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PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT INTERNAL MEMORANDUM — NOT FOR EXTERNAL DISTRIBUTION

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

May 15, 2024

MEMORANDUM

CONFIDENTIALITY LEGEND: This memorandum is privileged and confidential, prepared for internal use only. It contains information protected by the attorney-client privilege and the work-product doctrine. Do not distribute outside the named recipients without prior approval of the undersigned or the General Counsel. Any unauthorized disclosure, copying, or distribution of this memorandum or the information contained herein is strictly prohibited and may constitute a violation of the firm's policies and applicable professional-responsibility rules.

I. PURPOSE OF THIS MEMORANDUM

This memorandum summarizes the outcome of the conflicts-clearance process for proposed Matter No. 1031-00001 and formally communicates the firm's decision to decline the proposed engagement with Metropolitan Transit Development Corp. ("MTDC" or "Metro Transit"). After a thorough and carefully documented review, the firm has determined that it cannot undertake the proposed MTDC representation due to an unwaivable conflict of interest arising from the firm's existing representation of Pinnacle Workforce Analytics, Inc. ("Pinnacle"), a current firm client.

The purpose of this memorandum is threefold. First, it informs the proposed engagement team — Miriam Calloway, Devon Archer, and Nadia Petrov — that the firm is formally declining the representation and that all work on the matter must cease immediately. Second, it sets forth in detail the factual and ethical basis for the declination, the applicable rules of professional conduct, and the Conflicts Committee's unanimous determination, so that the record of this decision is complete and preserved in accordance with firm policy. Third, it describes the plan for communicating the declination to MTDC, the timeline for closure of the matter in the firm's systems, and the referral of MTDC to alternative counsel with appropriate expertise to handle the underlying proceedings.

All members of the proposed engagement team are directed to review this memorandum carefully, comply with the directives set forth in Section VIII below, and direct any questions to the undersigned or to Helen Drazkowski, the firm's General Counsel.

II. BACKGROUND — THE PROPOSED MTDC ENGAGEMENT

A. The Prospective Client

Metropolitan Transit Development Corp. ("MTDC" or "Metro Transit") is a unit of local government and special-purpose transit authority established under the Illinois Local Mass Transit District Act, 70 ILCS 3610/1 et seq. MTDC is headquartered at 550 West Harrison Street, Suite 1400, Chicago, Illinois 60607. It operates an extensive multimodal public-transportation network — encompassing fixed-route bus service, commuter rail service, and Americans with Disabilities Act ("ADA") paratransit service — across Cook County and five collar counties in the greater Chicago metropolitan area. MTDC provides critical transportation infrastructure serving approximately 1.6 million daily riders.

MTDC operates with an annual operating budget of approximately $3.2 billion, funded through a combination of farebox revenue, federal formula grants distributed under the Federal Transit Administration's Urbanized Area Formula Grants Program (49 U.S.C. § 5307), a 1.0% dedicated regional sales tax, and annual appropriations from the State of Illinois. MTDC's Employer Identification Number is 36-6041928.

The following MTDC officers are relevant to this matter:

• General Counsel: Terrence Whitfield

• Chief Information Security Officer: Lucia Marchetti

• Executive Director: Darnell Okafor

MTDC's existing outside litigation counsel is Hargrove, Tillman & Reese LLP, located at 233 South Wacker Drive, Suite 5600, Chicago, Illinois 60606. The lead partner on MTDC matters at that firm is Constance Hargrove. Hargrove, Tillman & Reese referred MTDC to Calderwood & Harkness specifically because of the firm's recognized expertise in biometric-privacy litigation and Illinois Biometric Information Privacy Act ("BIPA") matters, areas in which Hargrove, Tillman & Reese does not maintain a dedicated practice.

B. Origin of the Proposed Engagement

The proposed engagement originated when Terrence Whitfield, MTDC's General Counsel, contacted Rachel Bernstein by telephone on May 6, 2024. Mr. Whitfield explained that MTDC was facing significant and time-sensitive regulatory and litigation exposure related to its deployment of a biometric workforce-management platform and that Constance Hargrove at Hargrove, Tillman & Reese LLP had specifically recommended Calderwood & Harkness and, in particular, Rachel Bernstein's Privacy & Data Security group. Mr. Whitfield indicated that the matters were urgent and that MTDC wished to retain outside counsel with substantial BIPA experience as quickly as possible.

Following the initial call, and after a preliminary assessment of the nature and scope of the proposed engagement, a new-matter intake was formally opened on May 9, 2024, and assigned Calderwood & Harkness Matter No. 1031-00001. The intake triggered the firm's standard conflicts-clearance process, as described more fully in Section III below.

C. Underlying Matters Requiring Representation

The proposed engagement would have involved the defense and counseling of MTDC in connection with two related but distinct proceedings, as well as ancillary advisory work. The underlying matters are summarized below.

1. Illinois Attorney General Civil Investigative Demand

On April 22, 2024, the Illinois Attorney General's Bureau of Civil Rights, acting through Deputy Attorney General for Civil Rights Malcolm Jeffries, issued a Civil Investigative Demand ("CID") to MTDC (Reference No. CRB-2024-0417). The CID alleges violations of two Illinois privacy statutes: (i) the Illinois Biometric Information Privacy Act ("BIPA"), 740 ILCS 14/1 et seq., and (ii) the Illinois Personal Information Protection Act ("PIPA"), 815 ILCS 530/1 et seq. The CID requires MTDC to produce extensive documentation regarding its deployment of a biometric workforce-management platform, including records of biometric-data collection, consent practices, data-retention and destruction schedules, third-party data sharing, and internal privacy policies.

The AG's CID signals the likely commencement of a formal enforcement action under BIPA. The Attorney General's office has designated outside special counsel for the matter: Ridgeway & Falk LLP, located at 401 East Adams Street, Suite 300, Springfield, Illinois 62701, with lead partner Diane Falk heading the investigative team.

2. Employee Class Action

On April 29, 2024 — one week after the issuance of the AG's CID — a putative class of approximately 12,400 current and former MTDC employees filed suit against MTDC in the Circuit Court of Cook County, Chancery Division. The case is captioned Rodriguez et al. v. Metropolitan Transit Development Corp., Case No. 2024-CH-04417. The complaint alleges violations of BIPA and related state-law privacy and employment claims arising from MTDC's collection, use, storage, and dissemination of employees' biometric identifiers and biometric information — specifically fingerprint scans, facial-geometry measurements, and iris-scan data — without obtaining the informed written consent required by BIPA § 15(b) and without adopting and making publicly available a compliant written retention and destruction policy as required by BIPA § 15(a).

Lead class counsel is Martin Kessler, with co-counsel Yolanda Brandt, both of Kessler, Brandt & O'Neill LLP, located at 120 North LaSalle Street, Suite 2200, Chicago, Illinois 60602. Kessler, Brandt & O'Neill is a well-known plaintiffs' firm with an established track record in BIPA class-action litigation.

3. The Biometric Platform at Issue

The claims in both the AG CID proceeding and the employee class action center on the same technology platform: TruScan 360, an AI-powered timekeeping and scheduling platform using fingerprint recognition, facial-geometry analysis, and iris-scan data for employee identification, time-and-attendance tracking, and workforce scheduling. TruScan 360 is the flagship product of Pinnacle Workforce Analytics, Inc. ("Pinnacle"), a technology company discussed in greater detail in Section III below.

MTDC deployed TruScan 360 pursuant to a Master Software License and Services Agreement ("MSLA") between MTDC and Pinnacle, dated June 15, 2021. The MSLA has a total contract value of $8,700,000 over a five-year initial term ($1,740,000 per year), with an optional three-year renewal period exercisable at MTDC's option. The MSLA includes provisions regarding data ownership, privacy compliance, security obligations, and indemnification — provisions that are directly relevant to the prospective cross-claims discussed below.

D. Proposed Scope of Representation

MTDC sought to retain Calderwood & Harkness to provide representation across the following categories of work:

(a) Defense of the AG CID (Reference No. CRB-2024-0417) and any anticipated BIPA enforcement action brought by the Illinois Attorney General's office;

(b) Defense of the employee class action (Rodriguez et al. v. MTDC, Cook County Case No. 2024-CH-04417), including all aspects of class certification, discovery, dispositive motions, and trial;

(c) Advice on remediation of MTDC's biometric-data practices, including revision of consent protocols, data-retention and destruction policies, vendor oversight procedures, and employee notice practices to achieve compliance with BIPA and PIPA;

(d) Potential cross-claims and indemnification proceedings against technology vendors, including — and most significantly — Pinnacle Workforce Analytics, Inc., as the developer and licensor of TruScan 360 and the party responsible for the platform's biometric-data collection architecture; and

(e) Related employment counseling concerning MTDC's workforce-monitoring policies, including review and revision of employee handbook provisions, collective bargaining agreement implications, and labor-relations considerations arising from changes to timekeeping and scheduling systems.

It is element (d) above — the potential assertion of cross-claims and indemnification demands against Pinnacle — that gives rise to the direct conflict with the firm's existing representation of Pinnacle, as analyzed in Section III.C below. However, even absent the cross-claim dimension, the broader engagement would present an insurmountable material-limitation conflict, as discussed in the same section.

E. Proposed Staffing and Fee Estimates

The proposed engagement team and rate structure were as follows:

• Responsible Partner: Rachel Bernstein, Partner, Privacy & Data Security — $1,150/hour (standard government rate)

• Billing Partner: Miriam Calloway, Partner, Healthcare & Life Sciences

• Lead Associate: Devon Archer, Associate, Labor & Employment — $785/hour

• Working Associate: Nadia Petrov, Associate, Labor & Employment — $625/hour

Based on a preliminary assessment of the scope and complexity of the two proceedings, the proposed engagement was estimated to generate total fees in the range of $3.5 million to $5.2 million over an estimated duration of 18 to 24 months, assuming the matters proceeded through class certification, substantial discovery, and either trial or settlement. This estimate did not include fees associated with any indemnification action against Pinnacle, which could have added substantially to the overall engagement value.

