Legal Business

Austrian law student’s case against Facebook results in landmark ECJ decision to scrap safe harbour regime


An Austrian law student has won a legal challenge over the US safe harbour scheme, in a decision which will impact some 4,000 US companies which transferred personal information across the Atlantic.

Maximilian Schrems, a student living in Ireland, has succeeded in his legal challenge against Facebook’s ability for US companies to transfer personal data to the US after the European Court of Justice decided that the US ‘does not afford an adequate level of protection of personal data.’

Schrems instructed Gerard Rudden, a partner who had previously specialised in landlord and tenancy disputes at Dublin law firm Ahern Rudden, to bring the case.

Rudden told Legal Business when he initially spoke to Schrems about the case, it appeared to be a vital issue which required judicial intervention.

‘The fact that the European Court of Justice has held overwhelmingly in favour of Schrems is very satisfying and shows that one person, with legal representation, despite not insignificant obstacles, can make a difference,’ Rudden said. 

The case, brought before Ireland’s Data Protection Commissioner before being escalated to European’s highest court, declares the safe harbour scheme that allowed Facebook and over 4,000 other US companies to transfer personal information across the Atlantic invalid.

The Data Protection Commissioner was represented by barrister Paul Anthony McDermott, while joined party and lobby group Digital Rights Ireland was represented by barrister Fergal Crehan and Simon McGarr of McGarr Solicitors. 

Facebook user Schrems filed the case over his personal privacy following the revelations made by whistle-blower Edward Snowden that the US National Security Agency was routinely intercepting email, social media and telephone communications.  

The decision will have a far-reaching implications across the European Union and ends 15 years of the ‘safe harbour’ scheme. The decision allows national regulators to suspend data transfers to the US, instead of letting exchanges of information go unexamined.

Schrems said: ‘I very much welcome the judgment of the Court, which will hopefully be a milestone when it comes to online privacy. This judgment draws a clear line. It clarifies that mass surveillance violates our fundamental rights. Reasonable legal redress must be possible.’

He added: ‘The decision also highlights that governments and businesses cannot simply ignore our fundamental right to privacy, but must abide by the law and enforce it. This decision is a major blow for US global surveillance that heavily relies on private partners. The judgment makes it clear that US businesses cannot simply aid US espionage efforts in violation of European fundamental rights.’

The Court declared that ‘legislation permitting the public authorities to have access on a generalised basis to electronic communications must be regarded as compromising the essence of the fundamental right to respect for private life’ and declared the safe harbour regime ‘invalid’.

The court found the regime denied national authorities their powers to protect the privacy and fundamental rights and freedom of individuals.

Hogan Lovells European head of data protection Eduardo Ustaran warned the decision ‘leaves any organisation that relied upon Safe Harbour exposed to claims that transfers of personal data from the EU to the US are unlawful, unless they fit within one of the legal exemptions or are authorised by data protection authorities’. He added that multinational companies ‘will need to rethink how they operate’.

Covington & Burling special counsel Monika Kuschewsky, argues that ‘the EU’s highest court has pulled the rug under the feet of thousands of companies that have been relying on safe harbour’.

She added: ‘All these companies are now forced to find an alternative mechanism for their data transfers to the US, basically overnight, as the court has declared the Commission Decision on safe harbour invalid without providing for any transitional period.’

For more on the 2015 data protection landscape, see our earlier guest post by PwC’s Stewart Room: New year, new privacy and security strategy’ here.

Legal Business

Fieldfisher loses Facebook to Hogan Lovells as the firm hires Bristows partner as privacy head


Fieldfisher has lost key instructions from social networking giant Facebook which is set to direct privacy and information law work to top-ten firm Hogan Lovells.

The news emerges just weeks after its high profile head of privacy Eduardo Ustaran joined Hogan Lovells to lead its European arm within the global privacy and information management practice. Fieldfisher did, however, yesterday (29 July) announce a successor for Ustaran with the recruitment of Bristows partner Hazel Grant.

While Facebook do not currently operate a formal panel for external legal advisers, Fieldfisher’s strength in the technology, media and telecommunications sector previously saw it act for the company.

