draft-declination-letter-to-mtdc.docx

1031-00001 · Kessler, Brandt & O'Neill LLP · documents

draft-declination-letter-to-mtdc.docx DOCUMENT Labor & Employment

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DRAFT — ATTORNEY-CLIENT PRIVILEGED / FOR INTERNAL REVIEW ONLY NOT FOR TRANSMITTAL — PENDING REVIEW AND APPROVAL BY HELEN DRAZKOWSKI, GENERAL COUNSEL

Prepared by: Rachel Bernstein, Partner, Privacy & Data Security, Calderwood & Harkness LLP

Date Prepared: May 15, 2024

Purpose: Draft of formal declination letter addressed to Terrence Whitfield, Esq., General Counsel, Metropolitan Transit Development Corp. This draft is submitted for review and comment by Helen Drazkowski, Calderwood & Harkness General Counsel, prior to finalization and transmittal. Anticipated date of transmittal following incorporation of edits: May 17, 2024.

Internal Review Routing: Helen Drazkowski, General Counsel — for comments, edits, and final sign-off

Reference: C&H Matter No. 1031-00001

CALDERWOOD & HARKNESS LLP

One North Wacker Drive, Suite 4200 Chicago, Illinois 60606

Telephone: (312) 555-7000 Facsimile: (312) 555-7001 www.calderwoodharkness.com

May 15, 2024

Via Email and First-Class Mail

Terrence Whitfield, Esq. General Counsel Metropolitan Transit Development Corp. 550 West Harrison Street, Suite 1400 Chicago, Illinois 60607

Re: Proposed Engagement of Calderwood & Harkness LLP by Metropolitan Transit Development Corp. — Matter No. 1031-00001

Dear Mr. Whitfield:

Thank you for reaching out to Calderwood & Harkness LLP regarding the potential representation of Metropolitan Transit Development Corp. ("MTDC") in connection with the matters described during your initial telephone call on May 6, 2024, and formalized through our new-matter intake process, which was opened on May 9, 2024. We are grateful for MTDC's confidence in our firm, and we wish to express our particular appreciation for the referral from Constance Hargrove of Hargrove, Tillman & Reese LLP, whose high regard for our practice is a compliment we do not take lightly. We recognize the significance of the legal challenges MTDC currently faces, including the Civil Investigative Demand recently issued by the Illinois Attorney General's Bureau of Civil Rights and the putative employee class action pending in the Circuit Court of Cook County, and we understand that these matters involve complex and sensitive questions arising under the Biometric Information Privacy Act and the Illinois Personal Information Protection Act. We further appreciate the urgency with which MTDC is seeking to secure experienced outside counsel in light of the regulatory and litigation posture of these matters.

As communicated during our initial discussions, we understand that the proposed scope of the engagement would encompass the following areas of representation: defense of MTDC in connection with the Attorney General's enforcement inquiry and any anticipated civil enforcement action; defense of the putative employee class action filed in Cook County Circuit Court; counseling and advice regarding the remediation of MTDC's biometric-data collection, storage, and processing practices; evaluation and potential prosecution of cross-claims and indemnification proceedings against one or more technology vendors; and related employment counseling with respect to MTDC's workforce-monitoring policies and practices. The firm conducted a thorough review of the proposed engagement, including the identity of all parties involved, the subject matter and underlying facts as described by MTDC, and the relationships among the various matters and potential adverse parties.

In accordance with Calderwood & Harkness's standard new-matter intake procedures, the firm conducted a comprehensive conflicts-of-interest review upon the opening of Matter No. 1031-00001. This review encompassed all current and former client relationships, all active and recently concluded matters, all attorneys and professional staff who would be involved in the proposed engagement, and all parties and entities identified through the intake process. The conflicts review was completed in due course, and the matter was thereafter carefully evaluated by the firm's standing Conflicts Committee, which is chaired by the firm's General Counsel and includes senior partners from each of the firm's principal practice groups. The Committee gave full and careful consideration to the proposed engagement, the parties involved, and the applicable ethical standards governing the firm's obligations.

