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PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT

MEMORANDUM

CALDERWOOD & HARKNESS LLP One North Wacker Drive, Suite 4200 Chicago, Illinois 60606

To: Lawrence Keating, Senior Partner & Chair, Conflicts Committee Helen Drazkowski, General Counsel Colleen Farrow, Director, Conflicts & New Business Rachel Bernstein, Partner, Privacy & Data Security

From: Nadia Petrov, Associate, Labor & Employment (under the supervision of Devon Archer, Associate, Labor & Employment)

Date: May 13, 2024

Re: Imputation Analysis Under Illinois Rule of Professional Conduct 1.10 — Proposed Representation of Metropolitan Transit Development Corp. (Matter No. 1031-00001) / Existing Representation of Pinnacle Workforce Analytics, Inc. (Matter No. 1031-00001)

I. Question Presented

Whether the conflict of interest identified under Illinois Rules of Professional Conduct 1.7(a)(1) and 1.7(a)(2) — arising from the Firm's concurrent representation of Pinnacle Workforce Analytics, Inc. ("Pinnacle") in patent-enforcement litigation concerning the TruScan 360 biometric platform (C&H Matter No. 1031-00001, Pinnacle Workforce Analytics, Inc. v. Veritas Biometrics Corp., U.S. District Court, Eastern District of Virginia, Case No. 1:22-cv-01533) and the proposed representation of Metropolitan Transit Development Corp. ("MTDC") in an Illinois Attorney General Biometric Information Privacy Act ("BIPA") enforcement action (Civil Investigative Demand ("CID") Ref. No. CRB-2024-0417) and related employee class action (Gutierrez, et al. v. Metropolitan Transit Development Corp., Circuit Court of Cook County, Chancery Division, Case No. 2024-CH-04417) — can be cured through the imputation-screening mechanism set forth in Illinois Rule of Professional Conduct 1.10, thereby permitting Calderwood & Harkness LLP (the "Firm") to accept the MTDC engagement while continuing to represent Pinnacle.

Short Answer: No. The Illinois Rules of Professional Conduct do not permit screening to cure a current-client conflict of this nature. Illinois Rule 1.10(a) imputes the conflict of any one lawyer in a firm to all lawyers in the firm while the conflicted lawyer remains associated with the firm. The screening exception in Illinois Rule 1.10(d) applies only to conflicts arising from a lawyer's prior association with another firm — that is, the so-called "lateral hire" context — and only to certain former-client conflicts governed by Rule 1.9. It does not apply to concurrent-client conflicts governed by Rule 1.7. Because the Pinnacle conflict arises from the active, ongoing representation of Pinnacle by a current firm partner — Jonathan Mercer, Partner, intellectual Property / Patent Litigation — the screening mechanism is unavailable. No other exception under Rule 1.10, including the narrow "personal interest" carve-out in Rule 1.10(a), provides a pathway to cure the conflict. Accordingly, the Firm cannot accept the proposed MTDC engagement while continuing to represent Pinnacle, and the erection of an "ethical wall" or information barrier would not alter this conclusion under Illinois law.

II. Background

The following factual background is drawn from the Firm's internal records, the new-matter intake file for Matter No. 1031-00001, the Conflicts Search Reports dated May 10 and May 13, 2024 (prepared by Colleen Farrow, Director, Conflicts & New Business), conversations with Jonathan Mercer and Priya Subramaniam regarding the scope and status of the Pinnacle engagement, conversations with Rachel Bernstein regarding the proposed scope of the MTDC engagement, and publicly available court filings and regulatory materials. Additional factual details are set forth in the companion memoranda referenced herein.

A. The Existing Pinnacle Engagement

Calderwood & Harkness LLP has represented Pinnacle Workforce Analytics, Inc. ("Pinnacle") — a Delaware corporation headquartered at 11900 Sunrise Valley Drive, Suite 500, Reston, Virginia 20191 (EIN 54-2198437) — since 2019 in patent-licensing and enforcement matters. Pinnacle is a leading developer of workforce-management and biometric-authentication technology, with annual revenues of approximately $485 million. Pinnacle's General Counsel is Sandra Yee, and its Chief Executive Officer is Gregory Harmon. The Firm's relationship with Pinnacle spans multiple engagements involving intellectual property counseling, patent prosecution oversight, and licensing negotiations.

The active matter at issue is C&H Matter No. 1031-00001, which was opened on March 14, 2022. This matter involves the representation of Pinnacle as plaintiff in Pinnacle Workforce Analytics, Inc. v. Veritas Biometrics Corp., filed on September 6, 2022, in the United States District Court for the Eastern District of Virginia, Alexandria Division, Case No. 1:22-cv-01533. The defendant, Veritas Biometrics Corp., is a Virginia corporation headquartered at 8200 Greensboro Drive, Suite 1100, McLean, Virginia 22102. The action asserts claims for infringement of three utility patents covering TruScan 360's core biometric-recognition algorithms, specifically U.S. Patent Nos. 10,XXX,XXX, 11,XXX,XXX, and 11,XXX,XXX (the precise patent numbers are set forth in the confidential case file). The litigation is actively progressing; discovery remains ongoing, and the court has set a claim-construction hearing (Markman hearing) for September 2024.

The responsible and billing partner on the Pinnacle engagement is Jonathan Mercer, Partner, intellectual Property / Patent Litigation. The lead associate is Priya Subramaniam. Additional attorneys and patent agents have contributed to the matter on a periodic basis. In Fiscal Year 2023, the Firm's actual billings from Pinnacle totaled $2,137,500, making Pinnacle a significant institutional client. The Firm also billed an additional $412,000 to Pinnacle on related counseling matters in FY 2023, although those secondary matters are not directly implicated by this conflict analysis.

Critically, as a result of the ongoing representation, the Firm possesses extensive Pinnacle confidential information relevant to the TruScan 360 biometric platform. This confidential information includes, without limitation: (i) detailed technical specifications of TruScan 360's biometric-recognition algorithms; (ii) source-code architecture summaries provided in connection with patent prosecution and litigation support; (iii) data-flow diagrams illustrating how biometric data is collected, processed, stored, and transmitted within the TruScan 360 ecosystem; (iv) biometric-data retention policies and schedules; (v) algorithm design documents describing the proprietary methods by which TruScan 360 captures, converts, and matches biometric identifiers; and (vi) patent-prosecution correspondence with the United States Patent and Trademark Office. The breadth and sensitivity of this confidential information is documented in the Confidential Information Inventory prepared by Priya Subramaniam under Jonathan Mercer's supervision, which is attached hereto as referenced in Appendix D.

B. The Proposed MTDC Engagement

Metropolitan Transit Development Corp. ("MTDC") is a unit of local government and special-purpose transit authority organized under the Illinois Local Mass Transit District Act (70 ILCS 3610/1 et seq.), headquartered at 550 West Harrison Street, Suite 1400, Chicago, Illinois 60607 (EIN 36-6041928). MTDC oversees the operation and maintenance of commuter rail, bus rapid transit, and paratransit services across five counties in the greater Chicago metropolitan area. MTDC's General Counsel is Terrence Whitfield, its Chief Information Security Officer is Lucia Marchetti, and its Executive Director is Darnell Okafor.

MTDC initially approached the Firm on May 6, 2024, through an introductory telephone call with Rachel Bernstein, Partner, Privacy & Data Security. The Firm was referred to MTDC by Hargrove, Tillman & Reese LLP, a Chicago-based transportation and municipal-law firm led by Constance Hargrove, which serves as MTDC's primary outside counsel for transit regulatory and governance matters but lacks specialized expertise in BIPA litigation and biometric-data compliance. A new-matter intake was opened on May 9, 2024, and assigned C&H Matter No. 1031-00001.

The proposed scope of the engagement encompasses the following five principal work streams:

(a) Defense of Illinois AG Civil Investigative Demand. The Illinois Attorney General's Office, through outside special counsel Diane Falk of Ridgeway & Falk LLP, Springfield, Illinois, issued a Civil Investigative Demand (CID Ref. No. CRB-2024-0417) to MTDC on April 22, 2024, seeking extensive documentation and testimony concerning MTDC's deployment of biometric timekeeping, facility-access, and employee-monitoring systems. The CID is widely understood to be the precursor to a formal BIPA enforcement action under 740 ILCS 14/20(a).

(b) Defense of Employee Class Action. On April 29, 2024, the law firm of Kessler, Brandt & O'Neill LLP (Martin Kessler, lead class counsel; Yolanda Brandt, co-class counsel) filed a putative class action on behalf of approximately 12,400 current and former MTDC employees in the Circuit Court of Cook County, Chancery Division, Case No. 2024-CH-04417. The complaint alleges that MTDC collected, stored, and used employees' biometric identifiers and biometric information — including fingerprint scans and facial-geometry data — in violation of Sections 15(a), 15(b), and 15(d) of the Illinois Biometric Information Privacy Act, 740 ILCS 14/15.

(c) Biometric-Data Remediation Advice. MTDC seeks the Firm's counsel in developing and implementing a remediation plan for its biometric-data practices, including revision of biometric-data retention and destruction policies, employee-consent protocols, and data-processing agreements with third-party technology vendors.

(d) Potential Cross-Claims and Indemnification Demands Against Technology Vendors, Including Pinnacle. MTDC's initial communications with the Firm have identified potential cross-claims and contractual indemnification demands against several technology vendors whose products were deployed by MTDC in the biometric systems at issue. Among these vendors is Pinnacle Workforce Analytics, Inc. MTDC and Pinnacle are parties to a Master Software License and Services Agreement dated June 15, 2021 (the "MSL Agreement"), pursuant to which Pinnacle licensed the TruScan 360 biometric platform to MTDC for employee timekeeping and facility-access purposes. The total contract value of the MSL Agreement is $8,700,000 over five years, with an optional three-year renewal term. MTDC's General Counsel has expressed the view that Pinnacle's product was deployed in a manner that the vendor represented to be BIPA-compliant, and that Pinnacle should bear responsibility for any deficiencies in the platform's consent-management and data-handling functionalities.

(e) Employment Counseling on Workforce-Monitoring Policies. MTDC seeks ongoing advice regarding the revision of its broader workforce-monitoring and surveillance policies to ensure compliance with BIPA, the Illinois Employee Privacy Rights Act, and related federal and state privacy regulations.

MTDC's aggregate BIPA exposure has been estimated by Lakefront Actuarial Advisors, LLC (Felix Drummond, Principal, FSA, MAAA) at a range of $12,400,000 (assuming negligent violations at the statutory minimum of $1,000 per violation for each of the approximately 12,400 affected employees) to $62,000,000 (assuming intentional or reckless violations at the statutory maximum of $5,000 per violation). The Firm estimates that the proposed representation would generate fees in the range of $3,500,000 to $5,200,000 over an 18- to 24-month engagement period. Proposed hourly rates are $1,150 per hour for Rachel Bernstein (responsible partner), $785 per hour for Devon Archer (senior associate), and $625 per hour for Nadia Petrov (working associate). The billing partner would be Miriam Calloway.

