In-House Counsel

I recently heard a panel of judges speak about e-discovery issues. Their opinions on several subjects varied, but on one subject they agreed unanimously: Clawback provisions under Federal Rule of Evidence 502 are valuable tools in most significant litigation, but they remain rarely used.

This piqued my interest, so I asked several in-house litigators (not necessarily at the place where I work) whether they routinely seek FRE 502 clawback provisions in their cases. The in-house lawyers do not. And I asked whether outside counsel routinely recommend seeking those provisions. Not surprisingly (because the in-house folks aren’t using them), outside counsel do not.

The judges think clawback provisions are a good idea; in most situations, it strikes me that the judges are right. So what are FRE 502 clawback provisions, and why are inside and outside counsel routinely missing this trick?

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Ed. note: This post is by Will Meyerhofer, a former Sullivan & Cromwell attorney turned psychotherapist. He holds degrees from Harvard, NYU Law, and The Hunter College School of Social Work, and he blogs at The People’s Therapist. His new book, Life is a Brief Opportunity for Joy, is available on Amazon (affiliate link).

My client wasn’t getting enough sleep. I assumed it was insomnia, but that didn’t fit the bill. It wasn’t that she couldn’t sleep; it was that she wouldn’t sleep. She was staying up from 11 p.m. to 2 a.m., lying in bed — mostly, playing Angry Birds.

Those few hours were the only time she was left alone all day – no one from the firm called to assign her something awful to do or yell at her for something awful she’d done. To relinquish this sliver of “me time,” even for sleep, was out of the question….

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Success — at a law firm, in-house, or in any professional services environment — requires a certain mindset. The mindset is this: “My job is not to take an order from my client (or boss) and fill that order, but rather to achieve things.” Or, to put it differently, strive to execute projects, not simply to perform tasks.

Let’s start with a silly example: You ask someone to call the plumber to get the sink fixed.

Three days later, you realize that you haven’t heard back on this subject, so you ask, “Did you call the plumber?”

You hear back, “Oh, yes. I did.”

“And?”

“The plumber hasn’t returned my call.”

Do you feel as though you received intelligent help with this project? Of course not — because the project was to get the sink fixed. You didn’t really care whether your helper called the plumber, or e-mailed the plumber, or attracted the plumber’s attention with smoke signals. So long as the sink got fixed, the project was completed.

But your helper chose not to think about the project and instead focused only on the task — making a phone call, whether or not anything came of it. Your helper completed the task and ignored the actual project.

Undertaking tasks, rather than executing projects, is exactly the way to fail in a professional services environment. Here’s an example, from the legal world….

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Egad! The General Counsel just announced that your target for next year will be to handle 20 percent of all outside legal spend on an alternative fee basis! What do you do?

You can’t just do flat fee agreements! What happens if you agree to pay too much, and you’ve given away your client’s money? And success-based fees are a great idea, but they’re impossible to calculate! How does anyone know at the start of a piece of (non-routine) litigation what the case is worth? Since you don’t know the value of the matter, you can’t set the target from which you’ll judge success.

What’s an in-house lawyer to do?

Calm down. Here’s a way to ease into alternative fee agreements that will put neither you nor your outside firms at risk, will educate you slowly over time, and will meet your internal objectives….

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Ed. note: This post is by Will Meyerhofer, a former Sullivan & Cromwell attorney turned psychotherapist. He holds degrees from Harvard, NYU Law, and The Hunter College School of Social Work, and he blogs at The People’s Therapist. His new book, Life is a Brief Opportunity for Joy, is available on Amazon (affiliate link).

There’s slow at the office. Then there’s moribund. Like, stick a fork in it, parrot in the Monty Python skit, no longer viable, kaput, over and out, flatlining… dead dead dead.

Like you haven’t recorded a billable hour in weeks. Like you show up at 10:30 a.m., slide your Kindle under your computer monitor, and try to look busy while you read John LeCarre novels. Then leave at 6 p.m. – or whenever the coast is clear and you think you can get away with it.

We all know having nothing to do at a big law firm is better than being busy. Being busy is really, really bad…

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It’s not just the federal government that’s desperate for money. The states are, too.

One way that states are looking to fill their coffers is by auditing unclaimed property on companies’ books — so-called “escheat audits.” This isn’t the world’s sexiest topic, but an in-house lawyer might serve a valuable purpose by double-checking corporate escheat policies.

In the financial services industry, many companies must deal with unclaimed deposits and securities. But even outside that sector, most companies find themselves holding unclaimed property, in the form of uncashed vendor or payroll checks, undistributed benefits payments, or the like. Complying with escheat laws may pose a challenge.

States are now doing two things related to escheat laws to increase their revenue. First, they’re shortening the amount of time that a holder can retain unclaimed funds before turning those funds over to the state. Second, states are accelerating their use of “escheat audits” — auditing corporate books to see whether companies have complied with the applicable laws.