On Facebook directing work to Hogan Lovells, Fieldfisher’s head of technology, outsourcing and privacy, Robert Shooter, told Legal Business: ‘Facebook don’t have a panel as such. With Eduardo leaving us, undoubtedly some clients will follow him (and we anticipate clients joining us following Hazel’s hire). Facebook may choose to go with Eduardo to Hogans, or instruct both firms.’

Ustaran’s departure was a blow to Fieldfisher, despite its leading privacy practice that also counted Vodafone, Thomson Reuters, Ernst & Young, Nintendo, Reed Elsevier and Orange Business Services among its clients. It was not confirmed at the time of writing whether Fieldfisher had retained its position on Vodafone’s newly revamped panel.

Fieldfisher is also losing a four-strong associate team who are joining Ustaran at Hogan Lovells, while former Fieldfisher legal director Sian Rudgard already joined as of counsel in June.

The exit of Ustaran, a dual-qualified English solicitor and Spanish abogado, was considered contentious after he was given an exceptional 18-month notice period at the time of his resignation last October. He did, however, exit the firm to join Hogan Lovells in June, almost a year before the notice period expired.

In April, the firm also saw the departure of data protection and privacy partner Stewart Room for PwC Legal, and trade mark and brand protection practice head Mark Holah for Bird & Bird.

The firm has made some lateral hires of its own. As well as Grant, who is set to join the firm in late August, other partner recruits includes Osborne Clarke’s head of technology Mark Webber.

And with high profile client names including VMware, Netflix, Expedia and Box still on the roster, Shooter adds: ‘We’re still one of the largest privacy groups in Europe and we’re top ranked. We’re delighted about Hazel joining us and [partner] Phil Lee leading the charge in Palo Alto.’

Shooter added that the technology, outsourcing and privacy group is also enjoying a busy period and is seeking to hire partners to expand further, specifically in Manchester. ‘We’re looking at the Manchester market. With our merger with Heatons earlier this year, we’re looking to build on our existing team. We believe there is a business case for hiring a technology partner in Manchester and from there building a team. There are some really exciting times ahead.’

Hogan Lovells declined to comment. Facebook did not respond to requests for comment at the time of writing.

Legal Business

Guest post: West Coast, left field and progressive – a conversation with Facebook’s law firm


One of the more unusual reactions I’ve gotten to my book Growth Is Dead came from Kate Fritz, managing partner of Fenwick & West, who I had the chance to talk to recently.

Few lawyers will need an introduction to Fenwick, one of most respected practices in the West Coast of America and a leading adviser in California’s technology scene thanks for work for clients like Facebook, Apple and eBay.

Now, several people have taken the title of my book a bit too literally, but Kate challenged the concept on another level. She readily agreed that revenue growth substantially beyond inflation or headcount is probably over in law. But then came her insight. Kate believes firms have to grow a lot in the way fully mature animals or humans need to grow: smarter, evolving, learning new things, changing with the business climate, the demographics of the talent population, and changes in the world economy in general.

She went further: the mind-set of law firms needs to be one of radical change, which she described as change from the inside, not that driven by external forces. To elaborate: Kate believes law firms as institutions need to change, but they haven’t done so at all. How not? We have:

• the same positions

• the same hiring tactics

• the same recruiting practices

• the same compensation models

Kate warmed to the subject: ‘It’s crazy; what other business hasn’t changed those things in the last 100 years?’ Every company, every professional services firm, does everything radically differently than it did 15 years ago, and that’s just not true of law firms, she said. Change is ‘super-overdue’ and not just because clients are demanding it but because the talent pool has changed dramatically. For example, the degree of sophistication of people who aren’t lawyers but who can help lawyers to provide services to clients – and still lawyers refuse to adequately appreciate what people who don’t have a legal qualification can provide.

And, I assumed, that would carry over into a need to change the minimal respect people in the C-suite of most law firms get. Absolutely, Kate said: Just look at the financial analysts who can crunch data far more effectively than lawyers.

We turned to the subject of talent.

Kate said it’s not just demographic changes; it’s about technological changes. Starting to practise in the days of snail mail, hand delivery, faxes, FedEx, and no email, where responses were not expected to be instantaneous, is so different than the starting experience of today’s first-year associates. ‘So this isn’t the stereotype of baby boomers willing to work all the time and a new generation full of slackers,?’ I ask.

