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PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT — FOR MANAGEMENT COMMITTEE DISTRIBUTION ONLY

CALDERWOOD & HARKNESS LLP

Conflicts Committee Quarterly Report

Q2 2024

April 1, 2024 – June 30, 2024

Date of Report: July 12, 2024

Prepared by: Lawrence Keating, Senior Partner, Chair, Conflicts Committee, with the assistance of Colleen Farrow, Director, Conflicts & New Business

Distribution: Calderwood & Harkness LLP Management Committee (Restricted)

Report Period: Q2 2024 (April 1, 2024 – June 30, 2024)

Classification: This report, including all attachments and referenced memoranda, constitutes privileged and confidential attorney work product prepared in connection with the professional responsibility functions of Calderwood & Harkness LLP. This document is intended solely for the members of the Management Committee. Any further distribution, reproduction, or disclosure of this report or any portion thereof requires the prior written approval of the Conflicts Committee Chair. Receipt of this document by any person not identified on the restricted distribution list does not constitute waiver of any applicable privilege or protection.

I. EXECUTIVE SUMMARY OF Q2 2024 CONFLICTS ACTIVITY

During Q2 2024, the Conflicts Committee reviewed a total of 347 new-matter intake submissions. Of that number, 312 were cleared without issue following completion of standard conflicts searches and review procedures, 27 required enhanced review or conditional clearance (including the imposition of engagement conditions such as ethical screens, advance waivers, limited-scope carve-outs, or client-consent protocols), and 8 resulted in formal declination of the proposed engagement. These figures are consistent with the volume and disposition ratios observed in the preceding two quarters and reflect the continued effectiveness of the firm's early-identification protocols.

Of the eight declinations during the quarter, seven involved matters of routine scope where the estimated foregone fees were modest and the conflicts were resolved through standard intake procedures without the need for Committee-level escalation beyond the initial review. One declination, however, involved a proposed engagement of significant scope, with estimated foregone fees in the range of $3.5 million to $5.2 million over a projected 18- to 24-month engagement period. This matter is described in detail in Section II below and is brought to the Management Committee's attention as a matter of particular note, both because of the magnitude of the foregone revenue and because of the nature of the underlying conflict and the firm's existing client relationship that gave rise to the declination.

The Conflicts Committee operated throughout Q2 2024 with its standing composition. The Committee was chaired by the undersigned, Lawrence Keating, Senior Partner and Chair, Conflicts Committee. Standing members included Helen Drazkowski, General Counsel, and Colleen Farrow, Director, Conflicts & New Business. In addition, consistent with the Committee's charter, affected engagement partners participated in Committee deliberations on a matter-specific basis as required by the circumstances of individual matters under review. No changes to the Committee's composition occurred during the quarter.

The balance of the Q2 2024 matters reviewed by the Committee is summarized in the full report. This excerpt addresses only the significant declination referenced above and provides the Management Committee with a comprehensive record of the intake, conflicts review, ethical analysis, declination, referral, and administrative closure of that matter.

II. MATTER OF NOTE: DECLINED ENGAGEMENT — MATTER NO. 1031-00001

A. Matter Identification

The following information identifies the proposed engagement and the individuals and entities involved in the intake and conflicts review process:

C&H Matter No.: 1031-00001

Prospective Client: Metropolitan Transit Development Corp. ("MTDC"), a unit of local government and special-purpose transit authority organized under the Illinois Local Mass Transit District Act (70 ILCS 3610/1 et seq.), headquartered at 550 West Harrison Street, Suite 1400, Chicago, IL 60607.

Prospective Client General Counsel: Terrence Whitfield, General Counsel, Metropolitan Transit Development Corp.

Originating Office: Calderwood & Harkness LLP, Chicago Office, One North Wacker Drive, Suite 4200, Chicago, IL 60606.

Responsible Partner (Proposed): Rachel Bernstein, Partner, Privacy & Data Security Practice Group.

Billing Partner (Proposed): Miriam Calloway, Partner, Healthcare & Life Sciences Practice Group.

Proposed Lead Associate: Devon Archer, Associate, Labor & Employment Practice Group.

Proposed Working Associate: Nadia Petrov, Associate, Labor & Employment Practice Group.

Referral Source: Hargrove, Tillman & Reese LLP (Constance Hargrove, Partner), which serves as MTDC's existing outside litigation counsel and referred MTDC to Calderwood & Harkness for specialized expertise in data-privacy and biometric-law matters.

The proposed engagement was originated by Rachel Bernstein following initial contact from MTDC's General Counsel, Terrence Whitfield, who was directed to Ms. Bernstein by Constance Hargrove of Hargrove, Tillman & Reese LLP. Ms. Hargrove's firm has served as MTDC's primary outside litigation counsel for approximately seven years and referred the matter to Calderwood & Harkness due to the specialized nature of the biometric-privacy issues involved.

B. Prospective Client Background

Metropolitan Transit Development Corp. is one of the largest regional transit authorities in the Midwest and provides essential public transportation services across the greater Chicago metropolitan area. A summary of relevant organizational and financial background follows:

Operations: MTDC operates bus, commuter rail, and paratransit services across Cook County and the five collar counties of DuPage, Kane, Lake, McHenry, and Will. MTDC's service network encompasses approximately 1,850 route miles and serves approximately 1.6 million daily riders during peak-period operations.

Annual Operating Budget: Approximately $3.2 billion, funded through a combination of farebox revenue, federal formula grants (primarily under 49 U.S.C. § 5307 and § 5337), a dedicated 1.0% regional sales tax authorized under the Regional Transportation Authority Act, and State of Illinois general-fund appropriations.

Annual Outside-Counsel Budget: Approximately $14.8 million, as reported by Terrence Whitfield during the initial intake discussions with Rachel Bernstein. This figure encompasses litigation, regulatory, transactional, labor-relations, and specialized advisory engagements across multiple outside law firms.

Chief Information Security Officer: Lucia Marchetti, CISO, Metropolitan Transit Development Corp.

Executive Director: Darnell Okafor, Executive Director, Metropolitan Transit Development Corp.

MTDC's organizational structure, scale of operations, and public funding profile are noted here because they bear on the significance of the proposed engagement and the potential reputational and financial implications of the underlying biometric-privacy dispute for both MTDC and the other parties involved.

C. Proposed Engagement Scope

MTDC sought to retain Calderwood & Harkness LLP to provide comprehensive legal representation and advisory services in connection with a series of related matters arising from MTDC's deployment of a biometric workforce-management platform. The proposed scope of the engagement encompassed the following principal components:

1. Defense of Civil Investigative Demand. MTDC received a Civil Investigative Demand ("CID") issued by the Illinois Attorney General's Bureau of Civil Rights on April 22, 2024 (Reference No. CRB-2024-0417). The CID alleges potential violations of the Illinois Biometric Information Privacy Act ("BIPA"), 740 ILCS 14/1 et seq., and the Illinois Personal Information Protection Act ("PIPA"), 815 ILCS 530/1 et seq., in connection with MTDC's deployment of a biometric workforce-management platform used for employee timekeeping, access control, and identity verification. The CID requires the production of extensive documentary and electronically stored information and responses to interrogatories covering a period from January 2020 to the present.

The AG's investigation is led by Deputy Attorney General for Civil Rights Malcolm Jeffries, who has designated outside special counsel for the matter: Ridgeway & Falk LLP (Diane Falk, Partner), located in Springfield, Illinois. The involvement of outside special counsel suggests that the AG's office views the matter as one of significant public interest and potential enforcement priority.

2. Defense of Putative Employee Class Action. On April 29, 2024 — one week after the issuance of the AG's CID — a putative employee class action was filed in the Circuit Court of Cook County, Chancery Division (Case No. 2024-CH-04417). The action was brought on behalf of a class of approximately 12,400 current and former MTDC employees who were subject to biometric data collection through the workforce-management platform at issue. Plaintiffs' class counsel is the firm of Kessler, Brandt & O'Neill LLP, with Martin Kessler serving as lead class counsel and Yolanda Brandt serving as co-counsel, at 120 North LaSalle Street, Suite 2200, Chicago, IL 60602.

The class complaint asserts claims under BIPA Section 15(a) (failure to develop and publicly disclose a written biometric information retention and destruction policy), Section 15(b) (collection of biometric data without informed consent), and Section 15(d) (failure to implement reasonable security measures). The complaint seeks statutory damages under BIPA Section 20, injunctive relief, and attorneys' fees.

3. Biometric-Data Remediation Advisory. MTDC sought advice on the remediation of its biometric-data practices to bring its workforce-management operations into compliance with BIPA and PIPA, including revisions to consent protocols, data-retention schedules, vendor-management procedures, and employee-notification practices.

4. Cross-Claims and Vendor Indemnification. MTDC anticipated asserting cross-claims and indemnification demands against the technology vendor whose biometric workforce-management platform was deployed, based on the indemnification, warranty, and compliance provisions of the Master Software License and Services Agreement between MTDC and the vendor. The proposed engagement scope contemplated investigation, preparation, and prosecution of such claims.

5. Related Employment Counseling. MTDC also sought related employment counseling concerning the revision of workforce-monitoring policies implicated by the biometric platform deployment, including issues at the intersection of BIPA, the Illinois Employee Credit Privacy Act, and federal labor-law considerations arising from MTDC's collective-bargaining obligations with multiple labor organizations.

The engagement was anticipated to be complex, multi-faceted, and of extended duration, with an estimated active period of 18 to 24 months.

D. Financial Parameters of Proposed Engagement

The following financial parameters were discussed during the intake process and are summarized here for the Management Committee's reference:

Estimated Fees: $3.5 million to $5.2 million over an 18- to 24-month engagement period, based on the anticipated scope of work across all five engagement components described above. The fee estimate was prepared by Rachel Bernstein in consultation with Miriam Calloway and is consistent with the firm's experience in comparable biometric-privacy defense and regulatory-investigation matters.

