sections 15(a), 15(b), and 15(d), alleging that MTDC collected, captured, stored, and disseminated employees' biometric identifiers and biometric information — including fingerprints, facial geometry, and iris scans — without first obtaining the requisite written informed consent, without publishing a publicly available data-retention and destruction policy, and without adequate safeguards against unauthorized disclosure to third parties.

3. Remediation of Biometric-Data Practices. MTDC has requested advice regarding the remediation and restructuring of its biometric-data practices to bring its workforce-management operations into compliance with BIPA, PIPA, and any other applicable state and federal privacy laws. This workstream would involve a comprehensive audit of MTDC's existing data-collection, storage, and destruction practices; development and implementation of a compliant consent framework; revision of privacy policies and employee notices; and coordination with MTDC's CISO and IT staff on technical and operational changes.

4. Cross-Claims and Indemnification Proceedings Against Technology Vendors. Ms. Bernstein stated that MTDC's anticipated litigation strategy includes the assertion of cross-claims and indemnification demands against its technology vendors, notably including Pinnacle Workforce Analytics, Inc. ("Pinnacle"), under the Master Software License and Services Agreement ("MSLA") dated June 15, 2021, between MTDC and Pinnacle. Ms. Bernstein described the MSLA as a five-year agreement with a total contract value of $8,700,000 ($1,740,000 per year), with an optional three-year renewal. The MSLA contains indemnification provisions under which Pinnacle agreed to indemnify MTDC against claims arising from defects in or the unlawful operation of Pinnacle's software products, including claims related to data-privacy violations. Ms. Bernstein stated that the assertion of cross-claims and indemnification demands against Pinnacle is a core element of MTDC's defense strategy, as MTDC's position is that any BIPA violations were caused by Pinnacle's platform design, data-handling architecture, and inadequate compliance guidance, rather than by MTDC's independent conduct.

5. Employment Counseling. MTDC has also requested related employment counseling on workforce-monitoring policies, including the development of revised timekeeping and scheduling procedures that do not rely on biometric data collection, as well as guidance on employee communications and labor-relations considerations associated with the transition to new timekeeping systems.

Ms. Bernstein provided the following additional details concerning the financial scope and staffing of the proposed engagement:

Estimated BIPA Exposure. Based on an analysis prepared by MTDC's consulting actuary, Lakefront Actuarial Advisors, LLC (prepared by Felix Drummond, FSA, MAAA), MTDC's estimated BIPA exposure ranges from $12,400,000 at the negligent-violation floor (12,400 class members multiplied by the statutory minimum of $1,000 per violation under 740 ILCS 14/20(1)) to $62,000,000 at the intentional-or-reckless-violation ceiling (12,400 class members multiplied by the statutory maximum of $5,000 per violation under 740 ILCS 14/20(2)). Ms. Bernstein noted that this exposure calculation does not include potential statutory penalties, injunctive relief, or attorneys' fees that might be awarded in connection with the Attorney General's enforcement action.

Proposed Staffing. Rachel Bernstein, Partner, would serve as Responsible Partner. Miriam Calloway, Partner in the Healthcare & Life Sciences group, would serve as Billing Partner and provide subject-matter support on health-data and biometric-data regulatory overlap. Devon Archer, Senior Associate in the Labor & Employment group, would serve as lead associate. Nadia Petrov, Junior Associate in the Labor & Employment group, would serve as working associate.

Proposed Hourly Rates. Ms. Bernstein's proposed rate structure reflects the firm's standard government-entity rate: Partner — $1,150 per hour (Ms. Bernstein's standard government rate); Senior Associate — $785 per hour (Mr. Archer); Junior Associate — $625 per hour (Ms. Petrov).

Estimated Fees. Ms. Bernstein estimated that total fees for the engagement would range from approximately $3,500,000 to $5,200,000 over a period of eighteen to twenty-four months, depending on the pace and scope of the Attorney General's investigation, the trajectory of the class-action litigation, and the extent of any cross-claims or indemnification proceedings.

Client Budget Context. Mr. Whitfield indicated during the initial May 6, 2024, call that MTDC's total annual outside-counsel budget is approximately $14,800,000, placing the proposed engagement among MTDC's most significant outside-counsel expenditures.

C. The Biometric Platform at Issue

Ms. Bernstein explained that the biometric workforce-management platform at the center of both the Attorney General's CID and the class-action complaint is "TruScan 360," the flagship product of Pinnacle Workforce Analytics, Inc. TruScan 360 is an AI-powered timekeeping and scheduling platform that utilizes three categories of biometric data: fingerprint recognition, facial-geometry mapping, and iris-scan verification. The platform was deployed at MTDC under the MSLA effective June 15, 2021, and has been in continuous operation since that date. TruScan 360 is installed at MTDC's bus depots, maintenance facilities, commuter rail stations, and administrative offices across the service territory.

Ms. Bernstein emphasized that both the AG's CID and the class complaint specifically identify TruScan 360 by name and allege that the platform's data-collection, storage, and dissemination practices — including the manner in which biometric identifiers are captured at the point of employee clock-in, transmitted to cloud-based servers, retained beyond the period of active employment, and shared with third-party analytics and payroll processors — constitute violations of BIPA and PIPA. The platform itself, its design architecture, and its data-handling protocols are therefore central to every aspect of the proposed MTDC engagement.

IV. OVERVIEW OF EXISTING CLIENT RELATIONSHIP WITH PINNACLE WORKFORCE ANALYTICS, INC.

Mr. Keating invited Jonathan Mercer, Partner in the firm's intellectual Property / Patent Litigation practice group and the Responsible and Billing Partner for the firm's existing Pinnacle engagement, to present an overview of the firm's relationship with Pinnacle and the nature of the existing matter.

A. The Existing Client

Mr. Mercer stated that Pinnacle Workforce Analytics, Inc. ("Pinnacle") is a Delaware corporation headquartered at 11900 Sunrise Valley Drive, Suite 500, Reston, Virginia 20191. Pinnacle's registered agent is Cobalt Ridge Technologies, 1209 Orange Street, Wilmington, Delaware 19801. Pinnacle's annual revenues are approximately $485 million, and the company is a recognized leader in the biometric workforce-management technology sector. The company's Chief Executive Officer is Gregory Harmon, and its General Counsel is Sandra Yee. Pinnacle's primary product line centers on the TruScan suite of biometric timekeeping and workforce-analytics platforms, with TruScan 360 serving as the company's flagship offering.

Mr. Mercer reported that Calderwood & Harkness has represented Pinnacle continuously since 2019, initially in patent-licensing negotiations related to Pinnacle's core biometric-recognition algorithms and subsequently in patent-enforcement litigation. The relationship has deepened over the past five years, and Pinnacle is considered a significant institutional client of the firm. Mr. Mercer noted that Pinnacle's General Counsel, Sandra Yee, has a close working relationship with the firm and has expressed, on multiple occasions, a strong expectation that Calderwood & Harkness will maintain undivided loyalty to Pinnacle's interests.

B. The Existing Matter

Mr. Mercer described the existing engagement as follows. The firm currently represents Pinnacle under Matter No. 1031-00001, which was opened on March 14, 2022. The matter involves patent-infringement claims brought by Pinnacle against Veritas Biometrics Corp., a competitor in the biometric-technology space. The case was filed on September 6, 2022, in the United States District Court for the Eastern District of Virginia, and is docketed as Pinnacle Workforce Analytics, Inc. v. Veritas Biometrics Corp., Case No. 1:22-cv-01533. Veritas Biometrics Corp. is a Virginia corporation with its principal place of business at 8200 Greensboro Drive, Suite 1100, McLean, Virginia 22102. Its Chief Executive Officer is Randall Cho. Veritas is represented in the litigation by Whitmore & Sato LLP, with Akira Sato serving as lead counsel.

Mr. Mercer stated that the patent-infringement claims brought by Pinnacle against Veritas directly concern TruScan 360's core biometric-recognition algorithms — the same algorithms that power the biometric-data collection, processing, and storage functions of the TruScan 360 platform deployed at MTDC and at the center of the Attorney General's CID and the class-action complaint. The litigation involves detailed analysis of TruScan 360's technical architecture, including its fingerprint-matching protocols, facial-geometry mapping methods, iris-scan verification processes, and the AI-driven machine-learning models that underpin those functions.

Mr. Mercer serves as both Responsible Partner and Billing Partner for the Pinnacle engagement, with Priya Subramaniam, a senior associate in the firm's intellectual Property group, serving as lead associate. Actual billings from Pinnacle for fiscal year 2023 totaled $2,137,500. Mr. Mercer confirmed that the matter is active and ongoing, with no anticipated conclusion in the near term. Discovery is continuing, expert reports are expected in the fall of 2024, and trial is currently scheduled for the spring of 2025.

C. Confidential Information in the Firm's Possession

Mr. Mercer confirmed that, as a result of the firm's representation of Pinnacle in the patent-enforcement matter and related advisory work, the firm possesses extensive confidential information belonging to Pinnacle that is directly relevant to TruScan 360. Mr. Mercer identified the following categories of confidential information in the firm's possession:

1. Detailed technical specifications of TruScan 360, including system requirements, performance benchmarks, and integration protocols.

2. Source-code architecture summaries, including high-level descriptions of the software modules responsible for biometric-data capture, processing, encryption, and storage.

3. Data-flow diagrams illustrating the pathways by which biometric data is collected at the point of capture, transmitted to Pinnacle's cloud infrastructure, processed by the AI-driven recognition algorithms, stored in biometric databases, and — in certain deployment configurations — shared with third-party payroll and analytics platforms.

4. Biometric-data retention policies, including Pinnacle's internal guidelines on data-retention periods, deletion protocols, and the circumstances under which biometric data may be retained beyond an employee's period of active enrollment in the TruScan 360 system.

5. Algorithm design documents describing the proprietary machine-learning models, training datasets, and optimization methods used by TruScan 360's biometric-recognition engines.

6. Patent-prosecution correspondence, including communications with the United States Patent and Trademark Office and internal strategy memoranda concerning the scope, validity, and enforceability of Pinnacle's patent portfolio related to the TruScan platform.