‘No; we may think we worked all the time, but 24/7 access was not really the reality it is today. Law firms behave as if these changes are merely on the margins but they haven’t asked what the real impact is on lawyers and others. We need some pretty fundamental adjustments.’

‘But there has to be something about demographics, right? And I gather you’re talking about more than the fact that women have babies and men don’t?,’ I ask.

Absolutely, she agrees, and turns to diversity in general. The talent pool, if not the workforce within law firms itself, is truly diverse. But you may have to change your institution, your firm, to make it a place where diversity is welcome. ‘Why diversity? Why does it matter?,’ I ask. Diversity makes the firm a stronger, more resilient institution, better able to serve clients. If that’s a core goal, you need to do more than bring a group of diverse people in through recruitment and then watch them leave.

‘Women are the canary in the coal mine for all the diversity issues.’ They’re in the crosshairs of work/life (im)balance because the critical years to partnership overlap with critical family formation years in ways not remotely as conflicting for men. To take a first step in alleviating that, Fenwick got rid of lockstep promotion for associates a long time ago; Kate called it a crazy idea that makes no sense and has never been used outside Law Land.

She suggested we get more comfortable about thinking of career progression as a ‘lattice’, and not a ladder. The path to advancement needs to be divorced from law school graduation anniversaries and needs to more closely match what people are capable of doing. Follow people’s accomplishments, in other words, not an arbitrary measure of time passing.

Law firms also need to experiment more not just with ‘time in grade’ but with the roles on offer. A lot of associates don’t want to be partners, but would still rather stay at a law firm than to go in-house; for others, the ultimate plan is to go in-house; and still others have different plans altogether. Law firms need to be far more candid – with themselves – about acknowledging that and acknowledging that firms don’t just train associates to be partners but to be corporate clients, knowledge managers, judges, legal product developers, entrepreneurs, client relationship executives, practice managers, community leaders, and much more.

Kate observes that corporations and in-house departments have done a much better job at diversifying their legal departments, so the problem has to be laid at the door of law firms and not the wider legal profession. And if law firms can’t solve it, we’re excluding a huge part of the talent pool.

I change the subject to lawyers’ psychology.

‘There’s so much to be done internally that’s difficult because of that psychology.’ For people within the firm to be resilient and embrace change when lawyers, according to several studies, are naturally the ‘least resilient people on the planet’ means you have to make the institution itself resilient. Obviously, law firms are different from corporations, flatter and less hierarchical, which can be a great strength, but there are also many things law firms can learn from corporations.

It comes down to this: people need to participate in the change, become invested in doing things, trying small experiments and gaining adoption.

I ask what she thinks of the concept of an R&D budget for a law firm? ‘However you can accomplish the result of having everyone not spend every hour doing the task at hand, I applaud.’ She adds that Fenwick tends to create change through project experiments that start small, which allows for evolution and growth for successful experiments or smaller failure. Again, Kate insists, whatever it takes, be that ‘signalling’ permission with an R&D budget or giving permission to pursue projects not immediately directed at the task at hand, we need to think creatively about ways of accomplishing new and different things.

I raise my new least favourite word, ‘value’. (Least favourite because almost everyone who invokes it has no clue what they mean.) What does ‘value’ mean in the eyes of clients?

Well, she says, if you think about ordinary consumers and perceived value, much has to do with expectations of what the cost would be. For many years, the lawyer was the access point to legal knowledge. Now clients have tonnes of choices and a stronger sense of whether they’ve gotten value. Pricing initiatives are just one way Fenwick is trying to deliver value.

The same service can seem to a client to be exceptional or disappointing, based on ingoing expectations. A cautionary thought to those of us who are tempted always to promise impeccability as a starting point.

My takeaway?

• You could argue that Fenwick, with its roots in Silicon Valley and San Francisco, is unusually sensitive to the role of technology in driving change in the workplace. This may be true – it should be true – but I have news for you: listen up. The noted Canadian-American author William Gibson, who coined the word ‘cyberspace,’ also said ‘The future is already here; it’s just unevenly distributed’. So if Fenwick is closer to the future than most of Big Law, pay attention.