For context, MTDC's annual outside-counsel budget across all matters is approximately $14.8 million, as reported by Terrence Whitfield during the initial intake call.

F. MTDC's Estimated BIPA Exposure

The financial exposure facing MTDC in the employee class action is substantial. The putative class consists of approximately 12,400 current and former employees, each of whom may be entitled to statutory damages under BIPA § 15:

• Negligent violation (BIPA § 20(1)): $1,000 per violation × 12,400 class members = $12,400,000 (floor)

• Intentional or reckless violation (BIPA § 20(2)): $5,000 per violation × 12,400 class members = $62,000,000 (ceiling)

These calculations represent single-violation scenarios. Depending on the court's per-scan or per-occurrence analysis — an evolving area of BIPA jurisprudence following the Illinois Supreme Court's decision in Cothron v. White Castle System, Inc., 2023 IL 128004 — aggregate exposure could increase substantially if each biometric scan or transaction is deemed a separate violation.

MTDC has retained Lakefront Actuarial Advisors, LLC (Principal: Felix Drummond, FSA, MAAA), located at 200 East Randolph Street, Suite 1710, Chicago, Illinois 60601, to prepare an actuarial estimate of aggregate exposure across both the AG proceeding and the class action.

In addition to direct liability, the magnitude of MTDC's potential BIPA exposure carries significant ancillary consequences. Specifically, a material adverse judgment or settlement could trigger reporting obligations under MTDC's Continuing Disclosure Agreement and bond covenants with Meridian Trust National Bank (Chief Fiduciary Officer: Angela Tran), which serves as MTDC's fiscal agent and bond trustee for outstanding transit revenue bonds. Failure to timely report a material event could result in secondary liability under Securities and Exchange Commission regulations and municipal-securities rules.

III. THE CONFLICT — EXISTING REPRESENTATION OF PINNACLE WORKFORCE ANALYTICS, INC.

A. Identification of the Conflict

Upon the opening of the new-matter intake on May 9, 2024, the firm's Conflicts & New Business Department, under the direction of Colleen Farrow, Director, Conflicts & New Business, initiated a standard conflicts search (Round 1) against all parties identified in the intake questionnaire, including MTDC, its officers, the opposing parties, the technology vendors referenced in the underlying proceedings, and all known affiliated entities and individuals. The Round 1 conflicts search was completed and the results reported to the undersigned on May 10, 2024.

The Round 1 search identified an existing client match: Pinnacle Workforce Analytics, Inc., a Delaware corporation headquartered at 11900 Sunrise Valley Drive, Suite 500, Reston, Virginia 20191. Pinnacle's registered agent in Delaware is Cobalt Ridge Technologies, 1209 Orange Street, Wilmington, Delaware 19801. Pinnacle's Employer Identification Number is 54-2198437.

The following Pinnacle officers are relevant to this analysis:

• Chief Executive Officer: Gregory Harmon

• General Counsel: Sandra Yee

Pinnacle's annual revenues are approximately $485 million. The company is a privately held entity and a leading provider of AI-powered workforce-management solutions across both the public and private sectors.

Upon identification of the Pinnacle match, a supplemental conflicts search (Round 2, expanded parties) was initiated on May 13, 2024, to ensure that no additional conflicts existed with respect to any other parties or affiliates connected to the proposed MTDC engagement. The Round 2 search confirmed that no additional conflicts were identified beyond the Pinnacle issue described herein.

B. Nature of the Existing Pinnacle Engagement

Calderwood & Harkness has represented Pinnacle Workforce Analytics, Inc. since 2019 in connection with patent-licensing and enforcement matters related to TruScan 360's core biometric-recognition algorithms. The firm's intellectual Property / Patent Litigation group has served as Pinnacle's primary outside counsel for these matters, and the relationship has been continuous and active throughout this period.

The currently active Pinnacle matter is C&H Matter No. 1031-00001, opened March 14, 2022. The matter involves affirmative patent-infringement litigation brought by Pinnacle against Veritas Biometrics Corp. (CEO: Randall Cho) in the United States District Court for the Eastern District of Virginia, captioned Pinnacle Workforce Analytics, Inc. v. Veritas Biometrics Corp., Case No. 1:22-cv-01533. In that case, Pinnacle alleges that Veritas has infringed upon multiple patents covering the biometric-recognition algorithms, data-processing methods, and machine-learning techniques that form the technological core of TruScan 360. Veritas is represented by Whitmore & Sato LLP (lead partner: Akira Sato), located at 999 Waterside Drive, Suite 600, Norfolk, Virginia 23510.

The staffing on the Pinnacle matter is as follows:

• Responsible & Billing Partner: Jonathan Mercer, Partner, intellectual Property / Patent Litigation

• Lead Associate: Priya Subramaniam, Associate, intellectual Property

Calderwood & Harkness's annual billings from Pinnacle for fiscal year 2023 (actual) were $2,137,500. The Pinnacle engagement represents a significant and valued client relationship that the firm has cultivated over the past five years.

C. Why the Conflict Exists — Direct Adversity and Material Limitation

The conflict between the proposed MTDC engagement and the existing Pinnacle representation is analyzed under Illinois Rules of Professional Conduct 1.7(a)(1) and 1.7(a)(2). Both prongs of the conflict analysis are satisfied, and the conflict is therefore clear and unambiguous.

1. Direct Adversity — Illinois Rule 1.7(a)(1)

Under Illinois Rule of Professional Conduct 1.7(a)(1), a conflict of interest exists if "the representation of one client will be directly adverse to another client." The proposed MTDC engagement would place Calderwood & Harkness in a position of direct adversity to Pinnacle in at least two critical respects.

First, Pinnacle is identified as a "responsible party" in the Attorney General's Civil Investigative Demand (Reference No. CRB-2024-0417). Communications from the AG's Bureau of Civil Rights indicate that the AG may name Pinnacle as a co-respondent in any formal enforcement action. If the firm were to represent MTDC in defending the CID and any subsequent enforcement action, the firm would necessarily be operating in a proceeding in which its own existing client, Pinnacle, is a target of the same investigation and a potential co-party.

Second, and more significantly, a core element of the proposed MTDC engagement — expressly identified in the proposed scope of representation at paragraph (d) above — involves the assertion of cross-claims and indemnification demands against Pinnacle under the MSLA between MTDC and Pinnacle. MTDC's likely defense strategy in the BIPA proceedings would include shifting liability to Pinnacle as the developer, licensor, and deployer of TruScan 360 — the very platform whose biometric-data practices are alleged to violate Illinois law. Representing MTDC in asserting such cross-claims and indemnification demands would make Calderwood & Harkness directly adverse to its own existing client, Pinnacle, in active litigation. This constitutes direct adversity of the most straightforward kind.

2. Material Limitation — Illinois Rule 1.7(a)(2)

Under Illinois Rule of Professional Conduct 1.7(a)(2), a conflict of interest exists if "there is a significant risk that the representation of one or more clients will be materially limited by the lawyer's responsibilities to another client." Even if the proposed MTDC engagement could somehow be restructured to avoid the assertion of cross-claims against Pinnacle — which, as a practical matter, it could not, given that MTDC's defense strategy would necessarily involve shifting blame to its technology vendor — the engagement would still present an insurmountable material-limitation conflict.

The MTDC engagement would require the firm to argue, on behalf of MTDC, that TruScan 360's biometric-data collection, storage, and dissemination practices violated BIPA and PIPA — in essence, characterizing the platform as an unlawful surveillance tool that systematically collected and mishandled the biometric identifiers and biometric information of thousands of transit employees without proper consent, without adequate security safeguards, and without a compliant retention and destruction policy.

This legal and factual position is fundamentally and irreconcilably inconsistent with the firm's position in the Pinnacle patent-enforcement matter (Matter No. 1031-00001). In Pinnacle v. Veritas Biometrics Corp., the firm's litigation strategy depends upon establishing and defending the legitimacy, technical innovation, and commercial value of TruScan 360's biometric-recognition capabilities. The firm has presented TruScan 360 to the court, to opposing counsel, and to expert witnesses as a sophisticated, valuable, and lawful technology platform — not as an unlawful surveillance tool that violates state privacy laws.

It would be impossible for the firm to simultaneously advocate that TruScan 360 is a groundbreaking and valuable biometric technology (on behalf of Pinnacle) and that TruScan 360 is an unlawful privacy-violating surveillance system (on behalf of MTDC). These positions are diametrically opposed and cannot coexist within a single law firm's advocacy without compromising the competence and diligence owed to both clients.

3. Confidential Information

The material-limitation problem is further compounded by the firm's possession of extensive Pinnacle confidential information bearing directly on TruScan 360. In an email to the undersigned dated May 10, 2024, Jonathan Mercer confirmed that in the course of the patent-enforcement matter (Matter No. 1031-00001), the firm has received and retains the following categories of Pinnacle confidential information:

• Technical specifications for TruScan 360, including detailed descriptions of the platform's biometric-data collection methodologies, sensor hardware integration, and processing pipelines;

• Source-code architecture summaries, including high-level descriptions of the algorithms used for fingerprint matching, facial-geometry mapping, and iris-scan verification;

• Data-flow diagrams illustrating the movement of biometric data through TruScan 360's systems, including collection, processing, storage, and transmission architectures;

• Biometric-data retention policies, including Pinnacle's internal policies regarding the duration and manner of biometric-data retention and destruction;

• Algorithm design documents describing the machine-learning models and training datasets underlying TruScan 360's biometric-recognition functions; and

• Patent-prosecution correspondence, including communications with the United States Patent and Trademark Office regarding the claims, specifications, and prior-art analyses for TruScan 360-related patents.

This information is directly relevant — indeed, central — to the BIPA claims that MTDC would need to defend and, more critically, to the cross-claims and indemnification demands that MTDC would seek to assert against Pinnacle. The firm's possession of this information creates an irremediable risk that Pinnacle's confidences could be used, even inadvertently, to the detriment of Pinnacle and for the benefit of MTDC. The firm's duties of loyalty and confidentiality to Pinnacle categorically preclude this outcome.