Mr. Mercer stated, with emphasis, that this body of confidential information is directly relevant to the BIPA claims that MTDC would defend against and to any cross-claims or indemnification proceedings that MTDC might bring against Pinnacle. He noted that the data-flow diagrams and biometric-data retention policies, in particular, go to the heart of the BIPA allegations — specifically, the questions of whether adequate consent was obtained, whether retention and destruction policies were published and followed, and whether biometric data was disseminated to unauthorized third parties. Mr. Mercer stated that he could not envision a scenario in which the firm could represent MTDC in these matters without creating a substantial risk that Pinnacle's confidential information would be used to Pinnacle's disadvantage, either directly or through the influence of the firm's institutional knowledge on its litigation strategy for MTDC.

V. CONFLICTS SEARCH RESULTS

Mr. Keating invited Colleen Farrow, Director of Conflicts & New Business, to present the results of the conflicts searches conducted in connection with proposed Matter No. 1031-00001.

A. Round 1 Search — May 9, 2024

Ms. Farrow reported that a comprehensive conflicts search was run across all firm databases on May 9, 2024, in connection with the opening of the new-matter intake for the proposed MTDC engagement. The search was conducted using the firm's proprietary conflicts-management system (IntegrityCheck v.7.2) and covered all active matters, closed matters within the seven-year retention window, client and adverse-party databases, billing records, engagement letters, and related indices. The search terms included "Metropolitan Transit Development Corp.," "MTDC," all known MTDC officers and directors, "Pinnacle Workforce Analytics," "TruScan," "TruScan 360," and all parties identified in the Attorney General's CID and the class-action complaint.

The Round 1 search identified a direct match: Pinnacle Workforce Analytics, Inc., listed as the current client under Matter No. 1031-00001, with Jonathan Mercer as Responsible and Billing Partner. The search flagged both a direct-adversity issue under Illinois Rule of Professional Conduct 1.7(a)(1) and a material-limitation issue under Rule 1.7(a)(2). Ms. Farrow issued her Round 1 conflicts report on May 10, 2024, and immediately escalated the matter to Mr. Keating and Ms. Drazkowski for review.

B. Round 2 Search — Expanded Parties — May 13, 2024

At the direction of Ms. Drazkowski, Ms. Farrow conducted a supplemental expanded-parties search on May 13, 2024. This second search broadened the scope to include all known Pinnacle affiliates and subsidiaries, Pinnacle's identified subcontractors and technology partners, all MTDC board members and senior officers, Veritas Biometrics Corp. and its principals, Lakefront Actuarial Advisors, LLC, Meridian Trust National Bank (identified in MTDC's corporate disclosures as MTDC's trustee for certain transit-bond obligations), and all individuals identified in the CID and the class-action complaint, including named plaintiffs and their counsel.

The Round 2 search did not identify any additional conflicts beyond the Pinnacle issue already flagged in the Round 1 search. Ms. Farrow issued her Round 2 supplemental conflicts report on May 13, 2024, confirming that the sole conflict requiring Committee review was the Pinnacle matter.

VI. CONFLICTS ANALYSIS

Mr. Keating invited Helen Drazkowski, General Counsel of Calderwood & Harkness LLP, to present her analysis of the conflict. Ms. Drazkowski stated that she had prepared a final written analysis memorandum dated May 14, 2024 (the "Drazkowski Memorandum"), copies of which had been distributed to all attendees in advance of the meeting via the firm's secure document portal. Ms. Drazkowski summarized the key findings and conclusions of her analysis as follows.

A. Illinois Rule of Professional Conduct 1.7(a)(1) — Direct Adversity

Ms. Drazkowski stated that the proposed representation of MTDC would be directly adverse to the interests of Pinnacle, a current firm client, in violation of Illinois Rule of Professional Conduct 1.7(a)(1). She identified three independent grounds for this conclusion:

First, Pinnacle is identified as a "responsible party" in the Attorney General's CID (Ref. No. CRB-2024-0417). Ms. Drazkowski noted that Deputy AG Jeffries, through outside special counsel Diane Falk at Ridgeway & Falk LLP, has indicated through informal communications that the Attorney General's office may name Pinnacle as a co-respondent in any enforcement action arising from the investigation. Representing MTDC in the defense of the CID would therefore place the firm in a posture of direct adversity to Pinnacle, as MTDC's defense strategy would necessarily involve identifying Pinnacle as the party primarily responsible for the alleged BIPA violations.

Second, MTDC's anticipated cross-claims and indemnification demands under the MSLA dated June 15, 2021, would be asserted directly against Pinnacle. Ms. Bernstein confirmed during her presentation that the assertion of such claims is a core element of MTDC's anticipated litigation strategy. Representing MTDC in the prosecution of cross-claims and indemnification demands against Pinnacle would constitute a textbook instance of direct adversity between two clients of the same firm.

Third, the legal characterization of TruScan 360's biometric-data collection, storage, and dissemination practices as unlawful under BIPA is itself directly adverse to Pinnacle's interests. Pinnacle's business model, commercial reputation, and market position depend on the lawfulness and legitimacy of TruScan 360's data-handling practices. Representing MTDC in proceedings that require the firm to argue that TruScan 360's practices violate BIPA is fundamentally adverse to Pinnacle's interests, regardless of whether cross-claims are formally asserted.

Ms. Drazkowski concluded that direct adversity exists under Rule 1.7(a)(1) on each of these three independent grounds and that any one of them would be sufficient, standing alone, to establish a conflict.

B. Illinois Rule of Professional Conduct 1.7(a)(2) — Material Limitation

Ms. Drazkowski further stated that, independent of the direct-adversity analysis, there is a significant risk that the firm's representation of MTDC would be materially limited by the firm's responsibilities to Pinnacle, in violation of Illinois Rule of Professional Conduct 1.7(a)(2). She identified three bases for this conclusion:

First, the MTDC engagement would require the firm to argue that TruScan 360's design and deployment violated BIPA — that is, that the platform's biometric-data collection, storage, and dissemination practices are unlawful. This position is antithetical to the interests of Pinnacle, whose TruScan 360 platform is the subject of the allegations. A lawyer representing MTDC would be obligated to develop the factual record and legal arguments most damaging to TruScan 360's reputation for lawful data handling.

Second, the Pinnacle patent-enforcement engagement, by contrast, depends in significant part on establishing the legitimacy, innovation, and commercial value of TruScan 360's biometric capabilities. In Pinnacle v. Veritas Biometrics Corp., the firm is arguing that TruScan 360 embodies novel and valuable biometric-recognition technology deserving of patent protection and that Veritas's competing product infringes Pinnacle's proprietary innovations. Characterizing TruScan 360 as an unlawful surveillance tool that violates biometric-privacy law is fundamentally inconsistent with the positions the firm is simultaneously advancing on Pinnacle's behalf.

Third, the firm could not zealously advocate for MTDC's position without undermining arguments it is simultaneously making on behalf of Pinnacle, and vice versa. The duty of zealous advocacy running to each client would be materially compromised by the firm's obligations to the other. This is not a hypothetical or speculative risk; it is an inevitable consequence of concurrent representation in matters involving the same technology platform and overlapping factual and legal questions.

Ms. Drazkowski concluded that a material limitation exists under Rule 1.7(a)(2) and that this limitation provides an independent basis for finding a conflict, separate from and in addition to the direct-adversity finding under Rule 1.7(a)(1).

C. Illinois Rule of Professional Conduct 1.7(b) — Waivability Assessment

Ms. Drazkowski then addressed the question of whether the conflict identified under Rules 1.7(a)(1) and 1.7(a)(2) could be cured by the informed consent of both clients under Rule 1.7(b). She analyzed each prong of the Rule 1.7(b) consent test:

1. Reasonable belief of competent and diligent representation (Rule 1.7(b)(1)). Ms. Drazkowski stated that no reasonable lawyer could conclude that the firm can provide competent and diligent representation to both MTDC and Pinnacle simultaneously, given the diametrically opposed legal positions that the two engagements require regarding TruScan 360. The MTDC engagement requires the firm to argue that TruScan 360's biometric-data practices are unlawful; the Pinnacle engagement requires the firm to argue that TruScan 360 embodies legitimate, innovative, and commercially valuable technology. These positions cannot be reconciled. A lawyer attempting to advance both positions simultaneously would be unable to exercise independent professional judgment on behalf of either client, and the quality of representation provided to each would inevitably suffer. Ms. Drazkowski concluded that the threshold requirement of Rule 1.7(b)(1) — that the lawyer reasonably believe he or she can provide competent and diligent representation to each affected client — is not met.

2. Substantially related matters. Ms. Drazkowski emphasized that the two matters are not merely positionally inconsistent in unrelated contexts — a scenario in which consent might, in some circumstances, be effective. Rather, the matters involve the identical technology platform (TruScan 360), overlapping factual questions regarding the platform's biometric-data collection, storage, and dissemination practices, and the same underlying contractual instrument (the MSLA dated June 15, 2021). The degree of factual and legal overlap is extensive and direct, making this a case of concurrent adversity in substantially related matters rather than mere issue or positional conflict.

3. Confidential information. Ms. Drazkowski noted that the firm possesses Pinnacle's confidential technical architecture documents, source-code architecture summaries, data-flow diagrams, biometric-data retention policies, and algorithm design documents — all of which are directly material to the BIPA claims at issue in the proposed MTDC engagement. The firm's possession of this confidential information creates an additional and independent barrier to effective consent, as there is no practical mechanism to prevent the institutional knowledge embodied in these materials from influencing the firm's representation of MTDC, even if formal ethical walls were erected.

4. Representation not prohibited by law. Ms. Drazkowski acknowledged that no statute expressly prohibits the concurrent representation at issue. However, she stated that the irreconcilable nature of the conflict renders any purported consent ineffective as a matter of professional responsibility. Where the threshold test of Rule 1.7(b)(1) is not met, the question of whether the representation is prohibited by law is moot, because consent cannot cure a conflict that fails the reasonable-belief test.

Ms. Drazkowski concluded that the conflict is not waivable by informed consent of either or both clients. She stated that seeking consent from Pinnacle or MTDC would itself be improper, because the threshold test of Rule 1.7(b)(1) cannot be satisfied and it would be misleading to suggest to either client that effective consent is possible under these circumstances.