The proposed engagement team consists of Rachel Bernstein (responsible partner), Miriam Calloway (billing partner), Devon Archer (lead associate), and Nadia Petrov (working associate). None of these individuals has previously worked on any Pinnacle matter, and none has had access to the Pinnacle confidential information described in Section II.A above.

C. The Conflict

The Firm's standard conflicts-clearance process identified the issue now under analysis. On May 9, 2024, contemporaneous with the opening of the new-matter intake, the Conflicts & New Business Department conducted a Round 1 conflicts search across the Firm's party databases, matter-management systems, and lateral-clearance records. The resulting Conflicts Search Report, dated May 10, 2024, and prepared by Colleen Farrow, Director, Conflicts & New Business, identified a match between Pinnacle Workforce Analytics, Inc. — an existing firm client under Matter No. 1031-00001 — and Pinnacle as one of the technology vendors against which MTDC may assert cross-claims and indemnification demands in the proposed MTDC engagement. A supplemental Round 2 search was completed on May 13, 2024, and confirmed that no additional conflicts exist beyond the Pinnacle issue identified in Round 1.

The conflict identified is dual-pronged:

First, under Illinois Rule of Professional Conduct 1.7(a)(1), the representation of MTDC would be directly adverse to the interests of an existing firm client. Pinnacle is a named responsible party in the Attorney General's CID (CID Ref. No. CRB-2024-0417), and MTDC has expressly indicated its intention to assert cross-claims and contractual indemnification demands against Pinnacle under the MSL Agreement in connection with the class action. The proposed MTDC engagement would require the Firm to take affirmative legal action against Pinnacle — an entity to which the Firm currently owes duties of loyalty and confidentiality.

Second, under Illinois Rule of Professional Conduct 1.7(a)(2), the proposed MTDC representation creates a material limitation conflict. Effective representation of MTDC in the BIPA enforcement action and class action would require the Firm to characterize TruScan 360's biometric-data collection practices — including its data-capture algorithms, consent-management architecture, and data-retention protocols — as unlawful under BIPA. At the same time, the Firm's ongoing representation of Pinnacle in the patent-enforcement action against Veritas Biometrics depends upon establishing the legitimacy, innovation, and commercial value of TruScan 360's biometric-recognition capabilities. The Firm would be required to advance fundamentally inconsistent positions regarding the same technology platform in two concurrent matters.

Companion memoranda have analyzed the conflict in detail under the applicable substantive rules. Specifically:

• The Ethics Analysis: Illinois Rule 1.7 — Direct Adversity memorandum (prepared by Nadia Petrov, supervised by Devon Archer) concludes that a Rule 1.7(a)(1) conflict exists.

• The Ethics Analysis: Illinois Rule 1.7(a)(2) — Material Limitation analysis within the same memorandum concludes that a Rule 1.7(a)(2) conflict also exists.

• The Ethics Analysis: Illinois Rule 1.7(b) — Waivability Assessment memorandum (prepared by Nadia Petrov) concludes that the conflict is not subject to informed-consent waiver because the Firm cannot reasonably believe that it will be able to provide competent and diligent representation to both Pinnacle and MTDC simultaneously.

• The Ethics Analysis: Illinois Rule 1.9 — Former-Client Considerations memorandum (prepared by Nadia Petrov) confirms that Rule 1.9 is inapplicable at present because Pinnacle remains a current — not former — client of the Firm.

The present memorandum addresses the remaining question: whether the imputation rules under Illinois Rule of Professional Conduct 1.10 offer any structural pathway — including screening, information barriers, or other prophylactic measures — to cure the conflict and permit the Firm to accept the MTDC engagement while continuing to represent Pinnacle.

III. Applicable Rule: Illinois Rule of Professional Conduct 1.10

A. Text of Rule 1.10(a) — General Imputation Principle

The general imputation provision of Illinois Rule of Professional Conduct 1.10(a) provides in full:

While lawyers are associated in a firm, none of them shall knowingly represent a client when any one of them practicing alone would be prohibited from doing so by Rules 1.7 or 1.9, unless the prohibition is based on a personal interest of the prohibited lawyer and does not present a significant risk of materially limiting the representation of the client by the remaining lawyers in the firm.

The operative principle is clear and broadly stated: the conflicts of any one lawyer in a firm are the conflicts of all lawyers in the firm, absent the narrow personal-interest exception. This vicarious-disqualification rule reflects the foundational premise that a law firm is a single entity for purposes of conflict-of-interest analysis, and that the duties of loyalty and confidentiality that any individual lawyer owes to a client are, in effect, owed by the institution as a whole.

Application to the Present Facts. Jonathan Mercer is a current partner associated with Calderwood & Harkness LLP. He has been a partner at the Firm since at least 2019 and has served as the responsible and billing partner on the Pinnacle engagement throughout. His conflict with respect to Pinnacle under Rule 1.7(a)(1) (direct adversity) and Rule 1.7(a)(2) (material limitation) — as documented in the companion memoranda — is imputed under Rule 1.10(a) to every lawyer at the Firm. This includes Rachel Bernstein, Miriam Calloway, Devon Archer, and Nadia Petrov — the attorneys who would constitute the proposed MTDC engagement team — as well as every other lawyer associated with the Firm. So long as Mercer remains a partner at Calderwood & Harkness and the Pinnacle engagement remains active, no lawyer at the Firm may undertake a representation that Mercer, practicing alone, would be prohibited from accepting under Rule 1.7.

The "Personal Interest" Exception. Rule 1.10(a) contains a single, narrow exception: imputation does not apply where "the prohibition is based on a personal interest of the prohibited lawyer and does not present a significant risk of materially limiting the representation of the client by the remaining lawyers in the firm." This exception is designed to address situations in which a lawyer is disqualified from a representation due to a personal financial interest, family relationship, or other non-client-related circumstance — for example, where a lawyer holds stock in a party adverse to a prospective client, or where a lawyer's spouse is employed by an opposing party. In such cases, the personal nature of the disqualification may not implicate the institutional duties of loyalty and confidentiality that underpin the imputation doctrine, and other lawyers in the firm may be competent to provide uncompromised representation.

The Mercer/Pinnacle conflict is not based on any personal interest of Jonathan Mercer. It arises solely from his professional duties of loyalty and confidentiality to Pinnacle, an existing firm client. Mercer's disqualification is grounded in the attorney-client relationship he maintains with Pinnacle on behalf of the Firm — the very type of institutional, client-based conflict that Rule 1.10(a) was designed to impute. Accordingly, the personal-interest exception is inapplicable.

B. Text of Rule 1.10(d) — Screening Exception (Lateral Hire Context)

Illinois Rule of Professional Conduct 1.10(d) provides:

When a lawyer becomes associated with a firm, no lawyer associated in the firm shall knowingly represent a person in a matter in which that lawyer is disqualified under Rule 1.9, unless:

(1) the personally disqualified lawyer is timely screened from any participation in the matter and is apportioned no part of the fee therefrom; and

(2) written notice is promptly given to any affected former client to enable the former client to ascertain compliance with the provisions of this Rule.

This provision establishes the sole circumstance under which the Illinois Rules of Professional Conduct authorize the use of a screening mechanism to overcome imputed disqualification. Its operative terms impose three critical limitations on its availability:

First, the screening exception applies only "[w]hen a lawyer becomes associated with a firm." This language targets the lateral-hire scenario: a lawyer who joins Calderwood & Harkness from another firm and who brings with her a conflict arising from work performed at the prior firm. The trigger is the act of becoming newly associated — not the continued association of a lawyer who has been with the firm throughout the relevant time period.

Second, the exception applies only to disqualifications arising "under Rule 1.9." Rule 1.9 governs duties to former clients — specifically, the prohibition on representing a person in the same or a substantially related matter in which the person's interests are materially adverse to the interests of a former client, or the prohibition on using information relating to the former representation to the disadvantage of the former client. The screening mechanism of Rule 1.10(d) was crafted to address the practical reality that lateral movement of attorneys between firms is a regular feature of legal practice, and that an overly rigid imputation rule would impede lawyer mobility and client choice without commensurate benefit to the former client, particularly where the risk is primarily one of inadvertent disclosure of confidential information rather than a breach of the ongoing duty of loyalty.

Third, the exception does not extend to disqualifications arising under Rule 1.7 — the rule governing concurrent-client conflicts. This omission is deliberate and significant. The Illinois Supreme Court, in adopting the Illinois Rules of Professional Conduct (effective January 1, 2010, with subsequent amendments), chose to permit screening only in the narrow context of lateral-hire, former-client conflicts. It declined to extend the screening mechanism to concurrent-client conflicts, consistent with the prevailing view among professional-responsibility authorities that the duty of undivided loyalty owed to a current client is qualitatively distinct from — and more demanding than — the residual duties owed to a former client.

C. Distinction Between Rule 1.7 and Rule 1.9 Screening

The structural distinction between Rule 1.7 and Rule 1.9 is the linchpin of the imputation analysis. Understanding why the Illinois Rules authorize screening for the latter but not the former requires a brief examination of the differing policy considerations.

Duties to Current Clients (Rule 1.7). A lawyer's duties to a current client include both the duty of loyalty and the duty of confidentiality, and these duties exist at their most robust. The duty of loyalty requires that a lawyer not act in a manner adverse to the client's interests in any matter — even a matter wholly unrelated to the subject of the representation. See Ill. R. Prof. Conduct 1.7, cmt. [6] ("Loyalty to a current client prohibits undertaking representation directly adverse to that client without that client's informed consent."). This duty is absolute in character: it cannot be segmented, compartmentalized, or assigned to specific individuals within a firm. As long as any lawyer in the firm is representing a current client, the firm as an institution owes that client undivided loyalty.

Duties to Former Clients (Rule 1.9). Once the attorney-client relationship has concluded, the duty of loyalty diminishes significantly. What remains is a narrower obligation: the duty not to use confidential information obtained during the prior representation to the former client's disadvantage, and the duty not to undertake a substantially related adverse representation where doing so would risk the misuse of such information. See Ill. R. Prof. Conduct 1.9(a), (c). These residual duties are primarily informational in character — they are concerned with protecting the confidentiality of information shared during the prior engagement, not with preserving an ongoing relationship of trust and loyalty. Because the concern is primarily informational, it is amenable to structural safeguards: a properly constructed screen can effectively isolate the personally disqualified lawyer and prevent the flow of confidential information to lawyers handling the adverse matter.

Policy Rationale for the Distinction. The Comments to the Illinois Rules and the ABA Model Rules articulate the rationale clearly. Screening may mitigate confidentiality concerns in the former-client context because the risk to be addressed is the potential for inadvertent or improper disclosure of information — a risk that can, in many cases, be effectively managed through physical and informational barriers, access restrictions, and monitoring protocols. But screening cannot address the fundamental loyalty breach inherent in concurrent adverse representation. When a firm simultaneously represents Client A and Client B, and Client B's interests are directly adverse to Client A's interests, the firm faces an institutional conflict that cannot be resolved by walling off individual lawyers. The firm as an entity is, in that moment, simultaneously acting for and against the same client — a contradiction that no amount of structural separation can reconcile.