D. Waivability Assessment

After careful analysis, the Conflicts Committee has determined that the conflict is unwaivable under Illinois Rule of Professional Conduct 1.7(b). Under that rule, a lawyer may represent a client notwithstanding a concurrent conflict of interest only if all four conditions are met:

(1) the lawyer reasonably believes that the lawyer will be able to provide competent and diligent representation to each affected client;

(2) the representation is not prohibited by law;

(3) the representation does not involve the assertion of a claim by one client against another client represented by the lawyer in the same litigation or other proceeding before a tribunal; and

(4) each affected client gives informed consent, confirmed in writing.

The conflict here fails to satisfy the first condition — and arguably fails the third as well. No reasonable lawyer could conclude that the firm is able to provide competent and diligent representation to both MTDC and Pinnacle simultaneously under these circumstances. The reasons are as follows:

• Substantial relatedness: The proposed MTDC engagement and the existing Pinnacle engagement involve the same biometric platform (TruScan 360), the same factual questions (how the platform collects, processes, stores, and disseminates biometric data), and the same underlying technology. The matters are not merely "related" in some abstract or tangential sense; they are focused on the identical product, the identical data practices, and the identical regulatory and legal framework.

• Diametrically opposed legal positions: As detailed above, the firm would be required to simultaneously characterize TruScan 360 as a valuable and lawful technology (for Pinnacle) and as an unlawful privacy-violating surveillance tool (for MTDC). These positions cannot be reconciled.

• Possession of material confidential information: The firm possesses extensive Pinnacle confidential information that is directly relevant to the MTDC claims. There is no effective mechanism to prevent the risk — or the appearance — that this information could influence the firm's work on behalf of MTDC.

Consent from both clients, even if sought and obtained, would not cure the conflict. The nature of the conflict is such that informed consent cannot eliminate the fundamental impossibility of providing competent and diligent representation to both parties. This conclusion is consistent with the weight of authority interpreting Illinois Rule 1.7(b) and its ABA Model Rule counterpart, including the guidance provided in the Illinois State Bar Association's Advisory Opinion on Professional Conduct No. 14-03 and the ABA Formal Opinion 05-436.

Additionally, screening under Illinois Rule of Professional Conduct 1.10 is not available as a remedy in this situation. The screening provisions of Rule 1.10(a)(2) apply only to conflicts arising from the association of a lawyer with a former firm — i.e., lateral-hire scenarios. Here, the conflict arises from the concurrent representation of Pinnacle by a current firm partner, Jonathan Mercer, who continues to actively represent Pinnacle in the patent-enforcement matter. Screening is not a permissible mechanism to address a concurrent conflict of this nature.

Finally, although Illinois Rule of Professional Conduct 1.9 (duties to former clients) is not directly applicable because Pinnacle is a current — not former — client, we note for completeness that even if Pinnacle were a former client, the conflict would still bar representation under Rule 1.9 due to the substantial relationship between the matters and the firm's possession of material confidential information.

IV. CONFLICTS COMMITTEE DETERMINATION

Upon identification of the conflict through the Round 1 conflicts search and completion of the preliminary analysis described in Section III above, Rachel Bernstein formally escalated the matter to the firm's Conflicts Committee, chaired by Senior Partner Lawrence Keating, on May 13, 2024. The escalation was accompanied by a draft analysis memorandum prepared by Helen Drazkowski, General Counsel, dated May 13, 2024, and supporting ethics research memoranda prepared by Nadia Petrov at the direction of the undersigned.

The Conflicts Committee convened on May 14, 2024, to consider the matter. The following individuals attended the meeting:

• Lawrence Keating, Senior Partner & Chair, Conflicts Committee

• Helen Drazkowski, General Counsel

• Colleen Farrow, Director, Conflicts & New Business

• Rachel Bernstein, Partner, Privacy & Data Security (Responsible Partner, proposed MTDC matter)

• Jonathan Mercer, Partner, intellectual Property / Patent Litigation (Responsible Partner, existing Pinnacle matter)

The Committee reviewed the following materials:

• Round 1 Conflicts Search Report (May 10, 2024)

• Round 2 Conflicts Search Report (May 13, 2024)

• Draft Conflict Analysis Memorandum prepared by Helen Drazkowski (May 13, 2024)

• Ethics Research Memoranda prepared by Nadia Petrov (two memoranda, dated May 11 and May 12, 2024, addressing Illinois Rules 1.7, 1.9, and 1.10)

• New-Matter Intake Questionnaire for Matter No. 1031-00001

• Matter Summary for Pinnacle Matter No. 1031-00001

During the meeting, Jonathan Mercer confirmed the following:

• The Pinnacle client relationship is active and ongoing, with regular work being performed on the patent-enforcement matter;

• The patent-enforcement matter (Pinnacle v. Veritas Biometrics Corp., E.D. Va. Case No. 1:22-cv-01533) involves the identical TruScan 360 platform that is at the center of the proposed MTDC engagement;

• The firm possesses substantial confidential information belonging to Pinnacle that is directly relevant to TruScan 360's biometric-data practices; and

• In his professional judgment, the concurrent representation of MTDC and Pinnacle would be untenable and would jeopardize both client relationships and the firm's ethical standing.

After thorough discussion and deliberation, the Conflicts Committee reached a unanimous determination: the conflict is unwaivable, and the proposed MTDC engagement (Matter No. 1031-00001) must be declined. The Committee concluded that the firm's obligations under Illinois Rules of Professional Conduct 1.7(a)(1) (direct adversity) and 1.7(a)(2) (material limitation), coupled with the unwaivability analysis under Rule 1.7(b), compel this result. The Committee further concluded that no curative measures — including client consent, screening, or restructuring of the scope of the engagement — could adequately address the conflict.

A formal written resolution memorializing the Committee's determination was signed by Lawrence Keating on May 14, 2024, and has been filed in the Committee's records. A copy of the signed resolution is maintained by Colleen Farrow in the Conflicts & New Business Department.

V. FINANCIAL IMPACT — FOREGONE REVENUE

The declination of the proposed MTDC engagement results in the loss of a significant revenue opportunity for the firm. The estimated foregone fees from the MTDC engagement are in the range of $3.5 million to $5.2 million over 18 to 24 months, based on the preliminary fee estimate prepared during the intake process. This estimate encompasses the defense of the AG CID, the employee class action, remediation counseling, and related employment-law advisory work. It does not include fees that might have been generated by the indemnification proceedings against Pinnacle, which could have added materially to the total engagement value.

The Conflicts Committee acknowledged the significant revenue impact of the declination during its May 14, 2024 deliberations. However, the Committee concluded — correctly and without reservation — that the firm's ethical obligations under the Illinois Rules of Professional Conduct are paramount and override financial considerations. The firm's reputation, its relationships with current clients, and its standing before the courts and regulatory authorities depend upon rigorous adherence to the rules of professional conduct. No engagement, regardless of its financial value, may be undertaken in violation of those rules.

The Committee also noted, for informational purposes, that the preservation of the Pinnacle client relationship — which generated annual billings of $2,137,500 in fiscal year 2023 — is a relevant consideration in assessing the overall financial impact of the decision. However, the Committee was careful to emphasize that the declination rests on ethical grounds rather than on a comparative revenue analysis. Even if the MTDC engagement were projected to generate substantially more revenue than the Pinnacle engagement, the ethical analysis would remain the same, and the outcome would be unchanged.

No fees were billed on Matter No. 1031-00001. No disbursements were incurred. No billable time was recorded for the Conflicts Committee's review of the matter, which was treated as an internal administrative matter with zero client charges. The firm's financial exposure from the declination is therefore limited to the foregone revenue opportunity described above.

VI. PLAN FOR COMMUNICATING THE DECLINATION TO MTDC

A. Declination Letter

Rachel Bernstein will prepare a formal declination letter addressed to Terrence Whitfield, General Counsel, Metropolitan Transit Development Corp., 550 West Harrison Street, Suite 1400, Chicago, Illinois 60607. The letter will be reviewed and approved by Helen Drazkowski, General Counsel, before it is transmitted. The review by Ms. Drazkowski is intended to ensure that the letter complies with the firm's ethical obligations and, in particular, that it does not reveal the identity of the existing client (Pinnacle), the nature of the existing engagement, or any details that could enable MTDC to infer the identity of the conflicting client. The firm's duty of confidentiality to Pinnacle requires that the declination be communicated in appropriately general terms.

The declination letter will include the following elements:

• A statement that, following completion of the firm's conflicts-clearance process, Calderwood & Harkness has identified an unwaivable conflict of interest that precludes the firm from undertaking the proposed representation;

• A statement that the conflict cannot be cured by consent, screening, or any other mechanism;

• An express confirmation that no attorney-client relationship was formed between Calderwood & Harkness and MTDC during the intake process;

• An expression of regret that the firm is unable to accept the engagement;

• An offer to facilitate referral to qualified alternative counsel with relevant BIPA and data-privacy expertise; and

• Appropriate statements regarding the confidentiality of any information provided by MTDC during the intake process.

The target date for delivery of the declination letter is May 17, 2024.

A copy of the declination letter will also be provided to Constance Hargrove at Hargrove, Tillman & Reese LLP, who originally facilitated the referral, as a professional courtesy and to ensure that MTDC's existing counsel is aware that alternative arrangements will need to be made.

B. Referral to Alternative Counsel

In conjunction with the declination, Rachel Bernstein and Devon Archer will prepare a referral memorandum identifying qualified alternative counsel with substantial BIPA expertise and no conflicts of interest that would preclude their representation of MTDC. After a preliminary review of the Chicago legal market and the known conflicts profiles of leading privacy-litigation firms, the following firms are recommended for referral:

1. Aldridge, Paulson & Cho LLP

• Address: 150 North Michigan Avenue, Suite 3500, Chicago, Illinois 60601

• Contact Partner: Victoria Aldridge, BIPA Practice Lead

• Firm profile: Aldridge, Paulson & Cho maintains one of the largest and most experienced BIPA defense practices in Illinois. Victoria Aldridge has defended multiple BIPA class actions on behalf of public-sector and private-sector clients, including several matters involving biometric timekeeping systems.