D. Illinois Rule of Professional Conduct 1.9 — Former-Client Duties (Noted as Inapplicable)

Ms. Drazkowski noted for the record that Illinois Rule of Professional Conduct 1.9, which governs duties to former clients, does not apply to the present analysis because Pinnacle is a current, not former, client of the firm. The Rule 1.7 current-client analysis is therefore controlling. However, Ms. Drazkowski stated that she had conducted a Rule 1.9 analysis as a precautionary measure and confirmed that, even under a former-client framework, the same result would obtain: the matters are substantially related within the meaning of Rule 1.9(a), and the firm possesses material confidential information within the meaning of Rule 1.9(c). This observation was noted for the record in the event that the Pinnacle engagement were to terminate in the future and the MTDC engagement were to be reconsidered at that time.

E. Illinois Rule of Professional Conduct 1.10 — Imputation and Screening

Finally, Ms. Drazkowski addressed whether the conflict could be cured by the implementation of an ethical screen or information barrier within the firm. She concluded that it could not. The conflict arises from concurrent representation by a current firm partner, Jonathan Mercer, and not from the lateral hire of an attorney who brings a conflict from a prior firm. Illinois Rule of Professional Conduct 1.10(a) provides that when a lawyer is disqualified from representation under Rule 1.7, the disqualification is imputed to all lawyers associated in the same firm. The limited screening exception available under Rule 1.10(d) for conflicts arising from lateral movement of attorneys is inapplicable here, because Mr. Mercer is a longstanding partner of the firm and the Pinnacle engagement originated at Calderwood & Harkness.

Ms. Drazkowski confirmed that the conflict is therefore imputed to the entire firm under Rule 1.10(a), and no screening mechanism can cure it. Every attorney at Calderwood & Harkness LLP is disqualified from representing MTDC in proposed Matter No. 1031-00001.

VII. DISCUSSION

Following the presentations by Ms. Bernstein, Mr. Mercer, Ms. Farrow, and Ms. Drazkowski, Mr. Keating opened the floor for discussion. The following comments and observations were made.

A. Statements by Jonathan Mercer Regarding the Pinnacle Relationship

Mr. Mercer confirmed that the Pinnacle relationship is active, ongoing, and of significant institutional importance to the firm. He noted that Calderwood & Harkness's representation of Pinnacle has been continuous since 2019, that the firm has invested substantial resources in developing deep expertise in Pinnacle's technology and patent portfolio, and that the relationship has been a source of consistent and growing revenue for the firm's intellectual Property practice group.

Mr. Mercer reiterated that the patent-enforcement matter (Pinnacle Workforce Analytics, Inc. v. Veritas Biometrics Corp., E.D. Va. Case No. 1:22-cv-01533) involves the same TruScan 360 platform that is at the center of the proposed MTDC engagement. He stated that accepting the MTDC engagement would irreparably compromise the firm's obligations to Pinnacle and place the firm in an untenable position with respect to the confidential information it holds. He expressed grave concern that even the perception that the firm had considered representing a party adverse to Pinnacle in matters involving TruScan 360 could damage the relationship.

Mr. Mercer further noted that Pinnacle's General Counsel, Sandra Yee, has historically been highly sensitive to any perception that the firm's loyalties are divided. He recalled that, in 2021, Ms. Yee had expressed concern when a different Calderwood & Harkness practice group represented a party in an unrelated commercial dispute against a Pinnacle affiliate, even though no conflict existed on those facts. Mr. Mercer stated that Ms. Yee would almost certainly view the firm's acceptance of the MTDC engagement as a fundamental breach of trust, regardless of any screening or other measures the firm might attempt to implement.

B. Acknowledgment by Rachel Bernstein

Ms. Bernstein stated that she acknowledged the conflict and agreed with Ms. Drazkowski's analysis in all respects. Ms. Bernstein expressed regret at the loss of a significant potential engagement, noting that the estimated fees of $3,500,000 to $5,200,000 over eighteen to twenty-four months would have represented a substantial addition to the firm's Chicago-office revenue and would have established the firm's presence in the government-entity data-privacy defense market. She noted that MTDC is a high-profile government client in the Chicago metropolitan area and that the engagement would have offered meaningful visibility and business-development opportunities for the firm's Privacy & Data Security practice.

Ms. Bernstein confirmed, clearly and without reservation, that no Pinnacle confidential information had been shared with her or with any member of the proposed MTDC engagement team — including Miriam Calloway, Devon Archer, and Nadia Petrov — at any point during the intake process. She stated that she had not reviewed any documents related to the firm's representation of Pinnacle, had not discussed the substance of the Pinnacle engagement with Mr. Mercer or any member of his team, and had not accessed any files, databases, or work product associated with Matter No. 1031-00001.

Ms. Bernstein recommended that, in connection with the formal declination, the firm offer MTDC referrals to qualified alternative counsel with deep BIPA expertise and no conflicts. She identified several firms that she believed could competently handle the engagement and stated that she would prepare a referral letter for Mr. Whitfield's consideration.

C. Financial Considerations Noted for the Record

Mr. Keating noted for the record that the Committee had taken into account the following financial considerations in its deliberations:

• Estimated foregone fees from declining the MTDC engagement: $3,500,000 to $5,200,000 over eighteen to twenty-four months.

• Existing annual billings from Pinnacle: $2,137,500 (fiscal year 2023 actual), with the potential for continued growth as the Pinnacle v. Veritas litigation proceeds toward trial and as additional patent-related matters may arise.

• The proposed engagement would have been among the largest single new-matter openings for the firm's Chicago office in the current fiscal year.

Mr. Keating stated, and the Committee concurred, that these financial considerations were discussed solely for purposes of completeness and institutional context. They were not determinative of the Committee's decision. The determination of whether to accept or decline a proposed engagement in the face of a conflict of interest is governed solely by the firm's ethical obligations under the Illinois Rules of Professional Conduct, the firm's Conflicts Policy, and applicable professional-responsibility standards. The Committee does not weigh financial considerations against ethical obligations; where an unwaivable conflict exists, the engagement must be declined regardless of its financial significance.

Mr. Keating further noted that no billable time had been generated in connection with the conflicts review itself. Matter No. 1031-00001 will reflect zero fees and zero disbursements. No time entries will be recorded against the matter number, and no charges will be incurred by MTDC or any other party.

D. Committee Deliberation

Following the presentations and discussion summarized above, Mr. Keating called for formal deliberation by the Committee. All five attendees participated in the deliberation. No dissenting views were expressed at any point.

During the deliberation, the Committee specifically considered whether any alternative structuring of the proposed engagement could cure or mitigate the conflict. In particular, the Committee discussed the following hypothetical scenarios:

Partial engagement with scope limitation. The Committee considered whether the firm could accept a limited-scope engagement for MTDC that expressly excluded the assertion of cross-claims or indemnification demands against Pinnacle. The Committee concluded that this approach would not cure the conflict because the fundamental legal position that the firm would be required to advance on MTDC's behalf — namely, that TruScan 360's biometric-data practices violate BIPA — is itself directly adverse to Pinnacle's interests. This adversity exists regardless of whether cross-claims are formally pursued. Moreover, the Committee noted that limiting the scope of representation in this manner could itself constitute a disservice to MTDC, as it would prevent the firm from pursuing a core element of MTDC's defense strategy and could give rise to a separate conflict under Rule 1.7(a)(2) based on the material limitation on the firm's ability to represent MTDC effectively.

Engagement limited to remediation advisory work only. The Committee considered whether the firm could accept an engagement limited to advising MTDC on the prospective remediation of its biometric-data practices, without involvement in the litigation or enforcement proceedings. The Committee concluded that even a remediation-only engagement would require the firm to assess and characterize TruScan 360's data-handling practices and to advise MTDC on the ways in which those practices fail to comply with BIPA. Such an assessment and characterization would be adverse to Pinnacle's interests.

The Committee concluded that no alternative structuring of the engagement could cure the conflict. The conflict is inherent in the nature of the proposed representation and cannot be avoided by limiting the scope of work.

VIII. DETERMINATION

Following deliberation, the Conflicts Committee reached the following unanimous determination:

The Conflicts Committee unanimously determined that the proposed engagement of Metropolitan Transit Development Corp. (proposed Matter No. 1031-00001) must be declined due to an unwaivable conflict of interest with existing client Pinnacle Workforce Analytics, Inc. (existing Matter No. 1031-00001).

The Committee's determination rests on the following grounds:

1. Direct adversity under Illinois Rule of Professional Conduct 1.7(a)(1). The proposed representation of MTDC would be directly adverse to the interests of Pinnacle, a current firm client, because (a) Pinnacle is a named responsible party in the Attorney General's CID and a potential co-respondent in any enforcement action; (b) MTDC's anticipated cross-claims and indemnification demands would be asserted directly against Pinnacle; and (c) the legal characterization of TruScan 360's biometric-data practices as unlawful is directly adverse to Pinnacle's interests.

2. Material limitation under Illinois Rule of Professional Conduct 1.7(a)(2). There is a significant risk that the firm's representation of MTDC would be materially limited by the firm's responsibilities to Pinnacle, because the two engagements require diametrically opposed legal positions regarding the lawfulness and legitimacy of TruScan 360's biometric capabilities, and the firm could not zealously advocate for either client's position without undermining its obligations to the other.

3. The conflict is not waivable under Rule 1.7(b). No reasonable lawyer could conclude that competent and diligent representation of both MTDC and Pinnacle is possible given the irreconcilable nature of the conflict. The matters involve the same technology platform, overlapping factual and legal questions, and the same underlying contractual instrument. The firm possesses extensive Pinnacle confidential information directly material to the MTDC claims. Seeking consent from either or both clients would be improper because the threshold test of Rule 1.7(b)(1) is not met.

4. The conflict is imputed to the entire firm under Rule 1.10(a) and cannot be cured by screening. Because the conflict arises from concurrent representation by a current firm partner and not from the lateral movement of an attorney, the screening exception under Rule 1.10(d) is inapplicable, and the disqualification extends to every lawyer at Calderwood & Harkness LLP.