The ABA Model Rule 1.10, Comment [3], states: "The rule in paragraph (a) does not prohibit representation where neither questions of client loyalty nor protection of confidential information are presented." The converse implication is equally clear: where client loyalty is at stake — as it always is in a Rule 1.7 concurrent-client conflict — the imputation rule applies in full force, and screening is not an available remedy.

Illinois adopted this framework without material modification. The Illinois Supreme Court's decision to limit screening to the Rule 1.9 / Rule 1.10(d) lateral-hire context reflects a deliberate policy judgment that the duty of loyalty to a current client is too fundamental, and the risk of its breach too significant, to be entrusted to a screening mechanism — however well-designed.

IV. Analysis

A. Jonathan Mercer's Status as a Current, Active Partner

The threshold inquiry under Rule 1.10(d) is whether the disqualified lawyer is one who has recently "become[] associated with" the firm — that is, a lateral hire carrying a conflict from a prior firm association. Jonathan Mercer is not a lateral hire carrying a conflict from a prior firm. He is a sitting partner of Calderwood & Harkness LLP who has been affiliated with the Firm since well before the inception of the Pinnacle relationship. Mercer has actively represented Pinnacle in patent-licensing and enforcement matters since 2019, and he has served as the responsible and billing partner on the current active matter (C&H Matter No. 1031-00001) since it was opened on March 14, 2022.

Mercer's conflict arises entirely from his ongoing, active representation of Pinnacle at this Firm. It does not arise from any work he performed at a prior firm, any information he obtained at a prior firm, or any client relationship he formed at a prior firm. The factual predicate for Rule 1.10(d) — a lawyer who "becomes associated with a firm" and brings a pre-existing disqualification — is wholly absent. Accordingly, the lateral-screening mechanism of Rule 1.10(d) is facially inapplicable on this ground alone.

This conclusion would remain unchanged even if the Firm were to transfer Mercer to another office, reassign him to a different practice group, or otherwise restructure his role within the partnership. Rule 1.10(a) imputes his conflict to all lawyers in the firm "while lawyers are associated in a firm." So long as Mercer remains a partner at Calderwood & Harkness — regardless of his geographic location, practice-group assignment, or day-to-day responsibilities — his Pinnacle conflict is imputed to every lawyer at the Firm.

B. The Conflict Is a Rule 1.7 Concurrent-Client Conflict, Not a Rule 1.9 Former-Client Conflict

Even if Mercer's status within the Firm were somehow amenable to the "becomes associated" trigger of Rule 1.10(d) — which, as explained above, it is not — the screening exception would still be unavailable because the conflict is governed by Rule 1.7, not Rule 1.9.

Pinnacle is a current client of Calderwood & Harkness LLP. The engagement under Matter No. 1031-00001 is active and ongoing. The Firm billed $2,137,500 to Pinnacle in FY 2023. The underlying litigation — Pinnacle v. Veritas Biometrics Corp., E.D. Va. Case No. 1:22-cv-01533 — remains pending before Judge [the assigned judicial officer] in the Eastern District of Virginia. Discovery is ongoing, a Markman hearing is scheduled for September 2024, and no trial date has been set. There has been no termination, withdrawal, conclusion, or other cessation of the Firm's representation of Pinnacle. Sandra Yee, Pinnacle's General Counsel, continues to communicate with Jonathan Mercer and Priya Subramaniam on a regular basis regarding litigation strategy, discovery matters, and case developments.

Because Pinnacle is a current client, the conflict is squarely governed by Rule 1.7 — the rule addressing concurrent-client conflicts — rather than Rule 1.9, which applies only to duties owed to former clients. The screening exception in Rule 1.10(d) is, by its express terms, limited to disqualifications arising under Rule 1.9. It does not extend to Rule 1.7 concurrent-client conflicts. This textual limitation is unambiguous and admits of no exception, qualification, or equitable override.

The Illinois Rules do not provide any screening mechanism — whether in Rule 1.10 or elsewhere — to overcome imputed disqualification arising from a concurrent-client conflict under Rule 1.7. The absence of such a mechanism is not an oversight or a gap in the rules; it is a deliberate design choice reflecting the policy judgments discussed in Section III.C above.

C. No "Personal Interest" Exception Applies

As noted in Section III.A, Rule 1.10(a) contains a narrow exception to imputation where "the prohibition is based on a personal interest of the prohibited lawyer and does not present a significant risk of materially limiting the representation of the client by the remaining lawyers in the firm."

This exception is inapplicable here. Jonathan Mercer's disqualification is not rooted in any personal interest — financial, familial, or otherwise — that is unique to him as an individual and separable from his professional role. His disqualification arises from his status as the lead attorney representing Pinnacle in active patent-enforcement litigation. His duties of loyalty and confidentiality to Pinnacle are professional in nature, flowing from the attorney-client relationship, not from any personal stake he holds in Pinnacle's business, stock, or affairs. There is no indication in the record — nor has anyone suggested — that Mercer holds equity in Pinnacle, has a family relationship with any Pinnacle principal, or has any personal interest that could be isolated from the institutional attorney-client relationship.

Even if one were to stretch the concept of "personal interest" beyond recognition to encompass the professional interests of a client relationship (which the rule plainly does not contemplate), the second prong of the exception would independently defeat its application. The Pinnacle conflict "present[s] a significant risk of materially limiting the representation of the client by the remaining lawyers in the firm." The remaining lawyers on the proposed MTDC team — Bernstein, Calloway, Archer, and Petrov — would be materially limited in their ability to represent MTDC zealously because the Firm, through Mercer, simultaneously owes duties to Pinnacle that are diametrically opposed to MTDC's interests with respect to TruScan 360. No reasonable construction of the personal-interest exception encompasses this scenario.

D. Structural Separation ("Ethical Wall") Would Be Insufficient

We have been asked to consider whether the Firm could accept the MTDC engagement by erecting an information barrier — sometimes referred to as an "ethical wall" or "Chinese wall" — between the Mercer/Pinnacle team and the Bernstein/MTDC team. For the reasons set forth below, such a measure would not cure the conflict under Illinois law.

(i) The Illinois Rules Do Not Authorize Screening to Cure Concurrent-Client Conflicts

The most fundamental objection to an ethical-wall approach is that the Illinois Rules of Professional Conduct simply do not authorize it in this context. As detailed in Sections III and IV.A–B above, the only screening mechanism available under the Illinois Rules is the one set forth in Rule 1.10(d), and that mechanism is limited to lateral-hire, former-client conflicts under Rule 1.9. The Illinois Supreme Court has not adopted any rule, amendment, or comment that would permit screening as a remedy for concurrent-client conflicts under Rule 1.7.

The absence of textual authorization is dispositive. Under well-established principles of professional-responsibility jurisprudence, a law firm may not rely on self-imposed structural measures — however rigorous — to override an express prohibition in the applicable rules of professional conduct. The rules define the boundaries of permissible conduct; compliance is not a matter of degree, and good-faith effort to minimize the risks associated with a conflict does not convert an impermissible conflict into a permissible one.

(ii) The Loyalty Problem Is Institutional, Not Individual

Even setting aside the textual problem, an ethical wall would fail to address the core nature of the conflict. The conflict between the Pinnacle and MTDC representations is not merely an information-management problem — it is a loyalty problem. While Jonathan Mercer remains associated with the Firm, Calderwood & Harkness as an entity owes undivided loyalty to Pinnacle. That duty is not divisible; it belongs to the institution, not to any particular lawyer. Simultaneously representing MTDC in a matter that requires the Firm to argue that Pinnacle's product violates Illinois biometric-privacy law is an institutional breach of the duty of loyalty that cannot be compartmentalized by reassigning personnel or restricting access to files.

The Illinois Rules recognize the law firm as a single unit for conflict-of-interest purposes. See Ill. R. Prof. Conduct 1.10, cmt. [1] ("A firm of lawyers is essentially one lawyer for purposes of the rules governing loyalty to the client."). An ethical wall creates an internal division within that unit, but it does not transform one firm into two. Calderwood & Harkness LLP remains a single entity, and its institutional obligations run to all of its clients simultaneously. An ethical wall may segment the flow of information, but it cannot segment the Firm's institutional identity or its institutional duties.

(iii) The Confidential Information Concern Is Compounded

The Firm possesses Pinnacle's confidential technical architecture information, source-code summaries, data-flow diagrams, and biometric-data retention policies — all of which are directly relevant to the issues that would be litigated in the MTDC BIPA defense and any cross-claims against Pinnacle. An ethical wall might reduce the risk of inadvertent disclosure of this information to the MTDC engagement team, but it would not eliminate the institutional conflict.

Moreover, the confidentiality concern operates in both directions. Effective representation of MTDC would require the development of legal theories and factual positions regarding TruScan 360's alleged BIPA violations — positions that, if known to the Pinnacle team, could be used to Pinnacle's advantage in anticipating and preparing defenses against MTDC's cross-claims and indemnification demands. The Firm would be placed in the untenable position of possessing, within a single institution, adversarial legal strategies directed by one team against a client being represented by another team.

Even the most carefully constructed ethical wall cannot eliminate the risk that information or strategic insights will migrate across the barrier through informal channels — hallway conversations, shared administrative support, firm-wide attorney meetings, financial reporting, or common access to document-management systems. And even if the wall were perfectly impermeable in practice, its existence would not address the fundamental objection: the Firm would still be simultaneously acting for and against the same client, in the same subject-matter area, regarding the same technology platform.

(iv) Reputational and Relationship Harm to the Pinnacle Engagement

Finally, from a practical standpoint, Pinnacle's reaction to learning that its own law firm is simultaneously arguing in another forum that TruScan 360's biometric capabilities are unlawful under BIPA would almost certainly be severe. The existence of an ethical wall — however robust — would not assuage Pinnacle's entirely reasonable concern that the Firm's institutional loyalty has been compromised. Sandra Yee and Gregory Harmon have reposed significant trust in Calderwood & Harkness, and particularly in Jonathan Mercer, over a multi-year relationship involving the disclosure of highly sensitive technical and strategic information. That trust would be fundamentally undermined by the knowledge that the Firm is, in another engagement, attacking the very product that the Firm has been retained to protect.

The injury to the attorney-client relationship would be real and immediate, regardless of whether any actual breach of confidentiality occurred. The ethical rules are designed to prevent precisely this kind of harm — not merely to manage its consequences after the fact.

E. Contrast with Jurisdictions Permitting Broader Screening

For the sake of completeness, we note that some jurisdictions have adopted broader screening provisions that extend beyond the lateral-hire, former-client context. For example, the ABA Model Rules of Professional Conduct, as amended in 2009, permit screening in certain circumstances for lateral-hire conflicts, and some states have explored even broader applications. Additionally, certain jurisdictions have, by rule or case law, recognized the efficacy of ethical walls in limited concurrent-conflict scenarios — typically where the matters are wholly unrelated, the clients' interests do not directly clash, and the risk of harm is minimal.

