I wrote about these contractual issues the week before Thanksgiving. I received so many emails that I thought it best to flesh these topics out a bit more. Also, some of these headings are from the anonymous “comments” section on this site, so I can’t attribute them (and I’ve also edited them for language).
1) “Real life example: Company A hired to refurbish shipping vessel owned by Company B. Contract obligated Company B to indemnify Company A fully, worded broadly enough and specifically enough to require indemnification for Company A’s own fault. Company A sets the boat on fire through clearly negligent actions and then tries to put it out with a garden hose. Fifth Circuit Court of Appeals tells Company B that yes, Company A was at fault; yes, you are out quite a bit for the value of the boat and the lost income, but you must eat it as you have to indemnify Company A for your own claim.”
Why on Earth someone would agree to indemnify a Customer for their own negligence is beyond me. I have been through this scenario many times, and I always inquire as to how I am expected to indemnify my Customer for its own negligence. In the B2B arena, indemnity should be limited (if possible) to third party claims against the potential indemnitee, at which point the indemnitor would take on the payment.
This raises another point: even if I indemnify you, who is going to defend you?
Continue reading “House Rules: Insurance, LoL, and Indemnity, Redux”
So, the Customer wants you to take on unlimited liability for breach of confidentiality, indemnify (and hold harmless) for any and all bad acts of your employees, and to carry a multi-million dollar insurance policy. What do you do?
First, begin by triaging these from simplest to more complicated. During a negotiation it can be helpful to appear to “give” as much as possible up front when you’re down to a few points. This way, when the final hot button items arise, you appear reasonable.
Insurance requirements are usually no-brainers, and as long as the amounts demanded are not grotesquely high, your Risk folks will approve the proposed language with very light editing, if any. Today, it is also not unusual for the Customer to demand to be named as a payee in the event of a loss; this is often fine, and usually not an issue. More practice pointers, after the jump….
Continue reading “House Rules: Insurance, LoL, Indemnity, and Other Dirty Words”
Hurricane Irene: She came. She saw. She blew. She sucked? In the wake of Hurricane Tropical Storm Irene, people have been expressing their displeasure with the way this natural disaster panned out. Apparently, we’re now so bitter as a society that we’re wishing greater harm upon ourselves. That’s a little sick, no?
After days of preparation, there is still a lot of damage to deal with in the aftermath of the storm. So, for all of you Irene naysayers, consider these facts. Across the Eastern Seaboard, millions of people are without power. As of this morning, at least 21 people have lost their lives. We’re looking at estimated property losses of $7 billion.
UPDATE (1:10 PM): The property losses could actually run as high as $13 billion, meaning that total economic losses could reach $14 billion to $26 billion (because “the rule of thumb is that total economic losses are equal to about twice property losses”). See this interesting post, entitled “How Irene Lived Up to the Hype,” by Nate Silver.
In the legal world, we know that it pays to be prepared, but there are some things that we just can’t work around….
Continue reading “A Recap of Hurricane Tropical Storm Irene”
If this tiger reminds you of your pet cat, you are an idiot.
There’s a Chris Rock joke about the Siegfried & Roy tiger attack: “That tiger didn’t go crazy, that tiger went tiger.” With that in mind, I bring you this latest decision from the Tenth Circuit, via the National Law Journal:
An insurance company does not have to pay a Kansas family $100,000 for an accident in which a Siberian tiger attacked and killed their daughter during her senior photo shoot, a federal appeals court ruled this week.
On Monday, the 10th U.S. Circuit Court of Appeals held that Safeco Insurance Company of America does not have to pay damages in a wrongful death suit because the homeowners policy bought by the tiger’s owners excluded coverage for business pursuits.
I’ll admit, it took me a second to appreciate what was going on here. As it turns out, the only actor that behaved reasonably in this situation was the tiger (and the Tenth Circuit)….