2. Northfield McKay LLP

• Address: 311 South Wacker Drive, Suite 4800, Chicago, Illinois 60606

• Contact Partner: Damien Northfield, Data-Privacy Litigation Lead

• Firm profile: Northfield McKay is a mid-size litigation boutique with a dedicated data-privacy litigation group. Damien Northfield has particular experience with Attorney General investigations and enforcement actions under BIPA and related Illinois privacy statutes, and has represented several government entities in similar proceedings.

A referral letter will be sent to Terrence Whitfield at MTDC providing the contact information and brief descriptions of each recommended firm. Additionally, Rachel Bernstein will send brief heads-up emails to Victoria Aldridge and Damien Northfield advising that MTDC may be contacting them regarding potential engagement. These heads-up emails will provide only a high-level description of the nature of the matters and will not disclose any privileged information, any information received from MTDC during the intake process, or the reason for Calderwood & Harkness's declination.

The target date for delivery of the referral letter to MTDC is May 20, 2024.

VII. RETURN OF MATERIALS

During the intake and conflicts-clearance process, the firm confirmed that no substantive client documents or confidential information were received from MTDC. The initial intake was based on publicly available information (the filed class-action complaint, the AG's CID reference number as provided by Mr. Whitfield during the intake call, and general background information about MTDC's operations) and on verbal communications during the May 6, 2024, telephone call. No engagement letter was executed, no document productions were made, and no privileged or confidential MTDC materials were transmitted to the firm.

A brief confirmation letter will be sent to Terrence Whitfield at MTDC confirming that no materials were received during the intake process and that, accordingly, no materials need to be returned. The letter will reiterate that no attorney-client relationship was formed between Calderwood & Harkness and MTDC at any point during the intake process.

VIII. DIRECTIVES TO THE ENGAGEMENT TEAM

The following directives are effective immediately upon distribution of this memorandum and apply to all members of the proposed MTDC engagement team.

A. Cessation of Work

All members of the proposed MTDC engagement team — specifically Miriam Calloway, Devon Archer, and Nadia Petrov — are directed to immediately cease any and all work related to Matter No. 1031-00001. This directive encompasses, without limitation, the following:

• No further legal research or analysis related to the MTDC matter, the AG CID, the employee class action, BIPA compliance for transit authorities, or any related topic;

• No further drafting of memoranda, briefs, correspondence, or other work product related to the matter;

• No further communications — oral, written, or electronic — with MTDC, Terrence Whitfield, Lucia Marchetti, Darnell Okafor, or any other MTDC representative or agent;

• No further communications with Constance Hargrove at Hargrove, Tillman & Reese LLP regarding the MTDC matter (Rachel Bernstein will handle any necessary communications with Ms. Hargrove); and

• No further communications with any third party regarding the matter, including opposing counsel, the Attorney General's office, or any potential expert witnesses.

B. Archiving and Confidentiality

All internal work product generated during the intake and conflicts-clearance process — including conflicts memoranda, ethics research analyses, internal correspondence, draft engagement letters, notes from telephone calls, and any other materials related to Matter No. 1031-00001 — must be archived in accordance with the firm's standard document-retention procedures.

Files related to Matter No. 1031-00001 are to be retained per Calderwood & Harkness's seven-year retention policy under the following classification:

Retention Category: Declined Engagements — Conflicts Retention Period: Seven (7) years from the date of matter closure Access Restrictions: Limited to the named recipients of this memorandum and firm leadership

All members of the proposed engagement team are reminded that they must not discuss the matter, the underlying conflict, the identity of the conflicting client, or any aspect of the Conflicts Committee's deliberations outside the named recipients of this memorandum and firm leadership. Unauthorized disclosure of this information could violate the firm's duties of confidentiality to both MTDC (as a prospective client to whom certain duties attach even in the absence of a formal engagement) and Pinnacle (as a current client whose identity and engagement details are protected).

C. Protection of Pinnacle Confidential Information

The undersigned confirms that no Pinnacle confidential information was disclosed to any member of the proposed MTDC engagement team at any point during the intake and conflicts-clearance process. The proposed engagement team (Miriam Calloway, Devon Archer, and Nadia Petrov) did not have access to, and did not review, any confidential materials belonging to Pinnacle, including but not limited to the TruScan 360 technical specifications, source-code architecture summaries, data-flow diagrams, biometric-data retention policies, algorithm design documents, or patent-prosecution correspondence referenced in Section III.C.3 above.

Jonathan Mercer's team, through Lead Associate Priya Subramaniam, has separately confirmed this through a Confidential Information Inventory memorandum, which documents that all Pinnacle confidential materials are maintained within the patent-enforcement matter files (Matter No. 1031-00001) and are subject to the firm's standard access controls for confidential client information. No cross-pollination of information occurred during the intake process for Matter No. 1031-00001.

IX. MATTER CLOSURE — NEXT STEPS AND TIMELINE

The following table sets forth the specific action items, responsible persons, and target dates for the orderly closure of Matter No. 1031-00001:

All action items are to be completed by the dates indicated above. Rachel Bernstein and Colleen Farrow will coordinate to ensure that the closure process is executed in an orderly and timely manner. Any delays or complications should be reported immediately to Rachel Bernstein and Helen Drazkowski.

X. CONCLUSION

The declination of the proposed Metropolitan Transit Development Corp. engagement is regrettable but ethically compelled. The firm cannot undertake a representation that would place it in direct conflict with a current client on a substantially related matter involving the identical technology platform — Pinnacle's TruScan 360 — at the center of both the existing and proposed engagements. The firm's obligations under Illinois Rules of Professional Conduct 1.7(a)(1) (prohibition on direct adversity to a current client), 1.7(a)(2) (prohibition on representations materially limited by duties to another client), and 1.7(b) (conditions for waiver of concurrent conflicts) are clear and unambiguous, and the conflict is not susceptible to cure by client consent, screening, engagement restructuring, or any other mechanism.

The Conflicts Committee's unanimous determination, memorialized in its written resolution dated May 14, 2024, reflects the firm's longstanding commitment to the highest standards of professional responsibility. While the foregone revenue is significant, the firm's integrity and the trust that current and prospective clients place in our adherence to ethical obligations are of far greater value.

I wish to express my sincere appreciation to the members of the proposed engagement team — Miriam Calloway, Devon Archer, and Nadia Petrov — for their preliminary work on the matter and their cooperation during the conflicts-clearance process. The team's responsiveness and professionalism throughout this process were exemplary, and I regret that the circumstances do not permit us to proceed with what would have been a significant and intellectually challenging engagement.

Any questions regarding this memorandum, the declination, the closure process, or the firm's obligations with respect to MTDC or Pinnacle should be directed to the undersigned or to Helen Drazkowski, General Counsel.

CALDERWOOD & HARKNESS LLP

By: ________

Rachel Bernstein Partner, Privacy & Data Security One North Wacker Drive, Suite 4200 Chicago, Illinois 60606

Date: May 15, 2024

PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT — This memorandum is for internal use only and may not be distributed outside the named recipients without the prior written approval of the undersigned or the General Counsel. Unauthorized distribution may result in waiver of applicable privileges.

TO:

Devon Archer, Associate, Labor & Employment (Lead Associate, proposed MTDC matter)

Nadia Petrov, Associate, Labor & Employment (Working Associate, proposed MTDC matter)

FROM:	Rachel Bernstein, Partner, Privacy & Data Security (Responsible Partner, proposed MTDC matter)
CC:	Lawrence Keating, Senior Partner & Chair, Conflicts Committee

Helen Drazkowski, General Counsel

Colleen Farrow, Director, Conflicts & New Business

RE:	Declination of Proposed Engagement — Metropolitan Transit Development Corp. (Matter No. 1031-00001) — Unwaivable Conflict of Interest
Action Item	Responsible Person	Target Date
Finalize and send declination letter to MTDC (Terrence Whitfield)	Rachel Bernstein (reviewed by Helen Drazkowski)	May 17, 2024
Prepare and circulate internal referral memorandum	Rachel Bernstein, Devon Archer	May 17, 2024
Send referral letter to MTDC (Terrence Whitfield)	Rachel Bernstein	May 20, 2024
Send heads-up emails to Victoria Aldridge (Aldridge, Paulson & Cho LLP) and Damien Northfield (Northfield McKay LLP)	Rachel Bernstein	May 20, 2024
Send return-of-materials confirmation letter to MTDC	Rachel Bernstein	May 23, 2024
Complete Matter Closure Form (C&H Form MC-1)	Rachel Bernstein, processed by Colleen Farrow	May 23, 2024
Instruct Finance Department to close Matter No. 1031-00001 (zero billings, zero disbursements)	Colleen Farrow	May 23, 2024
Update conflicts database (MTDC entered as declined prospective client; cross-reference to Pinnacle Matter No. 1031-00001)	Colleen Farrow	May 23, 2024
Prepare and file document-retention memorandum	Colleen Farrow	May 23, 2024
Notification to Jonathan Mercer confirming declination and closure; confirming that no Pinnacle confidential information was disclosed to the proposed MTDC engagement team	Colleen Farrow	May 23, 2024
Entry in Q2 2024 Quarterly Conflicts Committee Report	Colleen Farrow / Lawrence Keating	End of Q2 2024

PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT INTERNAL MEMORANDUM — NOT FOR EXTERNAL DISTRIBUTION
CALDERWOOD & HARKNESS LLP One North Wacker Drive, Suite 4200 Chicago, Illinois 60606
May 15, 2024
MEMORANDUM
CONFIDENTIALITY LEGEND: This memorandum is privileged and confidential, prepared for internal use only. It contains information protected by the attorney-client privilege and the work-product doctrine. Do not distribute outside the named recipients without prior approval of the undersigned or the General Counsel. Any unauthorized disclosure, copying, or distribution of this memorandum or the information contained herein is strictly prohibited and may constitute a violation of the firm's policies and applicable professional-responsibility rules.
I. PURPOSE OF THIS MEMORANDUM
This memorandum summarizes the outcome of the conflicts-clearance process for proposed Matter No. 1031-00001 and formally communicates the firm's decision to decline the proposed engagement with Metropolitan Transit Development Corp. ("MTDC" or "Metro Transit"). After a thorough and carefully documented review, the firm has determined that it cannot undertake the proposed MTDC representation due to an unwaivable conflict of interest arising from the firm's existing representation of Pinnacle Workforce Analytics, Inc. ("Pinnacle"), a current firm client.
The purpose of this memorandum is threefold. First, it informs the proposed engagement team — Miriam Calloway, Devon Archer, and Nadia Petrov — that the firm is formally declining the representation and that all work on the matter must cease immediately. Second, it sets forth in detail the factual and ethical basis for the declination, the applicable rules of professional conduct, and the Conflicts Committee's unanimous determination, so that the record of this decision is complete and preserved in accordance with firm policy. Third, it describes the plan for communicating the declination to MTDC, the timeline for closure of the matter in the firm's systems, and the referral of MTDC to alternative counsel with appropriate expertise to handle the underlying proceedings.
All members of the proposed engagement team are directed to review this memorandum carefully, comply with the directives set forth in Section VIII below, and direct any questions to the undersigned or to Helen Drazkowski, the firm's General Counsel.
II. BACKGROUND — THE PROPOSED MTDC ENGAGEMENT
A. The Prospective Client
Metropolitan Transit Development Corp. ("MTDC" or "Metro Transit") is a unit of local government and special-purpose transit authority established under the Illinois Local Mass Transit District Act, 70 ILCS 3610/1 et seq. MTDC is headquartered at 550 West Harrison Street, Suite 1400, Chicago, Illinois 60607. It operates an extensive multimodal public-transportation network — encompassing fixed-route bus service, commuter rail service, and Americans with Disabilities Act ("ADA") paratransit service — across Cook County and five collar counties in the greater Chicago metropolitan area. MTDC provides critical transportation infrastructure serving approximately 1.6 million daily riders.
MTDC operates with an annual operating budget of approximately $3.2 billion, funded through a combination of farebox revenue, federal formula grants distributed under the Federal Transit Administration's Urbanized Area Formula Grants Program (49 U.S.C. § 5307), a 1.0% dedicated regional sales tax, and annual appropriations from the State of Illinois. MTDC's Employer Identification Number is 36-6041928.
The following MTDC officers are relevant to this matter:
•  General Counsel: Terrence Whitfield
•  Chief Information Security Officer: Lucia Marchetti
•  Executive Director: Darnell Okafor
MTDC's existing outside litigation counsel is Hargrove, Tillman & Reese LLP, located at 233 South Wacker Drive, Suite 5600, Chicago, Illinois 60606. The lead partner on MTDC matters at that firm is Constance Hargrove. Hargrove, Tillman & Reese referred MTDC to Calderwood & Harkness specifically because of the firm's recognized expertise in biometric-privacy litigation and Illinois Biometric Information Privacy Act ("BIPA") matters, areas in which Hargrove, Tillman & Reese does not maintain a dedicated practice.
B. Origin of the Proposed Engagement
The proposed engagement originated when Terrence Whitfield, MTDC's General Counsel, contacted Rachel Bernstein by telephone on May 6, 2024. Mr. Whitfield explained that MTDC was facing significant and time-sensitive regulatory and litigation exposure related to its deployment of a biometric workforce-management platform and that Constance Hargrove at Hargrove, Tillman & Reese LLP had specifically recommended Calderwood & Harkness and, in particular, Rachel Bernstein's Privacy & Data Security group. Mr. Whitfield indicated that the matters were urgent and that MTDC wished to retain outside counsel with substantial BIPA experience as quickly as possible.
Following the initial call, and after a preliminary assessment of the nature and scope of the proposed engagement, a new-matter intake was formally opened on May 9, 2024, and assigned Calderwood & Harkness Matter No. 1031-00001. The intake triggered the firm's standard conflicts-clearance process, as described more fully in Section III below.
C. Underlying Matters Requiring Representation
The proposed engagement would have involved the defense and counseling of MTDC in connection with two related but distinct proceedings, as well as ancillary advisory work. The underlying matters are summarized below.
1. Illinois Attorney General Civil Investigative Demand
On April 22, 2024, the Illinois Attorney General's Bureau of Civil Rights, acting through Deputy Attorney General for Civil Rights Malcolm Jeffries, issued a Civil Investigative Demand ("CID") to MTDC (Reference No. CRB-2024-0417). The CID alleges violations of two Illinois privacy statutes: (i) the Illinois Biometric Information Privacy Act ("BIPA"), 740 ILCS 14/1 et seq., and (ii) the Illinois Personal Information Protection Act ("PIPA"), 815 ILCS 530/1 et seq. The CID requires MTDC to produce extensive documentation regarding its deployment of a biometric workforce-management platform, including records of biometric-data collection, consent practices, data-retention and destruction schedules, third-party data sharing, and internal privacy policies.
The AG's CID signals the likely commencement of a formal enforcement action under BIPA. The Attorney General's office has designated outside special counsel for the matter: Ridgeway & Falk LLP, located at 401 East Adams Street, Suite 300, Springfield, Illinois 62701, with lead partner Diane Falk heading the investigative team.
2. Employee Class Action
On April 29, 2024 — one week after the issuance of the AG's CID — a putative class of approximately 12,400 current and former MTDC employees filed suit against MTDC in the Circuit Court of Cook County, Chancery Division. The case is captioned Rodriguez et al. v. Metropolitan Transit Development Corp., Case No. 2024-CH-04417. The complaint alleges violations of BIPA and related state-law privacy and employment claims arising from MTDC's collection, use, storage, and dissemination of employees' biometric identifiers and biometric information — specifically fingerprint scans, facial-geometry measurements, and iris-scan data — without obtaining the informed written consent required by BIPA § 15(b) and without adopting and making publicly available a compliant written retention and destruction policy as required by BIPA § 15(a).
Lead class counsel is Martin Kessler, with co-counsel Yolanda Brandt, both of Kessler, Brandt & O'Neill LLP, located at 120 North LaSalle Street, Suite 2200, Chicago, Illinois 60602. Kessler, Brandt & O'Neill is a well-known plaintiffs' firm with an established track record in BIPA class-action litigation.
3. The Biometric Platform at Issue
The claims in both the AG CID proceeding and the employee class action center on the same technology platform: TruScan 360, an AI-powered timekeeping and scheduling platform using fingerprint recognition, facial-geometry analysis, and iris-scan data for employee identification, time-and-attendance tracking, and workforce scheduling. TruScan 360 is the flagship product of Pinnacle Workforce Analytics, Inc. ("Pinnacle"), a technology company discussed in greater detail in Section III below.
MTDC deployed TruScan 360 pursuant to a Master Software License and Services Agreement ("MSLA") between MTDC and Pinnacle, dated June 15, 2021. The MSLA has a total contract value of $8,700,000 over a five-year initial term ($1,740,000 per year), with an optional three-year renewal period exercisable at MTDC's option. The MSLA includes provisions regarding data ownership, privacy compliance, security obligations, and indemnification — provisions that are directly relevant to the prospective cross-claims discussed below.
D. Proposed Scope of Representation
MTDC sought to retain Calderwood & Harkness to provide representation across the following categories of work:
(a) Defense of the AG CID (Reference No. CRB-2024-0417) and any anticipated BIPA enforcement action brought by the Illinois Attorney General's office;
(b) Defense of the employee class action (Rodriguez et al. v. MTDC, Cook County Case No. 2024-CH-04417), including all aspects of class certification, discovery, dispositive motions, and trial;
(c) Advice on remediation of MTDC's biometric-data practices, including revision of consent protocols, data-retention and destruction policies, vendor oversight procedures, and employee notice practices to achieve compliance with BIPA and PIPA;
(d) Potential cross-claims and indemnification proceedings against technology vendors, including — and most significantly — Pinnacle Workforce Analytics, Inc., as the developer and licensor of TruScan 360 and the party responsible for the platform's biometric-data collection architecture; and
(e) Related employment counseling concerning MTDC's workforce-monitoring policies, including review and revision of employee handbook provisions, collective bargaining agreement implications, and labor-relations considerations arising from changes to timekeeping and scheduling systems.
It is element (d) above — the potential assertion of cross-claims and indemnification demands against Pinnacle — that gives rise to the direct conflict with the firm's existing representation of Pinnacle, as analyzed in Section III.C below. However, even absent the cross-claim dimension, the broader engagement would present an insurmountable material-limitation conflict, as discussed in the same section.
E. Proposed Staffing and Fee Estimates
The proposed engagement team and rate structure were as follows:
•  Responsible Partner: Rachel Bernstein, Partner, Privacy & Data Security — $1,150/hour (standard government rate)
•  Billing Partner: Miriam Calloway, Partner, Healthcare & Life Sciences
•  Lead Associate: Devon Archer, Associate, Labor & Employment — $785/hour
•  Working Associate: Nadia Petrov, Associate, Labor & Employment — $625/hour
Based on a preliminary assessment of the scope and complexity of the two proceedings, the proposed engagement was estimated to generate total fees in the range of $3.5 million to $5.2 million over an estimated duration of 18 to 24 months, assuming the matters proceeded through class certification, substantial discovery, and either trial or settlement. This estimate did not include fees associated with any indemnification action against Pinnacle, which could have added substantially to the overall engagement value.