It is with genuine regret that I must inform you that Calderwood & Harkness has determined that it must respectfully decline the proposed engagement. The firm's conflicts review has identified an existing client relationship that gives rise to a conflict of interest that the firm has concluded is not waivable, even with the informed consent of all affected parties. In reaching this determination, the firm was guided by its obligations under the Illinois Rules of Professional Conduct, including, in particular, Rule 1.7, which governs conflicts of interest involving concurrent client representations. After thorough and careful analysis, the firm's Conflicts Committee unanimously concluded that Calderwood & Harkness cannot provide competent and diligent representation to MTDC in the proposed matters without compromising its duties of loyalty, confidentiality, and independent judgment owed to an existing client. This determination reflects the firm's good-faith assessment of its professional and ethical obligations. Critically, the Committee further concluded that the conflict is not one that may be cured through consent: the firm cannot reasonably determine that it would be able to provide competent and diligent representation to each affected client simultaneously, and accordingly, seeking waivers from the affected parties would be neither appropriate nor permissible under the circumstances. We recognize that this conclusion forecloses any alternative path to accepting the engagement, and we have reached it only after exhaustive deliberation.

We are mindful that our inability to disclose additional details regarding the nature of the conflict may be a source of frustration. However, the firm's obligations under the Rules of Professional Conduct — the same rules that impose duties of confidentiality upon us with respect to the identity and affairs of all of our clients — prevent us from identifying the existing client or describing the specific nature of the conflicting engagement. We trust that MTDC will appreciate that these confidentiality obligations are the very same protections that would inure to MTDC's benefit if Calderwood & Harkness were serving as its counsel. We are committed to safeguarding the confidential information of all clients and prospective clients equally, and we ask for your understanding in this regard. Additionally, we wish to confirm that no confidential information belonging to MTDC — whether communicated during the initial telephone call, the intake process, or otherwise — has been shared with any attorney, staff member, or other personnel at Calderwood & Harkness outside of the proposed engagement team that was assembled for purposes of the intake review.

We also wish to confirm expressly that no attorney-client relationship has been formed between Calderwood & Harkness LLP and Metropolitan Transit Development Corp. as a result of the intake process or any communications that occurred in connection therewith. No substantive legal advice has been rendered by any attorney at this firm to MTDC, and no work product of any kind has been prepared on MTDC's behalf. Furthermore, the firm did not receive any confidential documents, files, or other materials from MTDC during the intake process, and accordingly there are no materials to return. As a matter of best practice, a separate confirmation letter memorializing the absence of any received materials will follow under separate cover.

We are acutely aware of the time-sensitive nature of MTDC's legal needs. The pendency of the Attorney General's Civil Investigative Demand imposes response deadlines that will require prompt attention, and the putative employee class action will proceed on its own schedule in the Circuit Court. We therefore strongly encourage MTDC to move promptly to retain qualified alternative counsel with significant experience in BIPA defense, data-privacy enforcement actions, and employment class-action litigation. To that end, Calderwood & Harkness would be pleased to provide referrals to law firms that we believe are well-positioned to assist MTDC in these matters. We have identified several qualified firms with deep experience in the relevant practice areas that, to our knowledge, do not face conflicts similar to those that prevent our firm from accepting this engagement. I am personally prepared to discuss referral options with you by telephone at your earliest convenience. Should MTDC desire, I will also follow up with a written referral recommendation identifying specific firms and, where appropriate, individual attorneys whose experience is particularly well suited to MTDC's needs. Please do not hesitate to reach out to me directly to arrange a call.

We sincerely regret that we are unable to accept this engagement. This outcome is entirely the result of the firm's preexisting professional obligations and in no way reflects upon MTDC, its leadership, or the merits of MTDC's position in any of the underlying matters. We have the highest regard for MTDC as an institution and for you personally, and we hope that the referral assistance we have offered will be of meaningful value as MTDC navigates these challenging proceedings. We would welcome the opportunity to serve MTDC in future matters where no conflict exists, and we hope that this experience will not diminish MTDC's willingness to consider Calderwood & Harkness for engagements that may arise in the future.