The motion to decline the proposed MTDC engagement on the grounds stated above was made by Helen Drazkowski, seconded by Jonathan Mercer, and approved unanimously by all five attendees present (5–0). No abstentions were recorded.

IX. DIRECTED NEXT STEPS

The Committee directed the following actions to be taken in connection with the declination of proposed Matter No. 1031-00001:

1. Declination Communication. Rachel Bernstein shall prepare a formal declination letter addressed to Terrence Whitfield, General Counsel of MTDC, advising that Calderwood & Harkness LLP is unable to accept the proposed engagement due to the existence of an unwaivable conflict of interest. The letter shall be reviewed and approved by Helen Drazkowski before it is transmitted to Mr. Whitfield. The declination letter must not identify Pinnacle Workforce Analytics, Inc., or disclose the nature of the existing engagement that gives rise to the conflict. The letter shall state only that an unwaivable conflict of interest has been identified during the firm's standard intake review process and that the firm is therefore unable to accept the representation. The letter shall express the firm's regret and appreciation for MTDC's consideration. Ms. Bernstein shall prepare the draft declination letter no later than May 17, 2024, and Ms. Drazkowski shall complete her review no later than May 20, 2024, with the goal of transmitting the letter to Mr. Whitfield no later than May 21, 2024.

2. Referral to Qualified Alternative Counsel. In connection with the declination, Ms. Bernstein shall identify and recommend to MTDC qualified alternative outside counsel with substantial BIPA expertise and no conflicts of interest that would prevent their acceptance of the engagement. Ms. Bernstein shall prepare a referral letter to be transmitted to Mr. Whitfield concurrently with or promptly following the declination letter. The referral letter shall include the names and contact information of at least three recommended firms and a brief description of each firm's relevant qualifications.

3. Confirmation of No Information Sharing. Colleen Farrow shall confirm and document, in a written memorandum for the Conflicts Committee file, that no Pinnacle confidential information was disclosed to any member of the proposed MTDC engagement team — including Rachel Bernstein, Miriam Calloway, Devon Archer, and Nadia Petrov — at any point during the intake process or at any time prior to or during the Committee meeting. Ms. Farrow shall obtain written certifications from each member of the proposed engagement team confirming that they did not access, review, or receive any files, documents, work product, or other information related to the firm's representation of Pinnacle under Matter No. 1031-00001. These certifications shall be completed and filed no later than May 21, 2024.

4. Notification to Pinnacle Engagement Partner. Following the formal declination and closure of proposed Matter No. 1031-00001, Ms. Farrow shall provide written confirmation to Jonathan Mercer that the proposed matter has been formally declined and closed, and that the firm's ethical obligations to Pinnacle Workforce Analytics, Inc. have been preserved. This notification shall confirm that no Pinnacle confidential information was disclosed to the proposed MTDC engagement team and that no work was performed on behalf of MTDC. Mr. Mercer may, in his discretion and subject to Ms. Drazkowski's guidance, determine whether and how to communicate with Pinnacle's General Counsel, Sandra Yee, regarding the matter, although the Committee noted that proactive disclosure to Pinnacle is not required and may be inadvisable insofar as it would reveal the identity of the prospective client.

5. Matter Closure. Rachel Bernstein shall complete the firm's standard matter closure form (C&H Form MC-1) for proposed Matter No. 1031-00001. The form shall reflect the reason for closure as "Declined — Unwaivable Conflict of Interest." Colleen Farrow shall process the closure in all firm systems, including the billing system, the matter-management system, and the conflicts database. The matter shall reflect zero fees and zero disbursements.

6. Conflicts Database Update. Colleen Farrow shall update the firm's conflicts database to reflect MTDC as a declined prospective client, the nature of the conflict (direct adversity and material limitation involving an existing client), and a cross-reference to existing Matter No. 1031-00001. The database entry shall be flagged for review in the event that the Pinnacle engagement terminates in the future and a new MTDC engagement is proposed at that time.

7. Document Retention. All internal work product generated in connection with the conflicts review — including the Drazkowski Memorandum dated May 14, 2024, the Round 1 and Round 2 conflicts reports, these minutes, and all related correspondence and internal communications — shall be retained in accordance with the firm's seven-year retention policy under the "Declined Engagements — Conflicts" retention category. Materials shall be stored in the firm's secure document-management system with access restricted to members of the Conflicts Committee and the Office of the General Counsel.

8. Quarterly Report. An entry summarizing the Committee's determination shall be included in the Q2 2024 Conflicts Committee quarterly report to the Management Committee. The broader-distribution version of the quarterly report shall describe the nature of the conflict in general terms and shall omit the identity of the existing client (Pinnacle Workforce Analytics, Inc.) to preserve confidentiality. The restricted-distribution version of the quarterly report, circulated only to members of the Management Committee and the Office of the General Counsel, may include the identity of both the prospective client and the existing client.

X. ADJOURNMENT

There being no further business to come before the Committee, Mr. Keating called for a motion to adjourn. Ms. Drazkowski moved to adjourn, and Ms. Bernstein seconded the motion. The meeting was adjourned at 2:47 p.m. CDT.

Mr. Keating thanked all participants for their prompt attention to the matter and for the thoroughness of their presentations and analysis. He noted that the Committee's ability to identify, analyze, and resolve this conflict within five business days of the new-matter intake opening reflected well on the firm's conflicts-management processes and the diligence of the participants.

XI. APPROVAL

Minutes prepared by:

________________________________________

Colleen Farrow Director, Conflicts & New Business Calderwood & Harkness LLP

Date: May 14, 2024

Reviewed and approved by:

________________________________________

Lawrence Keating Senior Partner; Chair, Conflicts Committee Calderwood & Harkness LLP

Date: May 15, 2024

Distribution: Limited to attendees listed in Section II above. One copy retained in the file for proposed Matter No. 1031-00001; one copy retained in the permanent records of the Conflicts Committee.

Classification: PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT — ATTORNEY-CLIENT PRIVILEGED

This document reflects the deliberations and determinations of the Conflicts Committee of Calderwood & Harkness LLP and is protected by the attorney-client privilege, the attorney work product doctrine, and the firm's internal confidentiality policies. This document shall not be disclosed to any person outside the distribution list specified above without the express written authorization of the Chair of the Conflicts Committee. Unauthorized disclosure may result in waiver of privilege and may subject the disclosing party to disciplinary action.

Name	Title / Role	Office	Attendance
Lawrence Keating	Senior Partner; Chair, Conflicts Committee	New York	Via videoconference
Helen Drazkowski	General Counsel, Calderwood & Harkness LLP	New York	Via videoconference
Colleen Farrow	Director, Conflicts & New Business	Chicago	In person
Rachel Bernstein	Partner, Privacy & Data Security; Responsible Partner for proposed MTDC engagement	Chicago	In person
Jonathan Mercer	Partner, intellectual Property / Patent Litigation; Responsible and Billing Partner for existing Pinnacle Workforce Analytics, Inc. engagement	New York	Via videoconference