Continue reading “Tiger Goes Tiger, Insurance Company Doesn’t Have to Pay”
The comments on last month’s post about small law firms were uncommonly good. Readers shared valuable insights and information about life beyond Biglaw, including discussion of the pluses and minuses of working at a small — or smaller (size is relative) — law firm.
One commenter — after pointing out that non-Biglaw firms come in many shapes and sizes, making it hard to generalize — had this excellent suggestion:
You know what would be really helpful? A variety of open threads on different types of small firms. Do one or two threads a day getting people’s input on salaries in boutique regulatory firms, other types of transactional, plaintiffs firms, insurance defense, class action boutiques, whatever.
As someone that’s focusing my search primarily on small firms, it’s been really difficult trying to get a sense of what my salary demands should be. Short of asking my friends how much they make, the information really doesn’t exist in any useful form. A variety of open threads focusing on specific practice areas and what people can expect for salaries and benefits would probably be really beneficial to many readers.
Salary demands? How about just hoping that you have a salary?
But we like this idea for an occasional series of open threads, focusing on small firms with different specialties. Today’s topic: firms that practice INSURANCE LAW.
If this interests you, read more after the jump.
Continue reading “Small Law Firm Open Thread: Insurance Law”
This year hasn’t been a fabulous one for Blank Rome. They’ve had to cut both salaries and headcount. The firm also pushed back start dates for first-year associates, until “at least” January 2010, and the 2009 summer program was a brief six weeks.
This latest news doesn’t improve matters. From the Legal Intelligencer, via Am Law Daily (and also a commenter):
Blank Rome has entered into a $20 million agreement with the trustee of a former client that is now in bankruptcy to settle a complaint that alleged breach of fiduciary duty, professional malpractice and breach of contract claims against the firm.
The settlement, reached in the Philadelphia Common Pleas Court case Miller v. Blank Rome, was approved by U.S. Bankruptcy Judge Mary F. Walrath for the District of Delaware on July 28. Walrath is overseeing the bankruptcy of American Business Financial Services, which is involved in a string of litigation in both state and federal court stemming from its bankruptcy and business dealings.
Blank Rome does not admit any liability or wrongdoing in agreeing to the settlement, according to the agreement.
Of course they don’t admit liability. Still, $20 million is a lot of dough. Who’s on the hook for that?
Continue reading “Blank Rome’s Massive Malpractice Settlement”
It has been a tough two weeks for employees at McDermott Will & Emery. First the firm cut the salaries of summer associates. Then MWE fired 72 people.
Today, word came down to all associates and non-attorney personnel that the firm is also cutting benefits. A firm-wide memo explained:
The Firm has evaluated its employee benefit plans and is making changes effective July 1, 2009.
We began our evaluation late last year in response to the deteriorating economy and the fact that changes to employee benefits plans were occurring throughout corporate America. After a thorough review by our benefits consultants, we were informed that our plans were above market and that specific changes, if implemented, would bring our plans more in line with the market.
Right. Who wants to pay an “above market” benefit package?
Remember, McDermott is the firm that canceled aspects of its coffee service. At the point where the firm is looking to save nickels and dimes on coffee, it shouldn’t be surprising that it has found a way to save some money on more important employee benefits.
A tipster reports that the top line changes to MWE’s benefit structure include an increase in some premiums and deductibles, as well as a reduction in the percentage of pharmaceutical costs that are covered by the firm’s health plan. Suddenly, the nationwide health care debate expected to take place in Congress this summer just became much more important to employees at McDermott.
In fairness, MWE isn’t the first firm to go down this path. Last month, Kirkland & Ellis made similar changes to its health care coverage for associates.
Read the full memo after the jump.
Continue reading “Reversed Perk Watch: McDermott Will & Emery Scales Back on Benefits”
Law firms are dealing with the Great Recession in many different ways. As we’ve chronicled in these pages, layoffs and salary cuts are commonplace, practically clichéd.