Illinois has not adopted any such expanded provisions. The Illinois Supreme Court's version of Rule 1.10, as currently in effect, limits screening to the narrow context specified in Rule 1.10(d): lateral-hire conflicts involving former-client duties under Rule 1.9. There is no Illinois rule, comment, ethics opinion, or authoritative judicial decision that extends screening to concurrent-client conflicts under Rule 1.7.

Furthermore, even in jurisdictions that have adopted broader screening rules, screening is generally not permitted where the concurrent matters are substantially related and involve the same subject matter. Here, the TruScan 360 biometric platform sits at the very center of both the Pinnacle patent-enforcement action and the proposed MTDC BIPA defense. The two matters are not merely tangentially related — they involve the identical technology, the identical data-handling practices, and fundamentally contradictory legal positions regarding the lawfulness and value of that technology. It is difficult to conceive of a set of facts less amenable to a screening solution, even under the most permissive screening regime.

V. Hypothetical: Could the Conflict Be Cured If Pinnacle Were a Former Client?

For completeness, and as addressed in greater detail in the companion memorandum on Illinois Rule 1.9, we briefly examine the hypothetical scenario in which Pinnacle becomes a former client prior to the Firm's acceptance of the MTDC engagement. This analysis is presented to demonstrate that even under a more favorable analytical framework, the Firm would be unable to accept the MTDC engagement.

The "Hot Potato" Doctrine. If the Firm were to terminate the Pinnacle engagement for the purpose of eliminating the concurrent-client conflict and then immediately accept the MTDC engagement, the so-called "hot potato" doctrine would apply. Under this widely recognized principle of legal ethics, a law firm may not drop a current client "like a hot potato" in order to convert a concurrent-client conflict (governed by the more stringent Rule 1.7) into a former-client conflict (governed by the more permissive Rule 1.9). Courts have consistently held that a firm's strategic termination of a client relationship for the purpose of circumventing Rule 1.7's prohibitions is ethically impermissible and will be treated, for conflict-of-interest purposes, as if the client remained a current client. See, e.g., Picker Int'l, Inc. v. Varian Assocs., Inc., 869 F.2d 578, 584 (Fed. Cir. 1989); Truck Ins. Exch. v. Marlowe Casualty Group, 6 Cal. App. 4th 1050, 1057 (1992). The Firm could not ethically terminate Pinnacle for the purpose of accepting MTDC, and any attempt to do so would leave the firm subject to disqualification as though the concurrent conflict still existed.

Substantial-Relationship and Confidentiality Concerns Under Rule 1.9. Even assuming, hypothetically, that the Pinnacle engagement were to conclude through some legitimate, independent means — such as the resolution of Pinnacle v. Veritas Biometrics Corp. or Pinnacle's voluntary decision to transfer its matters to another firm — the conflict analysis would shift to Rule 1.9, but the outcome would remain the same. Under Rule 1.9(a), a lawyer who has formerly represented a client in a matter shall not thereafter represent another person in the same or a substantially related matter in which that person's interests are materially adverse to the interests of the former client, unless the former client gives informed consent, confirmed in writing.

The Pinnacle patent-enforcement litigation and the proposed MTDC BIPA defense are substantially related. Both matters centrally involve the TruScan 360 biometric platform — its architecture, its data-collection methodologies, its algorithmic processes, its consent-management features, and its data-retention practices. The legal questions in the two matters are not merely tangentially connected; they are deeply intertwined. The MTDC BIPA defense would require the Firm to develop and present arguments regarding how TruScan 360 collects, processes, and stores biometric data — the very same technical issues at the heart of the Pinnacle patent-enforcement action.

Moreover, under Rule 1.9(c), the Firm possesses extensive confidential information obtained during the Pinnacle representation that is directly material to the proposed MTDC representation. The Confidential Information Inventory prepared by Priya Subramaniam catalogues this information in detail. Of particular relevance: the data-flow diagrams, biometric-data retention policies, source-code architecture summaries, and algorithm design documents in the Firm's possession would be directly useful — and potentially devastating — in support of MTDC's cross-claims and indemnification demands against Pinnacle. A lawyer could not review this information and then represent MTDC against Pinnacle without running afoul of Rule 1.9(c)'s prohibition on using confidential information to the disadvantage of a former client.

Screening Under Rule 1.10(d). In this hypothetical former-client scenario, the screening mechanism of Rule 1.10(d) would, in theory, be potentially available — but only if the personally disqualified lawyer (Mercer) were "timely screened from any participation in the matter" and received "no part of the fee therefrom," and only if written notice were promptly given to Pinnacle. Even under this more favorable analytical framework, however, screening would face formidable obstacles. Given the substantial relationship between the two matters and the breadth and sensitivity of the confidential information at issue, it is doubtful that any court or disciplinary authority would find that screening adequately protects Pinnacle's interests. Screening is most effective when the matters are only tangentially related and the risk of informational contamination is limited. Where, as here, the matters involve the identical technology platform and the Firm possesses a wealth of directly material confidential information, screening may be deemed insufficient as a matter of law.

This hypothetical analysis reinforces the conclusion reached under the current-client framework: whether analyzed under Rule 1.7 (concurrent-client) or Rule 1.9 (former-client), the Firm cannot accept the MTDC engagement while Pinnacle's interests in TruScan 360 are implicated.

VI. Conclusion

Based on the foregoing analysis, we reach the following conclusions:

1. Imputation applies. The imputation provision of Illinois Rule of Professional Conduct 1.10(a) imputes Jonathan Mercer's Rule 1.7 conflict with respect to Pinnacle Workforce Analytics, Inc. to all lawyers at Calderwood & Harkness LLP. Every lawyer at the Firm is deemed to share Mercer's disqualification from representing any client whose interests are directly adverse to Pinnacle or whose representation would be materially limited by the Firm's concurrent obligations to Pinnacle.

2. The screening exception is unavailable. The screening mechanism set forth in Illinois Rule 1.10(d) is unavailable for two independent and each individually dispositive reasons: (a) the conflict arises from a current partner's ongoing representation of Pinnacle at this Firm, not from a lateral hire's prior association with another firm, and therefore the "becomes associated with a firm" trigger of Rule 1.10(d) is not satisfied; and (b) the conflict is governed by Rule 1.7 (concurrent-client conflict), not Rule 1.9 (former-client conflict), and Rule 1.10(d)'s screening mechanism applies exclusively to Rule 1.9 disqualifications.

3. No other exception under Rule 1.10 applies. The narrow "personal interest" exception in Rule 1.10(a) is inapplicable because Mercer's disqualification is based on his professional duties to an existing client, not on any personal financial, familial, or other individual interest.

4. An ethical wall would not cure the conflict. Erecting an information barrier between the Mercer/Pinnacle team and the Bernstein/MTDC team would not cure the conflict under Illinois law. The Illinois Rules do not authorize screening for concurrent-client conflicts; the loyalty problem is institutional and cannot be compartmentalized; the confidential information concerns are compounded by the substantial relationship between the two matters; and the attorney-client relationship with Pinnacle would be irreparably harmed regardless of the screen's effectiveness.

5. The MTDC engagement must be declined. The Firm cannot accept the proposed MTDC engagement (Matter No. 1031-00001) while continuing to represent Pinnacle (Matter No. 1031-00001). This conclusion holds whether the analysis is conducted under Rule 1.7 (current-client conflict) or, hypothetically, under Rule 1.9 (former-client conflict), and irrespective of any structural measures the Firm might consider implementing.

6. Consistency with companion memoranda. This analysis is fully consistent with the conclusions reached in the companion memoranda on Illinois Rule 1.7(a)(1)/(a)(2) (direct adversity and material limitation), Illinois Rule 1.7(b) (waivability), and Illinois Rule 1.9 (former-client considerations). Each of these independent analyses converges on the same result: the conflict is real, it is unwaivable, it is imputed firm-wide, and it cannot be cured by screening or consent.

Recommendation. This memorandum supports the Conflicts Committee's determination that the proposed representation of Metropolitan Transit Development Corp. in connection with C&H Matter No. 1031-00001 must be declined. The Firm should promptly communicate this determination to Rachel Bernstein so that MTDC and its referring counsel, Constance Hargrove of Hargrove, Tillman & Reese LLP, may be notified and afforded the opportunity to retain alternative BIPA counsel without further delay.

We remain available to discuss this analysis in greater detail at the Conflicts Committee meeting scheduled for May 14, 2024, or at any other time convenient to the Committee.

VII. Appendices / Attachments Referenced

The following materials are referenced in this memorandum and are available in the Conflicts Committee's confidential matter file for C&H Matter No. 1031-00001:

Appendix A: Text of Illinois Rule of Professional Conduct 1.10 (full rule with official comments), as adopted by the Illinois Supreme Court and currently in effect.

Appendix B: Text of Illinois Rule of Professional Conduct 1.7 (cross-reference), including official comments on concurrent conflicts of interest, direct adversity, and material limitation.

Appendix C: Text of Illinois Rule of Professional Conduct 1.9 (cross-reference), including official comments on duties to former clients, substantial relationship, and confidential information.

Appendix D: Cross-reference to companion ethics memoranda prepared in connection with the MTDC new-matter intake:

• Ethics Analysis: Illinois Rule 1.7 — Direct Adversity and Material Limitation (prepared by Nadia Petrov, Associate, Labor & Employment, under the supervision of Devon Archer, Associate, Labor & Employment), dated May 12, 2024.

• Ethics Analysis: Illinois Rule 1.7(b) — Waivability Assessment (prepared by Nadia Petrov, Associate, Labor & Employment), dated May 12, 2024.

• Ethics Analysis: Illinois Rule 1.9 — Former-Client Considerations (prepared by Nadia Petrov, Associate, Labor & Employment), dated May 13, 2024.

• Confidential Information Inventory — Pinnacle Workforce Analytics, Inc. (prepared by Priya Subramaniam, Associate, intellectual Property / Patent Litigation, under the supervision of Jonathan Mercer, Partner, intellectual Property / Patent Litigation), dated May 11, 2024.

Appendix E: Party relationship chart (cross-reference to Conflicts Committee Meeting Agenda materials for the meeting of May 14, 2024), illustrating the relationships among Calderwood & Harkness LLP, Pinnacle Workforce Analytics, Inc., Metropolitan Transit Development Corp., Veritas Biometrics Corp., the Illinois Attorney General's Office, Kessler, Brandt & O'Neill LLP (class counsel), and other relevant parties and counsel.

This memorandum is a privileged and confidential attorney work product prepared for the sole use of the Calderwood & Harkness LLP Conflicts Committee in connection with the evaluation of the proposed MTDC engagement. It is not intended to constitute, and should not be construed as, legal advice to any client or prospective client of the Firm. Distribution outside the Conflicts Committee requires the prior written authorization of the General Counsel.

PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT
MEMORANDUM
CALDERWOOD & HARKNESS LLP One North Wacker Drive, Suite 4200 Chicago, Illinois 60606
To: Lawrence Keating, Senior Partner & Chair, Conflicts Committee Helen Drazkowski, General Counsel Colleen Farrow, Director, Conflicts & New Business Rachel Bernstein, Partner, Privacy & Data Security
From: Nadia Petrov, Associate, Labor & Employment (under the supervision of Devon Archer, Associate, Labor & Employment)
Date: May 13, 2024
Re: Imputation Analysis Under Illinois Rule of Professional Conduct 1.10 — Proposed Representation of Metropolitan Transit Development Corp. (Matter No. 1031-00001) / Existing Representation of Pinnacle Workforce Analytics, Inc. (Matter No. 1031-00001)
I. Question Presented
Whether the conflict of interest identified under Illinois Rules of Professional Conduct 1.7(a)(1) and 1.7(a)(2) — arising from the Firm's concurrent representation of Pinnacle Workforce Analytics, Inc. ("Pinnacle") in patent-enforcement litigation concerning the TruScan 360 biometric platform (C&H Matter No. 1031-00001, Pinnacle Workforce Analytics, Inc. v. Veritas Biometrics Corp., U.S. District Court, Eastern District of Virginia, Case No. 1:22-cv-01533) and the proposed representation of Metropolitan Transit Development Corp. ("MTDC") in an Illinois Attorney General Biometric Information Privacy Act ("BIPA") enforcement action (Civil Investigative Demand ("CID") Ref. No. CRB-2024-0417) and related employee class action (Gutierrez, et al. v. Metropolitan Transit Development Corp., Circuit Court of Cook County, Chancery Division, Case No. 2024-CH-04417) — can be cured through the imputation-screening mechanism set forth in Illinois Rule of Professional Conduct 1.10, thereby permitting Calderwood & Harkness LLP (the "Firm") to accept the MTDC engagement while continuing to represent Pinnacle.
Short Answer: No. The Illinois Rules of Professional Conduct do not permit screening to cure a current-client conflict of this nature. Illinois Rule 1.10(a) imputes the conflict of any one lawyer in a firm to all lawyers in the firm while the conflicted lawyer remains associated with the firm. The screening exception in Illinois Rule 1.10(d) applies only to conflicts arising from a lawyer's prior association with another firm — that is, the so-called "lateral hire" context — and only to certain former-client conflicts governed by Rule 1.9. It does not apply to concurrent-client conflicts governed by Rule 1.7. Because the Pinnacle conflict arises from the active, ongoing representation of Pinnacle by a current firm partner — Jonathan Mercer, Partner, intellectual Property / Patent Litigation — the screening mechanism is unavailable. No other exception under Rule 1.10, including the narrow "personal interest" carve-out in Rule 1.10(a), provides a pathway to cure the conflict. Accordingly, the Firm cannot accept the proposed MTDC engagement while continuing to represent Pinnacle, and the erection of an "ethical wall" or information barrier would not alter this conclusion under Illinois law.
II. Background
The following factual background is drawn from the Firm's internal records, the new-matter intake file for Matter No. 1031-00001, the Conflicts Search Reports dated May 10 and May 13, 2024 (prepared by Colleen Farrow, Director, Conflicts & New Business), conversations with Jonathan Mercer and Priya Subramaniam regarding the scope and status of the Pinnacle engagement, conversations with Rachel Bernstein regarding the proposed scope of the MTDC engagement, and publicly available court filings and regulatory materials. Additional factual details are set forth in the companion memoranda referenced herein.
A. The Existing Pinnacle Engagement
Calderwood & Harkness LLP has represented Pinnacle Workforce Analytics, Inc. ("Pinnacle") — a Delaware corporation headquartered at 11900 Sunrise Valley Drive, Suite 500, Reston, Virginia 20191 (EIN 54-2198437) — since 2019 in patent-licensing and enforcement matters. Pinnacle is a leading developer of workforce-management and biometric-authentication technology, with annual revenues of approximately $485 million. Pinnacle's General Counsel is Sandra Yee, and its Chief Executive Officer is Gregory Harmon. The Firm's relationship with Pinnacle spans multiple engagements involving intellectual property counseling, patent prosecution oversight, and licensing negotiations.
The active matter at issue is C&H Matter No. 1031-00001, which was opened on March 14, 2022. This matter involves the representation of Pinnacle as plaintiff in Pinnacle Workforce Analytics, Inc. v. Veritas Biometrics Corp., filed on September 6, 2022, in the United States District Court for the Eastern District of Virginia, Alexandria Division, Case No. 1:22-cv-01533. The defendant, Veritas Biometrics Corp., is a Virginia corporation headquartered at 8200 Greensboro Drive, Suite 1100, McLean, Virginia 22102. The action asserts claims for infringement of three utility patents covering TruScan 360's core biometric-recognition algorithms, specifically U.S. Patent Nos. 10,XXX,XXX, 11,XXX,XXX, and 11,XXX,XXX (the precise patent numbers are set forth in the confidential case file). The litigation is actively progressing; discovery remains ongoing, and the court has set a claim-construction hearing (Markman hearing) for September 2024.
The responsible and billing partner on the Pinnacle engagement is Jonathan Mercer, Partner, intellectual Property / Patent Litigation. The lead associate is Priya Subramaniam. Additional attorneys and patent agents have contributed to the matter on a periodic basis. In Fiscal Year 2023, the Firm's actual billings from Pinnacle totaled $2,137,500, making Pinnacle a significant institutional client. The Firm also billed an additional $412,000 to Pinnacle on related counseling matters in FY 2023, although those secondary matters are not directly implicated by this conflict analysis.
Critically, as a result of the ongoing representation, the Firm possesses extensive Pinnacle confidential information relevant to the TruScan 360 biometric platform. This confidential information includes, without limitation: (i) detailed technical specifications of TruScan 360's biometric-recognition algorithms; (ii) source-code architecture summaries provided in connection with patent prosecution and litigation support; (iii) data-flow diagrams illustrating how biometric data is collected, processed, stored, and transmitted within the TruScan 360 ecosystem; (iv) biometric-data retention policies and schedules; (v) algorithm design documents describing the proprietary methods by which TruScan 360 captures, converts, and matches biometric identifiers; and (vi) patent-prosecution correspondence with the United States Patent and Trademark Office. The breadth and sensitivity of this confidential information is documented in the Confidential Information Inventory prepared by Priya Subramaniam under Jonathan Mercer's supervision, which is attached hereto as referenced in Appendix D.
B. The Proposed MTDC Engagement
Metropolitan Transit Development Corp. ("MTDC") is a unit of local government and special-purpose transit authority organized under the Illinois Local Mass Transit District Act (70 ILCS 3610/1 et seq.), headquartered at 550 West Harrison Street, Suite 1400, Chicago, Illinois 60607 (EIN 36-6041928). MTDC oversees the operation and maintenance of commuter rail, bus rapid transit, and paratransit services across five counties in the greater Chicago metropolitan area. MTDC's General Counsel is Terrence Whitfield, its Chief Information Security Officer is Lucia Marchetti, and its Executive Director is Darnell Okafor.
MTDC initially approached the Firm on May 6, 2024, through an introductory telephone call with Rachel Bernstein, Partner, Privacy & Data Security. The Firm was referred to MTDC by Hargrove, Tillman & Reese LLP, a Chicago-based transportation and municipal-law firm led by Constance Hargrove, which serves as MTDC's primary outside counsel for transit regulatory and governance matters but lacks specialized expertise in BIPA litigation and biometric-data compliance. A new-matter intake was opened on May 9, 2024, and assigned C&H Matter No. 1031-00001.
The proposed scope of the engagement encompasses the following five principal work streams:
(a) Defense of Illinois AG Civil Investigative Demand. The Illinois Attorney General's Office, through outside special counsel Diane Falk of Ridgeway & Falk LLP, Springfield, Illinois, issued a Civil Investigative Demand (CID Ref. No. CRB-2024-0417) to MTDC on April 22, 2024, seeking extensive documentation and testimony concerning MTDC's deployment of biometric timekeeping, facility-access, and employee-monitoring systems. The CID is widely understood to be the precursor to a formal BIPA enforcement action under 740 ILCS 14/20(a).
(b) Defense of Employee Class Action. On April 29, 2024, the law firm of Kessler, Brandt & O'Neill LLP (Martin Kessler, lead class counsel; Yolanda Brandt, co-class counsel) filed a putative class action on behalf of approximately 12,400 current and former MTDC employees in the Circuit Court of Cook County, Chancery Division, Case No. 2024-CH-04417. The complaint alleges that MTDC collected, stored, and used employees' biometric identifiers and biometric information — including fingerprint scans and facial-geometry data — in violation of Sections 15(a), 15(b), and 15(d) of the Illinois Biometric Information Privacy Act, 740 ILCS 14/15.
(c) Biometric-Data Remediation Advice. MTDC seeks the Firm's counsel in developing and implementing a remediation plan for its biometric-data practices, including revision of biometric-data retention and destruction policies, employee-consent protocols, and data-processing agreements with third-party technology vendors.
(d) Potential Cross-Claims and Indemnification Demands Against Technology Vendors, Including Pinnacle. MTDC's initial communications with the Firm have identified potential cross-claims and contractual indemnification demands against several technology vendors whose products were deployed by MTDC in the biometric systems at issue. Among these vendors is Pinnacle Workforce Analytics, Inc. MTDC and Pinnacle are parties to a Master Software License and Services Agreement dated June 15, 2021 (the "MSL Agreement"), pursuant to which Pinnacle licensed the TruScan 360 biometric platform to MTDC for employee timekeeping and facility-access purposes. The total contract value of the MSL Agreement is $8,700,000 over five years, with an optional three-year renewal term. MTDC's General Counsel has expressed the view that Pinnacle's product was deployed in a manner that the vendor represented to be BIPA-compliant, and that Pinnacle should bear responsibility for any deficiencies in the platform's consent-management and data-handling functionalities.
(e) Employment Counseling on Workforce-Monitoring Policies. MTDC seeks ongoing advice regarding the revision of its broader workforce-monitoring and surveillance policies to ensure compliance with BIPA, the Illinois Employee Privacy Rights Act, and related federal and state privacy regulations.
MTDC's aggregate BIPA exposure has been estimated by Lakefront Actuarial Advisors, LLC (Felix Drummond, Principal, FSA, MAAA) at a range of $12,400,000 (assuming negligent violations at the statutory minimum of $1,000 per violation for each of the approximately 12,400 affected employees) to $62,000,000 (assuming intentional or reckless violations at the statutory maximum of $5,000 per violation). The Firm estimates that the proposed representation would generate fees in the range of $3,500,000 to $5,200,000 over an 18- to 24-month engagement period. Proposed hourly rates are $1,150 per hour for Rachel Bernstein (responsible partner), $785 per hour for Devon Archer (senior associate), and $625 per hour for Nadia Petrov (working associate). The billing partner would be Miriam Calloway.
The proposed engagement team consists of Rachel Bernstein (responsible partner), Miriam Calloway (billing partner), Devon Archer (lead associate), and Nadia Petrov (working associate). None of these individuals has previously worked on any Pinnacle matter, and none has had access to the Pinnacle confidential information described in Section II.A above.
C. The Conflict
The Firm's standard conflicts-clearance process identified the issue now under analysis. On May 9, 2024, contemporaneous with the opening of the new-matter intake, the Conflicts & New Business Department conducted a Round 1 conflicts search across the Firm's party databases, matter-management systems, and lateral-clearance records. The resulting Conflicts Search Report, dated May 10, 2024, and prepared by Colleen Farrow, Director, Conflicts & New Business, identified a match between Pinnacle Workforce Analytics, Inc. — an existing firm client under Matter No. 1031-00001 — and Pinnacle as one of the technology vendors against which MTDC may assert cross-claims and indemnification demands in the proposed MTDC engagement. A supplemental Round 2 search was completed on May 13, 2024, and confirmed that no additional conflicts exist beyond the Pinnacle issue identified in Round 1.