This has recently become big business — with implications for in-house counsel….

double red triangle arrows Continue reading “Inside Straight: Be An In-House Hero: Escheat Audits!”

Ed. note: This post is by Will Meyerhofer, a former Sullivan & Cromwell attorney turned psychotherapist. He holds degrees from Harvard, NYU Law, and The Hunter College School of Social Work, and he blogs at The People’s Therapist. His new book, Life is a Brief Opportunity for Joy, is available on Amazon (affiliate link).

To judge by the accoutrements of “the profession,” lawyers, as a group, maintain an inflated self-image. They think they’re all that. It’s easy to get sucked into this mindset – especially fresh out of law school. Perhaps, when you’re not “thinking like a lawyer,” you’ve spent a few minutes admiring the little “Esq.” printed after your name on an envelope from school or a law firm — or some company in Parsippany trying to sell you a genuine mahogany and brass pen holder featuring a statue of “blind justice” for only $59.99 with free shipping.

Back when I passed the bar, I was offered the option by New York State to purchase a printed document – “suitable for hanging” – to memorialize the event. I figured what the heck and blew the twenty-five bucks. The “parchment” arrived in a cardboard tube, and it was huge – like a royal proclamation. I felt ridiculous, rolled it back up and stuck it in a closet, where it remains.

It’s hard to imagine accountants (who usually make more than lawyers), or bankers (who always make more than lawyers) laying on the pretension to quite the degree lawyers take for granted…

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Several readers have sent e-mails asking for advice on how to deliver bad news to clients.

Here’s proof that, if ye shall ask, ye may receive.

Think first about the “bad news” that you’re delivering. You’re not a physician, so you’re not looking a person in the eye and explaining that he or she has just six months to live. That’s really bad news, and that’s hard to deliver. Your job is easy.

Even in the universe of bad news delivered by lawyers, if you’re working with a corporate client, you’re probably getting off easy. You’re not reporting to the client that “the Supreme Court just rejected the application for a stay of your execution” or “the appellate court just affirmed the conviction, so you’ll be doing the time.” The bad news that civil litigators are delivering to corporate clients just isn’t that significant. So calm down.

I’m also ruling out other bad news that folks deliver to, or receive from, in-house counsel. I’m not thinking about telling employees that they’ve been laid off or fired or delivering unhappy performance reviews. I’m not thinking about how you deliver bad news to your own law firm or to a court. And I’m ruling out situations where the bad news results from your own error, rather than an adverse decision by a court. (It’s much harder to tell a client, for example, “I blew the statute of limitations, and your claim is now time-barred,” than it is to tell a client, say, “The court denied our motion for summary judgment.”) So maybe I’m cheating here, by limiting the discussion, but the optimal way to deliver bad news will vary with the situation.

So what’s the best way to deliver news of an adverse judicial decision to a corporate client?

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It takes a big man to ignore a small issue.

A lawyer who lacks self-confidence feels compelled to run down every issue, make every argument, and depose every witness. After all, if you choose to make an educated guess about the importance of a tangential issue, or whether to omit a plausible (but likely losing) argument from a brief, or whether to incur the cost of deposing a just-barely-relevant witness, all may be lost. You might lose the case, and the recriminations would never stop. Better to leave no stone unturned than to leave yourself at risk of being second-guessed.

That’s one reason to hire lawyers with a little self-confidence. They’re willing to take intelligent risks where it makes sense to do so.

Which brings us to the topic of today’s post: Compliance due diligence.

If your company’s considering an acquisition, you can simply outsource the entire compliance due diligence process. Hire Big Firm, ask it to handle due diligence, and wait for the results. No muss, no fuss.

And, at the end of the day, no deal.

No deal, but lots of legal expense.

Why?

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Ed. note: This post is by Will Meyerhofer, a former Sullivan & Cromwell attorney turned psychotherapist. He holds degrees from Harvard, NYU Law, and The Hunter College School of Social Work, and he blogs at The People’s Therapist. His new book, Life is a Brief Opportunity for Joy, is available on Amazon (affiliate link).

Associates at big law firms don’t normally burn out right away. They arrive bright-eyed and bushy-tailed, raring to go. This is their moment! Grasp the golden ring!

If you look closely, though, you’ll notice a few poor souls who burn out immediately – sometimes within a few weeks. These folks look awful almost from Day One, dread coming to work, don’t talk to the others, can’t sleep and wonder how to get out – like, immediately.

That’s because they’ve been sexually harassed.

Oh… that.

Right. That.

I know. Sexual harassment is a drag of a topic, the stuff of tedious lectures by gender theorists and “Human Resource professionals.” Nothing new to say, just standard material: wince-inducing scenarios, tired platitudes about respect and crossing the line and what’s appropriate in a workplace blah blah blah…boring, scary, boring.

I hear about sexual harassment all the time from my clients, so it’s a little less boring for me, and a lot more real. There is stuff worth talking about. But I’ll keep it quick.

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