For context, MTDC's annual outside-counsel budget across all matters is approximately $14.8 million, as reported by Terrence Whitfield during the initial intake call.
F. MTDC's Estimated BIPA Exposure
The financial exposure facing MTDC in the employee class action is substantial. The putative class consists of approximately 12,400 current and former employees, each of whom may be entitled to statutory damages under BIPA § 15:
•  Negligent violation (BIPA § 20(1)): $1,000 per violation × 12,400 class members = $12,400,000 (floor)
•  Intentional or reckless violation (BIPA § 20(2)): $5,000 per violation × 12,400 class members = $62,000,000 (ceiling)
These calculations represent single-violation scenarios. Depending on the court's per-scan or per-occurrence analysis — an evolving area of BIPA jurisprudence following the Illinois Supreme Court's decision in Cothron v. White Castle System, Inc., 2023 IL 128004 — aggregate exposure could increase substantially if each biometric scan or transaction is deemed a separate violation.
MTDC has retained Lakefront Actuarial Advisors, LLC (Principal: Felix Drummond, FSA, MAAA), located at 200 East Randolph Street, Suite 1710, Chicago, Illinois 60601, to prepare an actuarial estimate of aggregate exposure across both the AG proceeding and the class action.
In addition to direct liability, the magnitude of MTDC's potential BIPA exposure carries significant ancillary consequences. Specifically, a material adverse judgment or settlement could trigger reporting obligations under MTDC's Continuing Disclosure Agreement and bond covenants with Meridian Trust National Bank (Chief Fiduciary Officer: Angela Tran), which serves as MTDC's fiscal agent and bond trustee for outstanding transit revenue bonds. Failure to timely report a material event could result in secondary liability under Securities and Exchange Commission regulations and municipal-securities rules.
III. THE CONFLICT — EXISTING REPRESENTATION OF PINNACLE WORKFORCE ANALYTICS, INC.
A. Identification of the Conflict
Upon the opening of the new-matter intake on May 9, 2024, the firm's Conflicts & New Business Department, under the direction of Colleen Farrow, Director, Conflicts & New Business, initiated a standard conflicts search (Round 1) against all parties identified in the intake questionnaire, including MTDC, its officers, the opposing parties, the technology vendors referenced in the underlying proceedings, and all known affiliated entities and individuals. The Round 1 conflicts search was completed and the results reported to the undersigned on May 10, 2024.
The Round 1 search identified an existing client match: Pinnacle Workforce Analytics, Inc., a Delaware corporation headquartered at 11900 Sunrise Valley Drive, Suite 500, Reston, Virginia 20191. Pinnacle's registered agent in Delaware is Cobalt Ridge Technologies, 1209 Orange Street, Wilmington, Delaware 19801. Pinnacle's Employer Identification Number is 54-2198437.
The following Pinnacle officers are relevant to this analysis:
•  Chief Executive Officer: Gregory Harmon
•  General Counsel: Sandra Yee
Pinnacle's annual revenues are approximately $485 million. The company is a privately held entity and a leading provider of AI-powered workforce-management solutions across both the public and private sectors.
Upon identification of the Pinnacle match, a supplemental conflicts search (Round 2, expanded parties) was initiated on May 13, 2024, to ensure that no additional conflicts existed with respect to any other parties or affiliates connected to the proposed MTDC engagement. The Round 2 search confirmed that no additional conflicts were identified beyond the Pinnacle issue described herein.
B. Nature of the Existing Pinnacle Engagement
Calderwood & Harkness has represented Pinnacle Workforce Analytics, Inc. since 2019 in connection with patent-licensing and enforcement matters related to TruScan 360's core biometric-recognition algorithms. The firm's intellectual Property / Patent Litigation group has served as Pinnacle's primary outside counsel for these matters, and the relationship has been continuous and active throughout this period.
The currently active Pinnacle matter is C&H Matter No. 1031-00001, opened March 14, 2022. The matter involves affirmative patent-infringement litigation brought by Pinnacle against Veritas Biometrics Corp. (CEO: Randall Cho) in the United States District Court for the Eastern District of Virginia, captioned Pinnacle Workforce Analytics, Inc. v. Veritas Biometrics Corp., Case No. 1:22-cv-01533. In that case, Pinnacle alleges that Veritas has infringed upon multiple patents covering the biometric-recognition algorithms, data-processing methods, and machine-learning techniques that form the technological core of TruScan 360. Veritas is represented by Whitmore & Sato LLP (lead partner: Akira Sato), located at 999 Waterside Drive, Suite 600, Norfolk, Virginia 23510.
The staffing on the Pinnacle matter is as follows:
•  Responsible & Billing Partner: Jonathan Mercer, Partner, intellectual Property / Patent Litigation
•  Lead Associate: Priya Subramaniam, Associate, intellectual Property
Calderwood & Harkness's annual billings from Pinnacle for fiscal year 2023 (actual) were $2,137,500. The Pinnacle engagement represents a significant and valued client relationship that the firm has cultivated over the past five years.
C. Why the Conflict Exists — Direct Adversity and Material Limitation
The conflict between the proposed MTDC engagement and the existing Pinnacle representation is analyzed under Illinois Rules of Professional Conduct 1.7(a)(1) and 1.7(a)(2). Both prongs of the conflict analysis are satisfied, and the conflict is therefore clear and unambiguous.
1. Direct Adversity — Illinois Rule 1.7(a)(1)
Under Illinois Rule of Professional Conduct 1.7(a)(1), a conflict of interest exists if "the representation of one client will be directly adverse to another client." The proposed MTDC engagement would place Calderwood & Harkness in a position of direct adversity to Pinnacle in at least two critical respects.
First, Pinnacle is identified as a "responsible party" in the Attorney General's Civil Investigative Demand (Reference No. CRB-2024-0417). Communications from the AG's Bureau of Civil Rights indicate that the AG may name Pinnacle as a co-respondent in any formal enforcement action. If the firm were to represent MTDC in defending the CID and any subsequent enforcement action, the firm would necessarily be operating in a proceeding in which its own existing client, Pinnacle, is a target of the same investigation and a potential co-party.
Second, and more significantly, a core element of the proposed MTDC engagement — expressly identified in the proposed scope of representation at paragraph (d) above — involves the assertion of cross-claims and indemnification demands against Pinnacle under the MSLA between MTDC and Pinnacle. MTDC's likely defense strategy in the BIPA proceedings would include shifting liability to Pinnacle as the developer, licensor, and deployer of TruScan 360 — the very platform whose biometric-data practices are alleged to violate Illinois law. Representing MTDC in asserting such cross-claims and indemnification demands would make Calderwood & Harkness directly adverse to its own existing client, Pinnacle, in active litigation. This constitutes direct adversity of the most straightforward kind.
2. Material Limitation — Illinois Rule 1.7(a)(2)
Under Illinois Rule of Professional Conduct 1.7(a)(2), a conflict of interest exists if "there is a significant risk that the representation of one or more clients will be materially limited by the lawyer's responsibilities to another client." Even if the proposed MTDC engagement could somehow be restructured to avoid the assertion of cross-claims against Pinnacle — which, as a practical matter, it could not, given that MTDC's defense strategy would necessarily involve shifting blame to its technology vendor — the engagement would still present an insurmountable material-limitation conflict.
The MTDC engagement would require the firm to argue, on behalf of MTDC, that TruScan 360's biometric-data collection, storage, and dissemination practices violated BIPA and PIPA — in essence, characterizing the platform as an unlawful surveillance tool that systematically collected and mishandled the biometric identifiers and biometric information of thousands of transit employees without proper consent, without adequate security safeguards, and without a compliant retention and destruction policy.
This legal and factual position is fundamentally and irreconcilably inconsistent with the firm's position in the Pinnacle patent-enforcement matter (Matter No. 1031-00001). In Pinnacle v. Veritas Biometrics Corp., the firm's litigation strategy depends upon establishing and defending the legitimacy, technical innovation, and commercial value of TruScan 360's biometric-recognition capabilities. The firm has presented TruScan 360 to the court, to opposing counsel, and to expert witnesses as a sophisticated, valuable, and lawful technology platform — not as an unlawful surveillance tool that violates state privacy laws.
It would be impossible for the firm to simultaneously advocate that TruScan 360 is a groundbreaking and valuable biometric technology (on behalf of Pinnacle) and that TruScan 360 is an unlawful privacy-violating surveillance system (on behalf of MTDC). These positions are diametrically opposed and cannot coexist within a single law firm's advocacy without compromising the competence and diligence owed to both clients.
3. Confidential Information
The material-limitation problem is further compounded by the firm's possession of extensive Pinnacle confidential information bearing directly on TruScan 360. In an email to the undersigned dated May 10, 2024, Jonathan Mercer confirmed that in the course of the patent-enforcement matter (Matter No. 1031-00001), the firm has received and retains the following categories of Pinnacle confidential information:
•  Technical specifications for TruScan 360, including detailed descriptions of the platform's biometric-data collection methodologies, sensor hardware integration, and processing pipelines;
•  Source-code architecture summaries, including high-level descriptions of the algorithms used for fingerprint matching, facial-geometry mapping, and iris-scan verification;
•  Data-flow diagrams illustrating the movement of biometric data through TruScan 360's systems, including collection, processing, storage, and transmission architectures;
•  Biometric-data retention policies, including Pinnacle's internal policies regarding the duration and manner of biometric-data retention and destruction;
•  Algorithm design documents describing the machine-learning models and training datasets underlying TruScan 360's biometric-recognition functions; and
•  Patent-prosecution correspondence, including communications with the United States Patent and Trademark Office regarding the claims, specifications, and prior-art analyses for TruScan 360-related patents.
This information is directly relevant — indeed, central — to the BIPA claims that MTDC would need to defend and, more critically, to the cross-claims and indemnification demands that MTDC would seek to assert against Pinnacle. The firm's possession of this information creates an irremediable risk that Pinnacle's confidences could be used, even inadvertently, to the detriment of Pinnacle and for the benefit of MTDC. The firm's duties of loyalty and confidentiality to Pinnacle categorically preclude this outcome.
D. Waivability Assessment