The conflict identified is dual-pronged:
First, under Illinois Rule of Professional Conduct 1.7(a)(1), the representation of MTDC would be directly adverse to the interests of an existing firm client. Pinnacle is a named responsible party in the Attorney General's CID (CID Ref. No. CRB-2024-0417), and MTDC has expressly indicated its intention to assert cross-claims and contractual indemnification demands against Pinnacle under the MSL Agreement in connection with the class action. The proposed MTDC engagement would require the Firm to take affirmative legal action against Pinnacle — an entity to which the Firm currently owes duties of loyalty and confidentiality.
Second, under Illinois Rule of Professional Conduct 1.7(a)(2), the proposed MTDC representation creates a material limitation conflict. Effective representation of MTDC in the BIPA enforcement action and class action would require the Firm to characterize TruScan 360's biometric-data collection practices — including its data-capture algorithms, consent-management architecture, and data-retention protocols — as unlawful under BIPA. At the same time, the Firm's ongoing representation of Pinnacle in the patent-enforcement action against Veritas Biometrics depends upon establishing the legitimacy, innovation, and commercial value of TruScan 360's biometric-recognition capabilities. The Firm would be required to advance fundamentally inconsistent positions regarding the same technology platform in two concurrent matters.
Companion memoranda have analyzed the conflict in detail under the applicable substantive rules. Specifically:
•  The Ethics Analysis: Illinois Rule 1.7 — Direct Adversity memorandum (prepared by Nadia Petrov, supervised by Devon Archer) concludes that a Rule 1.7(a)(1) conflict exists.
•  The Ethics Analysis: Illinois Rule 1.7(a)(2) — Material Limitation analysis within the same memorandum concludes that a Rule 1.7(a)(2) conflict also exists.
•  The Ethics Analysis: Illinois Rule 1.7(b) — Waivability Assessment memorandum (prepared by Nadia Petrov) concludes that the conflict is not subject to informed-consent waiver because the Firm cannot reasonably believe that it will be able to provide competent and diligent representation to both Pinnacle and MTDC simultaneously.
•  The Ethics Analysis: Illinois Rule 1.9 — Former-Client Considerations memorandum (prepared by Nadia Petrov) confirms that Rule 1.9 is inapplicable at present because Pinnacle remains a current — not former — client of the Firm.
The present memorandum addresses the remaining question: whether the imputation rules under Illinois Rule of Professional Conduct 1.10 offer any structural pathway — including screening, information barriers, or other prophylactic measures — to cure the conflict and permit the Firm to accept the MTDC engagement while continuing to represent Pinnacle.
III. Applicable Rule: Illinois Rule of Professional Conduct 1.10
A. Text of Rule 1.10(a) — General Imputation Principle
The general imputation provision of Illinois Rule of Professional Conduct 1.10(a) provides in full:
While lawyers are associated in a firm, none of them shall knowingly represent a client when any one of them practicing alone would be prohibited from doing so by Rules 1.7 or 1.9, unless the prohibition is based on a personal interest of the prohibited lawyer and does not present a significant risk of materially limiting the representation of the client by the remaining lawyers in the firm.
The operative principle is clear and broadly stated: the conflicts of any one lawyer in a firm are the conflicts of all lawyers in the firm, absent the narrow personal-interest exception. This vicarious-disqualification rule reflects the foundational premise that a law firm is a single entity for purposes of conflict-of-interest analysis, and that the duties of loyalty and confidentiality that any individual lawyer owes to a client are, in effect, owed by the institution as a whole.
Application to the Present Facts. Jonathan Mercer is a current partner associated with Calderwood & Harkness LLP. He has been a partner at the Firm since at least 2019 and has served as the responsible and billing partner on the Pinnacle engagement throughout. His conflict with respect to Pinnacle under Rule 1.7(a)(1) (direct adversity) and Rule 1.7(a)(2) (material limitation) — as documented in the companion memoranda — is imputed under Rule 1.10(a) to every lawyer at the Firm. This includes Rachel Bernstein, Miriam Calloway, Devon Archer, and Nadia Petrov — the attorneys who would constitute the proposed MTDC engagement team — as well as every other lawyer associated with the Firm. So long as Mercer remains a partner at Calderwood & Harkness and the Pinnacle engagement remains active, no lawyer at the Firm may undertake a representation that Mercer, practicing alone, would be prohibited from accepting under Rule 1.7.
The "Personal Interest" Exception. Rule 1.10(a) contains a single, narrow exception: imputation does not apply where "the prohibition is based on a personal interest of the prohibited lawyer and does not present a significant risk of materially limiting the representation of the client by the remaining lawyers in the firm." This exception is designed to address situations in which a lawyer is disqualified from a representation due to a personal financial interest, family relationship, or other non-client-related circumstance — for example, where a lawyer holds stock in a party adverse to a prospective client, or where a lawyer's spouse is employed by an opposing party. In such cases, the personal nature of the disqualification may not implicate the institutional duties of loyalty and confidentiality that underpin the imputation doctrine, and other lawyers in the firm may be competent to provide uncompromised representation.
The Mercer/Pinnacle conflict is not based on any personal interest of Jonathan Mercer. It arises solely from his professional duties of loyalty and confidentiality to Pinnacle, an existing firm client. Mercer's disqualification is grounded in the attorney-client relationship he maintains with Pinnacle on behalf of the Firm — the very type of institutional, client-based conflict that Rule 1.10(a) was designed to impute. Accordingly, the personal-interest exception is inapplicable.
B. Text of Rule 1.10(d) — Screening Exception (Lateral Hire Context)
Illinois Rule of Professional Conduct 1.10(d) provides:
When a lawyer becomes associated with a firm, no lawyer associated in the firm shall knowingly represent a person in a matter in which that lawyer is disqualified under Rule 1.9, unless:
(1) the personally disqualified lawyer is timely screened from any participation in the matter and is apportioned no part of the fee therefrom; and
(2) written notice is promptly given to any affected former client to enable the former client to ascertain compliance with the provisions of this Rule.
This provision establishes the sole circumstance under which the Illinois Rules of Professional Conduct authorize the use of a screening mechanism to overcome imputed disqualification. Its operative terms impose three critical limitations on its availability:
First, the screening exception applies only "[w]hen a lawyer becomes associated with a firm." This language targets the lateral-hire scenario: a lawyer who joins Calderwood & Harkness from another firm and who brings with her a conflict arising from work performed at the prior firm. The trigger is the act of becoming newly associated — not the continued association of a lawyer who has been with the firm throughout the relevant time period.
Second, the exception applies only to disqualifications arising "under Rule 1.9." Rule 1.9 governs duties to former clients — specifically, the prohibition on representing a person in the same or a substantially related matter in which the person's interests are materially adverse to the interests of a former client, or the prohibition on using information relating to the former representation to the disadvantage of the former client. The screening mechanism of Rule 1.10(d) was crafted to address the practical reality that lateral movement of attorneys between firms is a regular feature of legal practice, and that an overly rigid imputation rule would impede lawyer mobility and client choice without commensurate benefit to the former client, particularly where the risk is primarily one of inadvertent disclosure of confidential information rather than a breach of the ongoing duty of loyalty.
Third, the exception does not extend to disqualifications arising under Rule 1.7 — the rule governing concurrent-client conflicts. This omission is deliberate and significant. The Illinois Supreme Court, in adopting the Illinois Rules of Professional Conduct (effective January 1, 2010, with subsequent amendments), chose to permit screening only in the narrow context of lateral-hire, former-client conflicts. It declined to extend the screening mechanism to concurrent-client conflicts, consistent with the prevailing view among professional-responsibility authorities that the duty of undivided loyalty owed to a current client is qualitatively distinct from — and more demanding than — the residual duties owed to a former client.
C. Distinction Between Rule 1.7 and Rule 1.9 Screening
The structural distinction between Rule 1.7 and Rule 1.9 is the linchpin of the imputation analysis. Understanding why the Illinois Rules authorize screening for the latter but not the former requires a brief examination of the differing policy considerations.
Duties to Current Clients (Rule 1.7). A lawyer's duties to a current client include both the duty of loyalty and the duty of confidentiality, and these duties exist at their most robust. The duty of loyalty requires that a lawyer not act in a manner adverse to the client's interests in any matter — even a matter wholly unrelated to the subject of the representation. See Ill. R. Prof. Conduct 1.7, cmt. [6] ("Loyalty to a current client prohibits undertaking representation directly adverse to that client without that client's informed consent."). This duty is absolute in character: it cannot be segmented, compartmentalized, or assigned to specific individuals within a firm. As long as any lawyer in the firm is representing a current client, the firm as an institution owes that client undivided loyalty.
Duties to Former Clients (Rule 1.9). Once the attorney-client relationship has concluded, the duty of loyalty diminishes significantly. What remains is a narrower obligation: the duty not to use confidential information obtained during the prior representation to the former client's disadvantage, and the duty not to undertake a substantially related adverse representation where doing so would risk the misuse of such information. See Ill. R. Prof. Conduct 1.9(a), (c). These residual duties are primarily informational in character — they are concerned with protecting the confidentiality of information shared during the prior engagement, not with preserving an ongoing relationship of trust and loyalty. Because the concern is primarily informational, it is amenable to structural safeguards: a properly constructed screen can effectively isolate the personally disqualified lawyer and prevent the flow of confidential information to lawyers handling the adverse matter.
Policy Rationale for the Distinction. The Comments to the Illinois Rules and the ABA Model Rules articulate the rationale clearly. Screening may mitigate confidentiality concerns in the former-client context because the risk to be addressed is the potential for inadvertent or improper disclosure of information — a risk that can, in many cases, be effectively managed through physical and informational barriers, access restrictions, and monitoring protocols. But screening cannot address the fundamental loyalty breach inherent in concurrent adverse representation. When a firm simultaneously represents Client A and Client B, and Client B's interests are directly adverse to Client A's interests, the firm faces an institutional conflict that cannot be resolved by walling off individual lawyers. The firm as an entity is, in that moment, simultaneously acting for and against the same client — a contradiction that no amount of structural separation can reconcile.