Proposed Hourly Rates:

• Partner (Rachel Bernstein): $1,150 per hour (the firm's standard discounted rate for government and quasi-governmental clients)

• Senior Associate (Devon Archer): $785 per hour

• Junior Associate (Nadia Petrov): $625 per hour

Additional rate schedules for specialists in other practice groups (e.g., intellectual Property, Government Contracts) who might have been engaged on discrete components of the work were not finalized prior to the conflicts declination.

Prospective Client's BIPA Exposure. MTDC's estimated aggregate BIPA exposure, as analyzed by MTDC's consulting actuary, Lakefront Actuarial Advisors, LLC (Felix Drummond, FSA, MAAA), ranges from a floor of approximately $12.4 million (calculated on the basis of 12,400 class members multiplied by the $1,000 per-violation statutory damages floor for negligent violations under BIPA Section 20(1)) to a ceiling of approximately $62.0 million (calculated on the basis of 12,400 class members multiplied by the $5,000 per-violation statutory damages ceiling for intentional or reckless violations under BIPA Section 20(2)). The actuarial exposure analysis is referenced here solely for context regarding the significance of the matter to MTDC.

Bond and Disclosure Implications. MTDC's fiscal agent and bond trustee, Meridian Trust National Bank (Angela Tran, Chief Fiduciary Officer), has been notified by MTDC that the potential for material BIPA liability could trigger reporting obligations under MTDC's Continuing Disclosure Agreement (filed pursuant to SEC Rule 15c2-12) and certain financial and negative covenants contained in MTDC's outstanding bond indentures. This adds an additional dimension of financial and regulatory complexity to MTDC's overall situation and underscores the significance of the matter from the prospective client's perspective.

E. Timeline of Intake and Conflicts Review

The following table summarizes the chronological sequence of events from initial client contact through formal closure of the matter in the firm's systems:

The total elapsed time from initial intake to formal closure was seventeen days (May 6 through May 23, 2024), which reflects the urgency with which the Conflicts Committee addressed the matter given the significance of the proposed engagement and the need to enable MTDC to promptly identify and retain alternative counsel.

F. Nature of the Conflict — Summary (Redacted for Broader Distribution)

NOTE: Consistent with Calderwood & Harkness LLP's established firm policy on conflicts reporting, the identity of the existing client is not disclosed in this broader-distribution version of the Quarterly Report. The existing client's name, matter number, and the complete details of the conflict are maintained in the Conflicts Committee's restricted files and are available for review by Management Committee members on a need-to-know basis upon request to the Committee Chair. The following summary provides sufficient information for the Management Committee's reference while preserving the confidentiality of the existing client relationship.

The Round 1 conflicts search conducted on May 9, 2024, identified that Calderwood & Harkness LLP currently represents an existing client in active patent-enforcement and licensing matters under C&H Matter No. 1031-00001, which was opened on March 14, 2022. The existing client's engagement is led by a partner in the firm's intellectual Property / Patent Litigation Practice Group and encompasses a range of services relating to the same biometric workforce-management technology platform that is the subject of the proposed MTDC engagement.

Specifically, the existing engagement includes the prosecution of patent-infringement claims against a competitor of the existing client in the United States District Court for the Eastern District of Virginia (Civil Action No. 1:22-cv-01533, filed September 6, 2022). The patent-infringement action directly concerns the core biometric-recognition algorithms and associated software architecture of the platform at issue. The claims in the patent action are premised on the novelty, inventiveness, and commercial significance of the existing client's proprietary biometric-identification technology — the very same technology that MTDC deployed through its workforce-management platform and that is now the subject of the AG's CID and the putative class action.

The annual billings generated by the existing client relationship in the most recent completed fiscal year (FY 2023 actual) totaled $2,137,500. The relationship has been active and productive, and the existing engagement remains ongoing with no anticipated conclusion date in the near term.

The nature of the conflict is both direct and substantive. The existing client is a named "responsible party" in the Illinois Attorney General's Civil Investigative Demand (Ref. No. CRB-2024-0417) and is a likely co-respondent in any enforcement action that may be brought by the AG's office. Moreover, MTDC's anticipated cross-claims and indemnification demands — which were within the scope of the proposed engagement — would be asserted directly against the existing client. These cross-claims would be grounded in the Master Software License and Services Agreement between MTDC and the existing client, which became effective on June 15, 2021, has a five-year initial term through June 14, 2026, includes an optional three-year renewal, and has a total contract value of $8,700,000. Representation of MTDC would therefore require the firm to take affirmative legal action against a current client in connection with active, related matters.

Additionally, and of critical importance to the Committee's analysis, Calderwood & Harkness possesses the existing client's confidential information bearing directly on the biometric technology platform at the center of the proposed MTDC engagement. The categories of confidential information in the firm's possession include, without limitation, the existing client's technical specifications for the biometric-recognition algorithms, detailed data-flow architecture documentation, biometric-data retention policies and internal compliance assessments, and proprietary information concerning the platform's design, capabilities, and known limitations. This body of confidential information would be material to the claims and defenses in both the AG investigation and the class action, and its possession by the firm creates an acute risk of inadvertent or compelled disclosure adverse to the existing client's interests.

The confluence of direct adversity, positional conflict, and confidential-information risk rendered this conflict among the most clear-cut and unwaivable conflicts the Committee has encountered in recent quarters.

G. Ethical Analysis — Summary

The Conflicts Committee conducted a thorough ethical analysis of the identified conflict under the applicable provisions of the Illinois Rules of Professional Conduct. The analysis was informed by a research memorandum prepared by Nadia Petrov (Associate, Labor & Employment) under the supervision of Devon Archer (Associate, Labor & Employment), as well as by the Committee's independent review of the governing rules, comments, and pertinent Illinois and ABA ethics opinions. The following summarizes the Committee's analysis:

Rule 1.7(a)(1) — Direct Adversity

Illinois Rule of Professional Conduct 1.7(a)(1) provides that a lawyer shall not represent a client if the representation involves a concurrent conflict of interest, which exists if the representation of one client will be directly adverse to another client. The Committee determined that the proposed MTDC engagement would be directly adverse to the existing client for the following independent and cumulative reasons:

(a) The existing client is a named responsible party in the Illinois Attorney General's Civil Investigative Demand (Ref. No. CRB-2024-0417), the defense of which was a central component of the proposed MTDC engagement. Representation of MTDC in responding to and defending against the CID would require the firm to take positions adverse to the existing client's interests and potentially to facilitate or support investigative findings that could be used against the existing client in enforcement proceedings.

(b) MTDC's anticipated cross-claims and indemnification demands — expressly within the proposed scope of the engagement — would be asserted directly against the existing client under the Master Software License and Services Agreement. The prosecution of such claims would place the firm in the position of bringing affirmative legal action against its own current client.

(c) The legal characterization of the biometric platform's data-collection and biometric-recognition capabilities as unlawful surveillance tools in violation of BIPA is directly and fundamentally adverse to the existing client's interests in the patent-enforcement action (Case No. 1:22-cv-01533, E.D. Va.), which depends on establishing the legitimacy, innovation, and commercial value of those very same capabilities. A finding or judicial characterization in the BIPA proceedings that the platform's core biometric-recognition functions constitute illegal data collection would undermine the existing client's position in the patent litigation and its broader commercial interests.

Each of these bases independently establishes direct adversity within the meaning of Rule 1.7(a)(1). Together, they present one of the most unambiguous instances of direct concurrent-client adversity the Committee has encountered.

Rule 1.7(a)(2) — Material Limitation

Illinois Rule of Professional Conduct 1.7(a)(2) provides that a concurrent 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, a former client, or a third person, or by a personal interest of the lawyer. The Committee determined that the proposed MTDC engagement would be materially limited by the firm's responsibilities to the existing client because representation of MTDC would require the firm to take legal positions diametrically opposed to those it takes on behalf of the existing client.

Specifically, effective representation of MTDC in the BIPA defense and remediation advisory would require the firm to characterize the biometric platform's data-collection practices as unlawful, invasive, and in violation of the privacy rights of MTDC's employees. At the same time, the firm's ongoing representation of the existing client in the patent-enforcement action requires the firm to argue that the same biometric-recognition capabilities are legitimate, innovative, commercially valuable, and deserving of intellectual-property protection. These positions cannot be reconciled, and a lawyer's advocacy on behalf of one client would necessarily undermine the firm's credibility and effectiveness on behalf of the other.

The material-limitation analysis is further compounded by the firm's possession of the existing client's confidential information. Even absent any actual disclosure, the knowledge held by the firm's lawyers — including detailed technical specifications, data-flow architecture, and the existing client's own internal assessments of its biometric-data practices — would inevitably influence and constrain the firm's ability to represent MTDC zealously and without reservation.

Rule 1.7(b) — Waivability Analysis

Having determined that a concurrent conflict of interest exists under both Rule 1.7(a)(1) and Rule 1.7(a)(2), the Committee next considered whether the conflict could be waived by informed consent under Rule 1.7(b). Rule 1.7(b) permits continued representation notwithstanding a concurrent conflict only if: (1) the lawyer reasonably believes that competent and diligent representation of each affected client can be provided; (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 Committee concluded that the conflict is not waivable by informed consent for the following reasons:

(i) No reasonable basis for belief in competent representation. No reasonable lawyer could conclude that Calderwood & Harkness could provide competent and diligent representation to both MTDC and the existing client under the circumstances presented. The matters involve the same technology platform, overlapping factual questions, and diametrically opposed legal positions. The firm's advocacy for MTDC would be constrained by its duties to the existing client, and vice versa. This threshold requirement of Rule 1.7(b)(1) cannot be satisfied.