PRIVILEGED AND CONFIDENTIAL ATTORNEY WORK PRODUCT — ATTORNEY-CLIENT PRIVILEGED
CALDERWOOD & HARKNESS LLP
CONFLICTS COMMITTEE
MINUTES OF MEETING
May 14, 2024
Date of Meeting: Tuesday, May 14, 2024
Time: 2:00 p.m. CDT
Format: Secure videoconference connecting the Chicago and New York offices
Location: Calderwood & Harkness LLP, One North Wacker Drive, Suite 4200, Chicago, Illinois 60606 (Conference Room 42-A), with participants also joining from 600 Lexington Avenue, 38th Floor, New York, New York 10022
Prepared by: Colleen Farrow, Director, Conflicts & New Business
Matter Reference: Proposed Matter No. 1031-00001 (Metropolitan Transit Development Corp.) / Cross-referenced with Existing Matter No. 1031-00001 (Pinnacle Workforce Analytics, Inc.)
I. CALL TO ORDER
Lawrence Keating, Senior Partner and Chair of the Conflicts Committee, called the meeting to order at 2:00 p.m. CDT. Mr. Keating confirmed that a quorum of the Conflicts Committee was present, with all five required participants in attendance either in person at the Chicago office or via the firm's secure videoconference platform from the New York office. Mr. Keating noted that the videoconference connection had been established over the firm's encrypted communications system and that no recording was being made of the proceedings.
Mr. Keating stated that the sole agenda item for the meeting was the review and determination regarding a potential conflict of interest arising from proposed Matter No. 1031-00001, which involves a prospective engagement by Metropolitan Transit Development Corp. ("MTDC"). He indicated that the matter had been escalated to the full Conflicts Committee following the identification of a direct conflict with an existing client during the standard new-matter intake process. Mr. Keating reminded all attendees that the proceedings, deliberations, and all related materials are protected by the attorney-client privilege, the attorney work product doctrine, and the firm's internal confidentiality policies, and that no information discussed during the meeting should be disclosed to any person outside the meeting without the express authorization of the Conflicts Committee.
II. ATTENDEES
The following individuals were present for the entirety of the meeting:
No other attorneys, staff members, or third parties were present at any point during the meeting. Attendance was strictly limited to the above-listed participants in order to preserve confidentiality and minimize the potential for any inadvertent disclosure of information related to either the prospective engagement or the existing client relationship at issue.
III. BACKGROUND AND OVERVIEW OF PROPOSED ENGAGEMENT
Mr. Keating invited Rachel Bernstein, Partner in the firm's Privacy & Data Security practice group and the proposed Responsible Partner for the MTDC engagement, to present the background, scope, and details of the proposed engagement. Ms. Bernstein's presentation covered the following matters.
A. The Prospective Client
Ms. Bernstein explained that the prospective client is Metropolitan Transit Development Corp. ("MTDC"), a unit of local government and special-purpose transit authority organized and operating under the Illinois Local Mass Transit District Act (70 ILCS 3610/1 et seq.). MTDC is headquartered at 550 West Harrison Street, Suite 1400, Chicago, Illinois 60607. MTDC operates bus, commuter rail, and paratransit services across Cook County and the five collar counties of DuPage, Kane, Lake, McHenry, and Will. MTDC serves approximately 1.6 million daily riders and maintains an annual operating budget of approximately $3.2 billion, funded by a combination of fare revenues, federal and state transit subsidies, and local sales tax allocations.
Ms. Bernstein identified the following key MTDC personnel relevant to the proposed engagement: Terrence Whitfield, General Counsel; Lucia Marchetti, Chief Information Security Officer ("CISO"); and Darnell Okafor, Executive Director. Ms. Bernstein noted that Mr. Whitfield serves as the primary legal decision-maker for MTDC's outside-counsel engagements and that Ms. Marchetti would serve as the principal operational contact for purposes of the data-privacy and biometric-compliance matters at issue.
Ms. Bernstein reported that MTDC was referred to Calderwood & Harkness by its existing outside litigation counsel, Hargrove, Tillman & Reese LLP, through Constance Hargrove, the lead partner on MTDC's account at that firm. Ms. Hargrove had explained to Mr. Whitfield that Hargrove, Tillman & Reese lacked in-house expertise in data-privacy law, biometric-information regulation, and the Illinois Biometric Information Privacy Act ("BIPA") in particular, and therefore recommended that MTDC engage specialized counsel for the matters described below.
Initial contact between Calderwood & Harkness and MTDC occurred on May 6, 2024, when Ms. Bernstein and Mr. Whitfield spoke by telephone. Mr. Whitfield described the nature and urgency of MTDC's legal needs, and Ms. Bernstein expressed preliminary interest in the engagement. A new-matter intake was opened on May 9, 2024, and assigned proposed Matter No. 1031-00001. The standard conflicts-check process was initiated simultaneously.
B. Nature of the Proposed Engagement
Ms. Bernstein described the proposed engagement as encompassing the following five interrelated workstreams:
1. Defense of Civil Investigative Demand. On April 22, 2024, the Illinois Attorney General's Bureau of Civil Rights issued a Civil Investigative Demand ("CID") to MTDC, bearing Reference No. CRB-2024-0417. The CID was issued under the authority of the Attorney General's office and is led by Deputy Attorney General for Civil Rights Malcolm Jeffries, with support from outside special counsel retained by the Attorney General's office, Ridgeway & Falk LLP (lead partner: Diane Falk). The CID alleges that MTDC's deployment of a biometric workforce-management platform violated the Illinois Biometric Information Privacy Act, 740 ILCS 14/1 et seq., and the Illinois Personal Information Protection Act, 815 ILCS 530/1 et seq. The CID demands production of extensive documentation concerning MTDC's biometric-data collection, storage, use, sharing, and destruction practices, as well as copies of all vendor contracts, employee consent forms, privacy notices, data-security assessments, and internal communications related to the implementation and operation of the biometric platform. Ms. Bernstein noted that the CID carries the potential for enforcement action, including civil penalties and injunctive relief, and that the Attorney General's office has indicated through informal channels that it may expand the scope of the investigation to include technology vendors supplying the biometric platform.
2. Defense of Putative Employee Class Action. On April 29, 2024, a putative employee class action was filed in the Circuit Court of Cook County, Chancery Division, styled as Williams et al. v. Metropolitan Transit Development Corp., Case No. 2024-CH-04417. The complaint was brought on behalf of a putative class of approximately 12,400 current and former MTDC employees by class counsel Kessler, Brandt & O'Neill LLP, with Martin Kessler serving as lead counsel and Yolanda Brandt as co-counsel. The complaint asserts claims under BIPA Sections 15(a), 15(b), and 15(d), alleging that MTDC collected, captured, stored, and disseminated employees' biometric identifiers and biometric information — including fingerprints, facial geometry, and iris scans — without first obtaining the requisite written informed consent, without publishing a publicly available data-retention and destruction policy, and without adequate safeguards against unauthorized disclosure to third parties.
3. Remediation of Biometric-Data Practices. MTDC has requested advice regarding the remediation and restructuring of its biometric-data practices to bring its workforce-management operations into compliance with BIPA, PIPA, and any other applicable state and federal privacy laws. This workstream would involve a comprehensive audit of MTDC's existing data-collection, storage, and destruction practices; development and implementation of a compliant consent framework; revision of privacy policies and employee notices; and coordination with MTDC's CISO and IT staff on technical and operational changes.
4. Cross-Claims and Indemnification Proceedings Against Technology Vendors. Ms. Bernstein stated that MTDC's anticipated litigation strategy includes the assertion of cross-claims and indemnification demands against its technology vendors, notably including Pinnacle Workforce Analytics, Inc. ("Pinnacle"), under the Master Software License and Services Agreement ("MSLA") dated June 15, 2021, between MTDC and Pinnacle. Ms. Bernstein described the MSLA as a five-year agreement with a total contract value of $8,700,000 ($1,740,000 per year), with an optional three-year renewal. The MSLA contains indemnification provisions under which Pinnacle agreed to indemnify MTDC against claims arising from defects in or the unlawful operation of Pinnacle's software products, including claims related to data-privacy violations. Ms. Bernstein stated that the assertion of cross-claims and indemnification demands against Pinnacle is a core element of MTDC's defense strategy, as MTDC's position is that any BIPA violations were caused by Pinnacle's platform design, data-handling architecture, and inadequate compliance guidance, rather than by MTDC's independent conduct.
5. Employment Counseling. MTDC has also requested related employment counseling on workforce-monitoring policies, including the development of revised timekeeping and scheduling procedures that do not rely on biometric data collection, as well as guidance on employee communications and labor-relations considerations associated with the transition to new timekeeping systems.
Ms. Bernstein provided the following additional details concerning the financial scope and staffing of the proposed engagement:
Estimated BIPA Exposure. Based on an analysis prepared by MTDC's consulting actuary, Lakefront Actuarial Advisors, LLC (prepared by Felix Drummond, FSA, MAAA), MTDC's estimated BIPA exposure ranges from $12,400,000 at the negligent-violation floor (12,400 class members multiplied by the statutory minimum of $1,000 per violation under 740 ILCS 14/20(1)) to $62,000,000 at the intentional-or-reckless-violation ceiling (12,400 class members multiplied by the statutory maximum of $5,000 per violation under 740 ILCS 14/20(2)). Ms. Bernstein noted that this exposure calculation does not include potential statutory penalties, injunctive relief, or attorneys' fees that might be awarded in connection with the Attorney General's enforcement action.
Proposed Staffing. Rachel Bernstein, Partner, would serve as Responsible Partner. Miriam Calloway, Partner in the Healthcare & Life Sciences group, would serve as Billing Partner and provide subject-matter support on health-data and biometric-data regulatory overlap. Devon Archer, Senior Associate in the Labor & Employment group, would serve as lead associate. Nadia Petrov, Junior Associate in the Labor & Employment group, would serve as working associate.
Proposed Hourly Rates. Ms. Bernstein's proposed rate structure reflects the firm's standard government-entity rate: Partner — $1,150 per hour (Ms. Bernstein's standard government rate); Senior Associate — $785 per hour (Mr. Archer); Junior Associate — $625 per hour (Ms. Petrov).
Estimated Fees. Ms. Bernstein estimated that total fees for the engagement would range from approximately $3,500,000 to $5,200,000 over a period of eighteen to twenty-four months, depending on the pace and scope of the Attorney General's investigation, the trajectory of the class-action litigation, and the extent of any cross-claims or indemnification proceedings.
Client Budget Context. Mr. Whitfield indicated during the initial May 6, 2024, call that MTDC's total annual outside-counsel budget is approximately $14,800,000, placing the proposed engagement among MTDC's most significant outside-counsel expenditures.
C. The Biometric Platform at Issue
Ms. Bernstein explained that the biometric workforce-management platform at the center of both the Attorney General's CID and the class-action complaint is "TruScan 360," the flagship product of Pinnacle Workforce Analytics, Inc. TruScan 360 is an AI-powered timekeeping and scheduling platform that utilizes three categories of biometric data: fingerprint recognition, facial-geometry mapping, and iris-scan verification. The platform was deployed at MTDC under the MSLA effective June 15, 2021, and has been in continuous operation since that date. TruScan 360 is installed at MTDC's bus depots, maintenance facilities, commuter rail stations, and administrative offices across the service territory.