Some firms are cutting costs more creatively. From a source at Kirkland & Ellis:
We just got a memo from K&E about a massive increase in our health care premiums. I’m not happy at all…. By my rough math, my deductible tripled, but the cost increased $100/month. So they’re screwing us two ways. Again, if my math is right.
From a second tipster:
This change effectively reduces associate salaries by approximately $1,000-$2,000 per year, although made under the guise of a change in the health care plan (perhaps in attempt to avoid blog coverage of salary cuts?).
K&E’s health care coverage was already pretty poor compared to other biglaw firms. This change makes their health care for associates (and other employees earning more than $90K) even worse. Also disturbing is that part of the justification for the change is to “bring the amount paid for health care coverage for associates closer to the amount paid by partners of the Firm…..”
My (albeit limited) understanding of health care coverage for partners in partnerships is that by its nature it is always different from the partnerships’ actual employees (i.e., associates)…. Additionally, we all know K&E partners make a ton of money (as evidenced by their high ppp, which have not been reduced). While associates at Kirkland are definitely well compensated, they work brutal hours for that money, and enacting a salary cut in the guise of bringing partners health care cost “in line” with associates seems greedy and ill-advised.
Full memo, in all of its hyper-technical glory, after the jump.
Continue reading “Reversed Perk Watch: Kirkland Claws Back Health Care Costs”
The effects of the global economic crisis continue to trickle through all aspects of the legal industry. Many firms simply aren’t willing to share the profits with associates as has been done in years past.
While we tend to focus on the Biglaw view of this crisis, it’s important to remember that associates as smaller firms are getting hit just as hard or worse from a dollars-per-hour perspective.
Last year we brought you a series of posts on law firm life outside of the top teir. One of the firms we highlighted was Kaufman Borgeest Ryan, a boutique insurance coverage firm with offices in New York, New Jersey, and California. Starting salaries there are about $90K while senior associates make just under what Biglaw first-years pull down.
In the past, associates have been eligible to receive around a $10K bonus, if they meet the minimum billable hours requirement of 2100.
Imagine being a lawyer, living in New York City, billing over 2000 hours a year, and making less than six-figures. Calgon take me away.
This year, associates at Kaufman should still receive their bonus, but it’s complicated. More after the jump.
Continue reading “Livin’ For The City”
Make no mistake: the future of AIG is in the hands of Eric Dinallo, superintendent of insurance for New York State.
Insurance companies are regulated by many different agencies, but because so many of the companies are incorporated in New York, the state’s superintendent of insurance becomes the de-facto primary regulator. Dinallo led the charge with bailouts of Ambac and MBIA. According to the WSJ Law Blog:
With AIG gasping for air, these days are Dinallo’s Stanley Cup, so to speak. According to the WSJ, Dinallo (Vassar, NYU Law) “took a significant role” in AIG’s survival talks over the weekend.
Dinallo rose to power under former-Gov. Eliot Spitzer’s tutelage. But Spitzer’s infamous downfall almost made him a star. As many know, “Client #9″ was exposed after his liaison with Ashlee Alexandra Dupree in room 871 of the Mayflower hotel in Washington.
Spitzer’s traveling companion earlier that day? Eric Dinallo. The two men were in Washington to give testimony on the how downgrading the ratings of insurance agencies would kill the municipal bond market.
It’s pretty clear that Dinallo did not see anything troubling regarding the former governor, and he has steadfastly refused to say anything about the day Spitzer went down. But to be that close to a train wreck and walk away unscathed speaks volumes of Dinallo’s private fortitude and public character.
AIG’s fate is in the hands of a pretty straight shooter.
Working for the Weekend: Lawyering up Merrill/BoA, Lehman, AIG [WSJ Law Blog]
We wish we knew how to quit… finding legal angles to every story under the sun. One such story is the recent, tragic death of Heath Ledger, the celebrated young actor.
We’ve noted the news in passing. Now we offer more substantive, law-related discussion (beyond fleeting references to NYU law students who went from their seminars about Jesus to join the crowd of gawkers assembled outside Ledger’s apartment).