Sincerely,

CALDERWOOD & HARKNESS LLP

By: ________

Rachel Bernstein Partner, Privacy & Data Security Calderwood & Harkness LLP One North Wacker Drive, Suite 4200 Chicago, Illinois 60606 Direct Dial: (312) 555-7024

Email: rbernstein@calderwoodharkness.com

cc:

[FOR INTERNAL REVIEW — cc: lines to be finalized upon approval by Helen Drazkowski]

Proposed cc: lines for final version:

Constance Hargrove, Esq. Hargrove, Tillman & Reese LLP 233 South Wacker Drive, Suite 5600 Chicago, Illinois 60606 (as MTDC's existing outside counsel who facilitated the referral)

Enclosures: None

INTERNAL REVIEW ANNOTATIONS DRAFT ONLY — TO BE REMOVED IN ENTIRETY BEFORE FINALIZATION AND TRANSMITTAL

PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT

From: Rachel Bernstein To: Helen Drazkowski, General Counsel Date: May 15, 2024 Re: Draft Declination Letter — MTDC / Matter No. 1031-00001

Helen —

Thank you in advance for reviewing this draft. Before you sign off and we move to finalization, I wanted to flag several issues for your specific attention and comment. I have set them out below in the order in which they appear in the letter:

1. Level of Generality Regarding the Conflict. I have been careful not to identify the existing client by name, not to describe the nature of the conflicting engagement, and not to reference any specific matter number or case caption. However, I would appreciate your assessment of whether the letter, as drafted, inadvertently narrows the universe of possible conflicting clients enough that a sophisticated reader — particularly one with knowledge of our firm's practice areas and client base — could infer the identity of the existing client. MTDC's in-house team is experienced and well-connected in the Chicago legal market, and I want to ensure that we have not provided any breadcrumbs, however unintentional, that might lead to such an inference. If you believe additional generalization is warranted, please suggest specific edits.

2. Reference to Illinois Rules of Professional Conduct, Rule 1.7. I have included a general reference to Rule 1.7 as the ethical basis for the declination. I believe this reference is appropriate to demonstrate that the firm's decision is grounded in well-established professional-responsibility principles and is not arbitrary. However, I recognize that citing the specific rule could provide MTDC with a roadmap to challenge the declination — for example, by arguing that the conflict is waivable under Rule 1.7(b) and demanding that we seek consent. I would welcome your view on whether the Rule 1.7 reference should be retained, softened (e.g., by referring only to "the applicable Rules of Professional Conduct" without citing a specific rule), or omitted entirely.

3. Statement Regarding Waivability. The letter states that the conflict is not waivable. I have included a brief explanation — namely, that the firm cannot reasonably conclude it could provide competent and diligent representation to both clients simultaneously — but I am concerned that this language may be viewed as too conclusory. Should we include additional explanation to support the waivability determination, or does further elaboration risk revealing too much about the nature of the conflict? I lean toward keeping the explanation concise to avoid disclosure risks, but I defer to your judgment.

4. Offer to Facilitate Referrals. I have offered to provide referrals to qualified alternative counsel and have stated my personal willingness to discuss referral options by telephone and in writing. I want to confirm that this offer does not create any appearance of an ongoing duty to MTDC or any form of quasi-representation that could give rise to arguments about the existence of an attorney-client relationship. Please advise whether the referral language should be qualified further or limited in any way.

5. Significance of the Declination. For context, and to underscore the importance of handling this communication with appropriate care, I note that the proposed MTDC engagement carried estimated fees in the range of $3.5 million to $5.2 million over an anticipated 18- to 24-month engagement period. The loss of this business opportunity is significant, and I want to ensure that our declination letter is drafted in a manner that preserves the relationship to the greatest extent possible while fully discharging our ethical obligations. MTDC is a prominent public-sector entity in the Chicago market, and I would like the letter to convey genuine respect and regret without appearing to minimize the inconvenience to MTDC or to be dismissive of the significance of the matters at issue.

6. Sign-Off and Transmission Timeline. I would appreciate your sign-off at your earliest convenience. My target date for finalizing and transmitting the letter is May 17, 2024. If you anticipate needing additional time for review or if you would like to discuss any of these issues in person, please let me know and I will adjust the timeline accordingly.

Thank you, Helen. I am available to discuss at any time.