Ms. Bernstein emphasized that both the AG's CID and the class complaint specifically identify TruScan 360 by name and allege that the platform's data-collection, storage, and dissemination practices — including the manner in which biometric identifiers are captured at the point of employee clock-in, transmitted to cloud-based servers, retained beyond the period of active employment, and shared with third-party analytics and payroll processors — constitute violations of BIPA and PIPA. The platform itself, its design architecture, and its data-handling protocols are therefore central to every aspect of the proposed MTDC engagement.
IV. OVERVIEW OF EXISTING CLIENT RELATIONSHIP WITH PINNACLE WORKFORCE ANALYTICS, INC.
Mr. Keating invited Jonathan Mercer, Partner in the firm's intellectual Property / Patent Litigation practice group and the Responsible and Billing Partner for the firm's existing Pinnacle engagement, to present an overview of the firm's relationship with Pinnacle and the nature of the existing matter.
A. The Existing Client
Mr. Mercer stated that Pinnacle Workforce Analytics, Inc. ("Pinnacle") is a Delaware corporation headquartered at 11900 Sunrise Valley Drive, Suite 500, Reston, Virginia 20191. Pinnacle's registered agent is Cobalt Ridge Technologies, 1209 Orange Street, Wilmington, Delaware 19801. Pinnacle's annual revenues are approximately $485 million, and the company is a recognized leader in the biometric workforce-management technology sector. The company's Chief Executive Officer is Gregory Harmon, and its General Counsel is Sandra Yee. Pinnacle's primary product line centers on the TruScan suite of biometric timekeeping and workforce-analytics platforms, with TruScan 360 serving as the company's flagship offering.
Mr. Mercer reported that Calderwood & Harkness has represented Pinnacle continuously since 2019, initially in patent-licensing negotiations related to Pinnacle's core biometric-recognition algorithms and subsequently in patent-enforcement litigation. The relationship has deepened over the past five years, and Pinnacle is considered a significant institutional client of the firm. Mr. Mercer noted that Pinnacle's General Counsel, Sandra Yee, has a close working relationship with the firm and has expressed, on multiple occasions, a strong expectation that Calderwood & Harkness will maintain undivided loyalty to Pinnacle's interests.
B. The Existing Matter
Mr. Mercer described the existing engagement as follows. The firm currently represents Pinnacle under Matter No. 1031-00001, which was opened on March 14, 2022. The matter involves patent-infringement claims brought by Pinnacle against Veritas Biometrics Corp., a competitor in the biometric-technology space. The case was filed on September 6, 2022, in the United States District Court for the Eastern District of Virginia, and is docketed as Pinnacle Workforce Analytics, Inc. v. Veritas Biometrics Corp., Case No. 1:22-cv-01533. Veritas Biometrics Corp. is a Virginia corporation with its principal place of business at 8200 Greensboro Drive, Suite 1100, McLean, Virginia 22102. Its Chief Executive Officer is Randall Cho. Veritas is represented in the litigation by Whitmore & Sato LLP, with Akira Sato serving as lead counsel.
Mr. Mercer stated that the patent-infringement claims brought by Pinnacle against Veritas directly concern TruScan 360's core biometric-recognition algorithms — the same algorithms that power the biometric-data collection, processing, and storage functions of the TruScan 360 platform deployed at MTDC and at the center of the Attorney General's CID and the class-action complaint. The litigation involves detailed analysis of TruScan 360's technical architecture, including its fingerprint-matching protocols, facial-geometry mapping methods, iris-scan verification processes, and the AI-driven machine-learning models that underpin those functions.
Mr. Mercer serves as both Responsible Partner and Billing Partner for the Pinnacle engagement, with Priya Subramaniam, a senior associate in the firm's intellectual Property group, serving as lead associate. Actual billings from Pinnacle for fiscal year 2023 totaled $2,137,500. Mr. Mercer confirmed that the matter is active and ongoing, with no anticipated conclusion in the near term. Discovery is continuing, expert reports are expected in the fall of 2024, and trial is currently scheduled for the spring of 2025.
C. Confidential Information in the Firm's Possession
Mr. Mercer confirmed that, as a result of the firm's representation of Pinnacle in the patent-enforcement matter and related advisory work, the firm possesses extensive confidential information belonging to Pinnacle that is directly relevant to TruScan 360. Mr. Mercer identified the following categories of confidential information in the firm's possession:
1.  Detailed technical specifications of TruScan 360, including system requirements, performance benchmarks, and integration protocols.
2.  Source-code architecture summaries, including high-level descriptions of the software modules responsible for biometric-data capture, processing, encryption, and storage.
3.  Data-flow diagrams illustrating the pathways by which biometric data is collected at the point of capture, transmitted to Pinnacle's cloud infrastructure, processed by the AI-driven recognition algorithms, stored in biometric databases, and — in certain deployment configurations — shared with third-party payroll and analytics platforms.
4.  Biometric-data retention policies, including Pinnacle's internal guidelines on data-retention periods, deletion protocols, and the circumstances under which biometric data may be retained beyond an employee's period of active enrollment in the TruScan 360 system.
5.  Algorithm design documents describing the proprietary machine-learning models, training datasets, and optimization methods used by TruScan 360's biometric-recognition engines.
6.  Patent-prosecution correspondence, including communications with the United States Patent and Trademark Office and internal strategy memoranda concerning the scope, validity, and enforceability of Pinnacle's patent portfolio related to the TruScan platform.
Mr. Mercer stated, with emphasis, that this body of confidential information is directly relevant to the BIPA claims that MTDC would defend against and to any cross-claims or indemnification proceedings that MTDC might bring against Pinnacle. He noted that the data-flow diagrams and biometric-data retention policies, in particular, go to the heart of the BIPA allegations — specifically, the questions of whether adequate consent was obtained, whether retention and destruction policies were published and followed, and whether biometric data was disseminated to unauthorized third parties. Mr. Mercer stated that he could not envision a scenario in which the firm could represent MTDC in these matters without creating a substantial risk that Pinnacle's confidential information would be used to Pinnacle's disadvantage, either directly or through the influence of the firm's institutional knowledge on its litigation strategy for MTDC.
V. CONFLICTS SEARCH RESULTS
Mr. Keating invited Colleen Farrow, Director of Conflicts & New Business, to present the results of the conflicts searches conducted in connection with proposed Matter No. 1031-00001.
A. Round 1 Search — May 9, 2024
Ms. Farrow reported that a comprehensive conflicts search was run across all firm databases on May 9, 2024, in connection with the opening of the new-matter intake for the proposed MTDC engagement. The search was conducted using the firm's proprietary conflicts-management system (IntegrityCheck v.7.2) and covered all active matters, closed matters within the seven-year retention window, client and adverse-party databases, billing records, engagement letters, and related indices. The search terms included "Metropolitan Transit Development Corp.," "MTDC," all known MTDC officers and directors, "Pinnacle Workforce Analytics," "TruScan," "TruScan 360," and all parties identified in the Attorney General's CID and the class-action complaint.
The Round 1 search identified a direct match: Pinnacle Workforce Analytics, Inc., listed as the current client under Matter No. 1031-00001, with Jonathan Mercer as Responsible and Billing Partner. The search flagged both a direct-adversity issue under Illinois Rule of Professional Conduct 1.7(a)(1) and a material-limitation issue under Rule 1.7(a)(2). Ms. Farrow issued her Round 1 conflicts report on May 10, 2024, and immediately escalated the matter to Mr. Keating and Ms. Drazkowski for review.
B. Round 2 Search — Expanded Parties — May 13, 2024
At the direction of Ms. Drazkowski, Ms. Farrow conducted a supplemental expanded-parties search on May 13, 2024. This second search broadened the scope to include all known Pinnacle affiliates and subsidiaries, Pinnacle's identified subcontractors and technology partners, all MTDC board members and senior officers, Veritas Biometrics Corp. and its principals, Lakefront Actuarial Advisors, LLC, Meridian Trust National Bank (identified in MTDC's corporate disclosures as MTDC's trustee for certain transit-bond obligations), and all individuals identified in the CID and the class-action complaint, including named plaintiffs and their counsel.
The Round 2 search did not identify any additional conflicts beyond the Pinnacle issue already flagged in the Round 1 search. Ms. Farrow issued her Round 2 supplemental conflicts report on May 13, 2024, confirming that the sole conflict requiring Committee review was the Pinnacle matter.
VI. CONFLICTS ANALYSIS
Mr. Keating invited Helen Drazkowski, General Counsel of Calderwood & Harkness LLP, to present her analysis of the conflict. Ms. Drazkowski stated that she had prepared a final written analysis memorandum dated May 14, 2024 (the "Drazkowski Memorandum"), copies of which had been distributed to all attendees in advance of the meeting via the firm's secure document portal. Ms. Drazkowski summarized the key findings and conclusions of her analysis as follows.
A. Illinois Rule of Professional Conduct 1.7(a)(1) — Direct Adversity
Ms. Drazkowski stated that the proposed representation of MTDC would be directly adverse to the interests of Pinnacle, a current firm client, in violation of Illinois Rule of Professional Conduct 1.7(a)(1). She identified three independent grounds for this conclusion:
First, Pinnacle is identified as a "responsible party" in the Attorney General's CID (Ref. No. CRB-2024-0417). Ms. Drazkowski noted that Deputy AG Jeffries, through outside special counsel Diane Falk at Ridgeway & Falk LLP, has indicated through informal communications that the Attorney General's office may name Pinnacle as a co-respondent in any enforcement action arising from the investigation. Representing MTDC in the defense of the CID would therefore place the firm in a posture of direct adversity to Pinnacle, as MTDC's defense strategy would necessarily involve identifying Pinnacle as the party primarily responsible for the alleged BIPA violations.
Second, MTDC's anticipated cross-claims and indemnification demands under the MSLA dated June 15, 2021, would be asserted directly against Pinnacle. Ms. Bernstein confirmed during her presentation that the assertion of such claims is a core element of MTDC's anticipated litigation strategy. Representing MTDC in the prosecution of cross-claims and indemnification demands against Pinnacle would constitute a textbook instance of direct adversity between two clients of the same firm.
Third, the legal characterization of TruScan 360's biometric-data collection, storage, and dissemination practices as unlawful under BIPA is itself directly adverse to Pinnacle's interests. Pinnacle's business model, commercial reputation, and market position depend on the lawfulness and legitimacy of TruScan 360's data-handling practices. Representing MTDC in proceedings that require the firm to argue that TruScan 360's practices violate BIPA is fundamentally adverse to Pinnacle's interests, regardless of whether cross-claims are formally asserted.
Ms. Drazkowski concluded that direct adversity exists under Rule 1.7(a)(1) on each of these three independent grounds and that any one of them would be sufficient, standing alone, to establish a conflict.
B. Illinois Rule of Professional Conduct 1.7(a)(2) — Material Limitation
Ms. Drazkowski further stated that, independent of the direct-adversity analysis, there is a significant risk that the firm's representation of MTDC would be materially limited by the firm's responsibilities to Pinnacle, in violation of Illinois Rule of Professional Conduct 1.7(a)(2). She identified three bases for this conclusion:
