Priority: High
PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT — INTERNAL FIRM COMMUNICATION
Jonathan,
I am writing to bring to your attention a potential conflict of interest that surfaced from a new-matter intake I opened yesterday, May 9. I want to make sure you are fully aware of the situation before this proceeds any further in the conflicts process, as it directly involves one of your clients.
**Background on the Proposed Engagement**
Our Chicago office has been approached by Metropolitan Transit Development Corp. ("MTDC"), a governmental transit authority organized under Illinois law, headquartered at 550 West Harrison Street, Suite 1400, Chicago, IL 60607. MTDC was referred to us by Constance Hargrove at Hargrove, Tillman & Reese LLP, as HTR lacks in-house data-privacy and biometric-law expertise for the matters at issue.
I had an initial call with MTDC's General Counsel, Terrence Whitfield, on May 6. The new-matter intake was opened on May 9 and assigned Matter No. 1031-00001. I would serve as responsible partner, Miriam Calloway as billing partner, with Devon Archer and Nadia Petrov staffed on the engagement.
**Proposed Scope**
The engagement would encompass the following:
(a) Defense of a Civil Investigative Demand ("CID") issued by the Illinois Attorney General's Bureau of Civil Rights on April 22, 2024 (Reference No. CRB-2024-0417), alleging that MTDC's deployment of a biometric workforce-management platform violated the Illinois Biometric Information Privacy Act ("BIPA"), 740 ILCS 14/1 et seq., and the Illinois Personal Information Protection Act, 815 ILCS 530/1 et seq.
(b) Defense of a putative employee class action filed April 29, 2024, in the Circuit Court of Cook County, Chancery Division (Case No. 2024-CH-04417), brought on behalf of approximately 12,400 current and former MTDC employees through class counsel Kessler, Brandt & O'Neill LLP (Martin Kessler and Yolanda Brandt), alleging BIPA violations and related state-law privacy and employment claims.
(c) Advice on remediation of MTDC's biometric-data collection, storage, and dissemination practices.
(d) Potential cross-claims and indemnification proceedings against MTDC's technology vendors.
(e) Related employment counseling regarding workforce-monitoring policies.
The estimated fees for the engagement are in the range of $3.5 million to $5.2 million over an 18- to 24-month period.
**The Conflict — Pinnacle Workforce Analytics, Inc.**
Here is where the issue arises, and it is a significant one. The biometric workforce-management platform at the center of both the AG's CID and the class action is **TruScan 360**, developed and licensed by **Pinnacle Workforce Analytics, Inc.** — your existing client. Pinnacle sold and deployed TruScan 360 to MTDC under a Master Software License and Services Agreement dated June 15, 2021, with a total contract value of $8.7 million over a five-year term.
The Round 1 conflicts search, which I ran on May 9 and received back this morning, flagged the match: the firm currently represents Pinnacle under Matter No. 1031-00001, with you as both responsible and billing partner.
The adversity here is multi-layered, and I want to lay it all out for you:
- **Pinnacle is a named "responsible party" in the AG's CID** (Ref. CRB-2024-0417). Whitfield has indicated to me that the AG's office — specifically Deputy AG Malcolm Jeffries, working with outside special counsel Diane Falk at Ridgeway & Falk LLP — has signaled it may name Pinnacle as a co-respondent in any subsequent enforcement action.
- **MTDC anticipates asserting cross-claims and indemnification demands against Pinnacle** under the MSLA. This would place Pinnacle in the posture of a direct adverse party in the litigation.
- **The substance of the MTDC defense** would require the firm to argue that TruScan 360's biometric-data collection, storage, and dissemination practices violated BIPA — in other words, that the platform's design and deployment were unlawful. I recognize that this appears fundamentally at odds with the firm's work on your patent-enforcement matter, where we are establishing the legitimacy, innovation, and commercial value of TruScan 360's biometric-recognition capabilities.
For additional context on the stakes: MTDC's potential BIPA exposure is substantial, with statutory damages ranging from approximately $12.4 million (12,400 class members at $1,000 per negligent violation) to $62 million (12,400 class members at $5,000 per intentional or reckless violation).
**My Concerns and Request**
I am flagging this as a likely direct-adversity issue under Illinois Rule of Professional Conduct 1.7(a)(1) and a potential material-limitation conflict under Rule 1.7(a)(2). The fact that your existing Pinnacle engagement — the patent-infringement action Pinnacle brought against Veritas Biometrics Corp. in the U.S. District Court for the Eastern District of Virginia (Case No. 1:22-cv-01533) — involves the very same TruScan 360 platform compounds the concern considerably.
Before I escalate this to the Conflicts Committee for formal review with Lawrence Keating, I would very much like to get your input on the following:
1. The current status and anticipated duration of the Pinnacle engagement under Matter No. 1031-00001.
2. The sensitivity of the Pinnacle relationship — in particular, whether the firm holds confidential information from Pinnacle concerning TruScan 360's technical architecture, data-handling protocols, or biometric-data practices that could be relevant to the BIPA claims MTDC faces.
3. Your preliminary view on whether this conflict might be waivable, or whether it is likely unwaivable given the degree of overlapping subject matter.
Could we get on a call or sit down together at your earliest convenience — ideally today or Monday morning — so we can jointly assess the situation? Colleen Farrow in Conflicts & New Business is aware and will be preparing the full conflicts report. I have the Round 1 Conflicts Search Report (dated May 10, 2024) in hand and am happy to forward it to you separately if you would like to review it before we speak.
Jonathan, I am hopeful we can sort through this quickly and find a workable path, but I want to be transparent with you that the initial indications suggest this may present a significant obstacle. I thought it was important that you hear about it from me directly and promptly rather than first encountering it through the formal conflicts process.
I am available all day. Please do not hesitate to reach me on my direct line at (312) 555-4718.
Best regards,
**Rachel Bernstein** Partner Privacy & Data Security Practice Calderwood & Harkness LLP One North Wacker Drive, Suite 4200 Chicago, IL 60606 Direct: (312) 555-4718 rbernstein@calderwoodharkness.com
PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT — INTERNAL FIRM COMMUNICATION