— Rachel

END OF DRAFT — DO NOT TRANSMIT

DRAFT — ATTORNEY-CLIENT PRIVILEGED / FOR INTERNAL REVIEW ONLY NOT FOR TRANSMITTAL — PENDING REVIEW AND APPROVAL BY HELEN DRAZKOWSKI, GENERAL COUNSEL
Prepared by: Rachel Bernstein, Partner, Privacy & Data Security, Calderwood & Harkness LLP
Date Prepared: May 15, 2024
Purpose: Draft of formal declination letter addressed to Terrence Whitfield, Esq., General Counsel, Metropolitan Transit Development Corp. This draft is submitted for review and comment by Helen Drazkowski, Calderwood & Harkness General Counsel, prior to finalization and transmittal. Anticipated date of transmittal following incorporation of edits: May 17, 2024.
Internal Review Routing: Helen Drazkowski, General Counsel — for comments, edits, and final sign-off
Reference: C&H Matter No. 1031-00001
CALDERWOOD & HARKNESS LLP
One North Wacker Drive, Suite 4200 Chicago, Illinois 60606
Telephone: (312) 555-7000 Facsimile: (312) 555-7001 www.calderwoodharkness.com
May 15, 2024
Via Email and First-Class Mail
Terrence Whitfield, Esq. General Counsel Metropolitan Transit Development Corp. 550 West Harrison Street, Suite 1400 Chicago, Illinois 60607
Re: Proposed Engagement of Calderwood & Harkness LLP by Metropolitan Transit Development Corp. — Matter No. 1031-00001
Dear Mr. Whitfield:
Thank you for reaching out to Calderwood & Harkness LLP regarding the potential representation of Metropolitan Transit Development Corp. ("MTDC") in connection with the matters described during your initial telephone call on May 6, 2024, and formalized through our new-matter intake process, which was opened on May 9, 2024. We are grateful for MTDC's confidence in our firm, and we wish to express our particular appreciation for the referral from Constance Hargrove of Hargrove, Tillman & Reese LLP, whose high regard for our practice is a compliment we do not take lightly. We recognize the significance of the legal challenges MTDC currently faces, including the Civil Investigative Demand recently issued by the Illinois Attorney General's Bureau of Civil Rights and the putative employee class action pending in the Circuit Court of Cook County, and we understand that these matters involve complex and sensitive questions arising under the Biometric Information Privacy Act and the Illinois Personal Information Protection Act. We further appreciate the urgency with which MTDC is seeking to secure experienced outside counsel in light of the regulatory and litigation posture of these matters.
As communicated during our initial discussions, we understand that the proposed scope of the engagement would encompass the following areas of representation: defense of MTDC in connection with the Attorney General's enforcement inquiry and any anticipated civil enforcement action; defense of the putative employee class action filed in Cook County Circuit Court; counseling and advice regarding the remediation of MTDC's biometric-data collection, storage, and processing practices; evaluation and potential prosecution of cross-claims and indemnification proceedings against one or more technology vendors; and related employment counseling with respect to MTDC's workforce-monitoring policies and practices. The firm conducted a thorough review of the proposed engagement, including the identity of all parties involved, the subject matter and underlying facts as described by MTDC, and the relationships among the various matters and potential adverse parties.
In accordance with Calderwood & Harkness's standard new-matter intake procedures, the firm conducted a comprehensive conflicts-of-interest review upon the opening of Matter No. 1031-00001. This review encompassed all current and former client relationships, all active and recently concluded matters, all attorneys and professional staff who would be involved in the proposed engagement, and all parties and entities identified through the intake process. The conflicts review was completed in due course, and the matter was thereafter carefully evaluated by the firm's standing Conflicts Committee, which is chaired by the firm's General Counsel and includes senior partners from each of the firm's principal practice groups. The Committee gave full and careful consideration to the proposed engagement, the parties involved, and the applicable ethical standards governing the firm's obligations.