1. Rights to remains. Sometimes this can become an issue, as it did in the case of Anna Nicole Smith. Earlier this week, the Ohio Supreme Court heard a case about a law providing that body parts removed during an autopsy are classified as medical waste (which usually results in the incineration, rather than burial with the body).
It fortunately appears this won’t be an issue in Ledger’s case. Although additional blood and tissue testing still needs to be done, his family will be taking custody of his body, according to the NYT’s City Room blog.
2. Pending projects. Heath Ledger’s sudden passing raises issues with respect to projects he was involved with. From the Hollywood Reporter:
Of particular importance to Hollywood will be the future of Terry Gilliam’s The Imaginarium of Doctor Parnassus, which had very recently begun shooting. After dealing with the shock of losing Ledger to unfortunate circumstances, the film’s producers and lawyers will have to consult with their production lawyers and the insurance firm that indemnified the film to decide whether to recast, restage and/or rewrite the film to work around Ledger’s absence, or whether Ledger’s death presents an irresolvable barrier to completion of the film.
More analysis, including discussion of insurance recovery issues, over here.
3. Funeral protestors. Exact funeral plans for Heath Ledger are not yet known. But when it does happen, it could get ugly. A tipster raises a legal question:
Check out this story [about how members of the antigay Westboro Baptist Church plan to protest at Heath Ledger's funeral, because of his work in "Brokeback Mountain"].
Here’s my question. These [SOBs] are saying horrible, offensive, disgusting things. When does the fighting words doctrine come into play, and does the fighting words doctrine protect me if I punch out one of these bastards? Because I would really like to.
Feel free to opine in the comments.
Update: More about that Jesus seminar, from the WSJ Law Blog.
Heath Ledger’s Death Leaves Big Legal Question [THR, ESQ. / Hollywood Reporter]
Anti-Gay Church to Protest Ledger Funeral [ABC News]
What Are They Teaching at NYU Law These Days? [Traditional Notions]
Where Were You When? [Concurring Opinions]
The Passion of the Christ: The Trial of Jesus [NYU School of Law]
Today we bring you not one, but two Judges of the Day. We can’t decide who is more deserving of the honor. From the Florida Times-Union:
Twelve days before Christmas, Circuit Judge Aaron Bowden fired his 17-year judicial assistant, who had been on leave since August with cancer. The Jacksonville judge said he feared her prolonged illness would leave him without an assistant at a time when the state had implemented a hiring freeze.
But his decision left Christine Birch, 54, with no medical, life or disability insurance and has created a firestorm at the courthouse.
Chief Circuit Judge Donald Moran responded by calling Bowden “a no-good son of a bitch,” prompting Bowden to respond with a blistering e-mail (PDF) defending his decision and calling Moran’s criticism irresponsible, unprofessional and unseemly.
Other judges’ assistants were also appalled by Birch’s firing. They raised money to pay her rent this month….
Birch declined comment Thursday. But she thanked Moran in a handwritten note last week for putting her back on the courthouse payroll in a rotating judicial assistant’s position. Birch was paid about $3,275 a month in her old job, and the state paid her health insurance premium. Her new rotating position pays $750 less a month and requires her to pay her own premiums.
Our tipster writes:
Best quote from the article: “He said if she died while on the payroll, he would have been without an assistant for two months, ‘not an ideal situation for a judge.’” I guess dying wouldn’t have been an ideal situation for her, either.
To get both sides of the story, check out the email from Judge Bowden in which he defends his actions (and rips Chief Judge Moran a new one). You can access his message — in which he benchslaps Chief Judge Moran for his “effrontery” and his “irresponsible” comments, made “precipitously [and] without authority” — by clicking here (PDF).
P.S. Speaking of cancer, here’s a PSA from ATL, and bad news for Biglaw associates and paralegals: according to cancer researchers, overnight work and sleep deprivation may raise your cancer risk.