(ii) Possession of directly relevant confidential information. The firm possesses the existing client's confidential information bearing directly on the claims and defenses in the proposed MTDC matter. This information — including technical specifications, data-flow architecture, and biometric-data retention policies — is precisely the type of information that would be material to MTDC's defense of the CID and class action, and that would be relevant to the formulation and prosecution of cross-claims against the existing client. No consent or screening mechanism can adequately protect the existing client's interests where the firm's lawyers in the proposed engagement would have access to, or be influenced by, this body of confidential information.

(iii) Substantial relationship between the matters. The matters are substantially related within the meaning of the Illinois Rules of Professional Conduct and the relevant case law. Both matters involve the identical biometric workforce-management platform, the same core biometric-recognition algorithms, overlapping factual questions concerning data-collection practices and platform capabilities, and the same parties and contractual relationships. The substantial-relationship test is satisfied by a wide margin.

Given the failure to satisfy the threshold condition of Rule 1.7(b)(1), the Committee did not reach the question of whether both clients would have consented to waiver, as the conflict is unwaivable as a matter of professional-responsibility law irrespective of client willingness.

Rule 1.9 — Former-Client Considerations

Illinois Rule of Professional Conduct 1.9 restricts a lawyer's ability to represent a client in a matter adverse to a former client when the matters are the same or substantially related. The Committee noted that Rule 1.9 is technically inapplicable in this instance because the existing client is a current client with an active, ongoing engagement. However, the Committee conducted a confirmatory analysis and determined that even under a former-client analytical framework — that is, even if the existing client relationship were to terminate — the matters would be deemed substantially related and representation of MTDC would be barred under Rule 1.9 due to the firm's possession of the existing client's confidential information and the overlapping factual and legal questions at the core of both matters.

Rule 1.10 — Imputation and Screening

Illinois Rule of Professional Conduct 1.10 addresses the imputation of conflicts of interest within a law firm and the limited circumstances under which screening may be employed to cure a conflict. The Committee confirmed that the conflict identified in this matter cannot be cured by screening. The conflict arises from the firm's concurrent representation of the existing client by a current firm partner, not from a lateral hire's prior representation at a former firm. Under the Illinois Rules, screening is available as a curative measure only in narrowly defined circumstances, principally involving the arrival of a lateral lawyer who is personally disqualified due to prior work at a former firm. The Illinois Rules do not permit screening to cure a concurrent-client conflict arising from the firm's own current representation. Accordingly, screening is not a viable remedy here.

Supporting Work Product

The ethical analysis summarized above was informed by the following internal work product, which is retained in the Conflicts Committee's restricted files:

(a) Research memorandum prepared by Nadia Petrov (Associate, Labor & Employment), under the supervision of Devon Archer (Associate, Labor & Employment), addressing the application of Illinois Rules 1.7, 1.9, and 1.10 to the facts of the proposed engagement, with a survey of relevant Illinois case law and ARDC advisory opinions.

(b) Confidential Information Inventory prepared by the existing client's engagement team at the direction of the Conflicts Committee, cataloguing at a high level the categories of the existing client's confidential information in the firm's possession that bear on the biometric technology platform at issue. This inventory was prepared for the sole purpose of the Committee's conflicts analysis and has been secured in the Committee's restricted files.

H. Conflicts Committee Determination

The Conflicts Committee convened on May 14, 2024, to consider the proposed engagement under Matter No. 1031-00001 and the conflict identified through the conflicts search process described above.

Attendees:

• Lawrence Keating, Senior Partner, Chair, Conflicts Committee

• Helen Drazkowski, General Counsel

• Colleen Farrow, Director, Conflicts & New Business

• Rachel Bernstein, Partner, Privacy & Data Security (proposed responsible partner for the MTDC engagement)

• The responsible partner for the existing client matter (C&H Matter No. 1031-00001), whose identity is redacted from this broader-distribution version of the report consistent with firm policy

The Committee reviewed the conflicts reports from both Round 1 and Round 2 searches, the research memorandum prepared by Nadia Petrov, the Confidential Information Inventory, the proposed engagement scope and financial parameters, and the applicable provisions of the Illinois Rules of Professional Conduct. The Committee also received presentations from Rachel Bernstein (regarding the nature and scope of the proposed MTDC engagement) and from the responsible partner for the existing client matter (regarding the status of the existing engagement and the nature and scope of confidential information in the firm's possession).

Following discussion, the Committee reached a unanimous determination that the conflict is unwaivable under Illinois Rules of Professional Conduct 1.7(a)(1), 1.7(a)(2), and 1.7(b), and that the proposed MTDC engagement must be declined. The Committee further determined that the conflict cannot be cured by screening under Rule 1.10 or by any other available mechanism.

A formal written resolution was executed by Lawrence Keating, as Chair of the Conflicts Committee, on May 14, 2024 (Conflicts Committee Resolution — Matter No. 1031-00001). The original resolution is maintained in the Committee's restricted files.

I. Declination and Referral Actions

Following the Committee's determination, the following declination and referral actions were taken in a prompt and orderly manner:

Internal Declination Memorandum. Rachel Bernstein prepared the internal declination memorandum, dated May 15, 2024. The memorandum was circulated to the proposed engagement team (Miriam Calloway, Devon Archer, and Nadia Petrov) and to firm leadership, including the undersigned and Helen Drazkowski. The memorandum confirmed the Committee's determination, directed the cessation of all intake-related work on the proposed MTDC engagement, and outlined the administrative closure procedures to be followed.

Formal Declination Letter to MTDC. On May 17, 2024, a formal declination letter was transmitted to Terrence Whitfield, General Counsel, Metropolitan Transit Development Corp. The letter explained in appropriately general terms that Calderwood & Harkness had identified an unwaivable conflict of interest that precluded the firm from undertaking the proposed engagement. Consistent with the firm's obligations of confidentiality to the existing client, the letter did not identify the existing client, the nature of the existing engagement, or the specific basis for the conflict. The letter expressed the firm's regret at being unable to assist MTDC and offered to facilitate a referral to qualified alternative counsel.

The declination letter was reviewed by Helen Drazkowski, General Counsel, prior to transmission to ensure that its language complied with the firm's confidentiality obligations to the existing client and with the requirements of the Illinois Rules of Professional Conduct regarding communications with prospective clients. Constance Hargrove at Hargrove, Tillman & Reese LLP, as MTDC's existing outside counsel and the original referral source, was copied on the transmittal email at the direction of Terrence Whitfield.

Referral to Alternative Counsel. On May 20, 2024, Rachel Bernstein sent a referral letter to Terrence Whitfield recommending two law firms with recognized expertise in Illinois biometric-privacy law and no identified conflicts with respect to the MTDC matter:

(a) Aldridge, Paulson & Cho LLP, 150 North Michigan Avenue, Suite 3500, Chicago, IL 60601 (contact: Victoria Aldridge, Partner, BIPA Practice Lead). Ms. Aldridge has substantial experience in BIPA defense and regulatory investigations and has been recognized as a leading practitioner in the field.

(b) Northfield McKay LLP, 311 South Wacker Drive, Suite 4800, Chicago, IL 60606 (contact: Damien Northfield, Partner, Data-Privacy Litigation Lead). Mr. Northfield's practice is focused on data-privacy litigation and class-action defense, with particular depth in BIPA matters.

Courtesy heads-up emails were sent to both Victoria Aldridge and Damien Northfield on May 20, 2024, providing a high-level description of the MTDC matter and the nature of the legal work sought by MTDC. These communications did not disclose any privileged information, the reason for Calderwood & Harkness's declination, or the identity of the existing client whose engagement gave rise to the conflict.

J. File Closure and Administrative Actions

The following administrative actions were completed to effect the formal closure of Matter No. 1031-00001 and to ensure compliance with the firm's records-management, conflicts-database, and confidentiality policies:

1. Matter Closure Form. The firm's standard Matter Closure Form (C&H Form MC-1) was completed by Rachel Bernstein and processed by Colleen Farrow on May 23, 2024. The stated reason for closure was: "Conflicts declination — unwaivable current-client conflict under Illinois Rule of Professional Conduct 1.7."

2. Confirmation of No Client Materials or Billings. The Conflicts & New Business Department confirmed that no client documents, confidential information, or privileged materials were received from MTDC at any point during the intake process. No fees were billed to MTDC, no disbursements were incurred on MTDC's behalf, and no work product was transmitted to MTDC. The matter was closed with zero billings and zero disbursements.

3. Return-of-Materials Confirmation. A return-of-materials confirmation letter was sent to Terrence Whitfield on May 23, 2024, confirming that the firm had no client materials to return and reiterating that no attorney-client relationship was formed between Calderwood & Harkness LLP and Metropolitan Transit Development Corp. as a result of the intake discussions.

4. Finance Department Notification. Colleen Farrow sent an email to the Finance Department on May 23, 2024, instructing that Matter No. 1031-00001 be closed in the firm's billing and accounting systems with zero billings and zero disbursements. The Finance Department confirmed closure on the same date.

5. Records Retention. All internal work product generated during the intake and conflicts review process — including the conflicts search reports, research memoranda, ethics analyses, the Confidential Information Inventory, Committee deliberation notes, the formal resolution, declination correspondence, and referral correspondence — has been retained in accordance with the firm's seven-year records-retention policy under Retention Category: Declined Engagements — Conflicts. These materials are maintained in the Conflicts Committee's restricted files and are accessible only to Committee members and authorized personnel.

6. Conflicts Database Update. The firm's conflicts database has been updated to reflect the following:

• MTDC is recorded as a declined prospective client (not a current or former client of the firm).