It is with genuine regret that I must inform you that Calderwood & Harkness has determined that it must respectfully decline the proposed engagement. The firm's conflicts review has identified an existing client relationship that gives rise to a conflict of interest that the firm has concluded is not waivable, even with the informed consent of all affected parties. In reaching this determination, the firm was guided by its obligations under the Illinois Rules of Professional Conduct, including, in particular, Rule 1.7, which governs conflicts of interest involving concurrent client representations. After thorough and careful analysis, the firm's Conflicts Committee unanimously concluded that Calderwood & Harkness cannot provide competent and diligent representation to MTDC in the proposed matters without compromising its duties of loyalty, confidentiality, and independent judgment owed to an existing client. This determination reflects the firm's good-faith assessment of its professional and ethical obligations. Critically, the Committee further concluded that the conflict is not one that may be cured through consent: the firm cannot reasonably determine that it would be able to provide competent and diligent representation to each affected client simultaneously, and accordingly, seeking waivers from the affected parties would be neither appropriate nor permissible under the circumstances. We recognize that this conclusion forecloses any alternative path to accepting the engagement, and we have reached it only after exhaustive deliberation.
We are mindful that our inability to disclose additional details regarding the nature of the conflict may be a source of frustration. However, the firm's obligations under the Rules of Professional Conduct — the same rules that impose duties of confidentiality upon us with respect to the identity and affairs of all of our clients — prevent us from identifying the existing client or describing the specific nature of the conflicting engagement. We trust that MTDC will appreciate that these confidentiality obligations are the very same protections that would inure to MTDC's benefit if Calderwood & Harkness were serving as its counsel. We are committed to safeguarding the confidential information of all clients and prospective clients equally, and we ask for your understanding in this regard. Additionally, we wish to confirm that no confidential information belonging to MTDC — whether communicated during the initial telephone call, the intake process, or otherwise — has been shared with any attorney, staff member, or other personnel at Calderwood & Harkness outside of the proposed engagement team that was assembled for purposes of the intake review.
We also wish to confirm expressly that no attorney-client relationship has been formed between Calderwood & Harkness LLP and Metropolitan Transit Development Corp. as a result of the intake process or any communications that occurred in connection therewith. No substantive legal advice has been rendered by any attorney at this firm to MTDC, and no work product of any kind has been prepared on MTDC's behalf. Furthermore, the firm did not receive any confidential documents, files, or other materials from MTDC during the intake process, and accordingly there are no materials to return. As a matter of best practice, a separate confirmation letter memorializing the absence of any received materials will follow under separate cover.
We are acutely aware of the time-sensitive nature of MTDC's legal needs. The pendency of the Attorney General's Civil Investigative Demand imposes response deadlines that will require prompt attention, and the putative employee class action will proceed on its own schedule in the Circuit Court. We therefore strongly encourage MTDC to move promptly to retain qualified alternative counsel with significant experience in BIPA defense, data-privacy enforcement actions, and employment class-action litigation. To that end, Calderwood & Harkness would be pleased to provide referrals to law firms that we believe are well-positioned to assist MTDC in these matters. We have identified several qualified firms with deep experience in the relevant practice areas that, to our knowledge, do not face conflicts similar to those that prevent our firm from accepting this engagement. I am personally prepared to discuss referral options with you by telephone at your earliest convenience. Should MTDC desire, I will also follow up with a written referral recommendation identifying specific firms and, where appropriate, individual attorneys whose experience is particularly well suited to MTDC's needs. Please do not hesitate to reach out to me directly to arrange a call.
We sincerely regret that we are unable to accept this engagement. This outcome is entirely the result of the firm's preexisting professional obligations and in no way reflects upon MTDC, its leadership, or the merits of MTDC's position in any of the underlying matters. We have the highest regard for MTDC as an institution and for you personally, and we hope that the referral assistance we have offered will be of meaningful value as MTDC navigates these challenging proceedings. We would welcome the opportunity to serve MTDC in future matters where no conflict exists, and we hope that this experience will not diminish MTDC's willingness to consider Calderwood & Harkness for engagements that may arise in the future.
Sincerely,
CALDERWOOD & HARKNESS LLP
By: ________
Rachel Bernstein Partner, Privacy & Data Security Calderwood & Harkness LLP One North Wacker Drive, Suite 4200 Chicago, Illinois 60606 Direct Dial: (312) 555-7024