Judge fires his assistant, draws criticism [Florida Times-Union]
Email from Judge Aaron Bowden (PDF) [Florida Times-Union]
* Mistrial in case against Muslim organization; retrial likely. [AP; New York Times]
* California wildfires lead lawyers to flee from their homes and offices… [The Recorder via Law.com]
* … and may give rise to insurance battles, too. [CNN]
* Ex-stripper convicted in “Last Seduction” trial. [MSNBC]
* White House accused of doctoring environmental testimony. [MSNBC]
* Rep. Linda Sanchez (D-CA) retracts her expressions of concern over the prosecution of an L.A. councilman. [Washington Briefs]
The home of Texas Supreme Court Justice David Medina was destroyed by a fire on June 28. Officials investigating the fire are now saying that the fire appears to have been intentionally set:
Investigators said they considered the fire as incendiary after ruling out all other accidental causes, such as an electrical short, that could have ignited the June 28 blaze that resulted in about $900,000 in damages to Medina’s Spring-area home….
Members of Medina’s family have been questioned during the investigation. His wife and one of his children were the only people in the home that night, arson officers said.
“They have been cooperative throughout the interview process,” said Dan Given, chief investigator with the fire marshal’s office.
At this point, there are no charges pending in the case, officials said.
“This is an active and ongoing investigation,” said Harris County Fire Marshal Mike Montgomery.
Nathan Green, a fire marshal investigator on the case, had earlier said six “persons of interest,” all of whom are Medina family members or friends, have been identified in the investigation. He had said there were inconsistencies in Medina’s and his wife’s accounts of where he was the night of the fire. She was at home.
Contacted by telephone on Tuesday, Medina said he would not comment about his whereabouts that night.
More after the jump.
Continue reading “Did A Texas Supreme Court Justice Burn Down His Own House?”
As we previously mentioned, this week is Non-Top-Tier Law School Week at ATL. Even our open threads on job hunting will reflect this theme.
One graduate of a non-elite law school sent us this suggested topic:
Lots of non-top tier law students end up working for insurance companies.
The dumb ones end up doing insurance defense (hired by insurance company to defend slip and fall, med mal, etc). The smart ones do insurance coverage (represent the insurance company which denied coverage).
How about postings where we can compare salary info? Salary info at these firms is much more guarded. I have no idea what anyone else makes.
So, what ARE salaries like in this area? From our tipster:
I’ll get the ball rolling from the insurance coverage perspective. When I started as a first year at one NYC insurance coverage firm, I was making $75,000 with no bonus (and a billable hours minimum of 1900).
Now, I am a fifth year doing insurance coverage at a different firm in NYC, my salary is $128,000, and our firm offers a $7,500 bonus to associates deemed the cream of the crop at year end. Name partners are rumored to make a boat load of cash, but other partners are rumored to be nothing more than senior associates. Our minimum billables are 2100.
More discussion, after the jump.
Continue reading “Where Do Non-Top-Tier Grads Go? Hello, Insurance Law!”
We continue our series of posts on the perks / fringe benefits of large law firm life. Today we cover a rather important subject that we have not yet hit. From a tipster:
I really like your series of posts on this topic. As a rising 2L about to enter OCI season, I am curious to know which firms have nice fringe benefits and which ones have cut all possible corners to match market pay.
However, you seem to have left off the grand-daddy of ‘em all: healthcare! I would imagine different firms have different health care and dental benefits.
Now, we weren’t sure this would be that interesting a topic. We’d expect most top firms to have similarly top-shelf health insurance plans. But our tipster provided some anec-data that suggests otherwise:
I heard of one southern California litigatrix leaving one of the L.A. “Big 3″ for another because [of health insurance issues]. She had regular health problems, and the difference in health plans was significant to her well-being.
Very interesting. Maybe we should we all move to Cuba? Michael Moore says the health care over there is faboo.
Please discuss legal employers and their health care benefits, in the comments. Thanks.