After careful analysis, the Conflicts Committee has determined that the conflict is unwaivable under Illinois Rule of Professional Conduct 1.7(b). Under that rule, a lawyer may represent a client notwithstanding a concurrent conflict of interest only if all four conditions are met:
(1) the lawyer reasonably believes that the lawyer will be able to provide competent and diligent representation to each affected client;
(2) the representation is not prohibited by law;
(3) the representation does not involve the assertion of a claim by one client against another client represented by the lawyer in the same litigation or other proceeding before a tribunal; and
(4) each affected client gives informed consent, confirmed in writing.
The conflict here fails to satisfy the first condition — and arguably fails the third as well. No reasonable lawyer could conclude that the firm is able to provide competent and diligent representation to both MTDC and Pinnacle simultaneously under these circumstances. The reasons are as follows:
•  Substantial relatedness: The proposed MTDC engagement and the existing Pinnacle engagement involve the same biometric platform (TruScan 360), the same factual questions (how the platform collects, processes, stores, and disseminates biometric data), and the same underlying technology. The matters are not merely "related" in some abstract or tangential sense; they are focused on the identical product, the identical data practices, and the identical regulatory and legal framework.
•  Diametrically opposed legal positions: As detailed above, the firm would be required to simultaneously characterize TruScan 360 as a valuable and lawful technology (for Pinnacle) and as an unlawful privacy-violating surveillance tool (for MTDC). These positions cannot be reconciled.
•  Possession of material confidential information: The firm possesses extensive Pinnacle confidential information that is directly relevant to the MTDC claims. There is no effective mechanism to prevent the risk — or the appearance — that this information could influence the firm's work on behalf of MTDC.
Consent from both clients, even if sought and obtained, would not cure the conflict. The nature of the conflict is such that informed consent cannot eliminate the fundamental impossibility of providing competent and diligent representation to both parties. This conclusion is consistent with the weight of authority interpreting Illinois Rule 1.7(b) and its ABA Model Rule counterpart, including the guidance provided in the Illinois State Bar Association's Advisory Opinion on Professional Conduct No. 14-03 and the ABA Formal Opinion 05-436.
Additionally, screening under Illinois Rule of Professional Conduct 1.10 is not available as a remedy in this situation. The screening provisions of Rule 1.10(a)(2) apply only to conflicts arising from the association of a lawyer with a former firm — i.e., lateral-hire scenarios. Here, the conflict arises from the concurrent representation of Pinnacle by a current firm partner, Jonathan Mercer, who continues to actively represent Pinnacle in the patent-enforcement matter. Screening is not a permissible mechanism to address a concurrent conflict of this nature.
Finally, although Illinois Rule of Professional Conduct 1.9 (duties to former clients) is not directly applicable because Pinnacle is a current — not former — client, we note for completeness that even if Pinnacle were a former client, the conflict would still bar representation under Rule 1.9 due to the substantial relationship between the matters and the firm's possession of material confidential information.
IV. CONFLICTS COMMITTEE DETERMINATION
Upon identification of the conflict through the Round 1 conflicts search and completion of the preliminary analysis described in Section III above, Rachel Bernstein formally escalated the matter to the firm's Conflicts Committee, chaired by Senior Partner Lawrence Keating, on May 13, 2024. The escalation was accompanied by a draft analysis memorandum prepared by Helen Drazkowski, General Counsel, dated May 13, 2024, and supporting ethics research memoranda prepared by Nadia Petrov at the direction of the undersigned.
The Conflicts Committee convened on May 14, 2024, to consider the matter. The following individuals attended the meeting:
•  Lawrence Keating, Senior Partner & Chair, Conflicts Committee
•  Helen Drazkowski, General Counsel
•  Colleen Farrow, Director, Conflicts & New Business
•  Rachel Bernstein, Partner, Privacy & Data Security (Responsible Partner, proposed MTDC matter)
•  Jonathan Mercer, Partner, intellectual Property / Patent Litigation (Responsible Partner, existing Pinnacle matter)
The Committee reviewed the following materials:
•  Round 1 Conflicts Search Report (May 10, 2024)
•  Round 2 Conflicts Search Report (May 13, 2024)
•  Draft Conflict Analysis Memorandum prepared by Helen Drazkowski (May 13, 2024)
•  Ethics Research Memoranda prepared by Nadia Petrov (two memoranda, dated May 11 and May 12, 2024, addressing Illinois Rules 1.7, 1.9, and 1.10)
•  New-Matter Intake Questionnaire for Matter No. 1031-00001
•  Matter Summary for Pinnacle Matter No. 1031-00001
During the meeting, Jonathan Mercer confirmed the following:
•  The Pinnacle client relationship is active and ongoing, with regular work being performed on the patent-enforcement matter;
•  The patent-enforcement matter (Pinnacle v. Veritas Biometrics Corp., E.D. Va. Case No. 1:22-cv-01533) involves the identical TruScan 360 platform that is at the center of the proposed MTDC engagement;
•  The firm possesses substantial confidential information belonging to Pinnacle that is directly relevant to TruScan 360's biometric-data practices; and
•  In his professional judgment, the concurrent representation of MTDC and Pinnacle would be untenable and would jeopardize both client relationships and the firm's ethical standing.
After thorough discussion and deliberation, the Conflicts Committee reached a unanimous determination: the conflict is unwaivable, and the proposed MTDC engagement (Matter No. 1031-00001) must be declined. The Committee concluded that the firm's obligations under Illinois Rules of Professional Conduct 1.7(a)(1) (direct adversity) and 1.7(a)(2) (material limitation), coupled with the unwaivability analysis under Rule 1.7(b), compel this result. The Committee further concluded that no curative measures — including client consent, screening, or restructuring of the scope of the engagement — could adequately address the conflict.
A formal written resolution memorializing the Committee's determination was signed by Lawrence Keating on May 14, 2024, and has been filed in the Committee's records. A copy of the signed resolution is maintained by Colleen Farrow in the Conflicts & New Business Department.
V. FINANCIAL IMPACT — FOREGONE REVENUE
The declination of the proposed MTDC engagement results in the loss of a significant revenue opportunity for the firm. The estimated foregone fees from the MTDC engagement are in the range of $3.5 million to $5.2 million over 18 to 24 months, based on the preliminary fee estimate prepared during the intake process. This estimate encompasses the defense of the AG CID, the employee class action, remediation counseling, and related employment-law advisory work. It does not include fees that might have been generated by the indemnification proceedings against Pinnacle, which could have added materially to the total engagement value.
The Conflicts Committee acknowledged the significant revenue impact of the declination during its May 14, 2024 deliberations. However, the Committee concluded — correctly and without reservation — that the firm's ethical obligations under the Illinois Rules of Professional Conduct are paramount and override financial considerations. The firm's reputation, its relationships with current clients, and its standing before the courts and regulatory authorities depend upon rigorous adherence to the rules of professional conduct. No engagement, regardless of its financial value, may be undertaken in violation of those rules.
The Committee also noted, for informational purposes, that the preservation of the Pinnacle client relationship — which generated annual billings of $2,137,500 in fiscal year 2023 — is a relevant consideration in assessing the overall financial impact of the decision. However, the Committee was careful to emphasize that the declination rests on ethical grounds rather than on a comparative revenue analysis. Even if the MTDC engagement were projected to generate substantially more revenue than the Pinnacle engagement, the ethical analysis would remain the same, and the outcome would be unchanged.
No fees were billed on Matter No. 1031-00001. No disbursements were incurred. No billable time was recorded for the Conflicts Committee's review of the matter, which was treated as an internal administrative matter with zero client charges. The firm's financial exposure from the declination is therefore limited to the foregone revenue opportunity described above.
VI. PLAN FOR COMMUNICATING THE DECLINATION TO MTDC
A. Declination Letter
Rachel Bernstein will prepare a formal declination letter addressed to Terrence Whitfield, General Counsel, Metropolitan Transit Development Corp., 550 West Harrison Street, Suite 1400, Chicago, Illinois 60607. The letter will be reviewed and approved by Helen Drazkowski, General Counsel, before it is transmitted. The review by Ms. Drazkowski is intended to ensure that the letter complies with the firm's ethical obligations and, in particular, that it does not reveal the identity of the existing client (Pinnacle), the nature of the existing engagement, or any details that could enable MTDC to infer the identity of the conflicting client. The firm's duty of confidentiality to Pinnacle requires that the declination be communicated in appropriately general terms.
The declination letter will include the following elements:
•  A statement that, following completion of the firm's conflicts-clearance process, Calderwood & Harkness has identified an unwaivable conflict of interest that precludes the firm from undertaking the proposed representation;
•  A statement that the conflict cannot be cured by consent, screening, or any other mechanism;
•  An express confirmation that no attorney-client relationship was formed between Calderwood & Harkness and MTDC during the intake process;
•  An expression of regret that the firm is unable to accept the engagement;
•  An offer to facilitate referral to qualified alternative counsel with relevant BIPA and data-privacy expertise; and
•  Appropriate statements regarding the confidentiality of any information provided by MTDC during the intake process.
The target date for delivery of the declination letter is May 17, 2024.
A copy of the declination letter will also be provided to Constance Hargrove at Hargrove, Tillman & Reese LLP, who originally facilitated the referral, as a professional courtesy and to ensure that MTDC's existing counsel is aware that alternative arrangements will need to be made.
B. Referral to Alternative Counsel
In conjunction with the declination, Rachel Bernstein and Devon Archer will prepare a referral memorandum identifying qualified alternative counsel with substantial BIPA expertise and no conflicts of interest that would preclude their representation of MTDC. After a preliminary review of the Chicago legal market and the known conflicts profiles of leading privacy-litigation firms, the following firms are recommended for referral:
1. Aldridge, Paulson & Cho LLP
•  Address: 150 North Michigan Avenue, Suite 3500, Chicago, Illinois 60601