• The nature of the conflict is recorded as an unwaivable current-client conflict under Illinois Rule of Professional Conduct 1.7.

• A cross-reference has been entered linking MTDC's record to the existing client's matter (C&H Matter No. 1031-00001).

• Future conflicts searches involving MTDC, its officers and directors, or the existing client and its related entities and technology products will automatically surface this record, ensuring that the institutional knowledge of this conflict is preserved for subsequent intake and conflicts clearance processes.

7. Notification to Existing Client's Engagement Partner. On May 23, 2024, Colleen Farrow sent a notification memorandum to the existing client's engagement partner confirming the declination and closure of Matter No. 1031-00001. The memorandum expressly confirmed that no existing-client confidential information was disclosed to the proposed MTDC engagement team (Rachel Bernstein, Miriam Calloway, Devon Archer, or Nadia Petrov) at any point during the intake process. The memorandum also confirmed that the Confidential Information Inventory prepared by the existing client's engagement team has been secured in the Committee's restricted files and will not be accessed except in connection with future conflicts reviews authorized by the Committee.

8. Instruction to Proposed Engagement Team. On May 23, 2024, Rachel Bernstein notified the proposed engagement team members — Miriam Calloway, Devon Archer, and Nadia Petrov — of the formal closure of the matter. All team members were instructed to cease any work related to the proposed engagement, to archive all files and work product in accordance with the firm's retention policy, and to refrain from discussing the matter or the underlying conflict outside the engagement team and firm leadership. Each team member acknowledged receipt of these instructions.

K. Financial Impact

The financial impact of the declination is summarized as follows:

Estimated Foregone Fees: $3.5 million to $5.2 million, based on the projected scope, complexity, and duration of the proposed MTDC engagement over an 18- to 24-month period. This estimate encompasses all five components of the proposed engagement (CID defense, class-action defense, remediation advisory, cross-claims/indemnification, and employment counseling).

Existing-Client Annual Billings Preserved: $2,137,500 (FY 2023 actual). By declining the proposed MTDC engagement, the firm has preserved its ongoing relationship with the existing client and eliminated the risk that acceptance of the MTDC engagement could result in the loss of the existing client, mandatory withdrawal from the existing client's matters, or disqualification proceedings in the pending patent-enforcement litigation.

Internal Administrative Costs: No fees were generated or billed in connection with the intake and conflicts review process. The time expended by Rachel Bernstein, Devon Archer, Nadia Petrov, Colleen Farrow, Helen Drazkowski, and other firm personnel on the conflicts analysis, Committee deliberations, and administrative closure is classified as internal administrative time and was not billed to any client. The total internal administrative cost is classified as $0 in billable time.

The Committee notes that, while the foregone fee opportunity is significant, the declination was compelled by the firm's professional-responsibility obligations and was not a matter of discretion. The preservation of the existing client relationship, the protection of the existing client's confidential information, and the firm's compliance with its ethical duties are paramount considerations that outweigh the financial impact of the declination.

III. OTHER Q2 2024 CONFLICTS COMMITTEE ACTIVITY — SUMMARY

The detailed summary of all other Q2 2024 matters reviewed by the Conflicts Committee is set forth in the full version of this Quarterly Report, which has been provided to the Management Committee under separate cover. This excerpt addresses only the significant declination described in Section II above.

For the Committee's reference, the aggregate Q2 2024 statistics are as follows:

The eight formal declinations include the matter described in Section II (Matter No. 1031-00001) as well as seven additional matters of routine scope. None of the other seven declinations involved estimated foregone fees exceeding $500,000, and none presented conflicts of sufficient complexity or significance to warrant individual treatment in this excerpt. Full details on all eight declinations, as well as on the 27 matters requiring enhanced review or conditional clearance, are available in the complete report.

IV. RECOMMENDATIONS AND FORWARD-LOOKING ITEMS

Based on the Committee's experience during Q2 2024, and with particular reference to the circumstances of Matter No. 1031-00001, the Committee offers the following recommendations and observations for the Management Committee's consideration:

1. Early Identification of Technology-Vendor Relationships. The Committee reminds all partners of the critical importance of early identification of potential adverse parties at the intake stage, particularly in matters involving technology vendors where the firm may have existing patent, intellectual-property, licensing, or other relationships. The MTDC matter illustrates that a prospective client's technology-vendor relationships may give rise to direct conflicts with the firm's existing clients in wholly separate practice areas and geographies. Partners are encouraged to include technology vendors, platform providers, and software licensors in the initial list of related parties submitted with the New Business Intake Form, even when those parties are not named defendants or counterparties in the principal matter.

2. Automatic Flagging in Conflicts Database. The firm's conflicts database has been updated to ensure that future inquiries from MTDC, or involving the biometric workforce-management platform at issue, will trigger an automatic flag alerting the Conflicts & New Business Department to the prior declination and the underlying conflict. This measure is intended to prevent inadvertent engagement on a matter that would give rise to the same or similar conflict.

3. Annual Ethics Training — Illinois Rules 1.7 and 1.10. The Committee recommends that the firm conduct a firm-wide refresher on Illinois Rules of Professional Conduct 1.7 (Conflict of Interest — Current Clients) and 1.10 (Imputation of Conflicts of Interest — General Rule) as part of the annual ethics training cycle. The Committee observes that the distinction between waivable and unwaivable conflicts, and the limitations on screening as a curative mechanism under the Illinois Rules, are areas where periodic reinforcement is beneficial, particularly for associates and junior partners who may encounter these issues with less frequency. The Committee will coordinate with Helen Drazkowski and the firm's Professional Development Department to schedule this training during Q3 or Q4 2024.

V. CERTIFICATION

This excerpt of the Q2 2024 Quarterly Conflicts Committee Report has been prepared for the Management Committee's review and is classified as privileged and confidential attorney work product. The contents of this report reflect the deliberations, analyses, and determinations of the Conflicts Committee in the discharge of its professional-responsibility oversight functions.

Distribution of this report, or any portion thereof, beyond the members of the Management Committee requires the prior written approval of the Conflicts Committee Chair. Recipients are reminded that this document is subject to attorney-client privilege, work-product protection, and the firm's confidentiality policies. Unauthorized disclosure could result in a waiver of applicable privileges and could compromise the firm's professional obligations to its clients.

The undersigned certifies that the information set forth in this excerpt is accurate and complete to the best of his knowledge as of the date hereof.

CALDERWOOD & HARKNESS LLP CONFLICTS COMMITTEE

By: ________

Name: Lawrence Keating

Title: Senior Partner, Chair, Conflicts Committee

Date: July 12, 2024

Restricted Copy To:

Helen Drazkowski, General Counsel, Calderwood & Harkness LLP

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

PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT — FOR MANAGEMENT COMMITTEE DISTRIBUTION ONLY. This document may not be reproduced, distributed, or disclosed without the prior written approval of the Conflicts Committee Chair.

Date	Event
May 6, 2024	MTDC's General Counsel, Terrence Whitfield, made initial contact with Rachel Bernstein by telephone to discuss potential retention. Rachel Bernstein conducted a preliminary assessment of the engagement scope and confirmed the firm's general capabilities in BIPA and biometric-privacy defense.
May 9, 2024	New-matter intake opened under Matter No. 1031-00001. Rachel Bernstein submitted the New Business Intake Form (C&H Form NBI-1) to the Conflicts & New Business Department. First-round (Round 1) conflicts search run by Colleen Farrow's team against the firm's conflicts database, encompassing MTDC, its officers and directors, known adverse and related parties, the technology vendor, the plaintiffs' class counsel, and other identified parties.
May 10, 2024	Conflicts report issued by the Conflicts & New Business Department. The report identified a conflict with an existing client as described in Section II.F below. Rachel Bernstein was notified of the identified conflict.
May 13, 2024	Supplemental conflicts search (Round 2 — expanded parties) completed, incorporating additional parties identified through further review of the CID, the class-action complaint, and related public filings. No additional conflicts were identified beyond the primary conflict flagged in Round 1. Rachel Bernstein escalated the matter to the Conflicts Committee for formal review and determination.
May 14, 2024	Conflicts Committee convened for formal deliberation. Following discussion and analysis, the Committee reached a unanimous determination that the identified conflict is unwaivable under the Illinois Rules of Professional Conduct. The Committee directed that the proposed MTDC engagement be declined. A formal written resolution was executed by the Committee Chair.
May 15, 2024	Internal declination memorandum prepared by Rachel Bernstein and circulated to the proposed engagement team and firm leadership.
May 17, 2024	Formal declination letter transmitted to Terrence Whitfield, MTDC General Counsel. The letter was reviewed by Helen Drazkowski, General Counsel, prior to transmission. Constance Hargrove (Hargrove, Tillman & Reese LLP) was copied on the transmittal email.
May 20, 2024	Referral letter sent by Rachel Bernstein to Terrence Whitfield recommending two alternative firms with BIPA expertise. Courtesy notification emails sent to the recommended firms.
May 23, 2024	Matter formally closed in firm systems. Matter Closure Form processed. Return-of-materials confirmation letter sent to MTDC. Finance Department instructed to close the matter with zero billings and zero disbursements. Conflicts database updated. Notification memorandum sent to existing client's engagement partner.
Category	Count
Total new-matter intake submissions reviewed	347
Cleared without issue	312
Required enhanced review or conditional clearance	27
Formally declined	8

PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT — FOR MANAGEMENT COMMITTEE DISTRIBUTION ONLY
CALDERWOOD & HARKNESS LLP
Conflicts Committee Quarterly Report
Q2 2024
April 1, 2024 – June 30, 2024
Date of Report: July 12, 2024
Prepared by: Lawrence Keating, Senior Partner, Chair, Conflicts Committee, with the assistance of Colleen Farrow, Director, Conflicts & New Business
Distribution: Calderwood & Harkness LLP Management Committee (Restricted)
Report Period: Q2 2024 (April 1, 2024 – June 30, 2024)
Classification: This report, including all attachments and referenced memoranda, constitutes privileged and confidential attorney work product prepared in connection with the professional responsibility functions of Calderwood & Harkness LLP. This document is intended solely for the members of the Management Committee. Any further distribution, reproduction, or disclosure of this report or any portion thereof requires the prior written approval of the Conflicts Committee Chair. Receipt of this document by any person not identified on the restricted distribution list does not constitute waiver of any applicable privilege or protection.
I. EXECUTIVE SUMMARY OF Q2 2024 CONFLICTS ACTIVITY
During Q2 2024, the Conflicts Committee reviewed a total of 347 new-matter intake submissions. Of that number, 312 were cleared without issue following completion of standard conflicts searches and review procedures, 27 required enhanced review or conditional clearance (including the imposition of engagement conditions such as ethical screens, advance waivers, limited-scope carve-outs, or client-consent protocols), and 8 resulted in formal declination of the proposed engagement. These figures are consistent with the volume and disposition ratios observed in the preceding two quarters and reflect the continued effectiveness of the firm's early-identification protocols.
Of the eight declinations during the quarter, seven involved matters of routine scope where the estimated foregone fees were modest and the conflicts were resolved through standard intake procedures without the need for Committee-level escalation beyond the initial review. One declination, however, involved a proposed engagement of significant scope, with estimated foregone fees in the range of $3.5 million to $5.2 million over a projected 18- to 24-month engagement period. This matter is described in detail in Section II below and is brought to the Management Committee's attention as a matter of particular note, both because of the magnitude of the foregone revenue and because of the nature of the underlying conflict and the firm's existing client relationship that gave rise to the declination.
The Conflicts Committee operated throughout Q2 2024 with its standing composition. The Committee was chaired by the undersigned, Lawrence Keating, Senior Partner and Chair, Conflicts Committee. Standing members included Helen Drazkowski, General Counsel, and Colleen Farrow, Director, Conflicts & New Business. In addition, consistent with the Committee's charter, affected engagement partners participated in Committee deliberations on a matter-specific basis as required by the circumstances of individual matters under review. No changes to the Committee's composition occurred during the quarter.
The balance of the Q2 2024 matters reviewed by the Committee is summarized in the full report. This excerpt addresses only the significant declination referenced above and provides the Management Committee with a comprehensive record of the intake, conflicts review, ethical analysis, declination, referral, and administrative closure of that matter.
II. MATTER OF NOTE: DECLINED ENGAGEMENT — MATTER NO. 1031-00001
A. Matter Identification
The following information identifies the proposed engagement and the individuals and entities involved in the intake and conflicts review process:
C&H Matter No.: 1031-00001
Prospective Client: Metropolitan Transit Development Corp. ("MTDC"), a unit of local government and special-purpose transit authority organized under the Illinois Local Mass Transit District Act (70 ILCS 3610/1 et seq.), headquartered at 550 West Harrison Street, Suite 1400, Chicago, IL 60607.
Prospective Client General Counsel: Terrence Whitfield, General Counsel, Metropolitan Transit Development Corp.
Originating Office: Calderwood & Harkness LLP, Chicago Office, One North Wacker Drive, Suite 4200, Chicago, IL 60606.
Responsible Partner (Proposed): Rachel Bernstein, Partner, Privacy & Data Security Practice Group.
Billing Partner (Proposed): Miriam Calloway, Partner, Healthcare & Life Sciences Practice Group.
Proposed Lead Associate: Devon Archer, Associate, Labor & Employment Practice Group.
Proposed Working Associate: Nadia Petrov, Associate, Labor & Employment Practice Group.
Referral Source: Hargrove, Tillman & Reese LLP (Constance Hargrove, Partner), which serves as MTDC's existing outside litigation counsel and referred MTDC to Calderwood & Harkness for specialized expertise in data-privacy and biometric-law matters.
The proposed engagement was originated by Rachel Bernstein following initial contact from MTDC's General Counsel, Terrence Whitfield, who was directed to Ms. Bernstein by Constance Hargrove of Hargrove, Tillman & Reese LLP. Ms. Hargrove's firm has served as MTDC's primary outside litigation counsel for approximately seven years and referred the matter to Calderwood & Harkness due to the specialized nature of the biometric-privacy issues involved.
B. Prospective Client Background
Metropolitan Transit Development Corp. is one of the largest regional transit authorities in the Midwest and provides essential public transportation services across the greater Chicago metropolitan area. A summary of relevant organizational and financial background follows:
Operations: MTDC operates bus, commuter rail, and paratransit services across Cook County and the five collar counties of DuPage, Kane, Lake, McHenry, and Will. MTDC's service network encompasses approximately 1,850 route miles and serves approximately 1.6 million daily riders during peak-period operations.
Annual Operating Budget: Approximately $3.2 billion, funded through a combination of farebox revenue, federal formula grants (primarily under 49 U.S.C. § 5307 and § 5337), a dedicated 1.0% regional sales tax authorized under the Regional Transportation Authority Act, and State of Illinois general-fund appropriations.
Annual Outside-Counsel Budget: Approximately $14.8 million, as reported by Terrence Whitfield during the initial intake discussions with Rachel Bernstein. This figure encompasses litigation, regulatory, transactional, labor-relations, and specialized advisory engagements across multiple outside law firms.
Chief Information Security Officer: Lucia Marchetti, CISO, Metropolitan Transit Development Corp.
Executive Director: Darnell Okafor, Executive Director, Metropolitan Transit Development Corp.
MTDC's organizational structure, scale of operations, and public funding profile are noted here because they bear on the significance of the proposed engagement and the potential reputational and financial implications of the underlying biometric-privacy dispute for both MTDC and the other parties involved.
C. Proposed Engagement Scope
MTDC sought to retain Calderwood & Harkness LLP to provide comprehensive legal representation and advisory services in connection with a series of related matters arising from MTDC's deployment of a biometric workforce-management platform. The proposed scope of the engagement encompassed the following principal components:
1. Defense of Civil Investigative Demand. MTDC received a Civil Investigative Demand ("CID") issued by the Illinois Attorney General's Bureau of Civil Rights on April 22, 2024 (Reference No. CRB-2024-0417). The CID alleges potential violations of the Illinois Biometric Information Privacy Act ("BIPA"), 740 ILCS 14/1 et seq., and the Illinois Personal Information Protection Act ("PIPA"), 815 ILCS 530/1 et seq., in connection with MTDC's deployment of a biometric workforce-management platform used for employee timekeeping, access control, and identity verification. The CID requires the production of extensive documentary and electronically stored information and responses to interrogatories covering a period from January 2020 to the present.
The AG's investigation is led by Deputy Attorney General for Civil Rights Malcolm Jeffries, who has designated outside special counsel for the matter: Ridgeway & Falk LLP (Diane Falk, Partner), located in Springfield, Illinois. The involvement of outside special counsel suggests that the AG's office views the matter as one of significant public interest and potential enforcement priority.
2. Defense of Putative Employee Class Action. On April 29, 2024 — one week after the issuance of the AG's CID — a putative employee class action was filed in the Circuit Court of Cook County, Chancery Division (Case No. 2024-CH-04417). The action was brought on behalf of a class of approximately 12,400 current and former MTDC employees who were subject to biometric data collection through the workforce-management platform at issue. Plaintiffs' class counsel is the firm of Kessler, Brandt & O'Neill LLP, with Martin Kessler serving as lead class counsel and Yolanda Brandt serving as co-counsel, at 120 North LaSalle Street, Suite 2200, Chicago, IL 60602.
The class complaint asserts claims under BIPA Section 15(a) (failure to develop and publicly disclose a written biometric information retention and destruction policy), Section 15(b) (collection of biometric data without informed consent), and Section 15(d) (failure to implement reasonable security measures). The complaint seeks statutory damages under BIPA Section 20, injunctive relief, and attorneys' fees.
3. Biometric-Data Remediation Advisory. MTDC sought advice on the remediation of its biometric-data practices to bring its workforce-management operations into compliance with BIPA and PIPA, including revisions to consent protocols, data-retention schedules, vendor-management procedures, and employee-notification practices.
4. Cross-Claims and Vendor Indemnification. MTDC anticipated asserting cross-claims and indemnification demands against the technology vendor whose biometric workforce-management platform was deployed, based on the indemnification, warranty, and compliance provisions of the Master Software License and Services Agreement between MTDC and the vendor. The proposed engagement scope contemplated investigation, preparation, and prosecution of such claims.
5. Related Employment Counseling. MTDC also sought related employment counseling concerning the revision of workforce-monitoring policies implicated by the biometric platform deployment, including issues at the intersection of BIPA, the Illinois Employee Credit Privacy Act, and federal labor-law considerations arising from MTDC's collective-bargaining obligations with multiple labor organizations.
The engagement was anticipated to be complex, multi-faceted, and of extended duration, with an estimated active period of 18 to 24 months.
D. Financial Parameters of Proposed Engagement
The following financial parameters were discussed during the intake process and are summarized here for the Management Committee's reference:
Estimated Fees: $3.5 million to $5.2 million over an 18- to 24-month engagement period, based on the anticipated scope of work across all five engagement components described above. The fee estimate was prepared by Rachel Bernstein in consultation with Miriam Calloway and is consistent with the firm's experience in comparable biometric-privacy defense and regulatory-investigation matters.
Proposed Hourly Rates:
•  Partner (Rachel Bernstein): $1,150 per hour (the firm's standard discounted rate for government and quasi-governmental clients)
•  Senior Associate (Devon Archer): $785 per hour
•  Junior Associate (Nadia Petrov): $625 per hour