First, the MTDC engagement would require the firm to argue that TruScan 360's design and deployment violated BIPA — that is, that the platform's biometric-data collection, storage, and dissemination practices are unlawful. This position is antithetical to the interests of Pinnacle, whose TruScan 360 platform is the subject of the allegations. A lawyer representing MTDC would be obligated to develop the factual record and legal arguments most damaging to TruScan 360's reputation for lawful data handling.
Second, the Pinnacle patent-enforcement engagement, by contrast, depends in significant part on establishing the legitimacy, innovation, and commercial value of TruScan 360's biometric capabilities. In Pinnacle v. Veritas Biometrics Corp., the firm is arguing that TruScan 360 embodies novel and valuable biometric-recognition technology deserving of patent protection and that Veritas's competing product infringes Pinnacle's proprietary innovations. Characterizing TruScan 360 as an unlawful surveillance tool that violates biometric-privacy law is fundamentally inconsistent with the positions the firm is simultaneously advancing on Pinnacle's behalf.
Third, the firm could not zealously advocate for MTDC's position without undermining arguments it is simultaneously making on behalf of Pinnacle, and vice versa. The duty of zealous advocacy running to each client would be materially compromised by the firm's obligations to the other. This is not a hypothetical or speculative risk; it is an inevitable consequence of concurrent representation in matters involving the same technology platform and overlapping factual and legal questions.
Ms. Drazkowski concluded that a material limitation exists under Rule 1.7(a)(2) and that this limitation provides an independent basis for finding a conflict, separate from and in addition to the direct-adversity finding under Rule 1.7(a)(1).
C. Illinois Rule of Professional Conduct 1.7(b) — Waivability Assessment
Ms. Drazkowski then addressed the question of whether the conflict identified under Rules 1.7(a)(1) and 1.7(a)(2) could be cured by the informed consent of both clients under Rule 1.7(b). She analyzed each prong of the Rule 1.7(b) consent test:
1. Reasonable belief of competent and diligent representation (Rule 1.7(b)(1)). Ms. Drazkowski stated that no reasonable lawyer could conclude that the firm can provide competent and diligent representation to both MTDC and Pinnacle simultaneously, given the diametrically opposed legal positions that the two engagements require regarding TruScan 360. The MTDC engagement requires the firm to argue that TruScan 360's biometric-data practices are unlawful; the Pinnacle engagement requires the firm to argue that TruScan 360 embodies legitimate, innovative, and commercially valuable technology. These positions cannot be reconciled. A lawyer attempting to advance both positions simultaneously would be unable to exercise independent professional judgment on behalf of either client, and the quality of representation provided to each would inevitably suffer. Ms. Drazkowski concluded that the threshold requirement of Rule 1.7(b)(1) — that the lawyer reasonably believe he or she can provide competent and diligent representation to each affected client — is not met.
2. Substantially related matters. Ms. Drazkowski emphasized that the two matters are not merely positionally inconsistent in unrelated contexts — a scenario in which consent might, in some circumstances, be effective. Rather, the matters involve the identical technology platform (TruScan 360), overlapping factual questions regarding the platform's biometric-data collection, storage, and dissemination practices, and the same underlying contractual instrument (the MSLA dated June 15, 2021). The degree of factual and legal overlap is extensive and direct, making this a case of concurrent adversity in substantially related matters rather than mere issue or positional conflict.
3. Confidential information. Ms. Drazkowski noted that the firm possesses Pinnacle's confidential technical architecture documents, source-code architecture summaries, data-flow diagrams, biometric-data retention policies, and algorithm design documents — all of which are directly material to the BIPA claims at issue in the proposed MTDC engagement. The firm's possession of this confidential information creates an additional and independent barrier to effective consent, as there is no practical mechanism to prevent the institutional knowledge embodied in these materials from influencing the firm's representation of MTDC, even if formal ethical walls were erected.
4. Representation not prohibited by law. Ms. Drazkowski acknowledged that no statute expressly prohibits the concurrent representation at issue. However, she stated that the irreconcilable nature of the conflict renders any purported consent ineffective as a matter of professional responsibility. Where the threshold test of Rule 1.7(b)(1) is not met, the question of whether the representation is prohibited by law is moot, because consent cannot cure a conflict that fails the reasonable-belief test.
Ms. Drazkowski concluded that the conflict is not waivable by informed consent of either or both clients. She stated that seeking consent from Pinnacle or MTDC would itself be improper, because the threshold test of Rule 1.7(b)(1) cannot be satisfied and it would be misleading to suggest to either client that effective consent is possible under these circumstances.
D. Illinois Rule of Professional Conduct 1.9 — Former-Client Duties (Noted as Inapplicable)
Ms. Drazkowski noted for the record that Illinois Rule of Professional Conduct 1.9, which governs duties to former clients, does not apply to the present analysis because Pinnacle is a current, not former, client of the firm. The Rule 1.7 current-client analysis is therefore controlling. However, Ms. Drazkowski stated that she had conducted a Rule 1.9 analysis as a precautionary measure and confirmed that, even under a former-client framework, the same result would obtain: the matters are substantially related within the meaning of Rule 1.9(a), and the firm possesses material confidential information within the meaning of Rule 1.9(c). This observation was noted for the record in the event that the Pinnacle engagement were to terminate in the future and the MTDC engagement were to be reconsidered at that time.
E. Illinois Rule of Professional Conduct 1.10 — Imputation and Screening
Finally, Ms. Drazkowski addressed whether the conflict could be cured by the implementation of an ethical screen or information barrier within the firm. She concluded that it could not. The conflict arises from concurrent representation by a current firm partner, Jonathan Mercer, and not from the lateral hire of an attorney who brings a conflict from a prior firm. Illinois Rule of Professional Conduct 1.10(a) provides that when a lawyer is disqualified from representation under Rule 1.7, the disqualification is imputed to all lawyers associated in the same firm. The limited screening exception available under Rule 1.10(d) for conflicts arising from lateral movement of attorneys is inapplicable here, because Mr. Mercer is a longstanding partner of the firm and the Pinnacle engagement originated at Calderwood & Harkness.
Ms. Drazkowski confirmed that the conflict is therefore imputed to the entire firm under Rule 1.10(a), and no screening mechanism can cure it. Every attorney at Calderwood & Harkness LLP is disqualified from representing MTDC in proposed Matter No. 1031-00001.
VII. DISCUSSION
Following the presentations by Ms. Bernstein, Mr. Mercer, Ms. Farrow, and Ms. Drazkowski, Mr. Keating opened the floor for discussion. The following comments and observations were made.
A. Statements by Jonathan Mercer Regarding the Pinnacle Relationship
Mr. Mercer confirmed that the Pinnacle relationship is active, ongoing, and of significant institutional importance to the firm. He noted that Calderwood & Harkness's representation of Pinnacle has been continuous since 2019, that the firm has invested substantial resources in developing deep expertise in Pinnacle's technology and patent portfolio, and that the relationship has been a source of consistent and growing revenue for the firm's intellectual Property practice group.
Mr. Mercer reiterated that the patent-enforcement matter (Pinnacle Workforce Analytics, Inc. v. Veritas Biometrics Corp., E.D. Va. Case No. 1:22-cv-01533) involves the same TruScan 360 platform that is at the center of the proposed MTDC engagement. He stated that accepting the MTDC engagement would irreparably compromise the firm's obligations to Pinnacle and place the firm in an untenable position with respect to the confidential information it holds. He expressed grave concern that even the perception that the firm had considered representing a party adverse to Pinnacle in matters involving TruScan 360 could damage the relationship.
Mr. Mercer further noted that Pinnacle's General Counsel, Sandra Yee, has historically been highly sensitive to any perception that the firm's loyalties are divided. He recalled that, in 2021, Ms. Yee had expressed concern when a different Calderwood & Harkness practice group represented a party in an unrelated commercial dispute against a Pinnacle affiliate, even though no conflict existed on those facts. Mr. Mercer stated that Ms. Yee would almost certainly view the firm's acceptance of the MTDC engagement as a fundamental breach of trust, regardless of any screening or other measures the firm might attempt to implement.
B. Acknowledgment by Rachel Bernstein
Ms. Bernstein stated that she acknowledged the conflict and agreed with Ms. Drazkowski's analysis in all respects. Ms. Bernstein expressed regret at the loss of a significant potential engagement, noting that the estimated fees of $3,500,000 to $5,200,000 over eighteen to twenty-four months would have represented a substantial addition to the firm's Chicago-office revenue and would have established the firm's presence in the government-entity data-privacy defense market. She noted that MTDC is a high-profile government client in the Chicago metropolitan area and that the engagement would have offered meaningful visibility and business-development opportunities for the firm's Privacy & Data Security practice.
Ms. Bernstein confirmed, clearly and without reservation, that no Pinnacle confidential information had been shared with her or with any member of the proposed MTDC engagement team — including Miriam Calloway, Devon Archer, and Nadia Petrov — at any point during the intake process. She stated that she had not reviewed any documents related to the firm's representation of Pinnacle, had not discussed the substance of the Pinnacle engagement with Mr. Mercer or any member of his team, and had not accessed any files, databases, or work product associated with Matter No. 1031-00001.
Ms. Bernstein recommended that, in connection with the formal declination, the firm offer MTDC referrals to qualified alternative counsel with deep BIPA expertise and no conflicts. She identified several firms that she believed could competently handle the engagement and stated that she would prepare a referral letter for Mr. Whitfield's consideration.
C. Financial Considerations Noted for the Record
Mr. Keating noted for the record that the Committee had taken into account the following financial considerations in its deliberations:
•  Estimated foregone fees from declining the MTDC engagement: $3,500,000 to $5,200,000 over eighteen to twenty-four months.
•  Existing annual billings from Pinnacle: $2,137,500 (fiscal year 2023 actual), with the potential for continued growth as the Pinnacle v. Veritas litigation proceeds toward trial and as additional patent-related matters may arise.
•  The proposed engagement would have been among the largest single new-matter openings for the firm's Chicago office in the current fiscal year.
Mr. Keating stated, and the Committee concurred, that these financial considerations were discussed solely for purposes of completeness and institutional context. They were not determinative of the Committee's decision. The determination of whether to accept or decline a proposed engagement in the face of a conflict of interest is governed solely by the firm's ethical obligations under the Illinois Rules of Professional Conduct, the firm's Conflicts Policy, and applicable professional-responsibility standards. The Committee does not weigh financial considerations against ethical obligations; where an unwaivable conflict exists, the engagement must be declined regardless of its financial significance.
Mr. Keating further noted that no billable time had been generated in connection with the conflicts review itself. Matter No. 1031-00001 will reflect zero fees and zero disbursements. No time entries will be recorded against the matter number, and no charges will be incurred by MTDC or any other party.
D. Committee Deliberation
Following the presentations and discussion summarized above, Mr. Keating called for formal deliberation by the Committee. All five attendees participated in the deliberation. No dissenting views were expressed at any point.