• Second, in going back over my notes something jumped out at me that I hadn’t perceived when we were talking: Kate used a single word a lot and invested it with great meaning. The word?: ‘Institution.’ This matters. It matters because law firms choose to be consumption and not investment engines, and tend to focus on the present and the immediate past, and never the future. The word ‘institution’ implies a strongly related concept, namely ‘stewardship’. Don’t we have an obligation to leave our institutions better than we found them?

Bruce MacEwen is president of Adam Smith Esq, the legal research and consulting company.

See ‘How to improve a law firm in 17 easy steps’ for more on how law firms can innovate.

Legal Business

Status update: Gibson Dunn partner hired as Facebook deputy GC


Social media giant Facebook has appointed Gibson, Dunn & Crutcher’s co-head of IT and data privacy Ashlie Beringer as deputy general counsel (GC), just weeks after Twitter announced Vijaya Gadde will take over as GC of the online social networking group.

Beringer takes over from Colin Stretch, who this summer succeeded Ted Ullyot as vice president and GC, following Ullyot’s announcement in May that he would be stepping down.

A litigation partner at Palo Alto-based Gibson Dunn, Beringer has represented Facebook and MySpace in the recently-announced Federal Trade Commission investigations and settlement of claims into alleged privacy violations.

Beringer previously specialised in entertainment litigation and a 2006 Wall Street Journal profile said: ‘Beringer has established something of a subspecialty in reality-TV litigation…. And she worked on a team that successfully defended Ozzy and Sharon Osbourne in two contract disputes related to their MTV reality series.

‘We can’t vouch for Beringer’s litigation skills, but Sharon Osbourne, in her memoirs “Sharon Osbourne: Extreme,” had this to say: “Ashlie Beringer has got balls of steel.”‘

Beringer starts at Facebook in November, and will oversee its litigation, regulatory and product team.

Her appointment comes just weeks after Twitter’s GC Alexander Macgillivray announced he is to leave the social networking giant in the lead up to its initial public offering.

Former Wilson Sonsini Goodrich & Rosati lawyer Vijaya Gadde has taken over the lead role.

In the blog announcing his departure Macgillivray said: ‘As for me, it has been my privilege to work and fight on behalf of great companies and their users over the last decade. A privilege and a lot of work. So, I’m looking forward to engaging my various internet passions from new and different perspectives, seeing friends and family without distraction, and just goofing off a bit. We should all do more of that.’

Legal Business

In-house: Facebook and Diageo fill top GC roles


Social networking giant Facebook and global drinks brand Diageo both this week announced appointments to fill their top legal positions.

Facebook confirmed yesterday (20 June) that it has appointed Colin Stretch to succeed company general counsel (GC) Ted Ullyot as vice president and general counsel from 5 July, following Ullyot’s announcement in May that he would be stepping down.

Stretch – a former partner at Washington, DC-based litigation outfit Kellogg, Huber, Hansen, Todd, Evans & Figel – joined Facebook’s in-house team in 2010 and has since served as lead negotiator for the company’s settlement with the Federal Trade Commission in 2011, and also led the appellate victory for Facebook in the profile raising Winklevoss case. He will now oversee the company’s legal and security departments.

Sheryl Sandberg, chief operating officer of Facebook said: ‘Colin has been an instrumental leader on the Facebook legal team and has earned the trust and confidence of management, the board of directors and our entire company. We are very excited to have him as our new general counsel.’

In the City meanwhile, Diageo’s European general counsel Siobhan Moriarty (pictured) will take over as general counsel of the 76-lawyer team from Tim Proctor, who is to retire from the company on 30 June after 13 years.

A corporate lawyer, Moriarty worked in private practice in London and Dublin before joining the FTSE 100 company’s in-house practice in 1997, where she has also worked as corporate M&A counsel and regional counsel for Ireland.

Chief executive Paul Walsh said: ‘Siobhan has held a range of senior roles that have demonstrated her leadership and performance contribution across both developed and emerging markets, and her ability to navigate the complex regulatory issues and legislative environments that shape our business. Her experience and judgement will be major assets to all of us as we progress our significant ambitions for our business.’

Diageo last carried out a review of its external advisors in 2009. Slaughter and May is the company’s lead corporate adviser and other advisers include CMS Cameron McKenna, Addleshaw Goddard, SJ Berwin and Pinsent Masons.