Additional rate schedules for specialists in other practice groups (e.g., intellectual Property, Government Contracts) who might have been engaged on discrete components of the work were not finalized prior to the conflicts declination.
Prospective Client's BIPA Exposure. MTDC's estimated aggregate BIPA exposure, as analyzed by MTDC's consulting actuary, Lakefront Actuarial Advisors, LLC (Felix Drummond, FSA, MAAA), ranges from a floor of approximately $12.4 million (calculated on the basis of 12,400 class members multiplied by the $1,000 per-violation statutory damages floor for negligent violations under BIPA Section 20(1)) to a ceiling of approximately $62.0 million (calculated on the basis of 12,400 class members multiplied by the $5,000 per-violation statutory damages ceiling for intentional or reckless violations under BIPA Section 20(2)). The actuarial exposure analysis is referenced here solely for context regarding the significance of the matter to MTDC.
Bond and Disclosure Implications. MTDC's fiscal agent and bond trustee, Meridian Trust National Bank (Angela Tran, Chief Fiduciary Officer), has been notified by MTDC that the potential for material BIPA liability could trigger reporting obligations under MTDC's Continuing Disclosure Agreement (filed pursuant to SEC Rule 15c2-12) and certain financial and negative covenants contained in MTDC's outstanding bond indentures. This adds an additional dimension of financial and regulatory complexity to MTDC's overall situation and underscores the significance of the matter from the prospective client's perspective.
E. Timeline of Intake and Conflicts Review
The following table summarizes the chronological sequence of events from initial client contact through formal closure of the matter in the firm's systems:
The total elapsed time from initial intake to formal closure was seventeen days (May 6 through May 23, 2024), which reflects the urgency with which the Conflicts Committee addressed the matter given the significance of the proposed engagement and the need to enable MTDC to promptly identify and retain alternative counsel.
F. Nature of the Conflict — Summary (Redacted for Broader Distribution)
NOTE: Consistent with Calderwood & Harkness LLP's established firm policy on conflicts reporting, the identity of the existing client is not disclosed in this broader-distribution version of the Quarterly Report. The existing client's name, matter number, and the complete details of the conflict are maintained in the Conflicts Committee's restricted files and are available for review by Management Committee members on a need-to-know basis upon request to the Committee Chair. The following summary provides sufficient information for the Management Committee's reference while preserving the confidentiality of the existing client relationship.
The Round 1 conflicts search conducted on May 9, 2024, identified that Calderwood & Harkness LLP currently represents an existing client in active patent-enforcement and licensing matters under C&H Matter No. 1031-00001, which was opened on March 14, 2022. The existing client's engagement is led by a partner in the firm's intellectual Property / Patent Litigation Practice Group and encompasses a range of services relating to the same biometric workforce-management technology platform that is the subject of the proposed MTDC engagement.
Specifically, the existing engagement includes the prosecution of patent-infringement claims against a competitor of the existing client in the United States District Court for the Eastern District of Virginia (Civil Action No. 1:22-cv-01533, filed September 6, 2022). The patent-infringement action directly concerns the core biometric-recognition algorithms and associated software architecture of the platform at issue. The claims in the patent action are premised on the novelty, inventiveness, and commercial significance of the existing client's proprietary biometric-identification technology — the very same technology that MTDC deployed through its workforce-management platform and that is now the subject of the AG's CID and the putative class action.
The annual billings generated by the existing client relationship in the most recent completed fiscal year (FY 2023 actual) totaled $2,137,500. The relationship has been active and productive, and the existing engagement remains ongoing with no anticipated conclusion date in the near term.
The nature of the conflict is both direct and substantive. The existing client is a named "responsible party" in the Illinois Attorney General's Civil Investigative Demand (Ref. No. CRB-2024-0417) and is a likely co-respondent in any enforcement action that may be brought by the AG's office. Moreover, MTDC's anticipated cross-claims and indemnification demands — which were within the scope of the proposed engagement — would be asserted directly against the existing client. These cross-claims would be grounded in the Master Software License and Services Agreement between MTDC and the existing client, which became effective on June 15, 2021, has a five-year initial term through June 14, 2026, includes an optional three-year renewal, and has a total contract value of $8,700,000. Representation of MTDC would therefore require the firm to take affirmative legal action against a current client in connection with active, related matters.
Additionally, and of critical importance to the Committee's analysis, Calderwood & Harkness possesses the existing client's confidential information bearing directly on the biometric technology platform at the center of the proposed MTDC engagement. The categories of confidential information in the firm's possession include, without limitation, the existing client's technical specifications for the biometric-recognition algorithms, detailed data-flow architecture documentation, biometric-data retention policies and internal compliance assessments, and proprietary information concerning the platform's design, capabilities, and known limitations. This body of confidential information would be material to the claims and defenses in both the AG investigation and the class action, and its possession by the firm creates an acute risk of inadvertent or compelled disclosure adverse to the existing client's interests.
The confluence of direct adversity, positional conflict, and confidential-information risk rendered this conflict among the most clear-cut and unwaivable conflicts the Committee has encountered in recent quarters.
G. Ethical Analysis — Summary
The Conflicts Committee conducted a thorough ethical analysis of the identified conflict under the applicable provisions of the Illinois Rules of Professional Conduct. The analysis was informed by a research memorandum prepared by Nadia Petrov (Associate, Labor & Employment) under the supervision of Devon Archer (Associate, Labor & Employment), as well as by the Committee's independent review of the governing rules, comments, and pertinent Illinois and ABA ethics opinions. The following summarizes the Committee's analysis:
Rule 1.7(a)(1) — Direct Adversity
Illinois Rule of Professional Conduct 1.7(a)(1) provides that a lawyer shall not represent a client if the representation involves a concurrent conflict of interest, which exists if the representation of one client will be directly adverse to another client. The Committee determined that the proposed MTDC engagement would be directly adverse to the existing client for the following independent and cumulative reasons:
(a) The existing client is a named responsible party in the Illinois Attorney General's Civil Investigative Demand (Ref. No. CRB-2024-0417), the defense of which was a central component of the proposed MTDC engagement. Representation of MTDC in responding to and defending against the CID would require the firm to take positions adverse to the existing client's interests and potentially to facilitate or support investigative findings that could be used against the existing client in enforcement proceedings.
(b) MTDC's anticipated cross-claims and indemnification demands — expressly within the proposed scope of the engagement — would be asserted directly against the existing client under the Master Software License and Services Agreement. The prosecution of such claims would place the firm in the position of bringing affirmative legal action against its own current client.
(c) The legal characterization of the biometric platform's data-collection and biometric-recognition capabilities as unlawful surveillance tools in violation of BIPA is directly and fundamentally adverse to the existing client's interests in the patent-enforcement action (Case No. 1:22-cv-01533, E.D. Va.), which depends on establishing the legitimacy, innovation, and commercial value of those very same capabilities. A finding or judicial characterization in the BIPA proceedings that the platform's core biometric-recognition functions constitute illegal data collection would undermine the existing client's position in the patent litigation and its broader commercial interests.
Each of these bases independently establishes direct adversity within the meaning of Rule 1.7(a)(1). Together, they present one of the most unambiguous instances of direct concurrent-client adversity the Committee has encountered.
Rule 1.7(a)(2) — Material Limitation
Illinois Rule of Professional Conduct 1.7(a)(2) provides that a concurrent 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, a former client, or a third person, or by a personal interest of the lawyer. The Committee determined that the proposed MTDC engagement would be materially limited by the firm's responsibilities to the existing client because representation of MTDC would require the firm to take legal positions diametrically opposed to those it takes on behalf of the existing client.
Specifically, effective representation of MTDC in the BIPA defense and remediation advisory would require the firm to characterize the biometric platform's data-collection practices as unlawful, invasive, and in violation of the privacy rights of MTDC's employees. At the same time, the firm's ongoing representation of the existing client in the patent-enforcement action requires the firm to argue that the same biometric-recognition capabilities are legitimate, innovative, commercially valuable, and deserving of intellectual-property protection. These positions cannot be reconciled, and a lawyer's advocacy on behalf of one client would necessarily undermine the firm's credibility and effectiveness on behalf of the other.
The material-limitation analysis is further compounded by the firm's possession of the existing client's confidential information. Even absent any actual disclosure, the knowledge held by the firm's lawyers — including detailed technical specifications, data-flow architecture, and the existing client's own internal assessments of its biometric-data practices — would inevitably influence and constrain the firm's ability to represent MTDC zealously and without reservation.
Rule 1.7(b) — Waivability Analysis
Having determined that a concurrent conflict of interest exists under both Rule 1.7(a)(1) and Rule 1.7(a)(2), the Committee next considered whether the conflict could be waived by informed consent under Rule 1.7(b). Rule 1.7(b) permits continued representation notwithstanding a concurrent conflict only if: (1) the lawyer reasonably believes that competent and diligent representation of each affected client can be provided; (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 Committee concluded that the conflict is not waivable by informed consent for the following reasons:
(i) No reasonable basis for belief in competent representation. No reasonable lawyer could conclude that Calderwood & Harkness could provide competent and diligent representation to both MTDC and the existing client under the circumstances presented. The matters involve the same technology platform, overlapping factual questions, and diametrically opposed legal positions. The firm's advocacy for MTDC would be constrained by its duties to the existing client, and vice versa. This threshold requirement of Rule 1.7(b)(1) cannot be satisfied.