During the deliberation, the Committee specifically considered whether any alternative structuring of the proposed engagement could cure or mitigate the conflict. In particular, the Committee discussed the following hypothetical scenarios:
Partial engagement with scope limitation. The Committee considered whether the firm could accept a limited-scope engagement for MTDC that expressly excluded the assertion of cross-claims or indemnification demands against Pinnacle. The Committee concluded that this approach would not cure the conflict because the fundamental legal position that the firm would be required to advance on MTDC's behalf — namely, that TruScan 360's biometric-data practices violate BIPA — is itself directly adverse to Pinnacle's interests. This adversity exists regardless of whether cross-claims are formally pursued. Moreover, the Committee noted that limiting the scope of representation in this manner could itself constitute a disservice to MTDC, as it would prevent the firm from pursuing a core element of MTDC's defense strategy and could give rise to a separate conflict under Rule 1.7(a)(2) based on the material limitation on the firm's ability to represent MTDC effectively.
Engagement limited to remediation advisory work only. The Committee considered whether the firm could accept an engagement limited to advising MTDC on the prospective remediation of its biometric-data practices, without involvement in the litigation or enforcement proceedings. The Committee concluded that even a remediation-only engagement would require the firm to assess and characterize TruScan 360's data-handling practices and to advise MTDC on the ways in which those practices fail to comply with BIPA. Such an assessment and characterization would be adverse to Pinnacle's interests.
The Committee concluded that no alternative structuring of the engagement could cure the conflict. The conflict is inherent in the nature of the proposed representation and cannot be avoided by limiting the scope of work.
VIII. DETERMINATION
Following deliberation, the Conflicts Committee reached the following unanimous determination:
The Conflicts Committee unanimously determined that the proposed engagement of Metropolitan Transit Development Corp. (proposed Matter No. 1031-00001) must be declined due to an unwaivable conflict of interest with existing client Pinnacle Workforce Analytics, Inc. (existing Matter No. 1031-00001).
The Committee's determination rests on the following grounds:
1.  Direct adversity under Illinois Rule of Professional Conduct 1.7(a)(1). The proposed representation of MTDC would be directly adverse to the interests of Pinnacle, a current firm client, because (a) Pinnacle is a named responsible party in the Attorney General's CID and a potential co-respondent in any enforcement action; (b) MTDC's anticipated cross-claims and indemnification demands would be asserted directly against Pinnacle; and (c) the legal characterization of TruScan 360's biometric-data practices as unlawful is directly adverse to Pinnacle's interests.
2.  Material limitation under Illinois Rule of Professional Conduct 1.7(a)(2). There is a significant risk that the firm's representation of MTDC would be materially limited by the firm's responsibilities to Pinnacle, because the two engagements require diametrically opposed legal positions regarding the lawfulness and legitimacy of TruScan 360's biometric capabilities, and the firm could not zealously advocate for either client's position without undermining its obligations to the other.
3.  The conflict is not waivable under Rule 1.7(b). No reasonable lawyer could conclude that competent and diligent representation of both MTDC and Pinnacle is possible given the irreconcilable nature of the conflict. The matters involve the same technology platform, overlapping factual and legal questions, and the same underlying contractual instrument. The firm possesses extensive Pinnacle confidential information directly material to the MTDC claims. Seeking consent from either or both clients would be improper because the threshold test of Rule 1.7(b)(1) is not met.
4.  The conflict is imputed to the entire firm under Rule 1.10(a) and cannot be cured by screening. Because the conflict arises from concurrent representation by a current firm partner and not from the lateral movement of an attorney, the screening exception under Rule 1.10(d) is inapplicable, and the disqualification extends to every lawyer at Calderwood & Harkness LLP.
The motion to decline the proposed MTDC engagement on the grounds stated above was made by Helen Drazkowski, seconded by Jonathan Mercer, and approved unanimously by all five attendees present (5–0). No abstentions were recorded.
IX. DIRECTED NEXT STEPS
The Committee directed the following actions to be taken in connection with the declination of proposed Matter No. 1031-00001:
1. Declination Communication. Rachel Bernstein shall prepare a formal declination letter addressed to Terrence Whitfield, General Counsel of MTDC, advising that Calderwood & Harkness LLP is unable to accept the proposed engagement due to the existence of an unwaivable conflict of interest. The letter shall be reviewed and approved by Helen Drazkowski before it is transmitted to Mr. Whitfield. The declination letter must not identify Pinnacle Workforce Analytics, Inc., or disclose the nature of the existing engagement that gives rise to the conflict. The letter shall state only that an unwaivable conflict of interest has been identified during the firm's standard intake review process and that the firm is therefore unable to accept the representation. The letter shall express the firm's regret and appreciation for MTDC's consideration. Ms. Bernstein shall prepare the draft declination letter no later than May 17, 2024, and Ms. Drazkowski shall complete her review no later than May 20, 2024, with the goal of transmitting the letter to Mr. Whitfield no later than May 21, 2024.
2. Referral to Qualified Alternative Counsel. In connection with the declination, Ms. Bernstein shall identify and recommend to MTDC qualified alternative outside counsel with substantial BIPA expertise and no conflicts of interest that would prevent their acceptance of the engagement. Ms. Bernstein shall prepare a referral letter to be transmitted to Mr. Whitfield concurrently with or promptly following the declination letter. The referral letter shall include the names and contact information of at least three recommended firms and a brief description of each firm's relevant qualifications.
3. Confirmation of No Information Sharing. Colleen Farrow shall confirm and document, in a written memorandum for the Conflicts Committee file, that no Pinnacle confidential information was disclosed to any member of the proposed MTDC engagement team — including Rachel Bernstein, Miriam Calloway, Devon Archer, and Nadia Petrov — at any point during the intake process or at any time prior to or during the Committee meeting. Ms. Farrow shall obtain written certifications from each member of the proposed engagement team confirming that they did not access, review, or receive any files, documents, work product, or other information related to the firm's representation of Pinnacle under Matter No. 1031-00001. These certifications shall be completed and filed no later than May 21, 2024.
4. Notification to Pinnacle Engagement Partner. Following the formal declination and closure of proposed Matter No. 1031-00001, Ms. Farrow shall provide written confirmation to Jonathan Mercer that the proposed matter has been formally declined and closed, and that the firm's ethical obligations to Pinnacle Workforce Analytics, Inc. have been preserved. This notification shall confirm that no Pinnacle confidential information was disclosed to the proposed MTDC engagement team and that no work was performed on behalf of MTDC. Mr. Mercer may, in his discretion and subject to Ms. Drazkowski's guidance, determine whether and how to communicate with Pinnacle's General Counsel, Sandra Yee, regarding the matter, although the Committee noted that proactive disclosure to Pinnacle is not required and may be inadvisable insofar as it would reveal the identity of the prospective client.
5. Matter Closure. Rachel Bernstein shall complete the firm's standard matter closure form (C&H Form MC-1) for proposed Matter No. 1031-00001. The form shall reflect the reason for closure as "Declined — Unwaivable Conflict of Interest." Colleen Farrow shall process the closure in all firm systems, including the billing system, the matter-management system, and the conflicts database. The matter shall reflect zero fees and zero disbursements.
6. Conflicts Database Update. Colleen Farrow shall update the firm's conflicts database to reflect MTDC as a declined prospective client, the nature of the conflict (direct adversity and material limitation involving an existing client), and a cross-reference to existing Matter No. 1031-00001. The database entry shall be flagged for review in the event that the Pinnacle engagement terminates in the future and a new MTDC engagement is proposed at that time.
7. Document Retention. All internal work product generated in connection with the conflicts review — including the Drazkowski Memorandum dated May 14, 2024, the Round 1 and Round 2 conflicts reports, these minutes, and all related correspondence and internal communications — shall be retained in accordance with the firm's seven-year retention policy under the "Declined Engagements — Conflicts" retention category. Materials shall be stored in the firm's secure document-management system with access restricted to members of the Conflicts Committee and the Office of the General Counsel.
8. Quarterly Report. An entry summarizing the Committee's determination shall be included in the Q2 2024 Conflicts Committee quarterly report to the Management Committee. The broader-distribution version of the quarterly report shall describe the nature of the conflict in general terms and shall omit the identity of the existing client (Pinnacle Workforce Analytics, Inc.) to preserve confidentiality. The restricted-distribution version of the quarterly report, circulated only to members of the Management Committee and the Office of the General Counsel, may include the identity of both the prospective client and the existing client.
X. ADJOURNMENT
There being no further business to come before the Committee, Mr. Keating called for a motion to adjourn. Ms. Drazkowski moved to adjourn, and Ms. Bernstein seconded the motion. The meeting was adjourned at 2:47 p.m. CDT.
Mr. Keating thanked all participants for their prompt attention to the matter and for the thoroughness of their presentations and analysis. He noted that the Committee's ability to identify, analyze, and resolve this conflict within five business days of the new-matter intake opening reflected well on the firm's conflicts-management processes and the diligence of the participants.
XI. APPROVAL
Minutes prepared by:
________________________________________
Colleen Farrow Director, Conflicts & New Business Calderwood & Harkness LLP
Date: May 14, 2024
Reviewed and approved by:
________________________________________
Lawrence Keating Senior Partner; Chair, Conflicts Committee Calderwood & Harkness LLP
Date: May 15, 2024
Distribution: Limited to attendees listed in Section II above. One copy retained in the file for proposed Matter No. 1031-00001; one copy retained in the permanent records of the Conflicts Committee.
Classification: PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT — ATTORNEY-CLIENT PRIVILEGED
This document reflects the deliberations and determinations of the Conflicts Committee of Calderwood & Harkness LLP and is protected by the attorney-client privilege, the attorney work product doctrine, and the firm's internal confidentiality policies. This document shall not be disclosed to any person outside the distribution list specified above without the express written authorization of the Chair of the Conflicts Committee. Unauthorized disclosure may result in waiver of privilege and may subject the disclosing party to disciplinary action.
Name | Title / Role | Office | Attendance
Lawrence Keating | Senior Partner; Chair, Conflicts Committee | New York | Via videoconference
Helen Drazkowski | General Counsel, Calderwood & Harkness LLP | New York | Via videoconference
Colleen Farrow | Director, Conflicts & New Business | Chicago | In person
Rachel Bernstein | Partner, Privacy & Data Security; Responsible Partner for proposed MTDC engagement | Chicago | In person
Jonathan Mercer | Partner, intellectual Property / Patent Litigation; Responsible and Billing Partner for existing Pinnacle Workforce Analytics, Inc. engagement | New York | Via videoconference