Email: rbernstein@calderwoodharkness.com
cc:
[FOR INTERNAL REVIEW — cc: lines to be finalized upon approval by Helen Drazkowski]
Proposed cc: lines for final version:
Constance Hargrove, Esq. Hargrove, Tillman & Reese LLP 233 South Wacker Drive, Suite 5600 Chicago, Illinois 60606 (as MTDC's existing outside counsel who facilitated the referral)
Enclosures: None
INTERNAL REVIEW ANNOTATIONS DRAFT ONLY — TO BE REMOVED IN ENTIRETY BEFORE FINALIZATION AND TRANSMITTAL
PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT
From: Rachel Bernstein To: Helen Drazkowski, General Counsel Date: May 15, 2024 Re: Draft Declination Letter — MTDC / Matter No. 1031-00001
Helen —
Thank you in advance for reviewing this draft. Before you sign off and we move to finalization, I wanted to flag several issues for your specific attention and comment. I have set them out below in the order in which they appear in the letter:
1.  Level of Generality Regarding the Conflict. I have been careful not to identify the existing client by name, not to describe the nature of the conflicting engagement, and not to reference any specific matter number or case caption. However, I would appreciate your assessment of whether the letter, as drafted, inadvertently narrows the universe of possible conflicting clients enough that a sophisticated reader — particularly one with knowledge of our firm's practice areas and client base — could infer the identity of the existing client. MTDC's in-house team is experienced and well-connected in the Chicago legal market, and I want to ensure that we have not provided any breadcrumbs, however unintentional, that might lead to such an inference. If you believe additional generalization is warranted, please suggest specific edits.
2.  Reference to Illinois Rules of Professional Conduct, Rule 1.7. I have included a general reference to Rule 1.7 as the ethical basis for the declination. I believe this reference is appropriate to demonstrate that the firm's decision is grounded in well-established professional-responsibility principles and is not arbitrary. However, I recognize that citing the specific rule could provide MTDC with a roadmap to challenge the declination — for example, by arguing that the conflict is waivable under Rule 1.7(b) and demanding that we seek consent. I would welcome your view on whether the Rule 1.7 reference should be retained, softened (e.g., by referring only to "the applicable Rules of Professional Conduct" without citing a specific rule), or omitted entirely.
3.  Statement Regarding Waivability. The letter states that the conflict is not waivable. I have included a brief explanation — namely, that the firm cannot reasonably conclude it could provide competent and diligent representation to both clients simultaneously — but I am concerned that this language may be viewed as too conclusory. Should we include additional explanation to support the waivability determination, or does further elaboration risk revealing too much about the nature of the conflict? I lean toward keeping the explanation concise to avoid disclosure risks, but I defer to your judgment.
4.  Offer to Facilitate Referrals. I have offered to provide referrals to qualified alternative counsel and have stated my personal willingness to discuss referral options by telephone and in writing. I want to confirm that this offer does not create any appearance of an ongoing duty to MTDC or any form of quasi-representation that could give rise to arguments about the existence of an attorney-client relationship. Please advise whether the referral language should be qualified further or limited in any way.
5.  Significance of the Declination. For context, and to underscore the importance of handling this communication with appropriate care, I note that the proposed MTDC engagement carried estimated fees in the range of $3.5 million to $5.2 million over an anticipated 18- to 24-month engagement period. The loss of this business opportunity is significant, and I want to ensure that our declination letter is drafted in a manner that preserves the relationship to the greatest extent possible while fully discharging our ethical obligations. MTDC is a prominent public-sector entity in the Chicago market, and I would like the letter to convey genuine respect and regret without appearing to minimize the inconvenience to MTDC or to be dismissive of the significance of the matters at issue.
6.  Sign-Off and Transmission Timeline. I would appreciate your sign-off at your earliest convenience. My target date for finalizing and transmitting the letter is May 17, 2024. If you anticipate needing additional time for review or if you would like to discuss any of these issues in person, please let me know and I will adjust the timeline accordingly.
Thank you, Helen. I am available to discuss at any time.
— Rachel
END OF DRAFT — DO NOT TRANSMIT

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