The ABA Model Rule 1.10, Comment [3], states: "The rule in paragraph (a) does not prohibit representation where neither questions of client loyalty nor protection of confidential information are presented." The converse implication is equally clear: where client loyalty is at stake — as it always is in a Rule 1.7 concurrent-client conflict — the imputation rule applies in full force, and screening is not an available remedy.
Illinois adopted this framework without material modification. The Illinois Supreme Court's decision to limit screening to the Rule 1.9 / Rule 1.10(d) lateral-hire context reflects a deliberate policy judgment that the duty of loyalty to a current client is too fundamental, and the risk of its breach too significant, to be entrusted to a screening mechanism — however well-designed.
IV. Analysis
A. Jonathan Mercer's Status as a Current, Active Partner
The threshold inquiry under Rule 1.10(d) is whether the disqualified lawyer is one who has recently "become[] associated with" the firm — that is, a lateral hire carrying a conflict from a prior firm association. Jonathan Mercer is not a lateral hire carrying a conflict from a prior firm. He is a sitting partner of Calderwood & Harkness LLP who has been affiliated with the Firm since well before the inception of the Pinnacle relationship. Mercer has actively represented Pinnacle in patent-licensing and enforcement matters since 2019, and he has served as the responsible and billing partner on the current active matter (C&H Matter No. 1031-00001) since it was opened on March 14, 2022.
Mercer's conflict arises entirely from his ongoing, active representation of Pinnacle at this Firm. It does not arise from any work he performed at a prior firm, any information he obtained at a prior firm, or any client relationship he formed at a prior firm. The factual predicate for Rule 1.10(d) — a lawyer who "becomes associated with a firm" and brings a pre-existing disqualification — is wholly absent. Accordingly, the lateral-screening mechanism of Rule 1.10(d) is facially inapplicable on this ground alone.
This conclusion would remain unchanged even if the Firm were to transfer Mercer to another office, reassign him to a different practice group, or otherwise restructure his role within the partnership. Rule 1.10(a) imputes his conflict to all lawyers in the firm "while lawyers are associated in a firm." So long as Mercer remains a partner at Calderwood & Harkness — regardless of his geographic location, practice-group assignment, or day-to-day responsibilities — his Pinnacle conflict is imputed to every lawyer at the Firm.
B. The Conflict Is a Rule 1.7 Concurrent-Client Conflict, Not a Rule 1.9 Former-Client Conflict
Even if Mercer's status within the Firm were somehow amenable to the "becomes associated" trigger of Rule 1.10(d) — which, as explained above, it is not — the screening exception would still be unavailable because the conflict is governed by Rule 1.7, not Rule 1.9.
Pinnacle is a current client of Calderwood & Harkness LLP. The engagement under Matter No. 1031-00001 is active and ongoing. The Firm billed $2,137,500 to Pinnacle in FY 2023. The underlying litigation — Pinnacle v. Veritas Biometrics Corp., E.D. Va. Case No. 1:22-cv-01533 — remains pending before Judge [the assigned judicial officer] in the Eastern District of Virginia. Discovery is ongoing, a Markman hearing is scheduled for September 2024, and no trial date has been set. There has been no termination, withdrawal, conclusion, or other cessation of the Firm's representation of Pinnacle. Sandra Yee, Pinnacle's General Counsel, continues to communicate with Jonathan Mercer and Priya Subramaniam on a regular basis regarding litigation strategy, discovery matters, and case developments.
Because Pinnacle is a current client, the conflict is squarely governed by Rule 1.7 — the rule addressing concurrent-client conflicts — rather than Rule 1.9, which applies only to duties owed to former clients. The screening exception in Rule 1.10(d) is, by its express terms, limited to disqualifications arising under Rule 1.9. It does not extend to Rule 1.7 concurrent-client conflicts. This textual limitation is unambiguous and admits of no exception, qualification, or equitable override.
The Illinois Rules do not provide any screening mechanism — whether in Rule 1.10 or elsewhere — to overcome imputed disqualification arising from a concurrent-client conflict under Rule 1.7. The absence of such a mechanism is not an oversight or a gap in the rules; it is a deliberate design choice reflecting the policy judgments discussed in Section III.C above.
C. No "Personal Interest" Exception Applies
As noted in Section III.A, Rule 1.10(a) contains a narrow exception to imputation where "the prohibition is based on a personal interest of the prohibited lawyer and does not present a significant risk of materially limiting the representation of the client by the remaining lawyers in the firm."
This exception is inapplicable here. Jonathan Mercer's disqualification is not rooted in any personal interest — financial, familial, or otherwise — that is unique to him as an individual and separable from his professional role. His disqualification arises from his status as the lead attorney representing Pinnacle in active patent-enforcement litigation. His duties of loyalty and confidentiality to Pinnacle are professional in nature, flowing from the attorney-client relationship, not from any personal stake he holds in Pinnacle's business, stock, or affairs. There is no indication in the record — nor has anyone suggested — that Mercer holds equity in Pinnacle, has a family relationship with any Pinnacle principal, or has any personal interest that could be isolated from the institutional attorney-client relationship.
Even if one were to stretch the concept of "personal interest" beyond recognition to encompass the professional interests of a client relationship (which the rule plainly does not contemplate), the second prong of the exception would independently defeat its application. The Pinnacle conflict "present[s] a significant risk of materially limiting the representation of the client by the remaining lawyers in the firm." The remaining lawyers on the proposed MTDC team — Bernstein, Calloway, Archer, and Petrov — would be materially limited in their ability to represent MTDC zealously because the Firm, through Mercer, simultaneously owes duties to Pinnacle that are diametrically opposed to MTDC's interests with respect to TruScan 360. No reasonable construction of the personal-interest exception encompasses this scenario.
D. Structural Separation ("Ethical Wall") Would Be Insufficient
We have been asked to consider whether the Firm could accept the MTDC engagement by erecting an information barrier — sometimes referred to as an "ethical wall" or "Chinese wall" — between the Mercer/Pinnacle team and the Bernstein/MTDC team. For the reasons set forth below, such a measure would not cure the conflict under Illinois law.
(i) The Illinois Rules Do Not Authorize Screening to Cure Concurrent-Client Conflicts
The most fundamental objection to an ethical-wall approach is that the Illinois Rules of Professional Conduct simply do not authorize it in this context. As detailed in Sections III and IV.A–B above, the only screening mechanism available under the Illinois Rules is the one set forth in Rule 1.10(d), and that mechanism is limited to lateral-hire, former-client conflicts under Rule 1.9. The Illinois Supreme Court has not adopted any rule, amendment, or comment that would permit screening as a remedy for concurrent-client conflicts under Rule 1.7.
The absence of textual authorization is dispositive. Under well-established principles of professional-responsibility jurisprudence, a law firm may not rely on self-imposed structural measures — however rigorous — to override an express prohibition in the applicable rules of professional conduct. The rules define the boundaries of permissible conduct; compliance is not a matter of degree, and good-faith effort to minimize the risks associated with a conflict does not convert an impermissible conflict into a permissible one.
(ii) The Loyalty Problem Is Institutional, Not Individual
Even setting aside the textual problem, an ethical wall would fail to address the core nature of the conflict. The conflict between the Pinnacle and MTDC representations is not merely an information-management problem — it is a loyalty problem. While Jonathan Mercer remains associated with the Firm, Calderwood & Harkness as an entity owes undivided loyalty to Pinnacle. That duty is not divisible; it belongs to the institution, not to any particular lawyer. Simultaneously representing MTDC in a matter that requires the Firm to argue that Pinnacle's product violates Illinois biometric-privacy law is an institutional breach of the duty of loyalty that cannot be compartmentalized by reassigning personnel or restricting access to files.
The Illinois Rules recognize the law firm as a single unit for conflict-of-interest purposes. See Ill. R. Prof. Conduct 1.10, cmt. [1] ("A firm of lawyers is essentially one lawyer for purposes of the rules governing loyalty to the client."). An ethical wall creates an internal division within that unit, but it does not transform one firm into two. Calderwood & Harkness LLP remains a single entity, and its institutional obligations run to all of its clients simultaneously. An ethical wall may segment the flow of information, but it cannot segment the Firm's institutional identity or its institutional duties.
(iii) The Confidential Information Concern Is Compounded
The Firm possesses Pinnacle's confidential technical architecture information, source-code summaries, data-flow diagrams, and biometric-data retention policies — all of which are directly relevant to the issues that would be litigated in the MTDC BIPA defense and any cross-claims against Pinnacle. An ethical wall might reduce the risk of inadvertent disclosure of this information to the MTDC engagement team, but it would not eliminate the institutional conflict.
Moreover, the confidentiality concern operates in both directions. Effective representation of MTDC would require the development of legal theories and factual positions regarding TruScan 360's alleged BIPA violations — positions that, if known to the Pinnacle team, could be used to Pinnacle's advantage in anticipating and preparing defenses against MTDC's cross-claims and indemnification demands. The Firm would be placed in the untenable position of possessing, within a single institution, adversarial legal strategies directed by one team against a client being represented by another team.
Even the most carefully constructed ethical wall cannot eliminate the risk that information or strategic insights will migrate across the barrier through informal channels — hallway conversations, shared administrative support, firm-wide attorney meetings, financial reporting, or common access to document-management systems. And even if the wall were perfectly impermeable in practice, its existence would not address the fundamental objection: the Firm would still be simultaneously acting for and against the same client, in the same subject-matter area, regarding the same technology platform.
(iv) Reputational and Relationship Harm to the Pinnacle Engagement
Finally, from a practical standpoint, Pinnacle's reaction to learning that its own law firm is simultaneously arguing in another forum that TruScan 360's biometric capabilities are unlawful under BIPA would almost certainly be severe. The existence of an ethical wall — however robust — would not assuage Pinnacle's entirely reasonable concern that the Firm's institutional loyalty has been compromised. Sandra Yee and Gregory Harmon have reposed significant trust in Calderwood & Harkness, and particularly in Jonathan Mercer, over a multi-year relationship involving the disclosure of highly sensitive technical and strategic information. That trust would be fundamentally undermined by the knowledge that the Firm is, in another engagement, attacking the very product that the Firm has been retained to protect.
The injury to the attorney-client relationship would be real and immediate, regardless of whether any actual breach of confidentiality occurred. The ethical rules are designed to prevent precisely this kind of harm — not merely to manage its consequences after the fact.
E. Contrast with Jurisdictions Permitting Broader Screening
For the sake of completeness, we note that some jurisdictions have adopted broader screening provisions that extend beyond the lateral-hire, former-client context. For example, the ABA Model Rules of Professional Conduct, as amended in 2009, permit screening in certain circumstances for lateral-hire conflicts, and some states have explored even broader applications. Additionally, certain jurisdictions have, by rule or case law, recognized the efficacy of ethical walls in limited concurrent-conflict scenarios — typically where the matters are wholly unrelated, the clients' interests do not directly clash, and the risk of harm is minimal.