(ii) Possession of directly relevant confidential information. The firm possesses the existing client's confidential information bearing directly on the claims and defenses in the proposed MTDC matter. This information — including technical specifications, data-flow architecture, and biometric-data retention policies — is precisely the type of information that would be material to MTDC's defense of the CID and class action, and that would be relevant to the formulation and prosecution of cross-claims against the existing client. No consent or screening mechanism can adequately protect the existing client's interests where the firm's lawyers in the proposed engagement would have access to, or be influenced by, this body of confidential information.
(iii) Substantial relationship between the matters. The matters are substantially related within the meaning of the Illinois Rules of Professional Conduct and the relevant case law. Both matters involve the identical biometric workforce-management platform, the same core biometric-recognition algorithms, overlapping factual questions concerning data-collection practices and platform capabilities, and the same parties and contractual relationships. The substantial-relationship test is satisfied by a wide margin.
Given the failure to satisfy the threshold condition of Rule 1.7(b)(1), the Committee did not reach the question of whether both clients would have consented to waiver, as the conflict is unwaivable as a matter of professional-responsibility law irrespective of client willingness.
Rule 1.9 — Former-Client Considerations
Illinois Rule of Professional Conduct 1.9 restricts a lawyer's ability to represent a client in a matter adverse to a former client when the matters are the same or substantially related. The Committee noted that Rule 1.9 is technically inapplicable in this instance because the existing client is a current client with an active, ongoing engagement. However, the Committee conducted a confirmatory analysis and determined that even under a former-client analytical framework — that is, even if the existing client relationship were to terminate — the matters would be deemed substantially related and representation of MTDC would be barred under Rule 1.9 due to the firm's possession of the existing client's confidential information and the overlapping factual and legal questions at the core of both matters.
Rule 1.10 — Imputation and Screening
Illinois Rule of Professional Conduct 1.10 addresses the imputation of conflicts of interest within a law firm and the limited circumstances under which screening may be employed to cure a conflict. The Committee confirmed that the conflict identified in this matter cannot be cured by screening. The conflict arises from the firm's concurrent representation of the existing client by a current firm partner, not from a lateral hire's prior representation at a former firm. Under the Illinois Rules, screening is available as a curative measure only in narrowly defined circumstances, principally involving the arrival of a lateral lawyer who is personally disqualified due to prior work at a former firm. The Illinois Rules do not permit screening to cure a concurrent-client conflict arising from the firm's own current representation. Accordingly, screening is not a viable remedy here.
Supporting Work Product
The ethical analysis summarized above was informed by the following internal work product, which is retained in the Conflicts Committee's restricted files:
(a) Research memorandum prepared by Nadia Petrov (Associate, Labor & Employment), under the supervision of Devon Archer (Associate, Labor & Employment), addressing the application of Illinois Rules 1.7, 1.9, and 1.10 to the facts of the proposed engagement, with a survey of relevant Illinois case law and ARDC advisory opinions.
(b) Confidential Information Inventory prepared by the existing client's engagement team at the direction of the Conflicts Committee, cataloguing at a high level the categories of the existing client's confidential information in the firm's possession that bear on the biometric technology platform at issue. This inventory was prepared for the sole purpose of the Committee's conflicts analysis and has been secured in the Committee's restricted files.
H. Conflicts Committee Determination
The Conflicts Committee convened on May 14, 2024, to consider the proposed engagement under Matter No. 1031-00001 and the conflict identified through the conflicts search process described above.
Attendees:
•  Lawrence Keating, Senior Partner, Chair, Conflicts Committee
•  Helen Drazkowski, General Counsel
•  Colleen Farrow, Director, Conflicts & New Business
•  Rachel Bernstein, Partner, Privacy & Data Security (proposed responsible partner for the MTDC engagement)
•  The responsible partner for the existing client matter (C&H Matter No. 1031-00001), whose identity is redacted from this broader-distribution version of the report consistent with firm policy
The Committee reviewed the conflicts reports from both Round 1 and Round 2 searches, the research memorandum prepared by Nadia Petrov, the Confidential Information Inventory, the proposed engagement scope and financial parameters, and the applicable provisions of the Illinois Rules of Professional Conduct. The Committee also received presentations from Rachel Bernstein (regarding the nature and scope of the proposed MTDC engagement) and from the responsible partner for the existing client matter (regarding the status of the existing engagement and the nature and scope of confidential information in the firm's possession).
Following discussion, the Committee reached a unanimous determination that the conflict is unwaivable under Illinois Rules of Professional Conduct 1.7(a)(1), 1.7(a)(2), and 1.7(b), and that the proposed MTDC engagement must be declined. The Committee further determined that the conflict cannot be cured by screening under Rule 1.10 or by any other available mechanism.
A formal written resolution was executed by Lawrence Keating, as Chair of the Conflicts Committee, on May 14, 2024 (Conflicts Committee Resolution — Matter No. 1031-00001). The original resolution is maintained in the Committee's restricted files.
I. Declination and Referral Actions
Following the Committee's determination, the following declination and referral actions were taken in a prompt and orderly manner:
Internal Declination Memorandum. Rachel Bernstein prepared the internal declination memorandum, dated May 15, 2024. The memorandum was circulated to the proposed engagement team (Miriam Calloway, Devon Archer, and Nadia Petrov) and to firm leadership, including the undersigned and Helen Drazkowski. The memorandum confirmed the Committee's determination, directed the cessation of all intake-related work on the proposed MTDC engagement, and outlined the administrative closure procedures to be followed.
Formal Declination Letter to MTDC. On May 17, 2024, a formal declination letter was transmitted to Terrence Whitfield, General Counsel, Metropolitan Transit Development Corp. The letter explained in appropriately general terms that Calderwood & Harkness had identified an unwaivable conflict of interest that precluded the firm from undertaking the proposed engagement. Consistent with the firm's obligations of confidentiality to the existing client, the letter did not identify the existing client, the nature of the existing engagement, or the specific basis for the conflict. The letter expressed the firm's regret at being unable to assist MTDC and offered to facilitate a referral to qualified alternative counsel.
The declination letter was reviewed by Helen Drazkowski, General Counsel, prior to transmission to ensure that its language complied with the firm's confidentiality obligations to the existing client and with the requirements of the Illinois Rules of Professional Conduct regarding communications with prospective clients. Constance Hargrove at Hargrove, Tillman & Reese LLP, as MTDC's existing outside counsel and the original referral source, was copied on the transmittal email at the direction of Terrence Whitfield.
Referral to Alternative Counsel. On May 20, 2024, Rachel Bernstein sent a referral letter to Terrence Whitfield recommending two law firms with recognized expertise in Illinois biometric-privacy law and no identified conflicts with respect to the MTDC matter:
(a) Aldridge, Paulson & Cho LLP, 150 North Michigan Avenue, Suite 3500, Chicago, IL 60601 (contact: Victoria Aldridge, Partner, BIPA Practice Lead). Ms. Aldridge has substantial experience in BIPA defense and regulatory investigations and has been recognized as a leading practitioner in the field.
(b) Northfield McKay LLP, 311 South Wacker Drive, Suite 4800, Chicago, IL 60606 (contact: Damien Northfield, Partner, Data-Privacy Litigation Lead). Mr. Northfield's practice is focused on data-privacy litigation and class-action defense, with particular depth in BIPA matters.
Courtesy heads-up emails were sent to both Victoria Aldridge and Damien Northfield on May 20, 2024, providing a high-level description of the MTDC matter and the nature of the legal work sought by MTDC. These communications did not disclose any privileged information, the reason for Calderwood & Harkness's declination, or the identity of the existing client whose engagement gave rise to the conflict.
J. File Closure and Administrative Actions
The following administrative actions were completed to effect the formal closure of Matter No. 1031-00001 and to ensure compliance with the firm's records-management, conflicts-database, and confidentiality policies:
1. Matter Closure Form. The firm's standard Matter Closure Form (C&H Form MC-1) was completed by Rachel Bernstein and processed by Colleen Farrow on May 23, 2024. The stated reason for closure was: "Conflicts declination — unwaivable current-client conflict under Illinois Rule of Professional Conduct 1.7."
2. Confirmation of No Client Materials or Billings. The Conflicts & New Business Department confirmed that no client documents, confidential information, or privileged materials were received from MTDC at any point during the intake process. No fees were billed to MTDC, no disbursements were incurred on MTDC's behalf, and no work product was transmitted to MTDC. The matter was closed with zero billings and zero disbursements.
3. Return-of-Materials Confirmation. A return-of-materials confirmation letter was sent to Terrence Whitfield on May 23, 2024, confirming that the firm had no client materials to return and reiterating that no attorney-client relationship was formed between Calderwood & Harkness LLP and Metropolitan Transit Development Corp. as a result of the intake discussions.
4. Finance Department Notification. Colleen Farrow sent an email to the Finance Department on May 23, 2024, instructing that Matter No. 1031-00001 be closed in the firm's billing and accounting systems with zero billings and zero disbursements. The Finance Department confirmed closure on the same date.
5. Records Retention. All internal work product generated during the intake and conflicts review process — including the conflicts search reports, research memoranda, ethics analyses, the Confidential Information Inventory, Committee deliberation notes, the formal resolution, declination correspondence, and referral correspondence — has been retained in accordance with the firm's seven-year records-retention policy under Retention Category: Declined Engagements — Conflicts. These materials are maintained in the Conflicts Committee's restricted files and are accessible only to Committee members and authorized personnel.
6. Conflicts Database Update. The firm's conflicts database has been updated to reflect the following:
•  MTDC is recorded as a declined prospective client (not a current or former client of the firm).
•  The nature of the conflict is recorded as an unwaivable current-client conflict under Illinois Rule of Professional Conduct 1.7.
•  A cross-reference has been entered linking MTDC's record to the existing client's matter (C&H Matter No. 1031-00001).
•  Future conflicts searches involving MTDC, its officers and directors, or the existing client and its related entities and technology products will automatically surface this record, ensuring that the institutional knowledge of this conflict is preserved for subsequent intake and conflicts clearance processes.
7. Notification to Existing Client's Engagement Partner. On May 23, 2024, Colleen Farrow sent a notification memorandum to the existing client's engagement partner confirming the declination and closure of Matter No. 1031-00001. The memorandum expressly confirmed that no existing-client confidential information was disclosed to the proposed MTDC engagement team (Rachel Bernstein, Miriam Calloway, Devon Archer, or Nadia Petrov) at any point during the intake process. The memorandum also confirmed that the Confidential Information Inventory prepared by the existing client's engagement team has been secured in the Committee's restricted files and will not be accessed except in connection with future conflicts reviews authorized by the Committee.
8. Instruction to Proposed Engagement Team. On May 23, 2024, Rachel Bernstein notified the proposed engagement team members — Miriam Calloway, Devon Archer, and Nadia Petrov — of the formal closure of the matter. All team members were instructed to cease any work related to the proposed engagement, to archive all files and work product in accordance with the firm's retention policy, and to refrain from discussing the matter or the underlying conflict outside the engagement team and firm leadership. Each team member acknowledged receipt of these instructions.
K. Financial Impact
The financial impact of the declination is summarized as follows:
Estimated Foregone Fees: $3.5 million to $5.2 million, based on the projected scope, complexity, and duration of the proposed MTDC engagement over an 18- to 24-month period. This estimate encompasses all five components of the proposed engagement (CID defense, class-action defense, remediation advisory, cross-claims/indemnification, and employment counseling).
Existing-Client Annual Billings Preserved: $2,137,500 (FY 2023 actual). By declining the proposed MTDC engagement, the firm has preserved its ongoing relationship with the existing client and eliminated the risk that acceptance of the MTDC engagement could result in the loss of the existing client, mandatory withdrawal from the existing client's matters, or disqualification proceedings in the pending patent-enforcement litigation.
Internal Administrative Costs: No fees were generated or billed in connection with the intake and conflicts review process. The time expended by Rachel Bernstein, Devon Archer, Nadia Petrov, Colleen Farrow, Helen Drazkowski, and other firm personnel on the conflicts analysis, Committee deliberations, and administrative closure is classified as internal administrative time and was not billed to any client. The total internal administrative cost is classified as $0 in billable time.
The Committee notes that, while the foregone fee opportunity is significant, the declination was compelled by the firm's professional-responsibility obligations and was not a matter of discretion. The preservation of the existing client relationship, the protection of the existing client's confidential information, and the firm's compliance with its ethical duties are paramount considerations that outweigh the financial impact of the declination.
III. OTHER Q2 2024 CONFLICTS COMMITTEE ACTIVITY — SUMMARY
The detailed summary of all other Q2 2024 matters reviewed by the Conflicts Committee is set forth in the full version of this Quarterly Report, which has been provided to the Management Committee under separate cover. This excerpt addresses only the significant declination described in Section II above.
For the Committee's reference, the aggregate Q2 2024 statistics are as follows:
The eight formal declinations include the matter described in Section II (Matter No. 1031-00001) as well as seven additional matters of routine scope. None of the other seven declinations involved estimated foregone fees exceeding $500,000, and none presented conflicts of sufficient complexity or significance to warrant individual treatment in this excerpt. Full details on all eight declinations, as well as on the 27 matters requiring enhanced review or conditional clearance, are available in the complete report.
IV. RECOMMENDATIONS AND FORWARD-LOOKING ITEMS
Based on the Committee's experience during Q2 2024, and with particular reference to the circumstances of Matter No. 1031-00001, the Committee offers the following recommendations and observations for the Management Committee's consideration:
1. Early Identification of Technology-Vendor Relationships. The Committee reminds all partners of the critical importance of early identification of potential adverse parties at the intake stage, particularly in matters involving technology vendors where the firm may have existing patent, intellectual-property, licensing, or other relationships. The MTDC matter illustrates that a prospective client's technology-vendor relationships may give rise to direct conflicts with the firm's existing clients in wholly separate practice areas and geographies. Partners are encouraged to include technology vendors, platform providers, and software licensors in the initial list of related parties submitted with the New Business Intake Form, even when those parties are not named defendants or counterparties in the principal matter.
2. Automatic Flagging in Conflicts Database. The firm's conflicts database has been updated to ensure that future inquiries from MTDC, or involving the biometric workforce-management platform at issue, will trigger an automatic flag alerting the Conflicts & New Business Department to the prior declination and the underlying conflict. This measure is intended to prevent inadvertent engagement on a matter that would give rise to the same or similar conflict.
3. Annual Ethics Training — Illinois Rules 1.7 and 1.10. The Committee recommends that the firm conduct a firm-wide refresher on Illinois Rules of Professional Conduct 1.7 (Conflict of Interest — Current Clients) and 1.10 (Imputation of Conflicts of Interest — General Rule) as part of the annual ethics training cycle. The Committee observes that the distinction between waivable and unwaivable conflicts, and the limitations on screening as a curative mechanism under the Illinois Rules, are areas where periodic reinforcement is beneficial, particularly for associates and junior partners who may encounter these issues with less frequency. The Committee will coordinate with Helen Drazkowski and the firm's Professional Development Department to schedule this training during Q3 or Q4 2024.
V. CERTIFICATION
This excerpt of the Q2 2024 Quarterly Conflicts Committee Report has been prepared for the Management Committee's review and is classified as privileged and confidential attorney work product. The contents of this report reflect the deliberations, analyses, and determinations of the Conflicts Committee in the discharge of its professional-responsibility oversight functions.
Distribution of this report, or any portion thereof, beyond the members of the Management Committee requires the prior written approval of the Conflicts Committee Chair. Recipients are reminded that this document is subject to attorney-client privilege, work-product protection, and the firm's confidentiality policies. Unauthorized disclosure could result in a waiver of applicable privileges and could compromise the firm's professional obligations to its clients.
The undersigned certifies that the information set forth in this excerpt is accurate and complete to the best of his knowledge as of the date hereof.
CALDERWOOD & HARKNESS LLP CONFLICTS COMMITTEE
By: ________
Name: Lawrence Keating
Title: Senior Partner, Chair, Conflicts Committee
Date: July 12, 2024
Restricted Copy To:
Helen Drazkowski, General Counsel, Calderwood & Harkness LLP
Colleen Farrow, Director, Conflicts & New Business, Calderwood & Harkness LLP
PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT — FOR MANAGEMENT COMMITTEE DISTRIBUTION ONLY. This document may not be reproduced, distributed, or disclosed without the prior written approval of the Conflicts Committee Chair.
Date | Event
May 6, 2024 | MTDC's General Counsel, Terrence Whitfield, made initial contact with Rachel Bernstein by telephone to discuss potential retention. Rachel Bernstein conducted a preliminary assessment of the engagement scope and confirmed the firm's general capabilities in BIPA and biometric-privacy defense.
May 9, 2024 | New-matter intake opened under Matter No. 1031-00001. Rachel Bernstein submitted the New Business Intake Form (C&H Form NBI-1) to the Conflicts & New Business Department. First-round (Round 1) conflicts search run by Colleen Farrow's team against the firm's conflicts database, encompassing MTDC, its officers and directors, known adverse and related parties, the technology vendor, the plaintiffs' class counsel, and other identified parties.
May 10, 2024 | Conflicts report issued by the Conflicts & New Business Department. The report identified a conflict with an existing client as described in Section II.F below. Rachel Bernstein was notified of the identified conflict.
May 13, 2024 | Supplemental conflicts search (Round 2 — expanded parties) completed, incorporating additional parties identified through further review of the CID, the class-action complaint, and related public filings. No additional conflicts were identified beyond the primary conflict flagged in Round 1. Rachel Bernstein escalated the matter to the Conflicts Committee for formal review and determination.
May 14, 2024 | Conflicts Committee convened for formal deliberation. Following discussion and analysis, the Committee reached a unanimous determination that the identified conflict is unwaivable under the Illinois Rules of Professional Conduct. The Committee directed that the proposed MTDC engagement be declined. A formal written resolution was executed by the Committee Chair.
May 15, 2024 | Internal declination memorandum prepared by Rachel Bernstein and circulated to the proposed engagement team and firm leadership.
May 17, 2024 | Formal declination letter transmitted to Terrence Whitfield, MTDC General Counsel. The letter was reviewed by Helen Drazkowski, General Counsel, prior to transmission. Constance Hargrove (Hargrove, Tillman & Reese LLP) was copied on the transmittal email.
May 20, 2024 | Referral letter sent by Rachel Bernstein to Terrence Whitfield recommending two alternative firms with BIPA expertise. Courtesy notification emails sent to the recommended firms.
May 23, 2024 | Matter formally closed in firm systems. Matter Closure Form processed. Return-of-materials confirmation letter sent to MTDC. Finance Department instructed to close the matter with zero billings and zero disbursements. Conflicts database updated. Notification memorandum sent to existing client's engagement partner.
Category | Count
Total new-matter intake submissions reviewed | 347
Cleared without issue | 312
Required enhanced review or conditional clearance | 27
Formally declined | 8

PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT — FOR MANAGEMENT COMMITTEE DISTRIBUTION ONLY

CALDERWOOD & HARKNESS LLP

Q2 2024

I. EXECUTIVE SUMMARY OF Q2 2024 CONFLICTS ACTIVITY

IV. RECOMMENDATIONS AND FORWARD-LOOKING ITEMS

V. CERTIFICATION

CALDERWOOD & HARKNESS LLP CONFLICTS COMMITTEE

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