•  Contact Partner: Victoria Aldridge, BIPA Practice Lead
•  Firm profile: Aldridge, Paulson & Cho maintains one of the largest and most experienced BIPA defense practices in Illinois. Victoria Aldridge has defended multiple BIPA class actions on behalf of public-sector and private-sector clients, including several matters involving biometric timekeeping systems.
2. Northfield McKay LLP
•  Address: 311 South Wacker Drive, Suite 4800, Chicago, Illinois 60606
•  Contact Partner: Damien Northfield, Data-Privacy Litigation Lead
•  Firm profile: Northfield McKay is a mid-size litigation boutique with a dedicated data-privacy litigation group. Damien Northfield has particular experience with Attorney General investigations and enforcement actions under BIPA and related Illinois privacy statutes, and has represented several government entities in similar proceedings.
A referral letter will be sent to Terrence Whitfield at MTDC providing the contact information and brief descriptions of each recommended firm. Additionally, Rachel Bernstein will send brief heads-up emails to Victoria Aldridge and Damien Northfield advising that MTDC may be contacting them regarding potential engagement. These heads-up emails will provide only a high-level description of the nature of the matters and will not disclose any privileged information, any information received from MTDC during the intake process, or the reason for Calderwood & Harkness's declination.
The target date for delivery of the referral letter to MTDC is May 20, 2024.
VII. RETURN OF MATERIALS
During the intake and conflicts-clearance process, the firm confirmed that no substantive client documents or confidential information were received from MTDC. The initial intake was based on publicly available information (the filed class-action complaint, the AG's CID reference number as provided by Mr. Whitfield during the intake call, and general background information about MTDC's operations) and on verbal communications during the May 6, 2024, telephone call. No engagement letter was executed, no document productions were made, and no privileged or confidential MTDC materials were transmitted to the firm.
A brief confirmation letter will be sent to Terrence Whitfield at MTDC confirming that no materials were received during the intake process and that, accordingly, no materials need to be returned. The letter will reiterate that no attorney-client relationship was formed between Calderwood & Harkness and MTDC at any point during the intake process.
VIII. DIRECTIVES TO THE ENGAGEMENT TEAM
The following directives are effective immediately upon distribution of this memorandum and apply to all members of the proposed MTDC engagement team.
A. Cessation of Work
All members of the proposed MTDC engagement team — specifically Miriam Calloway, Devon Archer, and Nadia Petrov — are directed to immediately cease any and all work related to Matter No. 1031-00001. This directive encompasses, without limitation, the following:
•  No further legal research or analysis related to the MTDC matter, the AG CID, the employee class action, BIPA compliance for transit authorities, or any related topic;
•  No further drafting of memoranda, briefs, correspondence, or other work product related to the matter;
•  No further communications — oral, written, or electronic — with MTDC, Terrence Whitfield, Lucia Marchetti, Darnell Okafor, or any other MTDC representative or agent;
•  No further communications with Constance Hargrove at Hargrove, Tillman & Reese LLP regarding the MTDC matter (Rachel Bernstein will handle any necessary communications with Ms. Hargrove); and
•  No further communications with any third party regarding the matter, including opposing counsel, the Attorney General's office, or any potential expert witnesses.
B. Archiving and Confidentiality
All internal work product generated during the intake and conflicts-clearance process — including conflicts memoranda, ethics research analyses, internal correspondence, draft engagement letters, notes from telephone calls, and any other materials related to Matter No. 1031-00001 — must be archived in accordance with the firm's standard document-retention procedures.
Files related to Matter No. 1031-00001 are to be retained per Calderwood & Harkness's seven-year retention policy under the following classification:
Retention Category: Declined Engagements — Conflicts Retention Period: Seven (7) years from the date of matter closure Access Restrictions: Limited to the named recipients of this memorandum and firm leadership
All members of the proposed engagement team are reminded that they must not discuss the matter, the underlying conflict, the identity of the conflicting client, or any aspect of the Conflicts Committee's deliberations outside the named recipients of this memorandum and firm leadership. Unauthorized disclosure of this information could violate the firm's duties of confidentiality to both MTDC (as a prospective client to whom certain duties attach even in the absence of a formal engagement) and Pinnacle (as a current client whose identity and engagement details are protected).
C. Protection of Pinnacle Confidential Information
The undersigned confirms that no Pinnacle confidential information was disclosed to any member of the proposed MTDC engagement team at any point during the intake and conflicts-clearance process. The proposed engagement team (Miriam Calloway, Devon Archer, and Nadia Petrov) did not have access to, and did not review, any confidential materials belonging to Pinnacle, including but not limited to the TruScan 360 technical specifications, source-code architecture summaries, data-flow diagrams, biometric-data retention policies, algorithm design documents, or patent-prosecution correspondence referenced in Section III.C.3 above.
Jonathan Mercer's team, through Lead Associate Priya Subramaniam, has separately confirmed this through a Confidential Information Inventory memorandum, which documents that all Pinnacle confidential materials are maintained within the patent-enforcement matter files (Matter No. 1031-00001) and are subject to the firm's standard access controls for confidential client information. No cross-pollination of information occurred during the intake process for Matter No. 1031-00001.
IX. MATTER CLOSURE — NEXT STEPS AND TIMELINE
The following table sets forth the specific action items, responsible persons, and target dates for the orderly closure of Matter No. 1031-00001:
All action items are to be completed by the dates indicated above. Rachel Bernstein and Colleen Farrow will coordinate to ensure that the closure process is executed in an orderly and timely manner. Any delays or complications should be reported immediately to Rachel Bernstein and Helen Drazkowski.
X. CONCLUSION
The declination of the proposed Metropolitan Transit Development Corp. engagement is regrettable but ethically compelled. The firm cannot undertake a representation that would place it in direct conflict with a current client on a substantially related matter involving the identical technology platform — Pinnacle's TruScan 360 — at the center of both the existing and proposed engagements. The firm's obligations under Illinois Rules of Professional Conduct 1.7(a)(1) (prohibition on direct adversity to a current client), 1.7(a)(2) (prohibition on representations materially limited by duties to another client), and 1.7(b) (conditions for waiver of concurrent conflicts) are clear and unambiguous, and the conflict is not susceptible to cure by client consent, screening, engagement restructuring, or any other mechanism.
The Conflicts Committee's unanimous determination, memorialized in its written resolution dated May 14, 2024, reflects the firm's longstanding commitment to the highest standards of professional responsibility. While the foregone revenue is significant, the firm's integrity and the trust that current and prospective clients place in our adherence to ethical obligations are of far greater value.
I wish to express my sincere appreciation to the members of the proposed engagement team — Miriam Calloway, Devon Archer, and Nadia Petrov — for their preliminary work on the matter and their cooperation during the conflicts-clearance process. The team's responsiveness and professionalism throughout this process were exemplary, and I regret that the circumstances do not permit us to proceed with what would have been a significant and intellectually challenging engagement.
Any questions regarding this memorandum, the declination, the closure process, or the firm's obligations with respect to MTDC or Pinnacle should be directed to the undersigned or to Helen Drazkowski, General Counsel.
CALDERWOOD & HARKNESS LLP
By: ________
Rachel Bernstein Partner, Privacy & Data Security One North Wacker Drive, Suite 4200 Chicago, Illinois 60606
Date: May 15, 2024
PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT — This memorandum is for internal use only and may not be distributed outside the named recipients without the prior written approval of the undersigned or the General Counsel. Unauthorized distribution may result in waiver of applicable privileges.
TO: | Miriam Calloway, Partner, Healthcare & Life Sciences (Billing Partner, proposed MTDC matter)
Devon Archer, Associate, Labor & Employment (Lead Associate, proposed MTDC matter)
Nadia Petrov, Associate, Labor & Employment (Working Associate, proposed MTDC matter)
FROM: | Rachel Bernstein, Partner, Privacy & Data Security (Responsible Partner, proposed MTDC matter)
CC: | Lawrence Keating, Senior Partner & Chair, Conflicts Committee
Helen Drazkowski, General Counsel
Colleen Farrow, Director, Conflicts & New Business
RE: | Declination of Proposed Engagement — Metropolitan Transit Development Corp. (Matter No. 1031-00001) — Unwaivable Conflict of Interest
Action Item | Responsible Person | Target Date
Finalize and send declination letter to MTDC (Terrence Whitfield) | Rachel Bernstein (reviewed by Helen Drazkowski) | May 17, 2024
Prepare and circulate internal referral memorandum | Rachel Bernstein, Devon Archer | May 17, 2024
Send referral letter to MTDC (Terrence Whitfield) | Rachel Bernstein | May 20, 2024
Send heads-up emails to Victoria Aldridge (Aldridge, Paulson & Cho LLP) and Damien Northfield (Northfield McKay LLP) | Rachel Bernstein | May 20, 2024
Send return-of-materials confirmation letter to MTDC | Rachel Bernstein | May 23, 2024
Complete Matter Closure Form (C&H Form MC-1) | Rachel Bernstein, processed by Colleen Farrow | May 23, 2024
Instruct Finance Department to close Matter No. 1031-00001 (zero billings, zero disbursements) | Colleen Farrow | May 23, 2024
Update conflicts database (MTDC entered as declined prospective client; cross-reference to Pinnacle Matter No. 1031-00001) | Colleen Farrow | May 23, 2024
Prepare and file document-retention memorandum | Colleen Farrow | May 23, 2024
Notification to Jonathan Mercer confirming declination and closure; confirming that no Pinnacle confidential information was disclosed to the proposed MTDC engagement team | Colleen Farrow | May 23, 2024
Entry in Q2 2024 Quarterly Conflicts Committee Report | Colleen Farrow / Lawrence Keating | End of Q2 2024

PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT INTERNAL MEMORANDUM — NOT FOR EXTERNAL DISTRIBUTION

MEMORANDUM

I. PURPOSE OF THIS MEMORANDUM

IV. CONFLICTS COMMITTEE DETERMINATION

VI. PLAN FOR COMMUNICATING THE DECLINATION TO MTDC

VII. RETURN OF MATERIALS

VIII. DIRECTIVES TO THE ENGAGEMENT TEAM

X. CONCLUSION

CALDERWOOD & HARKNESS LLP

Record

Parties

Dates

Amounts