Illinois has not adopted any such expanded provisions. The Illinois Supreme Court's version of Rule 1.10, as currently in effect, limits screening to the narrow context specified in Rule 1.10(d): lateral-hire conflicts involving former-client duties under Rule 1.9. There is no Illinois rule, comment, ethics opinion, or authoritative judicial decision that extends screening to concurrent-client conflicts under Rule 1.7.
Furthermore, even in jurisdictions that have adopted broader screening rules, screening is generally not permitted where the concurrent matters are substantially related and involve the same subject matter. Here, the TruScan 360 biometric platform sits at the very center of both the Pinnacle patent-enforcement action and the proposed MTDC BIPA defense. The two matters are not merely tangentially related — they involve the identical technology, the identical data-handling practices, and fundamentally contradictory legal positions regarding the lawfulness and value of that technology. It is difficult to conceive of a set of facts less amenable to a screening solution, even under the most permissive screening regime.
V. Hypothetical: Could the Conflict Be Cured If Pinnacle Were a Former Client?
For completeness, and as addressed in greater detail in the companion memorandum on Illinois Rule 1.9, we briefly examine the hypothetical scenario in which Pinnacle becomes a former client prior to the Firm's acceptance of the MTDC engagement. This analysis is presented to demonstrate that even under a more favorable analytical framework, the Firm would be unable to accept the MTDC engagement.
The "Hot Potato" Doctrine. If the Firm were to terminate the Pinnacle engagement for the purpose of eliminating the concurrent-client conflict and then immediately accept the MTDC engagement, the so-called "hot potato" doctrine would apply. Under this widely recognized principle of legal ethics, a law firm may not drop a current client "like a hot potato" in order to convert a concurrent-client conflict (governed by the more stringent Rule 1.7) into a former-client conflict (governed by the more permissive Rule 1.9). Courts have consistently held that a firm's strategic termination of a client relationship for the purpose of circumventing Rule 1.7's prohibitions is ethically impermissible and will be treated, for conflict-of-interest purposes, as if the client remained a current client. See, e.g., Picker Int'l, Inc. v. Varian Assocs., Inc., 869 F.2d 578, 584 (Fed. Cir. 1989); Truck Ins. Exch. v. Marlowe Casualty Group, 6 Cal. App. 4th 1050, 1057 (1992). The Firm could not ethically terminate Pinnacle for the purpose of accepting MTDC, and any attempt to do so would leave the firm subject to disqualification as though the concurrent conflict still existed.
Substantial-Relationship and Confidentiality Concerns Under Rule 1.9. Even assuming, hypothetically, that the Pinnacle engagement were to conclude through some legitimate, independent means — such as the resolution of Pinnacle v. Veritas Biometrics Corp. or Pinnacle's voluntary decision to transfer its matters to another firm — the conflict analysis would shift to Rule 1.9, but the outcome would remain the same. Under Rule 1.9(a), a lawyer who has formerly represented a client in a matter shall not thereafter represent another person in the same or a substantially related matter in which that person's interests are materially adverse to the interests of the former client, unless the former client gives informed consent, confirmed in writing.
The Pinnacle patent-enforcement litigation and the proposed MTDC BIPA defense are substantially related. Both matters centrally involve the TruScan 360 biometric platform — its architecture, its data-collection methodologies, its algorithmic processes, its consent-management features, and its data-retention practices. The legal questions in the two matters are not merely tangentially connected; they are deeply intertwined. The MTDC BIPA defense would require the Firm to develop and present arguments regarding how TruScan 360 collects, processes, and stores biometric data — the very same technical issues at the heart of the Pinnacle patent-enforcement action.
Moreover, under Rule 1.9(c), the Firm possesses extensive confidential information obtained during the Pinnacle representation that is directly material to the proposed MTDC representation. The Confidential Information Inventory prepared by Priya Subramaniam catalogues this information in detail. Of particular relevance: the data-flow diagrams, biometric-data retention policies, source-code architecture summaries, and algorithm design documents in the Firm's possession would be directly useful — and potentially devastating — in support of MTDC's cross-claims and indemnification demands against Pinnacle. A lawyer could not review this information and then represent MTDC against Pinnacle without running afoul of Rule 1.9(c)'s prohibition on using confidential information to the disadvantage of a former client.
Screening Under Rule 1.10(d). In this hypothetical former-client scenario, the screening mechanism of Rule 1.10(d) would, in theory, be potentially available — but only if the personally disqualified lawyer (Mercer) were "timely screened from any participation in the matter" and received "no part of the fee therefrom," and only if written notice were promptly given to Pinnacle. Even under this more favorable analytical framework, however, screening would face formidable obstacles. Given the substantial relationship between the two matters and the breadth and sensitivity of the confidential information at issue, it is doubtful that any court or disciplinary authority would find that screening adequately protects Pinnacle's interests. Screening is most effective when the matters are only tangentially related and the risk of informational contamination is limited. Where, as here, the matters involve the identical technology platform and the Firm possesses a wealth of directly material confidential information, screening may be deemed insufficient as a matter of law.
This hypothetical analysis reinforces the conclusion reached under the current-client framework: whether analyzed under Rule 1.7 (concurrent-client) or Rule 1.9 (former-client), the Firm cannot accept the MTDC engagement while Pinnacle's interests in TruScan 360 are implicated.
VI. Conclusion
Based on the foregoing analysis, we reach the following conclusions:
1.  Imputation applies. The imputation provision of Illinois Rule of Professional Conduct 1.10(a) imputes Jonathan Mercer's Rule 1.7 conflict with respect to Pinnacle Workforce Analytics, Inc. to all lawyers at Calderwood & Harkness LLP. Every lawyer at the Firm is deemed to share Mercer's disqualification from representing any client whose interests are directly adverse to Pinnacle or whose representation would be materially limited by the Firm's concurrent obligations to Pinnacle.
2.  The screening exception is unavailable. The screening mechanism set forth in Illinois Rule 1.10(d) is unavailable for two independent and each individually dispositive reasons: (a) the conflict arises from a current partner's ongoing representation of Pinnacle at this Firm, not from a lateral hire's prior association with another firm, and therefore the "becomes associated with a firm" trigger of Rule 1.10(d) is not satisfied; and (b) the conflict is governed by Rule 1.7 (concurrent-client conflict), not Rule 1.9 (former-client conflict), and Rule 1.10(d)'s screening mechanism applies exclusively to Rule 1.9 disqualifications.
3.  No other exception under Rule 1.10 applies. The narrow "personal interest" exception in Rule 1.10(a) is inapplicable because Mercer's disqualification is based on his professional duties to an existing client, not on any personal financial, familial, or other individual interest.
4.  An ethical wall would not cure the conflict. Erecting an information barrier between the Mercer/Pinnacle team and the Bernstein/MTDC team would not cure the conflict under Illinois law. The Illinois Rules do not authorize screening for concurrent-client conflicts; the loyalty problem is institutional and cannot be compartmentalized; the confidential information concerns are compounded by the substantial relationship between the two matters; and the attorney-client relationship with Pinnacle would be irreparably harmed regardless of the screen's effectiveness.
5.  The MTDC engagement must be declined. The Firm cannot accept the proposed MTDC engagement (Matter No. 1031-00001) while continuing to represent Pinnacle (Matter No. 1031-00001). This conclusion holds whether the analysis is conducted under Rule 1.7 (current-client conflict) or, hypothetically, under Rule 1.9 (former-client conflict), and irrespective of any structural measures the Firm might consider implementing.
6.  Consistency with companion memoranda. This analysis is fully consistent with the conclusions reached in the companion memoranda on Illinois Rule 1.7(a)(1)/(a)(2) (direct adversity and material limitation), Illinois Rule 1.7(b) (waivability), and Illinois Rule 1.9 (former-client considerations). Each of these independent analyses converges on the same result: the conflict is real, it is unwaivable, it is imputed firm-wide, and it cannot be cured by screening or consent.
Recommendation. This memorandum supports the Conflicts Committee's determination that the proposed representation of Metropolitan Transit Development Corp. in connection with C&H Matter No. 1031-00001 must be declined. The Firm should promptly communicate this determination to Rachel Bernstein so that MTDC and its referring counsel, Constance Hargrove of Hargrove, Tillman & Reese LLP, may be notified and afforded the opportunity to retain alternative BIPA counsel without further delay.
We remain available to discuss this analysis in greater detail at the Conflicts Committee meeting scheduled for May 14, 2024, or at any other time convenient to the Committee.
VII. Appendices / Attachments Referenced
The following materials are referenced in this memorandum and are available in the Conflicts Committee's confidential matter file for C&H Matter No. 1031-00001:
Appendix A: Text of Illinois Rule of Professional Conduct 1.10 (full rule with official comments), as adopted by the Illinois Supreme Court and currently in effect.
Appendix B: Text of Illinois Rule of Professional Conduct 1.7 (cross-reference), including official comments on concurrent conflicts of interest, direct adversity, and material limitation.
Appendix C: Text of Illinois Rule of Professional Conduct 1.9 (cross-reference), including official comments on duties to former clients, substantial relationship, and confidential information.
Appendix D: Cross-reference to companion ethics memoranda prepared in connection with the MTDC new-matter intake:
•  Ethics Analysis: Illinois Rule 1.7 — Direct Adversity and Material Limitation (prepared by Nadia Petrov, Associate, Labor & Employment, under the supervision of Devon Archer, Associate, Labor & Employment), dated May 12, 2024.
•  Ethics Analysis: Illinois Rule 1.7(b) — Waivability Assessment (prepared by Nadia Petrov, Associate, Labor & Employment), dated May 12, 2024.
•  Ethics Analysis: Illinois Rule 1.9 — Former-Client Considerations (prepared by Nadia Petrov, Associate, Labor & Employment), dated May 13, 2024.
•  Confidential Information Inventory — Pinnacle Workforce Analytics, Inc. (prepared by Priya Subramaniam, Associate, intellectual Property / Patent Litigation, under the supervision of Jonathan Mercer, Partner, intellectual Property / Patent Litigation), dated May 11, 2024.
Appendix E: Party relationship chart (cross-reference to Conflicts Committee Meeting Agenda materials for the meeting of May 14, 2024), illustrating the relationships among Calderwood & Harkness LLP, Pinnacle Workforce Analytics, Inc., Metropolitan Transit Development Corp., Veritas Biometrics Corp., the Illinois Attorney General's Office, Kessler, Brandt & O'Neill LLP (class counsel), and other relevant parties and counsel.
This memorandum is a privileged and confidential attorney work product prepared for the sole use of the Calderwood & Harkness LLP Conflicts Committee in connection with the evaluation of the proposed MTDC engagement. It is not intended to constitute, and should not be construed as, legal advice to any client or prospective client of the Firm. Distribution outside the Conflicts Committee requires the prior written authorization of the General Counsel.

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